Siemens Energy plans to broaden the scope of its manufacturing by way of a $2.3 billion grid expansion in transformer and switchgear factories by 2028. The upscaling of the production unit is the primary outcome of the global power requirement that goes up steeply due to the growth in the world population, trends in electrification, and the increasing use of energy-intensive technologies such as data centers and artificial intelligence. As such, the step represents a firm pledge by Siemens Energy to infrastructural networks as the mainstay of its business growth.
Their proposal involves a 20% increase in the total capital expenditure and research and development combined for 2026-2028 as compared to the 2023-2025 period. Additionally, Siemens Energy will enhance the operational efficiency of its global operations by shrinking its manufacturing network for onshore wind from 10 sites in 2023 to 4 by 2026, thus concentrating Siemens Gamesa onshore wind production quality, cost reduction, and operational efficiency areas.
Strong Fiscal 2025 Performance Enables Strategic Reset
This investment push is following a year with strong financial results of Siemens Energy. The fiscal year 2025 became a period of double-digit growth in all business segments. The company reported €58.9 billion in orders, which is a 19.4% increase on a comparable basis, and €39.1 billion in revenue, which is a 15.2% growth over the previous year.
Profit before Special items was as high as €2.355 billion, thus a 6% margin was achieved at the higher end of the targeted ranges. Moreover, free cash flow pre-tax was more than twice the amount, thus it reached €4.663 billion. Net income rose to €1.685 billion, thus the company’s path for the first dividend in four years, at €0.70 per share, was cleared. The turnaround was supported by the replacement of an €11 billion federal guarantee with a €9 billion commercial facility, thus prior restrictions on dividends payments were lifted.
President and CEO Christian Bruch stated that the company’s success is a reflection of sustainable growth and profitability improvements, thus it is creating momentum to increase mid-term targets until 2028.
Divisions Driving Growth
Siemens Energy‘s Grid Technologies segment was full of life due to strong demand, especially in the U.S., and its orders went beyond €21 billion. To take advantage of a shortened project cycle and the growing global demand for firm power systems, Gas turbines sold 194 units and made record profits of almost €1.6 billion.
The Transformation of Industry division pumped up the volume with industrial turbines, generators, and compression technologies. After a previous slowdown, Siemens Gamesa onshore wind production is back in the green with order growth, which is also supported by the relaunch of its revised 5.X onshore wind platform.
The portfolio reshaping continues with the sale of Siemens Gamesa’s power electronics business to ABB and the planned disposal of 90% of the India and Sri Lanka wind operations by Siemens Gamesa to a TPG-led consortium. Both transactions are expected to be completed in fiscal 2026.
Responding to a Rapidly Changing Energy Landscape
The grid expansion is a response to the electrification of the world fundamentally changing the structure of power systems worldwide. As a result of urbanization, rising living standards, electrification of transport and industry, and new data-intensive applications, the demand for electricity is expected to increase by about 45% by 2035.
For the 2026 fiscal year, Siemens Energy expects similar revenue growth of 11–13% and a profit margin before special items of 9–11%. Net income is expected to be between €3 and €4 billion, while free cash flow pre-tax is expected to be between €4 and €5 billion. These predictions are based on the assumption that Siemens Gamesa onshore wind production will break even.
Chief Financial Officer Maria Ferraro emphasized that the company’s improved balance sheet is a strong platform for profitable growth, with an emphasis on the creation of long-term value for shareholders.
Mid-Term Targets and Capital Returns
Siemens Energy has revised its 2028 mid-term objectives beyond the next few years. The group targets now a compound annual revenue growth rate of around the low-teens, with a profit margin of 14-16% before special items. The $2.3 billion grid expansion of its transformer factories and switchgear factories is at the heart of the move, allowing Siemens Energy to eliminate bottlenecks in power systems, attend to the electrification of the economy and, at the same time, make the transition possible to clean energy transition worldwide.
In addition, Siemens Energy investment in transformer and switchgear factories pledges to dividend payments and share buybacks amounting to maximum €10 billion over 2026–2028, thus creating a mixture of capital expenditure and operational efficiency.
As the world moves towards a greener future with governments and utilities putting in efforts to modernize grid expansion and speed up renewable energy investment, Siemens Energy remains a powerful force in the clean energy transition to global electricity system modernization thanks to its adjusted manufacturing footprint and good financial condition.
