Good morning, ladies and gentlemen, and welcome to our fiscal Q2 2026 conference call. All documents were released this morning and can be found also on our IR website.

I'm here today with our CEO, Roland Busch, and our new CFO, Veronika Bienert, for her first earnings call. Both will review the Q2 results.

After the presentation, we will have time for Q&A. With that, over to you, Roland.

Thank you, Tobias, and good morning, everyone, and thank you for joining us to discuss our second quarter performance. I'm pleased that we continued our successful path of profitable growth, creating value for all our stakeholders despite an overall environment that was geopolitically demanding.

In the Middle East, our top priority has been on supporting and safeguarding the well-being of our employees affected in the region. From a business perspective, we expect our direct revenue exposure in this region to be limited to 3 to 4% in fiscal year 2026.

Direct supply exposure at around 1% of purchasing volume is very low, and mitigation measures are in place. Obviously, we are closely monitoring developments as well as the magnitude of secondary effects regarding inflation, global supply chains, and investment sentiment.

Far, however, we have not seen material changes in broader customer buying behavior, and we are benefiting from our technological strengths and strong positioning in key growth markets. Now, let me walk you through the key highlights.

Book-to-bill reached a strong 1.22, lifting orders backlog to a record-high level of €124 billion. Nominal top-line growth rates were again materially impacted by the strong euro, as anticipated.

Group orders reached €24.1 billion, up 18% on the prior year, with double-digit growth in all three core businesses. Smart Infrastructure again reached a quarterly order record with strong demand across most end markets.

SI's Data Center vertical clearly stood out with unprecedented triple-digit order growth in the quarter, even topping the excellent Q1. Demand continues to be vibrant, driven by the build-out of cloud and AI infrastructure.

Digital Industries continued its growth path. The market environment had shown some early signs of improvement that are now being challenged by renewed geopolitical volatility.

DI's automation business was strong across regions. Our software business seized several larger opportunities across the portfolio and is successfully upselling with its customer base.

Mobility won attractive large orders in Q2. Two weeks ago, another high-profile contract came finally to a close, which will be accounted for in Q3.

We will deliver up to 200 double-deck trains based on the Desiro platform to SBB, this is the Swiss Bundesbahnen, for the Swiss commuter rail networks. The order value is around 2 billion Swiss francs.

Overall, revenue growth reached 6%, driven by Digital Industries and Smart Infrastructure. A very strong contribution came from Smart Infrastructure's Electrification business, up 18%.

The software business at Digital Industries achieved compelling 14%. It is good to see that revenue was up in all regions.

The Americas led the way, up 10%, fueled by strong momentum in the United States. EMEA grew by 2%, and Asia Australia was up 8%, driven by India, which was up 21%.

Industrial Business profit reached €3 billion, translating to a profit margin of 15.4%. We saw operational strengths at Digital Industries and Smart Infrastructure, while Mobility was impacted by US tariffs.

Currency headwinds amounted to 80 basis points and are expected to ease in the second half. These results translated into our earnings per share pre-PPA of €2.81, including, as previously indicated, a gain from the divestment of our airport logistics business in the US.

Compared to the first quarter, free cash flow picked up to €1.7 billion. We confirm our outlook for fiscal year 2026 on the group level, with some adjustments in the individual businesses.

Veronika will give you some more color later. In addition, we continue to shape our portfolio.

As planned, we clarified the timeline for the spin-off of Siemens Healthineers shares. The shareholder vote is now planned for our next ordinary annual shareholders' meeting in February 2027.

Four key levers drive our growth ambitions as one tech company. First, digital growth.

In the first half of the fiscal year 2026, we grew our digital business by 19%, well ahead of the ambition level of 15% that we set last November. Digital business was driven by a good mix of organic growth from expanding our Siemens Xcelerator software and digital service offerings, combined with a strong growth trajectory of our recent software acquisitions.

Second, grow regions. A great example of where Siemens' strengths across business come together as one is Vulcan Energy's Project Lionheart in Germany's Upper Rhine Valley.

This is Europe's first integrated lithium and renewable energy project, and it will create local lithium supply. As a result, it will strengthen growth and competitiveness in Germany.

The backbone of Lionheart will be our advanced automation and digitalization technologies, as well as smart buildings solutions. Bringing them together will help in ramping up production faster.

As a key partner, Siemens Financial Services will become a minority investor in this project and has supported the structuring and arrangement of the debt financing. Third, grow verticals.

Data center demand has been soaring and it reflects our trusted systems integration and delivery capabilities. The team grew our revenue in the first half year by more than 45% to €1.8 billion.

We are confident that we will be able to keep up this stunning pace throughout fiscal year 2026. To meet accelerated demand, we will ramp up further low- and medium-voltage production capacities in the US at several locations in the Carolinas.

We are continuously expanding our data center partner ecosystem to scale next-generation AI infrastructure. The goal: we are creating more flexibility across compute, energy, and infrastructure systems.

Data center operators can connect to the grid faster, scale efficiently, and operate reliably in a power-constrained world. Fourth growth lever: grow AI.

Bringing AI to the real world was our key theme at our first RXD summit held in Beijing, which was a major customer and partner event. We deepened our partnership with Alibaba to bring our advanced industrial software together with their cloud and AI capabilities.

