Siemens has launched its biggest strategy overhaul in four years, aimed at making it more profitable in the digital industrial age.
• German group seeks to shift from one-size-fits-all approach by trimming the number of its industrial businesses from five to three
Siemens, the German trains-toturbines group, has launched its biggest strategy overhaul in four years, aimed at making it more nimble and profitable in the digital industrial age beyond the reign of CEO Joe Kaeser.
Siemens reported industrial profit slightly ahead of expectations in the three months to the end of June, helped by another strong performance by its Digital Factory industrial automation unit, which compensated for a slump in power and gas.
But the figures were overshadowed by the Munich company’s unveiling of its new Vision 2020+ strategy, which will trim its number of industrial businesses to three from five, giving them more autonomy.
Siemens shares fell 4.8% to the bottom of Germany’s bluechip DAX as analysts asked whether the measures, designed to lift profitability by two percentage points from the company’s 11%-12% target, were ambitious enough.
“Our aspiration is to create a company that is not only successful today, but well prepared for the decade to come,” said Kaeser, who is due to step down in 2021 from the group that began as a telegraph technology business in the 19th century.
“We will shift from a onesize-fits-all set-up to a purposedriven and market-focused setup that can readily create and adapt to disruption and foster consolidation, the CEO told a news conference.
Kaeser, who has hived off Siemens’s wind power and train businesses into joint ventures and listed its medical technology unit on the stock exchange, said there was no plan to float any of the three new operating companies. The decision to avoid a full break-up of the company and continuing problems at the power and gas division — where profit halved — also weighed on the share price.
One investor expressed disappointment at the new strategy, saying it did not go far enough. “The new strategy goes in the right direction: focusing and expanding digitalisation expertise, more individual responsibility of the individual business units, bundling of service activities and reduction of costs and bureaucracy,” said Christoph Niesel, a portfolio manager at Union Investment.
“But it was disappointing that, compared to market expectations, Siemens did not give a clear figure what cost savings and efficiency savings Vision 2020+ will achieve, and nothing about more advanced portfolio restructuring measures, primarily at Power & Gas, has been communicated,” said Niesel whose company is Siemens’s 10th-largest investor with a 0.75% stake.
Industrial conglomerates like Siemens, whose activities span industrial software to medical scanners, have become increasingly unloved by investors, who favour companies with simpler businesses they can more easily value.
Rivals including Switzerland’s ABB have come under pressure from shareholders to separate weaker businesses, while General Electric is spinning off its healthcare business and divesting its stake in oil services firm Baker Hughes.
ONE INVESTOR EXPRESSED DISAPPOINTMENT AT THE NEW STRATEGY, SAYING IT DID NOT GO FAR ENOUGH