An industrial film is shown as a commercial in front of a press conference, something like this has been around for years. Many companies do this, especially those that have something to show. Car manufacturers, for example, like to use their four-cylinder engines in a big way, preferably in a spectacular setting. So more like the Portuguese Algarve coast A42 just before the Castrop-Rauxel-Ost motorway junction.
Because Siemens doesn’t build cars, this Thursday there are trains to see, circuits, digital animations, automated factories, artificial intelligence, waving, happy employees in flashing data centers, and always in the middle of it all: Siemens boss Roland Busch. In the past, when Siemens was much larger than it is today, advertising films could still show power plants, gas turbines and X-ray machines. But since the energy business was spun off under the name Siemens Energy and the medical technology business as Siemens Healthineers and listed on the stock exchange, the supply of images for such films has been limited.
So Siemens has become smaller, in terms of images and divisions, but because it is now concentrating on digital businesses and factory automation and delivering trains, it is more profitable than ever. The group closed the last financial year with a record profit of 8.5 billion euros. Sales rose by eleven percent to 77.8 billion euros. Siemens shares rose by up to six percent to over 146 euros. “The 2023 financial year was a year with numerous records,” said CEO Roland Busch. The strategy “pays off in the long term”.
At least a look at the profits shows that the division was worth it
Seen in this light, it particularly paid off for Siemens to spin off its energy technology business and list it on the stock exchange as Siemens Energy in September 2020. Otherwise the company would probably have a few more problems today.
Just 24 hours before Busch’s appearance, the former subsidiary Siemens Energy, in which Siemens still holds 25.1 percent, held a press conference that was completely different. The colleagues from energy technology had to report a record loss of 4.6 billion euros on Wednesday, mainly because of the problems in the wind turbine business. The company must now be supported with state guarantees, and the former parent company should also help.
Even if you still have Siemens in your name together, in the end it’s everyone else’s problems. And so a very good-humoured Siemens boss Busch thanked the “entire team” for their “outstanding performance”. His colleague Christian Bruch, boss at Siemens Energy, did the same as Busch and thanked all his colleagues on Wednesday. But here it was probably mainly a kind of motivational boost from above. The fact that a Siemens group needs guarantees amounting to 15 billion euros and is dependent on government guarantees for this does not happen so often in the otherwise self-confident Siemens world and therefore unsettles many employees. You ask yourself: How bad is my company and what will happen next?
That’s probably why Bruch’s message was: Hey, it’s not the fault of most of you, it’s the fault of the Spanish wind power subsidiary Siemens Gamesa.
But the truth is also: Siemens, a company that cooperates with the US IT giant Microsoft on artificial intelligence, has benefited significantly in these years from the digital transformation of society, from the construction of more and more data centers and the automation of factories. Siemens Energy, on the other hand, earns its money with classic technology for energy generation and transmission, building power plants and networks for electricity transmission and, for several years, also large wind turbines. A difficult business in which a lot can go wrong. And a lot has gone wrong in the wind business in particular in recent years. After all, it is a business in the middle of the restructuring of the energy system, in the middle of the energy transition. Now Siemens Energy is receiving billions in guarantees from the federal government and the banks as well as billions in support from the former parent company, which is buying part of the joint India business from its former subsidiary and transferring billions in return.
Making more profit with fewer transactions is the strategy
Concentrating on a few lucrative digital businesses, outsourcing large business areas and thereby removing and handing over more and more risks, making more profits with fewer and fewer business areas – that has been Siemens’ strategy for several years. So far it has worked well, at least for the parent company, which has continued to slim down.
And the time of separations is far from over at Siemens; the spin-offs continue. This time, Siemens wants to divest itself of its business with motors and large drives. The subsidiary, called Innomotics, has over 15,000 employees and could be listed on the stock exchange. Preparations for this should begin, but there are also “other options,” said Busch.
Things could soon be different at Siemens too; After its year of record profits, the Munich technology group is already preparing for lower growth. This also has to do with the fact that China, one of the major customer countries, is weakening. And it also became clear this morning in Munich: How a global corporation like Siemens is doing also depends crucially on how the rest of the world is doing economically. And what happens next with the geopolitical crises.