Siemens AG (OTC: SIEGY) has updated its Smart Infrastructure (SI) division’s mid-term outlook, citing strong growth in data centers, electrification, and energy storage.
New Targets:
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Revenue growth: 6%–9% annually
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Margin range: 16%–20%, up from the prior 11%–16%
Analysts from Goldman Sachs and Jefferies see these goals as “realistic and achievable,” with room for further upside.
Key Growth Drivers:
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Cost Competitiveness
Shifting manufacturing to India, Eastern and Southern Europe has reduced production costs. -
Portfolio Optimization
Of its €2 billion optimization target, €1 billion has already been achieved, with €300 million more expected by 2025. -
Regional Focus
Increased emphasis on the U.S. and India, markets with high demand for smart infrastructure. -
Sectoral Performance
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Strong demand in data centers and energy storage
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Cloud computing and IoT continue to drive need for energy-efficient electrical solutions
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Siemens’ electrification and electrical products division remains ahead of peers
Profit Over Price: Strategic Focus Shifts
Post-COVID price hikes contributed to a 300 basis point boost in margins, but Siemens is now prioritizing productivity gains and high-margin products over pricing levers.
Challenges in the Building Segment
Siemens’ building technologies unit still lags behind peers, but aims to narrow the gap by improving margins by 300–400 basis points by fiscal 2028.
The broader product mix has made restructuring slower, but efforts are ongoing.
Outlook: Positioned for Resilient Growth
With:
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Increased demand for low-carbon, digitalized infrastructure
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A leaner, more global cost structure
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Market leadership in electrification and mission-critical industries
Siemens appears well-positioned to deliver on its bold smart infrastructure roadmap, even as it works to unlock value from its underperforming segments.