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Siemens AG (OTCPK: SIEGY) has warned that adverse currency movements will weigh on its results next year, even as the German manufacturer expects the global economic environment to remain stabilize next year.
"Negative currency effects will strongly burden nominal growth rates in volume as well as profit for our industrial businesses and earnings per share," the Munich, Germany-based company said on Wednesday. The company expects its sales to rise by 6%-8% next year and 6%-9% in the mid-term.
Siemens projected fiscal year 2026 earnings per share of €10.40–€11.00 a share. This missed estimates of €11.54 a share, according to a company-compiled consensus. The company's shares fell as much as 6% on Thursday, with investors reacting to its sales outlook for next year.
Siemens has joined other export-driven European companies, citing currency fluctuations as a risk to their earnings. Germany's Bayer AG (OTC:BAYRY) and Spain's Telefónica SA (OTC:TEF) said "currency headwinds" had affected their latest financial results and outlook.
The US dollar has declined by about 11.5% against the euro year to date. A strong euro makes European goods more expensive abroad and hurts profit margins when converting US earnings back to euros.
Bayer reported on Tuesday that group sales came in at €9.7 billion in the third quarter of 2025, up 0.9% on a currency- and portfolio-adjusted basis. However, it reported an adverse currency effect of €447 million in the third quarter.
A weaker dollar creates a serious earnings headwind for European multinationals, compelling them to moderate their forecasts. Companies with a large share of revenue generated in North America are particularly exposed.
Siemens Chief Executive Roland Busch rejected analysts' concerns that the company's mid-term target was too conservative.
"I disagree that a 6-9% target rate going forward is a weak target," he told reporters and analysts during a briefing. "We are in a good place because we are offering what the world needs. And we are positioned along secular growth drivers; automation, digitalization, electrification, sustainability and artificial intelligence, AI for the real world."
In the fourth quarter of its 2025 fiscal year, Siemens' sales rose 6% on a comparable basis to €21.4 billion. Industrial profit rose 2% to €3.19 billion, short of projections for €3.32 billion in a company-gathered consensus.
German manufacturers, such as Siemens, are operating in a challenging environment as Europe's biggest economy lags behind China and the US in innovation and investment.
Germany' has imposed an effective corporate tax burden of 28.5%. This is higher than other advanced economies or neighboring European countries, according to the German Council of Economic Experts.
The council cut its forecast for Europe's largest economy in 2026 to 0.9% from 1.0% in its May report. Weak private investment activity and a sluggish export economy are weighing on overall economic growth in Germany, the council said.
"While it is likely to grow in 2025 for the first time since 2022, growth will be minimal," the council said about German GDP on Wednesday. "To return to a path of growth, its productivity must increase, in particular through more innovation and investment."
Rather than the private sector, government spending will drive economic growth, it said. The council called for the European Union (EU) to do more to remove trade barriers, strengthen capital markets, and unify its defense market.
Once an export powerhouse, Germany has started running a trade deficit with China, another sign of the struggles its companies face.
Germany is heading for a record trade deficit of €87 billion with China this year, Reuters reported on November 4, citing a forecast by state-owned international economic promotion agency Germany Trade & Invest.
China exported €14.6 billion worth of goods and services to Germany in September, compared with €6.7 billion in German exports to China, data from the Federal Statistical Office showed on November 7.
German companies have struggled to maintain their competitiveness with Chinese companies. Mercedes-Benz and Porsche AG have suffered from low demand and increasing competition from Chinese carmakers.
"The overall mood is characterized by a fall in confidence in the capacity of Germany's economic policy to tackle the pressing issues," ZEW President Professor Achim Wambach said on Tuesday. "The structural problems continue to exist."
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