Siemens Energy Sells Industrial Unit to Refocus on Gas Turbines and Grid Tech
By Christoph Steitz and Tom Käckenhoff
Siemens Energy's Strategic Shift and Business Realignment
FRANKFURT/DUESSELDORF, Aug 25 (Reuters) - Siemens Energy plans to sell most of its division supplying industrial customers, it said on Tuesday, in a move aimed at sharpening the supplier of power equipment's focus on the booming utility sector.
Transformation of Industry (ToI) Business Unit Overview
Siemens Energy's Transformation of Industry (ToI) business unit - which among other products makes steam turbines and electrolysers - accounted for €5.7 billion ($6.7 billion), or 15%, of group sales last year, with a profit margin of 11%.
Focus on Utility Sector and High-Margin Divisions
The announcement confirms the company's efforts to simplify its set-up, which is mostly focused on customers requiring components to produce electricity, including gas turbines and grid equipment.
Those divisions have higher profit margins than ToI, benefiting from an increased demand for generation capacity and network equipment to power data centres needed for artificial intelligence technology.
CEO Insights and Rationale Behind the Move
CEO Christian Bruch previously said that ToI faced different demand cycles than Siemens Energy's other divisions and was in competition with them for limited investments, arguments that are often made when it comes to spinning off of businesses.
"If we don't change our structure, we limit what Transformation of Industry can achieve," Bruch said in a statement, adding the group's focus was on its divisions offering higher returns.
Future Prospects for ToI and Industry Trends
Siemens Energy said it could bring in external investors for ToI and also flagged a "potential capital markets transaction", adding it would retain a minority stake.
The plans around ToI - which employs around 17,000, or around 17% of Siemens Energy's total staff - come as other industrial firms also seek ways to streamline, including Thyssenkrupp which is seeking to spin off its materials trading unit.
Supervisory Board Discussions and Sector Impact
Sources told Reuters in early August that the group's supervisory board would discuss the plans for ToI, which supplies the oil and gas, chemicals, paper, cement and maritime sectors, this week.
($1 = 0.8570 euros)
(Reporting by Christoph Steitz and Akanksha Khushi; Editing by Vijay Kishore and Nick Zieminski)
