Research Update: Siemens Energy Outlook To Stable On Better Operating Performance, High Demand, Net Cash Position; 'BBB-' Rating Affirmed

Siemens Energy reported stronger-than-expected results for the group in fiscal 2024 (ended Sept. 30, 2024) with like-for-like revenue growth of 10.8% and an S&P Global Ratings-adjusted EBITDA margin of 4.6% thanks mainly to lower losses in Siemens Gamesa Renewable Energy S.A. (SGRE), and stronger growth in its high-margin grid technology segment. In addition, the group reported another year with more than €50 billion in new orders, increasing its order backlog by about €11 billion to €123 billion, which resulted in high advanced payments and solid free operating cash flow (FOCF) of €1.2 billion. Given the very high demand for its conventional gas and power businesses, improving gross margins in the order backlog, and reduced losses at SGRE, we now assume

... results for the group in fiscal 2024 (ended Sept. 30, 2024) with like-for-like revenue growth of 10.8% and an S&P Global Ratings-adjusted EBITDA margin of 4.6% thanks mainly to lower losses in Siemens Gamesa Renewable Energy S.A. (SGRE), and stronger growth in its high-margin grid technology segment. - In addition, the group reported another year with more than 50 billion in new orders, increasing its order backlog by about 11 billion to 123 billion, which resulted in high advanced payments and solid free operating cash flow (FOCF) of 1.2 billion. - Given the very high demand for its conventional gas and power businesses, improving gross margins in the order backlog, and reduced losses at SGRE, we now assume that the group will be able to achieve S&P Global Rating-adjusted EBITDA margins of about 6.5%-7.0% in fiscal 2025 and about 10% in fiscal 2026, as well as maintain a net cash position. - We therefore revised our outlook to stable from...

Research Update