Now, engineering teams at our customers in China can flexibly run complex simulations more efficiently. We introduced 26 new products for edge automation and control to execute AI-driven applications in industry and in infrastructure.

These products were locally developed at China speed, as we say, for the Chinese market and beyond. Those of you who visited our booth in Hannover saw first hand how we are bringing industrial AI to the shop floor together with our partners.

Let me highlight just a few examples. First, we launched our Eigen engineering agent, with which we are moving industrial AI from providing assistance to autonomously planning and executing industrial automation engineering tasks.

The impact is impressive, with up to 50% greater engineering efficiency and up to 80% higher solution quality, proven in more than 100 global pilot deployments. Second, we showed that physical AI is becoming reality in our own factories.

We are automating complex and unpredictable logistics tasks with AI-powered robots. After receiving the task, they figure out by themselves how to solve challenges and optimize the required actions.

A huge opportunity to address the scarcity of skilled labor. With KION, we entered a strategic partnership to shape the supply chains of the future.

Using comprehensive digital twins and our Digital Twin Composer, we turn warehouses from a physical hub into the digital nerve center for the supply chain. A key part of this collaboration is exchanging selected areas of industrial data and domain expertise to accelerate AI-enabled solutions.

All these applications will lead to increasing demand for electricity for AI factories. We launched a comprehensive new direct protection and switching portfolio, the basis for offering more efficient and sustainable DC grid solutions.

I'm very pleased with the momentum and performance of our DI software business. Organic ARR growth trended upward to a very healthy level of 11% over the prior year.

The integration of our Altair and Dotmatics acquisitions is progressing very well. We have achieved an important milestone by implementing the targeted cost savings measures of $150 million following the Altair integration.

The bottom-line impact will follow subsequently. At the same time, we are working on accelerating cross-selling revenue synergies, where customer opportunities are gaining more and more traction.

As AI capabilities are evolving rapidly, our top priority is ensuring that all our teams fully embrace AI to leverage the full productivity gains of AI-powered coding. We are uniquely positioned to build on our strengths and meet key customer needs when implementing AI-powered industrial software.

First: deterministic. Our customers require the management of physical laws and deterministic outcomes.

Embedding AI in our physics-based solutions enables better and faster deterministic intelligence that, unlike probabilistic results, can be trusted. Our tools have the capability for sign-off and verification.

Second: contextualization. Industrial-grade AI requires precise contextualization of data.

Our industrial software understands design intent and all of a product's configurations. AI that is built on systems of record uniquely preserves all necessary rules and relationships.

Third: multidomain. The complexity of innovation is rapidly increasing in a world of personalized and software-defined products.

Customers require AI to be built on systems that understand the multidomain design intent across the enterprise. We are the only company that can do this across PLM, EDA, simulation, and shop floor execution.

Fourth: live. Real-time intelligence that will drive action requires a live digital twin that is infused with real-world physical data.

Siemens is the industrial leader in bringing the real and digital worlds together to drive better, faster real-time intelligence and governed actions. With focused investments, we are speeding up the development of AI-enhanced products and new applications in three ways.

First: faster engines. Our physics AI solution doesn't replace deterministic CAE solvers.

It makes them dramatically more efficient. Engineers can rapidly screen thousands of options and identify the most promising candidates.

Then, they run full deterministic solvers on only the top few. Result: dramatic faster design iterations and earlier validation.

Second: faster engineers. Another key innovation is our new agentic industrial-grade AI platform that autonomously plans, executes, and validates.

We have stress-tested this capability where the stakes are at the absolute highest, which is in the semiconductor design. The Fuse EDA AI system securely orchestrates highly complex workflows across very specialized tools.

It delivers real engineering productivity for industry leaders, such as TSMC and NVIDIA. Even more: this is a platform approach for scaling.

We are taking this agentic intelligence and will extend it to more than 20 agents across our broader software portfolio. Third: increased design intelligence.

One of the key challenges in adapting and implementing comprehensive digital twins for factories is the complexity of integrating data across ecosystems. Siemens has resolved this issue by introducing the Digital Twin Composer, which can merge all the data streams from the digital and real worlds into one experience.

You saw this compelling concept in Hannover with PepsiCo and KION examples. We enabled those companies to build an ever-evolving engineering mirror of the physical product and factory, constantly driving operational improvement.

Customer interest is massive. Far, we have been working on more than 300 inquiries from large enterprises since the launch at CES.

To sum it up: our foundation is strong. It's built on Teamcenter, the industry's number one trusted and secure system of records.

On this basis, we are bringing the benefits of faster engines, faster engineers, and enhanced design intelligence to life. We are building an AI-native experience that is secure, trusted, and governed.

We aim to lead this transformation. Now, over to you, Veronika.

Thank you, Roland, and good morning, everyone. Let me share more about our successful Q2 and our expectations for the remainder of the fiscal year.

Orders for Digital Industries at €4.8 billion were 12% above the prior year, with a book-to-bill of 1.03. Overall market dynamics in the automation business have been gradually improving.

At this stage, however, we have limited visibility into the future impact that the conflict in the Middle East will have on investment sentiment. DI software business again delivered strong growth over the prior year, with orders close to €1.8 billion.

Book-to-bill was clearly above 1, driven by structural tailwind from sustained AI momentum and by several large order wins in EDA and PLM. Our backlog at Digital Industries increased moderately to €10.2 billion with a gradually increasing software share.

