Siemens Said to Mull Metals Technologies Sale Amid Revamp
Siemens AG (SIE) is considering selling its VAI metals technologies unit as Chief Executive Officer Joe Kaeser evaluates the portfolio of Europe’s largest engineering company, according to three people with knowledge of the matter.
The 7,000 employee-strong division, which designs, builds and maintains plants for the steel industry and is based in Linz, Austria, isn’t considered to be a core business and profitability has slowed, two of the people said. A decision about a sale may be made in the first half of 2014, they said. A Siemens representative declined to comment.
The metals unit, acquired as part of VA Technologie AG in 2005, may be valued at 800 million euros ($1.1 billion), according to a Sept. 7 estimate by Societe Generale SA analyst Gael de Bray. Munich-based Siemens, which counts Italy’s Danieli SpA and Germany’s SMS Holding GmbH among its competitors in the segment, doesn’t break out earnings figures for VAI.
Kaeser, who took over as CEO in August after a series of missed profit goals under predecessor Peter Loescher, is working through Siemens’s portfolio before a planned update on his strategy next May. Global steel prices have slumped amid waning demand from automakers and builders and increased competition from low-cost competitors in China.
ThyssenKrupp AG (TKA), Germany’s biggest steelmaker, is seeking to focus on its elevator, auto-parts and marine services business after selling a plant in Alabama. The Essen-based company had to write down 6.4 billion euros of investments in its Steel Americas unit.
Siemens climbed as much as 0.6 percent to 95.14 euros today, and was trading 0.3 percent higher as of 11:02 a.m. in Frankfurt. That extends the gains this year to 19 percent, valuing the company at 83.7 billion euros.
Albrecht Neumann, who took over as head of Siemens’ VAI metals technologies unit in November, said in an interview posted on the Siemens internal network Oct. 14 that a sale of the business is “not on my agenda.” He said that his priority is to “make metals technologies competitive again.”
Siemens has already earmarked some businesses for disposal. The company sealed the 640 million-euro sale of parts of its water technologies business to New York-based AEA Investors last month and is also seeking a buyer for its baggage and package handling technology business.
Siemens said Nov. 7 it will buy back as much as 4 billion euros of shares as Kaeser bets that an efficiency push will boost profitability next year. The company, which the same day reported fourth-quarter earnings that beat analyst estimates, intends to raise its profit margin to about 10 percent of sales next year from 7.6 percent in 2013. Siemens had earlier this year abandoned a target for 12 percent profitability.
Kaeser told reporters last month that he couldn’t yet comment on his future strategy since it’s still being decided. He has promised to focus Siemens along the “electrification value chain,” without specifying what that entails.
To contact the editor responsible for this story: Simon Thiel at firstname.lastname@example.org