Siemens spins off struggling gas and power in smart digital shift
Siemens is spinning off its gas and power business, which has dragged on the German engineering firm’s performance as the rise of renewable power hits demand for gas turbines.
The new firm would be a “major player” in energy with revenues of 27 billion euros ($30 billion) and more than 80,000 employees, Siemens said on Tuesday, adding that it would now focus on its Digital Industries and Smart Infrastructure businesses.
Siemens said the Gas and Power division, which includes its oil and gas, conventional power generation, power transmission and related services businesses, will be set up as a standalone company with the aim of a public listing by September 2020.
Last week Reuters, citing sources familiar with the matter, reported that Siemens was considering carving out the unit, whose 2018 profit fell by 75 percent to 377 million euros ($421 million) as revenue dropped 19 percent.
“The new company won’t have to compete for resources with higher margin business like smart infrastructure and digital industries,” Siemens Chief Executive Joe Kaeser told reporters.
Siemens also plans to include its 59 percent stake in wind energy company Siemens Gamesa Renewable Energy in Gas and Power.
The decision to separate the business, which will be led by Gas and Power head Lisa Davis, was approved by Siemens supervisory board, which met on Tuesday ahead of its second quarter figures on Wednesday.
The Munich-based company said it would remain an anchor shareholder in Gas and Power with between 25 and 50 percent.
“It’s the right thing to do; it’s necessary and courageous to trigger the planned changes when the company is doing well,” Siemens chairman Jim Hagemann Snabe said.