The new CEO, Roland Busch, is tidying up the portfolio.
(Photo: dpa)
Munich The Siemens group outsources the business with large drives. More than 7000 employees worldwide are affected, around 2200 of them in Germany, the Handelsblatt learned from corporate circles. With this, Siemens is also preparing a possible partner search or sale of the unit known as Large Drive Applications (LDA).
The group basically confirmed the spin-off. “We have decided to bundle the LDA activities in our own companies,” said a spokesman on request. Siemens wants to give the business “additional independence and entrepreneurial freedom so that it can focus even better on its markets and customers”. One does not want to comment on any further speculations.
The new Siemens boss Roland Busch is tidying up the portfolio. In industrial circles, however, it was emphasized that he was not planning to turn the technology group into a pure IT company. “The combination of hardware and software is precisely the strength of Siemens.”
Busch had taken over the management of the group from Joe Kaeser at the annual general meeting in February. In the coming week he will present his strategy under the motto “Accelerate” at the Siemens Business Conference (SBC).
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At a capital market conference in June, he had already announced an acceleration in growth. Germany’s largest technology group now wants to increase sales by five to seven percent annually over the business cycles. So far, the company had promised four to five percent. The software and digital solutions business is expected to grow by a double-digit percentage over the next few years. But in an interview with Handelsblatt, Busch emphasized: “Hardware products will always play a role for us.”
It has not been the core business for a long time
The large drives, for example motors for use in mines, have not been part of the core business for a long time. They are managed under the Portfolio Companies (POC) outside the operational business units. A possible spin-off is now being prepared with the spin-off.
“Since the start of the Siemens Portfolio Companies in April 2019, we have always communicated that we are continuously evaluating optimizations for each business,” says Siemens now.
The large drives are one of the leading providers in the market and are in a strong position overall. “The greater entrepreneurial freedom is an essential driver for this.” Siemens will further strengthen and improve the position of LDA.
In industry circles it was emphasized that a possible sale is not imminent. The formal outsourcing takes time. LDA has developed very well over the past few months.
Nevertheless, there is unrest in the affected plants. The traditional Dynamowerk in Berlin was about to close years ago, but was then saved. According to industry circles, however, it is now well utilized. Among other things, plants in Erlangen and Ruhstorf are also affected. The group plans to phase out production in Ruhstorf anyway.
Controversial Adani project
In industry circles it was speculated that the experience with the Adani project could also have played a role in the considerations to make the unit independent.
Siemens was still caught in the crossfire of activists in Kaeser’s time, even though it only had a small signaling contract for the controversial coal mine. There is always the risk that Siemens technology will be used in a mine that will be criticized, so the considerations. But this is pure speculation.
In the third quarter of 2020/21 (September 30), the POCs at Siemens made a small loss overall, despite progress in individual areas. According to the quarterly report, this was due to loss-making investments. The businesses, which were still fully owned by Siemens, would have made a positive contribution to earnings.
The unit also includes, for example, the baggage and mail sorting systems. According to industry circles, Siemens is currently making a new attempt at a partial sale. According to insiders, selling the letter and parcel sorting machines could bring in half a billion euros.
The proceeds could be higher in the event of a possible sale of the road traffic control subsidiary Yunex, which has already been spun off. It had previously belonged to the Mobility train division and offers, for example, traffic light controls, traffic control, monitoring and toll systems that are used in metropolitan areas from Berlin to Bogota to Dubai.
Overall, business went well for Siemens in the past fiscal year. Kaeser and Busch raised the forecast several times. Most recently, on a comparable basis, the group expected sales growth of eleven to twelve percent and net profit of 6.1 to 6.4 billion euros. Siemens plans to present the annual figures on November 11th.
More: Siemens CFO Thomas on the delicate conversion of the software business.