Germany’s Siemens AG has decided to spin off its power and gas unit as part of a restructuring aimed at building up its automation, industrial digitalization, and smart infrastructure businesses.
Under the plan announced on Tuesday, Siemens Gas and Power, which includes oil and gas, gas turbines, power transmission, and related services, is slated to be listed separately on the German stock market by September 2020.
Siemens said it will contribute its 59% stake in Spanish wind power subsidiary Gamesa to the new company and remain a “strong anchor shareholder” in the entity.
“This move will create a powerful pure play in the energy and electricity sector with a unique, integrated setup — an enterprise that encompasses the entire scope of the energy market like no other company,” Siemens CEO Joe Kaeser said in a news release.
“Combining our portfolio for conventional power generation with power supply from renewable energies will enable us to fully meet customer demand,” he added. “It will also allow us to provide an optimized and, when necessary, combined range of offerings from a single source.”
As Deutsche Welle reports, Siemens, like many other German industrial conglomerates, “has been slimming down in recent years by getting rid of businesses that no longer match corporate long-term strategies.” In 2018, it spun off its Healthineers medical technology business.
The gas and power unit accounts for roughly one-third of Siemens’ current overall revenues and a quarter of its total global workforce of 380,000. But according to DW, the business “is disliked by an increasing number of shareholders and has been struggling to meet profitability targets as Germany goes ahead with its centrally prescribed energy transition.”
Kaeser has also been calling for increased flexibility, saying Siemens’ remaining divisions should operate “like a fleet of ships rather than a lumbering oil tanker.” Those divisions include digital industries and smart infrastructure.
“The company is now what Joe Kaeser has always wanted it to be,” Daniela Bergdolt, vice president of the German shareholders’ association DSW, said. “It’s become an integrated concern in which all entities are strategically interlinked.”