Revenue for DI increased 8%. Therein, its software business was strongly up by 14% on broad-based double-digit growth across PLM, simulation, and EDA.

DI's automation revenue was up by 6% to €3 billion, led by the short-cycle factory automation business. Process automation was up modestly.

DI's profitability was higher than expected at 18.5% with a strong contribution from its software business. DI is increasingly reaping benefits from the fact that the SaaS transition is nearing completion, and from executing cost synergies in connection with Altair.

A favorable mix with the high share of short-cycle business supported healthy profit conversion from automation as well. Sustained productivity gains remained the engine for a clearly net-positive economic equation in Q2.

Integration-related costs for Altair and Dotmatics had a magnitude of 90 basis points in the second quarter, in line with expectations. We now expect this number to reach around 80 basis points for full fiscal 2026.

Finally, as anticipated, negative currency effects weighted on DI's margin development with around 90 basis points. I'm pleased that Digital Industries improved its free cash flow performance to €760 million.

Looking at the regional top-line perspective, DI's automation business grew across the board. China was robust, clearly up in orders and revenue after a strong first quarter, which was supported by some pull-forward effects due to the expected price increases.

In Q2, the book-to-bill was above 1 in China, where motion control drove revenue growth. Our local China portfolio is well on track, growing by a rate in the mid-20s.

Germany showed 13% order growth on easy comps, while revenue was up modestly. The US showed positive trends, driven by brownfield modernization and greenfield activity in selected industries.

Among them were semiconductors, data center, power generation, grid modernization, as well as aerospace and defense-related manufacturing. After a successful first half year, we raise our fiscal year 2026 guidance for DI's revenue growth 100 basis points at the midpoint to a narrowed range of 7 to 10%.

We now expect DI's profit range to reach 17 to 19%, up 100 basis points at the midpoint versus our previous guidance. DI is driving growth and margin expansion by simplifying its setup, optimizing its sales approach, fostering innovation, and ensuring stringent post-merger integration.

For the third quarter, we see DI orders clearly up over the prior-year level with a strong contribution from its automation business. DI software will grow moderately on lower order volume from EDA year-over-year.

The sales funnel for EDA is skewed towards the fourth quarter again. We anticipate that DI revenue growth will see a high single-digit increase, supported by growth in automation and software.

We expect a profit margin of around 18%. Now, let's turn to Smart Infrastructure, which continued its success story with an excellent performance across all businesses and metrics.

Orders were up 35%, reaching a new record level of €7.5 billion. This increase was driven by massive growth of 62% in SI's Electrification business and 38% in its Electrical Products business.

Both businesses benefited from surging contract wins from hyperscalers and colocation providers, but also from leading semiconductor firms. Data center orders amounted to a record-high €1.9 billion, with customers globally building out capacities for surging AI workloads.

Book-to-bill reached an outstanding 1.27. SI's record order backlog of €22 billion now already provides visibility well into fiscal year 2027.

Revenue growth was broad-based and reached 10%. The largest contribution came from the Electrification business, up 18%.

Stringent backlog execution led to further operational margin expansion, up 10 basis points year-over-year to 18.6%. SI's business continued to benefit from economies of scale due to higher revenue and from sustainable productivity improvements.

This offset a material currency headwind of 110 basis points as well as higher commodity costs. For the second half of fiscal year 2026, we expect pricing measures in SI's product business to increasingly compensate for higher commodity prices.

Free cash flow showed excellent cash conversion at 1.02, with a reduction in operating working capital despite strong top-line growth. Looking at the regional top-line development, there was healthy demand across the board and stringent backlog execution drove revenue.

The US demonstrated exceptional order momentum, up 72%, led by data center demand. It was also good to see bookings in buildings up by low teens.

Germany recorded double-digit order growth in buildings and electrical products. The Europe and Middle East region also benefited from large data center orders in the Nordics and from some power utilities wins.

SI's top-line in China showed further improvement, driven by Electrification and Electrical Products, despite a continuously soft real estate market. The service business delivered 7% growth, clearly up across all regions.

We anticipate that the service business will accelerate in the second half year. Our teams continue to expect very consistent end-market dynamics, with data centers and power utilities as key pillars for growth.

After delivering 10% revenue growth in the first half of fiscal year 2026, and given high visibility from backlog, we raise our guidance for the full fiscal year. For SI, we now expect comparable revenue growth in the range of 8 to 10%, up by 150 basis points at the midpoint.

For full fiscal 2026, we continue to expect SI's profit margin to be in the upper half of our guided range of 18 to 19%. For the third quarter, we anticipate that SI's revenue growth will be at the upper end of the full-year range and profit margin in line with full-year expectations.

Mobility recorded a mixed set of results in the second quarter. Strong orders at €5.3 billion were well above the prior year with a book-to-bill of 1.76.

Order backlog stands at €53.5 billion, with further improvement of the gross margin profile. Around 30% represents attractive service business.

As Roland mentioned, the sales pipeline for the second half of fiscal 2026 looks very promising. Revenue in Q2 came in 2% below the strong prior-year level on tough comparables, held back by the impact of US tariffs, mainly in rolling stock.

