Siemens to spin-off energy business, emphasizing need for ‘focus’

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Siemens has revealed more details of the spin-off its energy business later this month, as it aims to create a firm which CEO Joe Kaeser has previously described as encompassing “the entire scope of the energy market like no other company.”

At its capital market day Tuesday, Siemens Energy CEO Christian Bruch outlined plans for the spin-off, which will see Siemens shareholders hold 55% of the company. Siemens will retain a 35.1% stake and Siemens Pension-Trust will own a 9.9% share. It is due to list on the Frankfurt Stock Exchange at the end of September.

Speaking to CNBC’s Squawk Box Europe, Bruch explained why the company felt the spin-off was required.

“It’s about focus … it’s about really focusing on driving an energy technology company forward,” he replied.

Asked whether this meant job cuts amid speculation about layoffs and shuttered plants, Bruch replied: When I talk about focus I first of all mean really helping our customers in the transition to a more sustainable energy world.”

“And we will look on all ends, obviously, also, on how to improve our operational performance – that is no question,” he added. “I am not satisfied with the operational performance currently, we all are not satisfied at the company and we are working on this.”

At the end of March 2020, Siemens Energy employed around 91,000 people globally, with operations focused on areas including gas turbines, generators and steam turbines. It also has a 67% share in Siemens Gamesa Renewable Energy, a major player in the wind turbine sector.

Bruch emphasized the importance of “driving innovation, which really serves future energy markets: from green hydrogen, to transmission, to grid stability, finding … highly efficient gas turbine technologies – these are the things we are working on and what we want to drive.”

Coal’s role

Despite this focus from Bruch, the fact remains that coal, a fossil fuel, still plays a big role in the global energy mix.

“Around 40% of … electricity generation is still based on coal and so it is a tremendous element which we have to resolve,” he conceded.

“We all are more happy if we do not have coal fired power plants, that is not a question, the question is does our technology help to save CO2 by making coal fired power plants more efficient?”

Describing this as the “riddle to resolve,” the CEO said this was why his firm was taking “more time to really define the path forward and keep the balance … between affordability, sustainability and reliability of supply.”

He also highlighted projects based in Asia, where he described coal as playing “quite a significant role in … electricity generation.” 

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