Siemens spins off struggling gas and power division, including wind turbines
German engineering conglomerate Siemens is spinning off its gas and power business, which has dragged on the firm’s performance as the rise of renewable power hits demand for gas turbines, report John Revill and Arno Schütze for Reuters. Siemens said the Gas and Power division, which includes its oil and gas, conventional power generation, power transmission and related services businesses, will be set up as a standalone company with the aim of a public listing by September 2020. The new firm would be a “major player” in energy with revenues of 27 billion euros and more than 80,000 employees, according to Siemens. Siemens also plans to include its majority stake in wind energy company Siemens Gamesa Renewable Energy in the Gas and Power division.
Siemens epitomises the upheaval caused by the Energiewende in the world’s fourth largest economy like few other companies. Despite the emphasis on sustainability in its corporate communications, Siemens underestimated the shift to renewable energies in Germany and abroad – similarly to many utilities as well as competitors GE and Mitsubishi Heavy – and remained a big supplier to the oil and gas industry. The Power and Gas division, which specialises in gas turbines, is by revenue still the company’s largest business and has long been instrumental for the group’s total profits. This is why the collapse of international demand for fossil power generation caused “disruption of unprecedented scope and speed” in this business area, according to Siemens.
Siemens Gamesa is Germany’s largest turbine maker and was formed by a merger between Siemens’ wind power branch and Spanish turbine manufacturer Gamesa.