Siemens sees restructuring start to pay off
Siemens is seeing its restructuring start to pay off as it saw five percent growth is a weak market for the last financial year.
The company has been focussing more on digital industries with the acquisitions of EDA company Mentor Graphics, Edge Technology, Mendix and ESTEQ, and spinning off its oil and gas and renewable energy businesses next year into Siemens Energy.
Digital Industries grew 4 percent to €4.9bn, with double-digit revenue growth in the software business and a clear increase in the process automation business, although the factory automation and motion control businesses faced deteriorating demand particularly from the automotive and machine-building industries. This will lead to flat revenues in 2020, but that still outperforms the broader market where there is continued weakness in the automotive and machine tool industries.
“We expect global macroeconomic development to remain subdued in fiscal 2020, with risks particularly related to geopolitical and geoeconomic uncertainties,” said Joe Kaeser President and CEO of Siemens AG.
“We assume a moderate decline in market volume for our short-cycle businesses. Given the foregoing, we expect the Siemens Group to again achieve moderate growth in comparable revenue, net of currency translation and portfolio effects, and a book-to-bill ratio above 1. Smart Infrastructure expects to achieve moderate comparable revenue growth in fiscal 2020, driven by its longer-cycle solutions and service business, even as its short-cycle industrial products business faces headwinds from a market slowdown.
The Mobility division that makes rolling stock saw a 36 percent decline this year after a bumper 2018, and expects 5 to 8 percent growth in 2020.
“As previously announced, we plan to carve out Gas and Power and to contribute our 59 percent stake in Siemens Gamesa Renewable Energy (SGRE) to create a new entity, Siemens Energy. For this entity, we plan a spin-off and public listing before the end of fiscal 2020, with Siemens Energy becoming part of discontinued operations prior to the spin-off,” he said.
SGRE saw a growth of 12 percent to €2.9bn in 2019, with significant order growth year-over-year, led by the onshore power and service businesses. Growth Asia, Australia and particularly in India partly offset a decline in the Americas, but the strongest growth ame from Europe.
“Since 2014 when we launched Vision 2020, we’ve invested more than €30 billion in research and development; some €17 billion in property, plant and equipment; and over €15 billion in acquisitions,” said Kaeser. “We’re now in the transformation phase and making good progress. When we’re done, the Siemens brand will no longer be a conglomerate of the conventional type. Instead, it will comprise three companies, each focused on its own sector. One is the Industrial Siemens, comprising Digital Industries, Smart Infrastructure and Mobility. One is Siemens Healthineers. And one is Siemens Energy. These three strong Siemens companies will work together in one ecosystem.”
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