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2025 was not a recovery year. It was a repricing year

By the time major gas turbine OEMs closed their 2025 books, one thing was clear: this was no longer a story about post-crisis recovery, portfolio clean-up, or balance-sheet repair. 2025 marked a repricing of flexibility, execution capability, and industrial credibility across the gas turbine ecosystem.

Financial results released over the past weeks show solid revenue growth, expanding backlogs, and, critically, improving margins. At the same time, equity markets rewarded some OEMs aggressively, while remaining cautious on others, signalling that investors are no longer betting on “energy transition narratives” alone, but on operational delivery under increasingly constrained systems.

This article goes beyond summarising results. It connects 2025 financial performance, stock market behaviour, and analyst expectations for 2026, to answer a more strategic question: what has structurally changed, and what will actually define OEM performance next year?

Why this matter for the gas turbine industry

Gas turbines sit at the intersection of three system-level pressures:

• accelerating electricity demand growth (AI, data centres, electrification),

• rising system volatility from renewables,

• and policy-driven decarbonisation constraints.

OEM performance is therefore no longer a proxy for cyclical power markets, it is a forward indicator of how credible gas turbines remain as a system asset.

Strong order intake and backlogs in 2025 signal confidence from utilities, IPPs, and industrials. But the real signal lies in where orders came from, what configurations were sold, and how investors priced execution risk. These dynamics will define 2026 far more than headline revenue numbers.

2025 at a glance – financial and commercial performance

One of the clearest signals emerging from 2025 financial disclosures is the broad and sustained improvement in EBIT / EBITDA margins across major OEM energy segments, as shown in the Figure 1. EBIT / EBITDA margin measures how much operating profit a company generates from its revenues before financing and taxes (and, for EBITDA, before depreciation and amortisation). In simple terms, it shows how much value a company keeps from each euro or dollar of sales once operating costs are covered.

While absolute levels vary, the direction is consistent: margins have strengthened steadily since 2022 and continue to trend upward into 2026 guidance.

This margin recovery reflects more than internal efficiency gains. Across OEMs, it coincides with strong order books, high backlog coverage, and persistent demand for dispatchable power capacity. In such conditions, price competition has eased and commercial selectivity has increased. OEMs are no longer optimising for volume alone, but for project quality, service attachment, and execution certainty.

The data shown relates to each company’s energy segment, which typically aggregates gas turbines with other technologies such as steam turbines, reciprocating engines, and in some cases nuclear. While this limits gas-turbine-only precision, the alignment of trends across OEMs indicates a common underlying driver: energy system demand is supporting stronger and more durable profitability.

From a financial standpoint, 2025 confirms that the energy equipment business has exited its margin trough and entered a structurally firmer phase.

A critical signal behind the numbers: rising margins are not free

While rising margins are often framed as a welcome sign of industrial recovery, they also reveal a deeper shift in how value and cost are distributed across the energy system.

Margin expansion in 2025 has been enabled by higher equipment prices, firmer service rates, tighter contractual frameworks, and longer lead times. These mechanisms strengthen OEM balance sheets, but they also transfer cost, rigidity, and risk downstream. Gas turbines and their lifecycle services are becoming structurally more expensive, not temporarily inflated.

For end users, this translates into higher upfront capital costs, rising long-term service expenditure, and reduced flexibility in outage planning and contract renegotiation. At utility and industrial level, these costs do not disappear; they are reflected in electricity prices, capacity remuneration mechanisms, or industrial production economics. At system level, they intensify the tension between reliability requirements and affordability objectives.

What the margin trend ultimately signals is a rebalancing of power within the value chain. OEMs are no longer competing primarily on price, but on scarcity, execution capability, and installed-base leverage. Reliability, flexibility, and inertia now carry a visible price tag, and gas turbines sit at the centre of that repricing.

From a strategic perspective, 2025 may be remembered as the year the industry moved decisively from price recovery to price authority. This strengthens OEM sustainability and investment capacity, but it also raises a question that will become unavoidable in 2026: who ultimately pays for reliability in a constrained energy system?

This is not a short-term inflation story. It is a signal that dispatchable power, flexibility, and inertia now carry a visible and rising price tag, and that gas turbines sit at the centre of that recalibration.

