Siemens is releasing its energy business into independence: Siemens Energy will be listed on the stock exchange on Monday. The new company faces major challenges. Concentration on yourself should help.
Siemens is releasing its energy business into independence: Siemens Energy will be listed on the stock exchange on Monday. The new company faces major challenges. Concentration on yourself should help.
Siemens distributes 55 percent of its energy business to its shareholders. Hundreds of millions of shares of the new Siemens Energy will appear in the depots on Monday and trading on the stock exchange will begin. The company, with a good 90,000 employees and an annual turnover of 29 billion euros most recently, is being sent to independence primarily on the basis of one conviction: everyone works better for themselves. Siemens Energy should go its own way through the upcoming challenges – without the protection, but also without the ballast of the group.
The energy business has a long tradition at Siemens, but there was a central problem within the group: with its long-term maintenance contracts and huge order backlog, it is robust against short-term fluctuations, but less profitable than the industrial business, for example. That made it difficult in the internal competition for investments.
To say goodbye, Energy has once again received solid financing. In the future, the new energy boss Christian Bruch, who took up the position in the spring, can and must get the money himself on the capital market, albeit at slightly less favorable terms than Siemens due to a slightly poorer rating.
And the split could entail risks: For example, the outgoing Siemens boss Joe Kaeser warned at the extraordinary general meeting about the split that certain savings and economies of scale would be lost. And above all, Energy is active in a rapidly changing market that is also subject to political fluctuations.
Kaeser becomes the controller
A champion in the energy business with a unique breadth and depth – that's how you see the new company at Siemens. But this breadth is also a challenge, because although the new company has a strong wind energy business with a two-thirds stake in Siemens Gamesa and is also active in the important ongoing power transmission, it also supplies and maintains turbines and other technology for gas and gas especially coal-fired power plants. It's about a market that will shrink and collapse over the coming decades.
Kaeser, who continues to accompany Energy as chairman of the supervisory board, has already given the board of directors to develop a plan to get out of coal – more responsibly than activists demanded and "more consistently than hesitants consider it necessary". One danger here: In the end, the plan is likely to receive criticism from both sides.
Bruch has already negotiated this with his plans for cost savings at Energy. Among other things, he does not want to take over the agreement on site security that applies to Siemens and to reduce sites. The company argues that this should simplify production chains. The union reacted far from amused and spoke of "hidden threats" on the home stretch to the split.
Siemens will not split up completely: The group will initially retain a good 35 percent of Energy itself, and just under 10 percent will go to the Group's pension fund. Both positions will shrink over time, but Siemens wants to remain an anchor shareholder with a stake of around 25 percent.
Candidate for the Dax
Given its size, Siemens Energy could in the foreseeable future become part of the Dax share index alongside its old parent company Siemens. Because this also applies to the other large Siemens spin-off, Healthineers, three companies with the Siemens name could play in the top league of Deutsche Börse at the end of next year.
But before that comes the stock market launch on Monday, and that could be turbulent for technical reasons alone. Every Siemens shareholder receives one from Siemens Energy for every two Siemens shares. But not everyone can or wants to keep the new papers. For example, funds that track the Dax have to sell the shares that are currently not in the Dax.
In Siemens circles, larger fluctuations are expected for at least two to three weeks. Only then will the price of the new company really say something about its value – and the combined market value of Siemens and Siemens Energy something about whether individual parts are really worth more as a whole.
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