In addition, we saw conversion delays in large-scale rail infrastructure projects due to delayed call-offs under framework agreements, especially in Europe. The US Supreme Court ruling on tariffs and the subsequent introduction of similar tariff structures triggered an immediate reassessment of project calculations in the US.

The result of this assessment impacted both top and bottom line equally. The negative impact on Mobility's profit margin of 6.9% was 170 basis points.

In addition, severance charges at 80 basis points were somewhat higher due to some factory network optimization measures. Free cash flow was soft, as expected, because the timing of milestone payments led to a temporary buildup of operating working capital.

Looking at project payment profiles and the timing of order awards, we continue to expect a material catch-up in the second half of fiscal 2026. After the first half year, we take a prudent perspective on the current geopolitical challenges, and having taken into consideration the current situation of US tariffs, as a result, we lower our full-year outlook for revenue growth at Mobility to the range of 5 to 7%.

Despite this change, we confirm the full-year margin outlook in the range of 8 to 10%, also it is now expected to be towards the lower end. For the third quarter, we see Mobility's revenue growth and margin within its full-year guidance.

Our below-IB performance, as shown on page 19 in the appendix, was as expected. The results included a gain of €172 million from the sale of our airport logistics business in the US.

Free cash flow of €1.7 billion in the second quarter was well above the prior year. As discussed, we saw a significant catch-up in the industrial businesses and lower tax payments below the line.

We are very confident that we will achieve a double-digit cash return once again in fiscal year 2026. With a capital structure of 1.2 for industrial net debt over EBITDA and strong ratings, we continue to act from a position of financial strength.

Our leadership team is fully committed to delivering stringent capital allocation and a strong shareholder return. Therefore, we retired 18 million shares in March, and we have almost finished our current €6 billion buyback program after less than two and a half years.

Since we will conclude the buyback in a few weeks, we are already announcing today a new program of up to €6 billion over a period of up to five years. These parameters allow sufficient flexibility.

However, we have built a track record of accelerated execution when feasible. Now, let me point out our updated outlook assumptions for full fiscal 2026.

Incremental investments in AI-based innovation will lead to R&D intensity slightly above prior-year levels. Selected investments in optimizing our sales channels will keep SG&A as a percentage of revenue on par with the prior year.

We will continue to support mid-term growth momentum by increasing capex in targeted growth fields to expand capacities. Severance costs are now expected in the range of €300 to €350 million.

We will continue working on ensuring competitiveness across our businesses and functions, primarily with regard to Digital Industries. As expected, FX was a strong burden in the first half of fiscal 2026.

However, based on current rates, we expect the headwinds to ease over the second half year. Finally, let me conclude with a confirmed outlook for the Siemens Group and the updated guidance for the businesses at a glance.

We continue to expect to reach the upper half of our group revenue growth guidance of 6 to 8%, and we anticipate that we will reach EPS pre-PPA in the range of €10.70 to €11.10. In a time of highly volatile geopolitics, we are delivering resilient performance with healthy growth and strong free cash flow.

With that, I hand it back to Tobias for Q&A.

Thank you, Veronika. We are now ready for Q&A.

Please limit yourselves to one question per person. We want to give as many of you as possible the opportunity to raise your question.

Operator, please open the Q&A now.

Thank you. Hi, good morning Roland, Veronika, and Tobias.

I'd like to dig a bit deeper into the triple-digit data center momentum, please. Is this just an easy comp?

Is it a one-off, or are you gaining share, and if so, why is that? Anything you can help to offer to build out that huge headline order momentum would be great.

Thank you.

We do our homework when we compare our growth in, as far as we can obviously see it, from what we call electrification, this is a sum of medium-voltage, low-voltage. From that perspective, we, I would say we slightly gained market share, but we are growing, let's say, with the key competitors likewise, and maybe a little bit stronger in that quarter.

This is all about delivering capabilities, so that we continuously expand our manufacturing footprint in the United States, in Carolinas, we invested more, we are ramping up high-quality manufacturing, very much automated, we are able to do that. We have our supply chain under control, and we are having a strong focus on that.

Therefore, this is the way to keep momentum. The other part is that we are not only growing with the hyperscalers, we are diversifying also to others, other data center builders.

The last point is, and that's more looking forward, we are launching new products. You saw that 800-volt DC switching technology, which hits the market anytime soon, launched right now, which gives hopefully another momentum going forward.

Thank you. Is there any kind of thing to bear in mind from our side in terms of gross margin dilution or a material margin profile difference for what we're seeing coming through on the order book, please?

Thank you for the follow-up.

No, it's supporting a great margin in that business.

Thank you. Yeah.

Next question, please.

Yes, good morning, everyone, and thank you for the time. I wondered if I could ask a little bit about the automation momentum, broadly similar environment to last quarter, and the Chinese environment potentially have been even a little bit faster.

I wondered if you could talk a bit about market share in China. Was it that a year ago you'd done the launch, it was a tougher comparative?

You mentioned some pre-buys. Could you talk a little bit about global automation momentum into April as well?

Thanks.

Okay. Oh, well done.

Let me start, and maybe that's one of the key messages we are also looking for, is that April shows really another strong growth, which is even above our forecast, just to give you that glimpse. This is automation globally.

Let me start maybe in China. In general, the industrial market is recovering, in particular, that China is going more for high-tech manufacturing, but they're also driving export for e-cars, semiconductors, and the like.

