Siemens weighs carving out Gas and Power unit

Siemens CEO Joe Kaeser attends a signing ceremony ahead of a news conference with German Chancellor Angela Merkel and Iraqi Prime Minister Adil Abdul-Mahdi at the Chancellery in Berlin, Germany. (File/Reuters)
Updated 04 May 2019
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Siemens weighs carving out Gas and Power unit

MUNICH: German industrial conglomerate Siemens is weighing options for its Gas and Power unit, carving out all or part of the business to prepare it for a potential stock market listing or a merger with a peer, two people close to the matter said.
The business caters to the oil and gas industry as well as to power generators and distributors.
The sources said Siemens’ supervisory board may decide on a potential carve-out at a meeting on Tuesday and could present the plans at the company’s capital markets day on Wednesday.
Siemens declined to comment on the future strategy for the Gas and Power unit, whose gas turbines business has seen orders slump as utilities shift toward renewable energy sources.
“The situation on the global market for fossil power plant technology remains unchanged. Siemens began tackling these challenges back in early 2015,” a company spokesman said.

 

Chief Executive Joe Kaeser has embarked on a strategy to simplify Siemens’ operations by separating the conglomerate into what he has termed “a fleet of ships” which thrive under their own steam.
The move is designed to enable the businesses to raise their own funds for acquisitions and investments as well as crystallising their standalone market value, removing some of the “conglomerate discount” that weighs on Siemens’ valuation.
As part of this push, Siemens listed its health care unit Healthineers last year.
Siemens also has a separately listed renewable power business, Siemens Gamesa.
Kaeser tried to combine its train segment Siemens Mobility with listed peer Alstom, but scrapped the deal earlier this year as antitrust concerns mounted. Analysts expect that Siemens will eventually opt for a stock market listing for the Mobility unit.
Siemens has told investors that its capital markets day would focus on its Gas and Power, Smart Infrastructure and Digital Industries businesses, none of which have so far have been set up as independent companies.
Gas and Power, headquartered in Houston, Texas, makes gear for oil and gas extraction and production, as well as gas and steam turbines and technology for power grids, including high-voltage transmission systems.
The unit was set up weeks ago as part of a reshuffle Siemens’ business units.

FASTFACTS

Siemens’ gas and power unit is headquartered in Houston.


US, China need to reverse course in trade row to help economy: OECD

Updated 25 min 10 sec ago
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US, China need to reverse course in trade row to help economy: OECD

  • OECD: The global economy would grow by only 3.2 percent this year
  • China, which is not an OECD country, has been seeking to stimulate its economy

PARIS: Economic growth in China and the United States could be 0.2-0.3 percent lower on average by 2021 and 2022 if the two countries do not row back on tit-for-tat tariffs in their dispute that has dampened the global economic outlook, the OECD said on Tuesday.
US President Donald Trump has raised tariffs on $200 billion on Chinese imports to 25 percent from 10 percent in the long-running trade row, while Beijing said it would hit back by lifting tariffs on $60 billion in US goods.
The global economy would grow by only 3.2 percent this year as growth in trade flows is nearly halved this year to only 2.1 percent, the Organization for Economic Cooperation and Development (OECD) said in its biannual Economic Outlook.
That would be the slowest pace of global economic growth since 2016 and was down marginally from the Paris-based policy forum’s last forecast in March for growth of 3.3 percent.
The world economy should fare slightly better next year with a growth rate of 3.4 percent, but only if the United States and China pull back from tariff hikes announced this month.
The OECD said growth in China and the United States could come in 0.2-0.3 percent lower on average by 2021 and 2022 if the two nations did not reverse course.
Without taking the latest round of tariff increases into account, the OECD forecast the United States would outpace other big developed economies with growth of 2.8 percent this year, up from the 2.6 percent the organization had projected in March.
The world’s biggest economy was seen slowing to 2.3 percent next year even if the new tariff hikes are not carried through.
China, which is not an OECD country, has been seeking to stimulate its economy but growth was still seen easing from 6.2 percent this year to 6.0 percent in 2020, the lowest rate in 30 years for the world’s second-biggest economy.
Global investors are closely watching to see how much more support Beijing will inject to shore up growth after China already loosened monetary policy, cut taxes and allowed local governments to issue special bonds to fund infrastructure projects.
Japan’s export-dependent economy is suffering from the drop in trade flows with growth expected at only 0.7 percent in 2019 and 0.6 percent in 2020, trimmed from the OECD’s March forecasts of 0.8 percent and 0.7 percent respectively.
The euro zone is also paying a heavy price for the global trade slowdown, with its growth seen this year at 1.2 percent before rising to 1.4 percent year. That was slightly better than the 1.0 percent and 1.2 percent expected in March as Italy’s downturn proves slightly less severe than previously expected
Meanwhile, the OECD raised Britain’s growth forecast to 1.2 percent this year from 0.8 percent previously, as the prospect of its exit from the European Union was pushed back. UK growth is expected to fall to 1.0 percent, marginally better than the 0.9 percent expected in March.