Stock performance in 2025. Markets rewarded certainty

Equity markets in 2025 made one thing clear: execution beats narrative.

• GE Vernova significantly outperformed broader industrial indices, driven by margin expansion, backlog growth, and a clear operational turnaround story.

• Siemens Energy experienced a volatile but upward year, with investors balancing improving profitability against residual balance-sheet and execution risks.

• Mitsubishi Heavy Industries delivered steadier stock performance, reflecting diversified exposure and a lower-risk, lower-volatility profile.

• Baker Hughes benefited from its service-heavy exposure and lifecycle-driven revenues. While less directly tied to new-build gas turbine orders, its margin resilience reinforced investor preference for recurring, execution-led business models.

• Caterpillar showed similar dynamics. Its Energy & Transportation segment, covering large reciprocating engines and power solutions, was valued for cash generation and pricing discipline rather than growth optionality, aligning with broader market preferences.

Importantly, gas turbine exposure itself was not penalised. Instead, markets differentiated between OEMs that could convert orders into cash predictably and those still managing legacy complexity.

Analyst expectations for 2026. Higher scrutiny, not lower demand

Consensus analyst outlooks for 2026 point to normalisation rather than contraction. After the strong 2024–2025 order cycle, order intake is expected to stabilise at elevated levels, supported by system-driven demand rather than policy momentum.

Margin expectations have also evolved. Rather than assuming further rapid expansion, analysts increasingly focus on margin durability, whether OEMs can sustain current profitability as inflation pass-through effects fade and execution complexity rises. The emphasis has shifted from how fast margins grow to how defensible they are under constraint.

As a result, capital discipline, backlog quality, and cash conversion are becoming more important than headline order growth. Projects with strong service attachment and lower execution risk are favoured in forward-looking valuations.

At the same time, analyst treatment of hydrogen has become more cautious. Long-term optionality alone is no longer sufficient; credibility now depends on near-term deployment, retrofit pathways, or tangible service revenues. In this context, gas turbine businesses are increasingly modelled not as transitional liabilities, but as infrastructure-like cash generators with pricing power tied to system reliability.

What will define 2026, the parameters that matter

As the industry enters 2026, gas turbines are no longer operating in a recovery environment, but in a constrained and repriced system. The strong 2025 results confirmed that demand exists and margins can be defended. The next question is how this plays out when constraints persist and costs propagate through the system.

Three structural drivers will shape OEM performance, and, by extension, the experience of operators and consumers, in 2026.

• First, execution under constraint becomes the primary differentiator.

  Manufacturing capacity, skilled labour, and outage windows are now binding constraints rather than planning assumptions. OEMs will increasingly be forced to prioritise backlog quality over sheer volume, favouring projects with stronger margins, lower risk, and longer service attachment. This reinforces pricing discipline, but also extends lead times and raises entry barriers for users.

• Second, service intensity and installed-base leverage will define profitability.

  With a growing global fleet and limited service capacity, lifecycle services are no longer a secondary revenue stream, they are the economic backbone of OEM portfolios. Higher service rates and tighter contractual structures support margin expansion, but they also lock users into a more expensive and less flexible operating environment. What appears as financial resilience at OEM level translates into rising OPEX pressure downstream.

• Third, demand will be driven by system needs rather than policy narratives.

  Data centres, electrification, grid inertia requirements, and reliability constraints continue to generate demand for gas turbines largely independent of long-term decarbonisation rhetoric. This system-driven demand gives OEMs confidence to hold pricing and reinforces the role of gas turbines as infrastructure assets rather than transitional stopgaps.

Combined, these drivers explain why margin expansion is likely to persist into 2026, and why this matters beyond corporate performance. The cost of execution certainty, flexibility, and reliability is increasingly explicit, and it does not disappear within OEM balance sheets. It moves downstream, affecting utilities, industrial operators, and ultimately energy prices.

Looking ahead: 2026 will therefore not be defined by headline order growth or breakthrough announcements. It will be defined by how scarcity is managed, how costs are allocated, and how openly the industry addresses the rising price of reliability. Gas turbines will remain central to the power system, but the debate around them is shifting from necessity to accountability.

References: Solar Turbines service literature; GasTurbineHub Aftermarket Report; GE and Siemens service documentation; Baker Hughes press announcements.

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