Siemens' CEO: Sale of Turbine Unit Just 'Media Speculation'

Siemens Chief Executive Joe Kaeser on June 19 said reports last week that the German engineering company was considering a sale of its gas turbines manufacturing unit are “media speculation.”

Kaeser made the remarks during an event in Zurich, Switzerland. He told Reuters that his company wants to improve the performance of the turbine unit, though he did not address whether Siemens intends to keep the unit.

“This is media speculation and in our view there is no need to comment on media speculation,” Kaeser said. “We know what we are doing. We have a clear commitment we are going to make good on. We are actually doing much better than the competition and this is a good thing.”

Turbine manufacturing and service is part of Siemens Power & Gas division. The unit’s profits dropped 74% during the most-recent quarter. Barclays estimates large turbines account for about 35% of the division’s sales.

Siemens in a March report cut its 2018 forecast for the large turbine market by 10%, to 100 units. Board member Lisa Davis, who is responsible for the unit, in May said she did not see signs of a “medium-term recovery” in the sector. Davis in a memo to staff on June 15 said Siemens is “committed” to its turbine business.

Reports from Bloomberg on June 13 said Munich, Germany-based Siemens is considering several options for its turbine business, including a sale. Siemens, along with rivals General Electric (GE) and Mitsubishi Hitachi Power Systems (MHPS), is struggling with fewer orders for its turbines as more power generators opt for renewable energy resources in their portfolios. MHPS has moved ahead of its two rivals in terms of the number of orders received for gas turbines in the first quarter of this year, according to Barclays. GE in December 2017 said it would cut 12,000 jobs in its power unit.

Bloomberg’s report last week also said Siemens could keep the unit and try to weather the current global slowdown in demand for gas turbines. The company in November 2017 said it would cut 6,900 jobs, mostly in the Power & Gas division, in an effort to reduce costs.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).

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