Siemens AG will spin-off its power technologies business at the end of this month, and reports are emerging that the new Siemens Energy will be closing plants after the separation, in its effort to increase profit margins.
Siemens AG announced the spin-off plan for Siemens Gas and Power Division in May 2019, projecting that the new business will be a “major player” in the global energy sector, with about $33.6 billion of annual revenue and about 80,000 employees. As of March 2020, the Siemens Energy operations had about 91,000 workers.
The new business manufactures industrial gas and steam turbines and power-transmission systems, and it holds a 67% stake in Siemens Gamesa, the world's second-largest wind turbine manufacturer.
Siemens AG plans to retain a 45% share of the new business, but also intends to reduce that holding to 35.1% within 18 months. Siemens CEO Joe Kaeser, who will become Siemens Energy’s chairman, has said Siemens ultimately will keep a 25% stake in the spin-off.
The Siemens pension fund will hold a 9.9% stake in the new company.
In its capital-markets presentation Siemens Energy told investors it aims to achieve EBITDA of 6.5-8.5% for FY 2023, and sees its sales declining 2%-5% this year from $34.14 billion in 2019, and then recovering by 2-12% in 2021.
“Production sites will be shut down,” a Siemens source told Reuters, which noted that the Siemens Energy has more than 70 manufacturing operations around the world with more than 50 employees each.
Siemens Energy's CEO Christian Bruch told CNBC Europe the purpose of spinning off the operations is "about really focusing on driving an energy-technology company forward."
Bruch elaborated: "When I talk about focus I first of all mean really helping our customers in the transition to a more sustainable energy world.
“And we will look on all ends, obviously, also, on how to improve our operational performance," he added. “I am not satisfied with the operational performance currently, we all are not satisfied at the company and we are working on this."
