Siemens Q1 2026 Earnings Show Strong Growth and Optimism

Siemens Aktiengesellschaft (ETR:SIE) reported a robust performance for the first quarter of fiscal 2026, marked by a significant increase in orders, broad revenue growth, and an improved industrial profit margin, despite facing currency challenges. The company is raising its full-year earnings-per-share projection, reflecting confidence in its ongoing business momentum.

Record Orders and Profit Margins

CEO Roland Busch highlighted a “strong start” to fiscal 2026, emphasizing Siemens’ focus on opportunities amid geopolitical uncertainties. The company achieved a book-to-bill ratio of 1.12 and recorded a backlog of EUR 120 billion in orders. The industrial business posted a profit of EUR 2.9 billion, with a profit margin rising to 15.6%. Busch noted that negative currency translation effects impacted the results by approximately 60 basis points, but the overall performance remains strong, with basic earnings per share before purchase price allocation (EPS pre PPA) at EUR 2.80. Siemens’ free cash flow for the quarter stood at EUR 0.7 billion, a seasonal decrease following an exceptionally strong fourth quarter in fiscal 2025.

Smart Infrastructure Thrives

The Smart Infrastructure segment delivered exceptional results, with orders increasing by 22% to a quarterly record of EUR 7.2 billion and a book-to-bill ratio of 1.30. Chief Financial Officer Ralf Thomas noted that the order backlog in this unit reached an all-time high of EUR 20.2 billion, providing strong visibility for the rest of fiscal 2026. The rise in orders was attributed to Electrification, which saw a 38% increase, and Electrical Products, which increased by 22%. Notably, data center orders hit a record EUR 1.8 billion, with approximately half stemming from larger contracts.

Revenue in Smart Infrastructure grew by 10%, surpassing internal expectations, with Electrification revenue climbing by 22%. The segment’s profit margin improved by 210 basis points year-over-year to 19.0%. Thomas mentioned a beneficial impact from commodity hedging due to fluctuating copper and silver prices, which offset the negative currency impact.

In the United States, orders surged by 54%, driven by demand in data centers and construction projects. Looking ahead, Thomas expects comparable revenue growth in Smart Infrastructure to fall within the upper half of the 6% to 9% guidance range, supported by the substantial backlog.

Digital Industries and Mobility Performance

The Digital Industries segment also showed positive trends, with orders rising by 13% to EUR 4.8 billion and a book-to-bill ratio of 1.07. Thomas described improvements in the automation business for the third consecutive quarter. Despite a gradual recovery in market dynamics, visibility remains limited. Software orders approached EUR 1.7 billion, bolstered by larger electronic design automation deals, while overall revenue grew by 10%, with software increasing by 11% and automation by 9% to EUR 7.9 billion.

The profit margin for Digital Industries reached 17.8%, exceeding expectations due to effective pricing and productivity enhancements. Thomas pointed out integration costs related to Altair and Dotmatics, which impacted the segment margin. Negative currency effects also reduced margins by about 110 basis points.

The Mobility segment reported orders of EUR 2.9 billion, exceeding previous year’s figures with a book-to-bill ratio of 0.90. The order backlog stands at EUR 51 billion, which includes EUR 15 billion in service contracts. Revenue increased by 9%, driven by rolling stock and customer services, while the profit margin improved to 9%.

Thomas expects Q2 to be “rather soft,” following a strong Q1, but anticipates a rebound in the second half of fiscal 2026. Siemens confirmed its full-year guidance for Mobility, targeting comparable revenue growth of 8% to 10% and a profit margin within the same range.

Updated Outlook and Shareholder Returns

Siemens has raised its full-year guidance for basic EPS pre PPA to between EUR 10.70 and EUR 11.10, a EUR 0.20 increase at the midpoint. Operating working capital rose by approximately EUR 1.3 billion in Q1, consistent with seasonal patterns. Siemens also settled a long-standing obligation of around EUR 400 million related to nuclear waste removal in Hanau, Germany.

The company aims to achieve double-digit cash returns on revenue in fiscal 2026, supported by a net debt-to-EBITDA ratio of 0.9 and double-A ratings from S&P and Moody’s. Siemens plans to retire 18 million treasury shares in March, reducing its capital stock to 782 million shares, while it has executed nearly EUR 4.4 billion in share buybacks over the past two years.

In terms of portfolio actions, Busch indicated that Siemens is making progress toward the planned deconsolidation of Siemens Healthineers, with further details anticipated in the spring. Siemens recently divested its airport logistics business in the U.S. to Vanderlande, marking a significant step in its strategic realignment.

Overall, Siemens Aktiengesellschaft’s first-quarter results underscore a resilient performance and an optimistic outlook, driven by strong order growth and strategic initiatives across its core segments.