Siemens Energy Reports Record Quarter as AI Data Centres and Middle East Projects Drive Demand

Siemens Energy has reported record orders, revenue and profitability for the third quarter of its 2026 financial year, supported by growing electricity demand from artificial intelligence data centres in the United States and major power generation projects in the Middle East.

The German energy technology group received €17.93 billion in orders during the three months ending 30 June, an increase of 8.5% on a comparable basis from the same period a year earlier. Quarterly revenue rose 18.5% to €11.45 billion, exceeding the €11.22 billion average analyst forecast compiled by the company.

Profit before special items more than tripled from €497 million to €1.62 billion, also surpassing the market consensus of approximately €1.38 billion. The corresponding adjusted profit margin reached 14.2%, compared with 5.1% in the third quarter of the previous financial year. Net income increased by 70.5% to €1.19 billion.

The company’s order backlog rose to a record €162 billion, providing visibility over future manufacturing, installation and servicing activity. Its book-to-bill ratio, which compares orders received with revenue generated, stood at 1.57, indicating that new orders continued to exceed completed sales during the quarter.

Gas Turbine Orders Rise Sharply

Gas Services was the strongest contributor to the quarter. Orders in the division increased by 61.9% on a comparable basis to almost €10 billion, while revenue rose 20.8% to €3.76 billion.

Siemens Energy said the increase reflected large orders connected to US data centres, alongside contracts for new power plants in the Middle East and Asia. Both the new equipment and service businesses recorded substantial growth.

According to Reuters, data centre operators and customers in the Middle East represented approximately half of the company’s gas turbine orders during the quarter. Chief executive Christian Bruch described the current market as the beginning of a major electrification wave, with electricity accounting for a growing share of overall energy demand.

AI data centres are placing particularly great and concentrated demands on electricity systems. Operators require continuous power, rapid grid connections and backup capacity, often on development schedules that are shorter than those associated with conventional power infrastructure.

In regions where transmission capacity or renewable generation cannot be expanded quickly enough, developers and utilities are increasingly considering gas-fired generation as a way to provide dispatchable power. Gas turbines can be deployed alongside renewable energy and storage, but their climate impact depends on operating efficiency, utilization, methane leakage across the fuel supply chain, and whether carbon capture or lower-carbon fuels are introduced.

Middle East Investment Supports Equipment Demand

Power generation projects in the Middle East were another important driver of Siemens Energy’s performance. Governments and utilities across the region are investing in new generation capacity to meet population growth, industrial expansion, cooling demand and the development of digital infrastructure.

Energy security concerns are also influencing investment decisions. Reuters reported that regional tensions and the vulnerability of critical infrastructure have encouraged some Middle Eastern governments to accelerate spending on power equipment and domestic generation capacity.

The region is simultaneously expanding renewable energy, grid infrastructure and conventional generation. This creates demand across Siemens Energy’s portfolio, which includes gas and steam turbines, generators, transformers, converter systems, electrolysers and wind power technology.

For governments pursuing net-zero or emissions-reduction targets, the challenge will be ensuring that new gas infrastructure does not become a long-term source of unabated emissions. New plants may need to be designed for greater operational flexibility, higher shares of renewable electricity and potential future use of hydrogen or carbon capture technologies.

Clear transition plans will be important because gas facilities commonly operate for several decades. Decisions taken during the current construction cycle could therefore influence regional emissions well beyond 2030.

Grid Technologies Continues Rapid Expansion

Siemens Energy’s results were not solely dependent on gas turbines. Grid Technologies was one of the leading contributors to group revenue growth, reflecting increased investment in transmission networks and electrical equipment.

Grid expansion has become a central requirement for both digitalization and decarbonization. Data centres, renewable energy projects, electric transport and industrial electrification all depend on stronger transmission and distribution infrastructure.

However, lengthy permitting processes, equipment shortages and interconnection queues remain obstacles in several markets. Demand for transformers, substations and high-voltage systems is consequently increasing at the same time that manufacturers are attempting to expand production capacity.

For the full financial year, Siemens Energy expects comparable revenue growth of between 25% and 27% in Grid Technologies, with an adjusted profit margin of 18% to 20%. Gas Services is expected to deliver revenue growth of between 16% and 18%.

Siemens Gamesa Returns to Quarterly Profitability

The company’s wind power subsidiary, Siemens Gamesa, also reported a positive quarterly result for the first time since the 2022 financial year.

The improvement was supported by productivity gains, cost controls and higher utilization of manufacturing capacity. Siemens Energy said the division remains on track to achieve break-even profitability before special items for the full 2026 financial year.

The development is significant because losses in the wind business have weighed heavily on Siemens Energy’s performance in recent years. A sustained recovery would allow the group to benefit more evenly from growth in both conventional power equipment and renewable energy infrastructure.

However, the wind industry continues to face challenges including project delays, higher financing costs, supply-chain pressure and technical problems affecting some turbine platforms.

Higher Outlook Supported by Cash Generation

Siemens Energy confirmed its 2026 financial guidance and said its adjusted profit margin is expected to reach the upper end of its projected 10% to 12% range.

The company expects comparable annual revenue growth of between 14% and 16%, net income of around €4 billion, and pre-tax free cash flow of approximately €8 billion. During the third quarter alone, pre-tax free cash flow increased from €419 million to €2.32 billion, partly supported by customer advance payments and reservation fees linked to strong orders.

The results demonstrate the scale of investment now flowing into electricity generation and networks. They also illustrate a tension within the energy transition: rapid electrification can support emissions reductions across transport, buildings and industry, but meeting new demand through additional fossil-fuel generation may increase emissions unless those assets are carefully integrated into wider decarbonization strategies.

For utilities, policymakers and data centre operators, the practical priority will be aligning new computing capacity with grid investment, renewable procurement, storage, demand flexibility and credible plans for reducing the emissions associated with dispatchable generation.

Source: www.reuters.com