We see stable distributor stock levels, which is good, and what's really exciting is our Chinese new products. They grow extremely well.

They hit the market really to the point. We talk about broad portfolio: edge, drives, and controls.

I'm super excited about our smart PLC, which was part of the last 26 products we launched, but also switching technology. It's not only automation, it's also electrification, and there's high business there.

We continued to see a China new product growth, and this growth is really gaining market share definitely in that case, and a strong growth in OEM business, too. If you ask for the verticals, there are a couple of government-supported verticals: AI, semiconductors, obviously, e-cars, solar, batteries, logistics, marine.

At the other level, maybe on a short one on pricing, you saw that there was a price increase in Q1, currently the pricing sits on a stable level. All in all, that's doing well.

There, regarding pre-buy, we currently see indicators which suggest that pre-buying may be partly driven by our order dynamics, fueled by maybe component scarcity or price increase. We cannot rule out some of these effects.

However, if you look at our KPIs, we see no meaningful shifts in order patterns or requested lead times that would point out pre-buy distortions in our performance. That's very, very important to say, but we are staying, obviously, very vigilant on this point.

On a global basis, if you ask for the automation, we see in the automotive space, there is limited growth in early '26, partially US recovery, Europe, Japan flat, China soften sequentially, as overcapacities in China, therefore, cautions in capex spendings. Machinery, there's a moderate moment ahead of us.

Europe is slightly positive, and the automation demand is expected to grow modestly, low single-digit to mid-single-digit. Chemicals, we see chemical output shows moderate growth, driven by China, Europe weakening further.

Pharma, solid growth there, led by China, Japan. Pricing remains under pressure, also by tariffs.

Food and beverage, production growth remains modest, there's some more cautious near-term outlook. Electronics, semiconductors, super strong, exceptional momentum due to the AI chip demand.

Aerospace and defense, likewise here, key growth drivers. Aerospace and defense is a high dynamic market, and Siemens can play a key role in scaling up capacities and in a closed-loop production.

I hope that covers your question somehow.

That's very helpful. Thanks, Roland.

Yeah.

Next question, please.

Good morning Roland, Veronika, and Tobias. Thank you very much for taking the question.

It's unsurprisingly, it's also about China. I guess my puzzle here is what is new and what could be driving this?

In terms of your conversations, Roland, I guess with either the customers or government, etc., why do we think we may now finally be seeing some form of improvement in China? Has this to do with the 15th Five-Year Plan?

Is this to do with just catch-up? Is it stimulus?

I just your sense of what might be going on. Then, could you just talk a little bit specifically about the machine building segment, one of your end markets, which I see on your slides are kind of flattish, but other people are calling out, Germany getting better, Italy getting better.

Could we just drill into that vertical a little bit more? Thank you.

Yeah. Yeah.

Talking about China, on a high level, we said it over the last quarters, remember, we said we expect China to improve gradually. There will be no V-cycle, whatever, it will improve gradually.

This is a combination of, let's say, getting step-by-step more consumer confidence, of having the Chinese government strategy working out, remember, high-quality manufacturing, but also being able to divert their export away from United States to other regions, Asia in particular, but also Europe. This is a combination which somehow drives it.

The last point I would say, China is really good in embracing new technologies. AI technologies, and let me take that now one by one.

Let me talk with this about the export. This is cars, for example, but also machines, they're quite competitive.

They diverted their export to other markets, as I said, amazingly fast. Their export is increasing despite the tariffs and the let's say the throttling of export to United States.

This was a surprisingly fast way to really find new ways. That helped.

The other one is there's clearly a kind of a pivot to this high-quality manufacturing, which is also higher price, higher value-added. If you go away from, let's say, clothing to a machine, that makes a big difference.

That goes along with technology, the embracement of technology. We see that for local competitors, but also the international ones acting there.

Maybe here, there's something what I really believe we are sticking out if we look around and compare ourselves to number one local Chinese competitors, and we really win customers back. Our RXD summit was extremely successful.

We had roughly 3,000 people, 42 partners exhibiting in our summit. We had I think more than 1 million streamings, it really hit the market, including forging partnerships.

I had Alibaba on stage, and we are going now offering our software in China on the cloud so it can be deployed super fast, and we see a lot of interest there. This is coming together.

Coming to your point about machine building, you know that, Ben, that the machine builders in China, they really made a step up, super competitive. Would I see them already in their super high-end market, the, let's say, the DMG MORIs or the high-end TRUMPF machines?

Maybe not. The working horses, standard machines, they're quite good, and they take advantage out of that.

Overall, and coming back maybe to the customer sentiment, the private consumption, we believe that this comes back gradually, as we say. Another sideline, obviously, the real estate thing is improving also gradually, don't expect any kind of fast pivot here.

This package, what I was talking about, seems to be a very, let's say, somehow slow, but gradually improving momentum there. Yeah.

Super interesting. Thank you.

Maybe, Ben, just to add to the China performance, really, in the way how we are really monitoring that in a very prudent way. Therefore, what what is really important for us that we look at the distributor stock levels, and here we see for for the for Q2 really a stable distributor level.

What is as well quite interesting that if you look at at the market development, that what was really driving was the high-tech manufacturing, what Roland mentioned, but as well the export growth, for instance, really for e-cars and semis, which is a very important element, and that is something which we expect as well to develop going forward in this.

