Siemens rides record surge as healthineers spin-off stalls

By the end of fiscal 2025, Siemens had built an impressive foundation for sustained growth, boasting a record order backlog of approximately EUR 110 billion fueled by a robust order intake near EUR 90 billion. This strong demand pipeline translated into over 10% year-on-year revenue growth to around EUR 80–82 billion, with the Digital Industries segment leading the charge by increasing revenues to EUR 22–23 billion and enhancing profit margins. The company’s strategic emphasis on higher-margin software, automation, and energy-efficient solutions not only bolstered profitability—industrial business profits surpassed EUR 10–11 billion and net income reached about EUR 6 billion—but also propelled Siemens’ stock to near-yearly highs at EUR 190 by mid-2026.

Siemens’ momentum accelerated into 2026, highlighted by a record third quarter where orders surged 14% to EUR 27.9 billion, outpacing revenue growth of 8% to EUR 20.8 billion and resulting in a book-to-bill ratio of 1.34 that underscored demand significantly exceeding processing capacity. This operational strength drove a 25% jump in industrial profit to EUR 3.5 billion with a 17.3% segment margin, alongside a 15% rise in net income to EUR 2.6 billion, prompting management to raise full-year EPS guidance to between EUR 11.20 and EUR 11.50. Notably, the Smart Infrastructure division outperformed expectations, lifting its revenue growth outlook to 10–11% and margin guidance to 18.5–19.5%, while the Mobility segment secured a landmark EUR 3 billion contract with Italian operator Italo for 26 high-speed trains plus a 30-year maintenance agreement, further cementing Siemens’ robust segment-level performance.

Despite achieving crucial tax clarity in August 2026 that resolved fiscal uncertainties with German authorities and enabled Siemens to reduce its stake below 40%, the spin-off of Siemens Healthineers remains mired in delays with no shareholder votes scheduled or completion date set. This tax breakthrough, hailed as a significant milestone by Siemens AG, clears a major hurdle but does not immediately accelerate the process, as management cautions that the sale of the Diagnostics division—a key component of the spin-off—could take up to 24 months to finalize.

Operational challenges, particularly within the Diagnostics division, continue to weigh heavily on Siemens Healthineers’ outlook, with revenue growth forecasts downgraded multiple times—from an initial 5.0-6.0% down to 3.5-4.0%—largely due to competitive pressures in China, procurement policy shifts, and costs associated with transitioning to a new lab platform. These headwinds, compounded by geopolitical factors such as new 10% US tariffs on European imports under Section 301 and the Middle East conflict, have pressured margins and contributed to a 12-13% year-to-date share price decline, reflecting investor wariness about the spin-off’s timing and the company’s near-term growth prospects.

In response to market uncertainty and operational headwinds, Siemens Healthineers has actively supported its equity through a robust share buyback program, repurchasing over 2.8 million shares between June and mid-August 2026, signaling management’s confidence amid a volatile trading environment. Concurrently, the company is leveraging innovation milestones—such as showcasing new diagnostic technologies at the ADLM conference and advancing the RAD101 imaging agent with a pivotal FDA meeting scheduled for October 1—to reassure investors and underpin future growth potential despite the current challenges.

Looking ahead, critical near-term catalysts include the third-quarter earnings release on July 31, 2026, and a Jefferies roadshow in early August, which are expected to provide clarity on the impact of tariffs, operational stabilization in diagnostics, and spin-off progress. While adjusted earnings-per-share guidance has been raised to €2.35-2.45 despite trimmed revenue forecasts, the market remains cautious, with shares trading significantly below their 52-week highs and investors closely monitoring management’s execution on restructuring and growth strategies.

Since June 1, 2026, Siemens Healthineers has embarked on a robust share buyback program, repurchasing over 2.82 million shares by mid-August to underpin shareholder value and support employee and management compensation schemes. This steady repurchasing activity, totaling up to €230 million in authorized volume, reflects the company’s strategic use of buybacks as a capital return tool amid operational headwinds, particularly in diagnostics and the China market, which have pressured the stock price despite intermittent gains.

Parallel to Healthineers, Siemens AG has also actively engaged in share repurchases, acquiring over 1.14 million shares in July 2026 alone, signaling a coordinated capital return strategy across the Siemens group to bolster investor confidence during a period of restructuring and market challenges. Both entities have emphasized transparency and regulatory compliance by executing transactions exclusively via the Frankfurt Stock Exchange’s Xetra platform and disclosing detailed buyback data in alignment with EU Market Abuse Regulation (MAR), thereby reinforcing strong governance and clear communication with shareholders.

Internal governance at Siemens has been marked by a rare but pointed dissent regarding the company’s breakup strategy, particularly the divestitures of Siemens Healthineers and Siemens Energy executed under former CEO Joe Kaeser between 2018 and 2020. Tobias Bäumler, chairman of Siemens' group works council, publicly criticized these carve-outs as strategic missteps, arguing that Siemens’ valuation would be higher today had these businesses remained within the group. This internal debate is intensifying as Siemens prepares for another major structural move: the planned spin-off of Siemens Healthineers, with shareholder votes slated for next year and further details expected in November. Notably, Siemens has addressed tax concerns related to the spin-off and is actively reducing managerial overlap by cutting the number of supervisory board seats held by Siemens executives at Healthineers from three to one, signaling a clear intent to delineate governance and ownership structures more distinctly.

While the works council chief remains critical of past divestitures, he acknowledges a significant strategic pivot under current CEO Roland Busch, describing it as a 'paradigm shift' that refocuses Siemens on technology leadership, particularly in AI and unified data architecture. Bäumler’s primary demand now centers on enhancing transparency with the workforce amid ongoing restructuring efforts, emphasizing the need for clearer communication rather than a reversal of the breakup strategy. This nuanced stance reflects internal tensions balancing growth ambitions with shareholder interests, highlighting the complex governance dynamics as Siemens navigates its transformation.

Siemens is strategically positioning itself at the forefront of digital transformation by developing a specialized transformer tailored for AI data centers, a move that underscores its commitment to innovation within its broader digitalization agenda. Concurrently, Siemens Healthineers is advancing its theranostics pipeline with a critical FDA meeting scheduled for October 1 to finalize the Phase 3 study design for RAD101, an imaging agent targeting brain metastases. Success in this high-margin theranostics program could not only solidify Siemens Healthineers’ role as a vital infrastructure partner in this emerging field but also provide a crucial growth catalyst that offsets slower momentum in its traditional diagnostics segment.