Siemens unveils strategy to spin off gas and power business

Siemens Energy' post-spin-off strategy includes meeting accelerated, profitable growth targets, adjusting its portfolio, and gradually directing research and development towards sustainability and service. In financial terms, Siemens Energy aims to increase its EBITA margin (earnings before interest, taxes, depreciation, and amortization) from 6.5% to 8.5% for fiscal year 2023. The company plans to list its energy unit by around September next year, according to the head of its gas and power division.

An estimated one-sixth of all electricity generated is based on Siemens Energy’s technology. The company expects that it will continue to be highly relevant to the value chain of future sustainable energy supplies.

In the first strategy phase, the focus for Siemens Energy's Gas and Power segment is on increasing profitability and cash flow until fiscal year 2023. The company is evaluating a leaner cost structure, optimized logistics, centralized purchasing and the reduction of non-conformance costs. As an example, Siemens Energy recently streamlined its offering of aeroderivative gas turbines. Furthermore, Siemens Energy is currently reviewing a potential phase out of its business with coal-fired power generation.

The company also plans to focus on project selection and better execution. Projects with a negative lifecycle margin will be constantly phased out and bidding processes will be more selective to improve the margin in the project business. The company is currently evaluating operational initiatives targeting more than €300 million additional annual gross global cost savings on top of the recently announced €1 billion savings target until fiscal year 2023, when compared to the cost base of fiscal year 2018.

More than 50% of the company's portfolio is already decarbonized. The broad product portfolio of Siemens Energy includes products enabling the energy transition, such as hybrid power plants and gas turbines that can be operated with hydrogen. Siemens Energy is also a key player in wind energy and invests in the hydrogen economy.