Since we are talking about it, another one is, Q1 is normally strong, Q2 normally we see a little bit weak. This is not the case.

Now, going into April, again, you see a good momentum there. That's really encouraging, we like that.

Super helpful. Thank you very much.

Next question, please.

Hi, yeah. Good morning.

Thank you for the question. I wanted to touch on M&A.

There were some reports yesterday, and you were linked to a potential rail acquisition. If you could maybe comment on that.

Just broader, how are you thinking about M&A? Can you talk about the pipeline?

Are there any divisions that you're particularly focused on right now? Thank you.

The first part of your question, I can make very short. We do not comment on that.

On the second one, I can speak a little bit longer. We number one is obviously we have a lot in focus which is supporting our strategy, which is combining the real and the digital world.

Any kind of digital assets, software assets is super interesting. It's getting harder the more, the more market leadership you're expanding with Altair, for example, then the harder it gets.

There's another space, we call operational software, which is really not we're going away from the design world of software into the operational world. That's super interesting.

Obviously, we're looking also into any kind of AI or data-related assets, which is interesting. We do not shy away from also going into hardware, in particular connected hardware, hardware which supports our electrification growth.

Is it bolt-on acquisitions or looking also into adjacencies? That the AI factory market is very fast-changing.

We see a change in technology. You have to control data center AI factory differently from a data center.

That has an impact on the controls itself, on the valves, the mechanics, the controls, but also the DC technology which you see there, we're looking in that space as well. Anything what is, and we love connected hardware.

The hardware who delivers data and who's connected is super relevant for us because finally it has not only memory on it, but also silicon, you can really run AI technology on it. Therefore, broader space to look at.

Regional expansion, obviously, India is a place we always would like to do more. Remember our C&S acquisition, we love it.

This was low-voltage stuff. If we find any other options here, we would do this as well.

Very clear. Thank you.

Next question, please.

Yes, good morning. Thank you very much for taking my question.

Could we talk about the industrial software momentum and how you assess your performance there versus your respective peer groups? Also, could you talk about if your plans has changed at all on the potential AI impact on this space?

I think at Hannover Messe, you talked to a lot of people who are excited about prospects for simulation and how much can be done with agents. Are you ready to price for that hike in consumption?

Yeah.

Let me start with the industrial software. Number one is, and I said it in my presentation, and spend a little bit more time on that, that we have we are developing software.

Industrial software is based on physics, it is has a difference between AI technology, which is non-deterministic, to that one which you require. For us, the combination is making the beauty.

Having simulation, which you can enrich with AI, by the way, also rewriting and running on a different hardware on GPUs makes it already faster, but AI is really making a big difference. With our software and the combination, you can make non-deterministic AI suggestions, look at deterministic, and roll it in the real world, is it on the shop floor, but also on the design.

You cannot make a mistake in a design of your semiconductors that costs you billions if you make a mistake there. That's what we love.

The other one is, turning to PLM, Teamcenter. This is the trusted, secure system of records.

It also contextualizes. This is super important because if you throw AI on non-structured, non-contextualized data, it doesn't really do well.

If you work it on a contextualized way, you really do magic. This is the reason why Teamcenter is such a powerful platform, and we offer it not only also with the X version for small and medium-sized enterprises who scale it faster.

Now, we're developing an AI agent platform and an agent studio to supply a variety of agents that enhance Teamcenter capabilities for customers and for all products. On AI stack and an own agent framework across, and now listen, EDA, PLM, and simulation, that's unique.

That's unique in the market. Again, with our X expansions, we're offering that also from the cloud.

That's a kind of a competitive edge. The other elements are going then across now moving from the design space to the operation space.

Our Digital Twin Composer, for example, if you have digital twins of products and manufacturing, you compose it into one, which creates this digital thread, which is unique. Then we make it able, make it open for a round trip of data, real-time data going into that and have a chance to really operate then out of the cloud.

This is another unique element which requires actually having a hands-on operations and getting real-time data into our software stack. We believe that we have a, number one, a super strong position there, including, Altair was really closing a gap in our simulation.

Now we go cross-domains, to speak, super relevant cross-domains. Domains is either the supply chain, as I said, EDA, PLM, simulation, but also cross-disciplines like hardware, software, electronics, and the like.

The other one is the capabilities to increase it. Maybe two more things.

One is, we are writing our software also in a sense for the how customers use it. Currently, it's engineering using our software.

In the future, it will be a blend of engineers and agents, which is, obviously, you can imagine, is a different way. This, now to your other question, this spills over to the way how we monetize.

We also look into AI-driven monetization: tokens, usage-based, which is with the changing the model. That's something which is it's premature yet, but we see that this is a huge opportunity as well to leverage the portfolio I was talking about, also into the way how we monetize it.

Now, I talked a lot, but I don't know whether I hit your all your the points you wanted to know. No,

that's really helpful. Thank you.

I guess in H1 performance, do you feel like you've taken share or performed more in line with the market?

No, I would say we took share. Remember, for the first half, our digital business grew by 19%.

In the quarter now, Q2, our software by 14%. We feel here very very confident.

We're super happy about this performance, absolutely. Veronika?

