Siemens Energy targets upper end of outlook as US demand outweighs tariffs

By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUESSELDORF (Reuters) -Siemens Energy expects to hit the upper end of its 2025 growth outlook range, it said on Wednesday, as its wind turbine division and strong demand for equipment in the U.S. have reduced the impact of import tariffs.

The company, which makes around a fifth of its sales in the United States, has been insulated from the impact of President Donald Trump's import duties by its strong U.S. presence and contracts that allow costs to be passed on.

Siemens Energy Chief Executive Christian Bruch said the impact of tariffs was manageable. Although duties were painful, he said, the U.S. market had performed very strongly and was critical to the company's strategy.

Bruch said the tariffs had reduced profits by 100 million euros ($116 million) for the fiscal year so far, adding another mid-double-digit million euro amount would be incurred in the fourth quarter.

This was mainly a result of older service contracts that make it harder to pass on price increases caused by tariffs compared with newer ones, Bruch said.

"I assume that we will see figures of similar magnitude next year, but this will decline over the years because we will gradually phase out these service contracts and replace them with new ones," he told journalists.

Shares in the company, which have nearly doubled since the beginning of the year, were down 0.9% at 0857 GMT, with traders pointing to profit taking following the strong run.

Demand in the United States for gas turbines and power transmission equipment - two components Siemens Energy supplies - was rising, the group said, adding that it was trending towards the upper end of its annual outlook.

An agreement between Brussels and Washington on tariffs struck last month, which imposes a 15% duty on most EU goods, "provides planning certainty", the company said.

Siemens Energy, which last month said it had regained its ability to pay a dividend sooner than expected, forecast sales growth of 13-15% and a profit margin before special items of 4-6%, compared with estimates of 12.9% and 6% respectively in a company-provided poll.

Orders grew by nearly two-thirds to 16.6 billion euros in the third quarter, beating analysts' forecast of 14.1 billion euros, and bringing the group's order backlog to a new record 136 billion euros.

The performance and stock price recovery also reflects the group's emergence from a major quality crisis at its wind turbine division two years ago that forced the former Siemens AG unit to seek funding guarantees from the German government.

($1 = 0.8635 euros)

(Reporting by Christoph Steitz and Tom Kaeckenhoff; Additional reporting by Zuzanna Szymanska and Danilo Masoni; Editing by Sandra Maler, Miranda Murray, Eileen Soreng and Jan Harvey)