Siemens’ energy unit spinoff lags expectations in market debut

FRANKFURT • German industrial giant Siemens AG yesterday spun off its energy division, with a below-expectations valuation of €16 billion, in one of the largest stock market debuts in Europe this year.

Shares in Siemens Energy AG traded at €22.01 (RM110.05) at open, before sliding back to €21.68 at 0834 GMT.

The valuation lagged expectations, with analysts having predicted the new company’s market cap to reach between €17 billion and €24 billion. In March, Siemens said the energy unit had equity of about €17.3 billion.

“As an independent company, we now have the entrepreneurial flexibility we need to help shape the global transformation of the energy markets in a sustainable and economically successful manner,” said Siemens Energy’s CEO Christian Bruch.

Despite the Covid-19 pandemic upending business plans worldwide, Siemens pressed ahead with the spinoff first announced in May 2019.

Siemens Energy, with its oil and gas, turbines, power transmission and related services businesses, joins medical devices arm Siemens Healthineers AG and light- bulb unit Osram Licht AG on the stock market, which debuted in 2018 and 2013 respectively, as Siemens slims down to become more agile.

Siemens CEO Joe Kaeser (picture) in 2017 said he wanted the company to become a “fleet of ships” rather than an awkward tanker, as it seeks to chart a course through a more challenging time for industrial companies.

The energy unit, which employs 91,000 people, has struggled in recent years and last year announced 2,700 job cuts worldwide. It generated revenue of €28.8 billion in fiscal year 2019.

The conglomerate has, however, proved broadly resilient to the coronavirus pandemic, beating expectations with net profit of €539 million in the three months to the end of June.

As part of the spinoff, Siemens will give 55% of shares in Siemens Energy to its current shareholders at a ratio of one Siemens Energy share for every two shares in the main company.

The company’s pension fund will get 9.9%, with the parent company holding on to 35.1%. After anticipating the share price to suffer a little at first, “in two to three weeks we will see the share price stabilise and towards December we will see the first fair valuation”, Siemens CFO Ralf Thomas told AFP.

The shares had a “bumpy start” to trading, but the industry had “a promising future”, Comdirect analyst Andreas Lipkow said. Siemens intends to reduce

its shareholding significantly within 12 to 18 months after the completion of the spinoff, it said. — AFP