Maybe just to briefly add to monetization. We are convinced that user-based licenses will continue to exist, but if required for AI, we can really fully leverage new monetization models, and we are testing this on new AI solutions and our AI capabilities in the product.

Therefore, we are convinced that the mix of both will really help to grow our top and bottom line.

I give you one more, since I this is so exciting. Eigen engineering agent.

I don't know whether you have a chance to be at our Hannover trade fair, but what is it? It is an agent which really helps engineers programming industrial PLCs, typically using our TIA Portal, but that can go much, much broader.

What it does, it receives, actually, you interact with a prompt, this is the first thing, and you go for a task. For example, I would like to give you a welding task, including the clamping, the welding, and the unclamping, and moving on.

Then the agent goes out and checks out for all the necessary documents, whatever you need in order to do that for your machines. It looks around in all the documents, uploads it, creates a software to run on your PLC, validates it over and over again until it really works, and then it comes back and say, 'Okay, here's the ready to release software,' and finally a human can decide and push a button and upload it.

Guess what? It works.

This is so amazing. That's something what was really done by our Seattle team based on a pre-work in for our team in here in Germany.

They did it made it work, and this is first of its kind engineering agent. By the way, we call it Eigen because, number one, it's yours, 'eigen' is a German it's yours.

Number two, it's links to the eigenstate of in physics, which means that, and this is a very interesting point because physics is non-deterministic if it comes to quantum, but eigenstate is deterministic. That's the beauty of it.

We make out of a non-deterministic technology and deterministic output, which is hardened and can run on the shop floor. for being a little bit technologically here, but we love it.

Our customers, too. They have very strong interest.

Next question, please.

Thank you, and good morning everyone. I just wanted to ask about the Healthineers spin.

Obviously in the quarter you made the announcement that the vote would take place at the AGM next year. I was just wondering, could you give us a little bit of context around kind of why that's now at an AGM as opposed to maybe an Extraordinary General Meeting earlier?

Then maybe sort of once the vote happens at the AGM, what kind of timeline after that would we expect the transaction actually to take place? What are the hurdles that need to happen once it kind of what do we need to get through once it has shareholder approval?

Thank you.

Happy to take your question. We are working on an unprecedented transaction, and whilst that process naturally take time, the alignment with the tax authorities is progressing well, and in a very constructive and positive manner.

We cannot give you details on the ongoing proceedings. However, the alignment with the tax authorities is progressing well, and so we are very confident there.

I assume you are as well aware that there are certain key contractual aspects which need to be solved between Siemens Healthineers and Siemens AG. All existing contractual relationships like service contracts, rental, leasing contracts, or financing agreements, they are being checked, and their continuation or termination evaluated from both sides.

We are confident that we will have satisfactory solutions to the questions at the time of the spin-off. We have a very straightforward approach.

We will go to the regular AGM and then execute on the relevant spin-off activities. That's how we move forward, yeah.

You are aware we are currently hold 67%, and we will deconsolidate with effectiveness of the spin-off. While reductions are planned in the mid-term as previously communicated, we are in no rush and will approach reductions as we always do, with a very steady hand and taking into the account that the market and operational developments of Siemens Healthineers.

Okay. Thank you, Veronika.

Next question, please.

Oh, thanks very much. Good morning Roland, Veronika, and Toby.

I wondered if you could just talk a little bit about DI margins and in particular, I'm thinking about whether you can give some clarification about what you've included in terms of basis point headwinds, FX, price cost in particular, I suppose, in the full-year guide. Then, I guess, really what I'm getting at is thinking as we exit this year, we're looking at well north of 20 on an underlying basis.

I'm just sort of trying to get a framework for thinking about 2027. Thank you.

As previously explained, for Q2, we see 80 basis points impact in terms of FX, and then for the entire fiscal year, 50 basis points. Our expectation is that in the Q3 and Q4, the difference to a previous year will kind of flatten out.

In this regard to the different impacts in terms of supply chain, inflation, and the like, we are heavily working to keep economic equation up and to compensate in different areas so that we have a very strong purchase price approach here. Therefore, we are quite confident to fulfill our targets for the course of the fiscal year, yeah.

Next question, please.

Hi. Good morning.

Thank you for taking my question. I just wanted to follow up on some news articles a couple of weeks ago regarding you considering reorganizing how the divisions DI and SI are structured.

I just wanted to check whether you've considered anything of that sort or if we should dismiss those, and in case you would consider, what is the logic behind? Thank you.

Thanks, Daniela, for asking that one. For the time, dismiss it.

Because we keep on going with what we do. We do it's maybe behind the scenes, I give you a little bit of background.

There's and remember, we had our with our One Tech Company program, we also had, which is targeted for three elements. Number one is stronger customer focus, number two, faster innovations, increasing our innovation velocity, and number three is ultimately going for gearing for higher profitable growth.

We thought, what do we need to do in order to make a step up? Give you a little bit of background, and some things there's a reason why I say disregard it, because hopefully you don't see what we do, because while delivering, we're increasing our performance.

Take you an example. We basically reworked our sales organization in the automation business.

It was currently, it was driven by actually four business units and segments, and this whole structure was reduplicated in the regions. We don't think that this is a good idea.

We bring that now under one control. It's one CRM, one sales organization, which is really having a much, much more better grip on what products to sell, how to sell it.

It's a common way to address it. It goes live, and we already work in that direction.

