After a difficult but successful year, Siemens is looking to the next with confidence. In the fiscal year that ended at the end of September, special effects had depressed profits, but the group expects a strong increase in the new one, as it announced on Thursday in Munich. The core business is booming and if the parts that don’t belong to it are sold or spun off, Siemens is now planning a much larger one for the next step.
Siemens has been working on spinning off its Large Drives (LDA) business for some time. On Thursday, CEO Roland Busch announced that the spin-off would be about twice as big. LDA is to be combined with low-voltage and geared motors from the Motion Control division, the manufacturing technology subsidiary Sykatec and the special business Weiss Spindeltechnologie.
Overall, a new unit with a turnover of around 3 billion euros and 14,000 employees is to be created in the course of the financial year. “The new company will be extremely competitive,” said Busch with conviction. CFO Ralf Thomas emphasized: “The fact that it is not a Siemens core business does not mean that it is not good business.”
No time pressure
In view of the expansion, however, Thomas probably no longer expects the conclusion in the current financial year. But that’s not necessary, he stressed. You are not pressed for time. According to Thomas, whether the spin-off will result in a sale, an IPO or something else has not yet been decided. You keep all options open.
Hagen Reimer, the trade union secretary responsible for Siemens at IG Metall, notes: “We are still extremely skeptical about the spin-off itself.” But if it cannot be prevented, “then we consider it to be the most favorable perspective in its current expanded form. This means that the future company is the most stable and broadest.”
Basically, things are going well at Siemens: the result in the central industrial business was at a record level in the past fiscal year. The fact that the consolidated profit fell by 34 percent to 4.4 billion euros was mainly due to a billion-dollar write-down on the remaining shares in the former energy business Siemens Energy, which had been taken public in the summer. It had given the group its first quarter of losses in more than a decade.
But the withdrawal from Russia also had a negative impact on business. Nevertheless, sales increased nominally by almost 16 percent to 72 billion euros. The order backlog grew to a record 102 billion.
Sustained high demand
Siemens boss Busch spoke of an “extremely challenging year” and an “outstanding performance”. Siemens has gained market share and the high demand for the group’s hardware and software offerings is continuing, he stressed.
In the fourth quarter of the year, everything was fine again at Siemens with a whopping profit of 2.9 billion euros. However, a significant profit from the sale of the post and parcel business also contributed to this.
For the current new fiscal year, Siemens expects a significant increase in profit. Adjusted for certain purchase price effects, it should rise to EUR 8.70 to EUR 9.20 per share. That would be an increase of 59 to 68 percent. Roughly speaking, that would be around 7.2 billion euros for the group.
The shareholders will not feel anything from the drop in profits in the past year: the dividend is to increase by 25 cents to 4.25 euros per share. The stock exchange reacted extremely positively to the news from Siemens on Thursday: The share was by far the biggest winner in the leading index Dax in the morning.
