Siemens Energy said that it plans to return around 10 billion euros, equivalent to $11.5 billion, to its shareholders by the end of 2028 because of a booming demand in power infrastructure equipment, which has lifted its shares to a historic high.
Apparently, almost 6 billion euros are going to be in the form of a share buyback program, confirmed Siemens Energy as part of a U.S. capital markets day, with dividends comprising the rest.
It is well to be noted that the shares in Siemens Energy, which last week went on to raise its midterm targets due to strong global demand in terms of gas turbines as well as energy grids, surged as much as 8.4% to the highest level ever since the company was spun off from Siemens AG in 2020.
Buyback Is What Drives the Shares
Christian Bruch, the CEO, said that they are a company having an electricity DNA ever since the days of Werner von Siemens, thereby referring to the 19th-century founder of this massive business empire.
He added that they are indeed convinced that the electricity and electrification markets offer them an incredible amount of opportunities so as to grow the company profitably.
According to him, a strong buyback could very well help the shares re-rate relative to GE Vernova, which is the main rival of Siemens Energy that goes on to trade at a price-to-earnings ratio of 50 times as compared to the 30 times of Siemens Energy, analysts at Citi opined.
Part of this kind of gap is attributed to generally greater multiples in North America, which is the second-biggest market for Siemens Energy after Europe, wherein it makes almost a quarter of revenues.
It is worth noting that the boom in power infrastructure equipment demand, which is partly driven by the need for data centers when it comes to AI technology, is also going to result in investments of almost 6 billion euros by 2028; as a matter of fact, around a third of that is going to go to transformer as well as switchgear plants.
GE Vernova confirmed in 2024 that it planned to invest almost $9 billion till 2028.