It goes live then 1st of October, but we're ready to do that. We believe that with the same portfolio, we can do better impact because we have better transparency, we get our productivity of our sales people up.

This includes also how we steer new products when they go to the market. Then we also strengthening our marketing, product marketing.

Once we are launching products, you saw that in China, that we have a product marketing and a campaigning behind to really create impact much, much faster. In short, this is professionalizing the CRM, our sales organization in automation as an example.

That's what we do. The other one is we're working on our the way how we are delivering products, and I'm still on automation, so that we don't have redundant platforms, which creates a kind of an headroom for investing in new innovations, China new products, super successful, we keep on going.

We talk about virtual PLC, software-defined automation, which already starts hitting the market. We need that headroom to deliver and grow faster in doing that.

Then the next thing is that we, once you start doing that, you think also about what is it what our functions can do. We create a fabric of functions which are able to scale also technology.

We talk IT and AI technologies across the company much faster, while having a clear focus on supporting the businesses. World-class support for businesses in scaling.

Give you one detail, one idea behind. We have currently, because we didn't really put too much attention on it, something like 600, 700 engineering tools in our company, which is maybe not the right idea to really scale productivity also, using GitHub and all the new technologies in AI.

We're consolidating that now and driving then, with into doing that, not only operational productivity of our coders, but also developers, but also having a toolchain which is supporting them to be much, much more productive. On top comes scaling that as for the company, it makes us also more productive if we move people around and the like.

This is what we do. We do not touch things which are not broken, you don't you see very limited change in our medium-voltage, low-voltage business.

You see an improvement in our building business. Therefore, we are very selective, but we are very clear what we want to do and how we want to do it to come again back: stronger customer focus, faster innovations, and higher profitable growth.

Yeah.

We have time for two short questions.

Thank you. Good morning.

It's Martin from Citi. Just to come back to the margin in DI, in particular on software.

I think you've said that software was an important part of that margin improvement inside DI. Can you remind us where we are in the SaaS transition in terms of the drag from that sort of beginning to reverse or improve?

To just understand, is it largely driven by the timing around that, or is there also an underlying pickup in profitability inside software? Thank you.

We are on our way with the SaaS transition as planned, but still some activities are underway, but we are progressing very well. You are very well aware that we are not disclosing the software margins, but what we see as well from the Altair integration activities in terms of synergies, revenue synergies, we see as well the translation into profitability.

Therefore, we are very confident in the overall SaaS transition.

Maybe to add, coming back to when we started off also taking you with us on the SaaS transition, this is something what is really high credit to our team. They execute as planned.

Even this goes back now, I don't know, 4 years or whatever, 5 years. They deliver as planned, here we see up the expected pickup in margins.

They deliver on the integration of Altair and Dotmatics. Measures for the $150 million savings are in place, which are kicking in in our bottom line going forward.

From that perspective, we are very happy that they pick up as planned and also on the top line, we the pipeline building up for our cross-selling and upselling.

Great. Thank you very much.

We take one last question, please.

Good morning. Thanks very much, everybody.

My question is for Veronika. I'd be really interested in hearing about your early observations in the role.

Where are your priorities and focus as CFO? Is there anything you'd like to do differently from your predecessor?

If I may, in terms of the capital allocation strategy, why only €6 billion of buybacks given the strength of the balance sheet and the expected deconsolidation of the debt from Healthineers in less than a year's time?

Happy to take your question. With regards You mentioned it on your own.

Oh, you make me stay tuned now here.

Capital allocation is, of course, one of the focus areas which is on top of my mind, but in addition as well, stringent execution in terms of delivering our free cash flow. That is something which is very important to show the healthiness of our businesses.

Another area is something, in particular, in this challenging geopolitical environment, and if you think about increasing inflation and volatility in different areas, is, of course, our economic equation because that is something which shows as well whether our different businesses are healthy and resilient in order to navigate in challenging environments. To come back to capital allocation, this goes into different directions.

Of course, our announced share buyback program, it's one of the building blocks, it's more or less one instrument which we are looking at. Capital allocation goes into the direction when we look in a very prudent manner at M&A activities.

Of course, we are doing that in the same manner as before, no change, yeah, a very prudent approach. However, if you look at the multiples in different areas we are in industries we are acting in, so, therefore, we really need to show or to see evaluating such targets how does it look like with synergies about revenue, cost synergies, and is it the strategic fit in terms of top, bottom line, and many other areas.

You are very well aware of our five to six focus areas from a strategic point, so that is something which we further pursue. When we talk about capital allocation, it's not only about share buybacks and M&A activities, it is as well if you look kind of inside the company, R&D activities, R&D efficiency, such topics we really need to look at in a very close manner and the way how we allocate resources, just to translate it into a resilience of a company.

We really need to diversify. We need to diversify the way where are our production locations, where are we running our R&D activities, and that is something which we started to do, but we will do that in an even more focused manner that we really ensure in a very stringent way, but in a very forward-looking way for the value creation of our company.

I hope this gives you an a certain insight on my focus areas going forward.

Yes. Thank you very much.

Thanks a lot to everyone for participating today. As always, the team and I will be available for further questions.

We're looking forward to our sell-side meeting, or sell-side call later today, and meeting many of you on our roadshows over the upcoming weeks. Have a wonderful day, and goodbye.