Siemens Energy Navigates U.S. Tariffs with Resilient Growth

The U.S. tariffs announced in April 2025 have cast a shadow over global trade, but for Siemens Energy, the financial fallout remains marginal. Despite the potential profit hit of up to €100 million ($113 million) in the latter half of its fiscal year 2025, the company’s robust order backlog, operational improvements, and strategic adjustments position it to withstand trade pressures. Let’s dissect how Siemens Energy is turning macroeconomic headwinds into opportunities.

Ask Aime: How does Siemens Energy's strategic adjustments mitigate the impact of US tariffs?

The Tariff Impact: A Manageable Setback

Siemens Energy has quantified the direct financial impact of U.S. tariffs as “limited,” with losses capped at less than €100 million for the period ending March 31, 2026. This projection reflects the company’s proactive mitigation efforts, including supply chain reconfigurations and cost-containment measures. While the tariffs primarily target imports from Mexico—used in U.S. factory components—the financial toll is dwarfed by Siemens Energy’s broader growth trajectory.

Strength in Numbers: A Surge in Orders and Revenue

The company’s Q2 results underscore its resilience. Revenue jumped 20.7% to €10 billion in the quarter, while net profit nearly quintupled to €501 million, far exceeding analyst expectations of €217 million. A record €14.4 billion in orders—up 52% year-over-year—has bolstered its order backlog to a staggering €133 billion. Key drivers include:
- Gas Services: Surging demand for gas turbines, fueled by global energy transitions and grid infrastructure upgrades.
- Grid Technologies: A 25% revenue spike in grid equipment, driven by investments in renewable energy and data center infrastructure.
- Offshore Wind: Siemens Gamesa’s offshore wind division delivered revenue growth, signaling gradual recovery despite ongoing challenges in its onshore turbine business.

Why the Tariff Impact Isn’t Derailing the Story

1. Mitigation in Action: Siemens Energy’s supply chain adjustments have minimized tariff exposure. For instance, shifting some manufacturing closer to U.S. markets or renegotiating supplier terms could further insulate margins.
2. Demand Dynamics: Rising global power demand—particularly in gas-fired generation and grid modernization—is creating tailwinds. Siemens Energy’s backlog now includes projects like the $1.2 billion Texas Gulf Coast gas power plant and a $300 million grid upgrade in California.
3. Financial Flexibility: The company’s revised guidance projects a net income of up to €1 billion for fiscal 2025, excluding gains from its Indian demerger. Free cash flow is expected to hit €4 billion, reflecting strong operational cash generation.

The Bigger Picture: Siemens Gamesa and Beyond

While the Gamesa wind-turbine unit’s €1.3 billion loss in 2025—due to turbine defects—remains a concern, this issue is unrelated to tariffs. Management has already outlined a turnaround plan, including halting 5.X onshore turbine sales until 2026 and focusing on profitable offshore projects. Meanwhile, the company’s gas and grid segments are delivering steady growth, with grid revenue expected to hit €4.5 billion by 2026.

Conclusion: Tariffs Are a Speedbump, Not a Roadblock

Siemens Energy’s fiscal 2025 outlook—13-15% revenue growth and a 4-6% margin—paints a picture of a company thriving despite external pressures. The €100 million tariff impact amounts to less than 1% of its projected €1 billion net income, underscoring its ability to absorb disruptions. With a €133 billion backlog, strong execution in high-margin segments, and a strategic focus on mitigating trade risks, investors can rest assured that Siemens Energy’s fundamentals remain intact.

As CEO Christian Bruch stated, “Profitable growth is our priority.” The numbers back him: even with tariffs, Siemens Energy is on track to deliver its best financial year since 2019. For investors, this resilience positions the company as a key player in the energy transition—a sector set to grow at 6% annually through 2030. The tariffs, while inconvenient, are but a minor footnote in Siemens Energy’s story of transformation.