How might growth expectations rise at the November Capital Markets Day?

  • Goldman Sachs expects Siemens Energy’s fiscal 2030 EBITA to reach about 6 times its fiscal 2025 level, roughly 11% above Bloomberg consensus; the group’s margin before special items is expected to exceed 20% by then. This growth path depends on both revenue expansion and margin improvement.
  • The 11 November Capital Markets Day is a key milestone: Goldman Sachs expects the company to update the medium-term guidance set in the third quarter of 2025 and extend its targets to fiscal 2030. The bank has raised its fiscal 2026–2028 earnings per share forecasts by an average of about 2.4%.

How will gas and grid businesses contribute incremental profit?

  • Goldman Sachs expects gas services to contribute 38% of the group’s incremental profit in fiscal 2025–2030, with a fiscal 2030 margin before special items of about 26%, compared with 13% in fiscal 2025. Higher prices for new equipment, a capacity ramp-up to above 30 GW, improved service margins and cost reductions together drive growth; the bank expects about one-third of installed capacity in fiscal 2030 to come from data centers.
  • Grid Technologies is expected to contribute 36% of incremental profit over the same period. Goldman Sachs expects the company to set a fiscal 2030 margin target of 24%–26%, compared with 15.8% in fiscal 2025; higher equipment prices, electricity demand, renewable energy connections and replacement demand drive sales volumes, while greater scale further spreads costs.
  • Expectations differ on the pace of grid growth: Goldman Sachs expects annual revenue growth of close to 20%, below the actual 25.4% in fiscal 2025. Its valuation thesis focuses on a longer investment cycle rather than continually accelerating growth.

How do a wind power recovery and business separation reduce risk?

  • Goldman Sachs expects Siemens Gamesa to be close to break-even on profit before special items in fiscal 2026, but sees free cash flow break-even in fiscal 2030. Resolving legacy projects and delivering the higher prices in the order backlog are the links between reducing losses and restoring cash flow.
  • Turbine quality problems directly constrain this path: further quality issues in onshore turbines could lead to additional spending beyond the 1.6 billion euros in charges already recognized in the third quarter of 2023, weighing on earnings.
  • A legal and operational separation plan has been announced for the Transformation of Industry business; the company intends to deconsolidate it while retaining a meaningful minority stake. Goldman Sachs believes this will help focus the portfolio, but the timing of separation, amount of funding raised and use of funds remain important Capital Markets Day topics.

Where will the 30 billion euros in shareholder returns come from?

  • Under the company’s current plan, approximately 28 billion euros will be available for allocation in fiscal 2026–2028, including about 23 billion euros in operating cash flow and approximately 5 billion euros in adjusted net cash in fiscal 2025. About one-third is allocated to capital expenditure and other operations, one-third to shareholder returns and one-third to a strategic reserve; the shareholder return target is about 10 billion euros.
  • After considering capital expenditure and investment commitments in the India business, Goldman Sachs expects cumulative returns to rise to 17 billion euros by fiscal 2028, 70% above the current target; by fiscal 2030 they are expected to reach 30 billion euros, including 18 billion euros in buybacks and 12 billion euros in dividends, equivalent to about 30% of current market capitalization.
  • This capacity depends on converting profits into cash, investment needs becoming limited and adjustments to capital allocation policy. If orders weaken, lower customer advances would also weigh on working capital and affect cash available for returns.

Why does Goldman Sachs see further valuation upside?

  • Based on Goldman Sachs’ fiscal 2030 forecasts, Siemens Energy trades at about 5 times EV/EBITDA, a discount of approximately 30% to electrical equipment companies in the European industrial sector and approximately 57% to GE Vernova. The bank believes earnings growth, lower wind power risk and greater shareholder returns together support a narrowing of the discount; it maintains its Buy rating and 12-month price target of 212 euros.