Siemens Energy to Divest Industrial Unit and Refocus on Gas Turbines, Grids
Siemens Energy's Strategic Shift and Business Realignment
(This Aug 25 story has been republished, with no changes to text.)
By Christoph Steitz and Tom Käckenhoff
Divestment of Industrial Division
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%.
Profit Margins and Market Focus
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 for Restructuring
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.
Potential Investors and Market Transactions
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.
Industry Trends and Broader Context
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.
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)