First, the wind power business, which produces generators and components associated with direct-drive turbines, will be merged with Flender to create a new company with annual revenues of around €2 billion. The second step would be to take Flender public by spinning off the new company.
German industrial giant Siemens plans to merge its wind energy business with Flender, its mechanical drives unit, and spin off the combined entity to pursue a public listing of Flender.
The company said Friday it has developed a two-phase strategy for the plan, which it believes will improve its offerings as a supplier of wind energy systems.
First, the wind power business, which produces generators and components associated with direct-drive turbines, will be merged with Flender to create a new company with annual revenues of around €2 billion. The second step would be to take Flender public by spinning off the new company.
Siemens said shareholders will vote on the proposal at its annual meeting in February 2021.
"With this move, we will improve our offering as a system supplier to the wind power industry, an ecologically and economically important industry that is currently undergoing a major technological transformation," said Roland Busch, Chief Technology Officer.
Busch added that since April 2019, the business has been exploring how to allow each division to reach its full potential, which is an important part of the future growth strategy. "The fully combined unit is no longer loss-making and is on a growth trajectory."
Siemens said it will strengthen its cost savings program to cope with the impact of the ongoing COVID-19 pandemic.
In the January-March period, the second quarter of fiscal 2020, Siemens' revenue was 14.2 billion euros, essentially flat compared to the same period a year ago, as growth in Siemens' healthcare and mobility businesses offset a decline in its digital industrial business.
Meanwhile, net income (including a loss of €300 million from discontinued operations) for the second quarter of fiscal 2020 was €700 million, compared to €1.9 billion in the second quarter of 2019, due to income of €200 million from discontinued operations and a lower tax rate.
At the end of the second quarter of fiscal 2020, natural gas and Power and Siemens Gamesa Renewable Energy (SGRE) were classified as disposables and discontinued operations.
"We still had a strong quarter under severe conditions. Although we expect to bottom out in the third quarter of fiscal 2020, we will continue to make the health and safety of our partners and employees our top priority, while maintaining business continuity as responsibly as possible, "said Joe Kaeser, President and CEO of Siemens AG.
"We expect the pandemic to have a greater impact on business development in the third quarter. Beyond the third quarter of fiscal 2020, macroeconomic developments and their impact on Siemens cannot be reliably assessed at this time. As a result, we are no longer in a position to confirm our initial guidance for fiscal 2020."
Kaeser added, "We now expect fiscal 2020 revenue to decline modestly, without currency translation and portfolio impact, and the book to debt ratio to remain above 1." The decline in demand has had the greatest impact on our operating companies' digital industries and smart infrastructure."
Kaeser stressed, "We stand by our plan to complete the demerger and public listing of Siemens Energy by the end of fiscal 2020. We expect to record spin-off gains from non-continuing operations."
