Siemens Faces Headwinds: Currency Impact on 2026 Projections and CEO's Defense of Mid-Term Goals
Siemens AG has communicated that it anticipates substantial negative impacts on its financial outcomes for the next year due to fluctuating currency exchange rates. This forecast comes even as the German manufacturing conglomerate foresees a relatively stable global economic environment. The company's projections suggest that both the revenue growth and profitability of its industrial segments, along with its earnings per share, will experience considerable pressure from these currency movements. This revelation caused a significant decrease in the company's stock value following the announcement.
The Munich-based industrial powerhouse expects its sales to increase by 6% to 8% in the coming fiscal year, with a mid-term growth expectation of 6% to 9%. However, its projected earnings per share for fiscal year 2026, set between \u20ac10.40 and \u20ac11.00, fell short of the market's consensus estimate of \u20ac11.54. This discrepancy, largely attributed to currency challenges, reflects a broader trend affecting export-oriented European corporations. Companies like Germany's Bayer AG and Spain's Telef\u00f3nica SA have also reported similar 'currency headwinds' impacting their recent financial results and outlooks.
The depreciation of the US dollar against the euro, by approximately 11.5% year-to-date, has intensified these challenges for European businesses. A stronger euro makes European products more expensive for international buyers and erodes profit margins when converting earnings from dollar-denominated sales back into euros. For instance, Bayer reported a negative currency effect of \u20ac447 million in the third quarter, despite a slight increase in group sales on a currency-adjusted basis.
Despite these challenges, Siemens Chief Executive Roland Busch firmly defended the company's mid-term growth objectives. He countered analysts' concerns about the conservativeness of a 6%-9% target rate, asserting that Siemens is well-positioned to meet global demands. Busch highlighted the company's focus on key secular growth drivers: automation, digitalization, electrification, sustainability, and artificial intelligence, which he believes will fuel future success. In the fourth quarter of its 2025 fiscal year, Siemens reported a 6% rise in comparable sales to \u20ac21.4 billion, though industrial profit slightly missed projections.
German manufacturers, including Siemens, are navigating a complex economic landscape. Germany's economy faces headwinds, particularly in innovation and investment, lagging behind other major economies like China and the United States. The nation's corporate tax burden, at 28.5%, is higher than in many other advanced economies and neighboring European countries, as noted by the German Council of Economic Experts. The council recently revised down its growth forecast for Germany's economy in 2026 to 0.9% from 1.0%, citing weak private investment and a subdued export sector as primary contributors to this sluggish growth. They emphasized the need for increased productivity through greater innovation and investment to return to a robust growth trajectory.
Furthermore, Germany has begun experiencing a trade deficit with China, a significant shift for a country traditionally known for its export prowess. Projections indicate a record \u20ac87 billion trade deficit with China this year. Data from the Federal Statistical Office shows a substantial imbalance in trade, with China exporting significantly more goods and services to Germany than vice versa. German companies are struggling to maintain their competitive edge against Chinese counterparts, as evidenced by the challenges faced by automotive giants like Mercedes-Benz and Porsche AG due to reduced demand and heightened competition from Chinese car manufacturers. The overall sentiment among German businesses reflects a dwindling confidence in economic policies to address these persistent structural issues.