MUNICH (Reuters)-
Siemens is divesting its gas and electricity business, and as the rise of renewable energy meets demand for gas turbines, it is dragging down the performance of the German engineering company.
The new company will become a "major participant" in the energy sector with an income of 27 billion euros ($30 billion)
Siemens said on Tuesday that it has more than 80,000 employees and will focus on the digital industry and smart infrastructure business.
The natural gas and power sector, which includes its oil and gas, traditional power generation, power transmission and related services operations, will be established as an independent company with the aim of listing by September 2020, Siemens said.
Last week, Reuters reported, citing people familiar with the matter, that Siemens was considering selling the company, whose 2018 profit fell 75% to 0. 377 billion euros ($421 million)
Revenue fell by 19%.
"The new company doesn't have to compete for higher-margin resources like the smart infrastructure and digital industries," Siemens Chief Executive Joe Kaeser told reporters . ".
Siemens also plans to include its 59% stake in wind energy company Siemens Gamesa Renewable energy in the gas and electricity sector.
The decision to separate the business led by Lisa Davis, head of natural gas and power, was approved by the Siemens Board of Supervisors, which held a meeting on Tuesday ahead of Wednesday's second-quarter data release. The Munich-
The US-based company says it will remain a major shareholder in natural gas and electricity, with a 25-50% stake.
"This is the right thing to do;
"When the company is doing well, it is necessary and brave to trigger changes in the plan," said Jim Hagemann Snabe, chairman of Siemens . ".
The union also supported the decision, saying companies other than Siemens were doing better.
"Investment will be further reduced if the sector continues to stay at Siemens.
So the business will actually starve to death, "Birgit Steinborn, chairman of the Siemens engineering committee, said in a statement that he is also the vice chairman of the company.
"With plans for an initial public offering in Germany
Siemens will remain determined to work in Germany and Europe.
"In a joint venture, for example in a joint venture with a Japanese competitor, we will see a high risk," she added . ".
Siemens aims to cut costs.
By 2023, 2 billion layoffs had reached 10,400.
Mainly administrative and support roles
Including 3,000 of smart infrastructure and 4,900 of the digital industry.
The company will cut at least 10,400 jobs during the overhaul.
Meanwhile, Siemens plans to create 20,500 jobs by 2023 to achieve net growth.
Smart Infrastructure-
Manufacturing fire safety and security products, power grid control or energy storage systems for buildings
Siemens is now targeting 13-
15% to 2023.
Digital Industry
Industrial software and automation solutions for businesses
The target is 17-23 percent.
Kaeser stressed that Siemens Mobile, the Siemens railway department, has many options and plenty of time.
Siemens tried to combine mobile with its listed peer Alstom, but the deal was canceled earlier this year due to heightened antitrust concerns.
Analysts expect that Siemens will eventually choose to go public in the company.