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Siemens investors call for further unbundling of the group

Published 02/07/2024, 11:19 AM
Updated 02/08/2024, 08:15 AM
© Reuters. FILE PHOTO: Siemens logo is seen near computer motherboard in this illustration taken January 8, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

By John Revill

(Reuters) -Two of Siemens's largest investors have called for the German engineering group to simplify its operations by cutting its investments at Siemens Energy and Siemens Healthineers.

Union Investment, a German fund manager with a just under 1% stake in Siemens, and Deka Investment, an asset manager for Germany's unlisted banks, say Siemens's complexity weighs on its share price.

Despite a strong operational performance last year, Siemens's total shareholder return has lagged rivals.

Both want Siemens to reduce its stakes in Siemens Energy and Siemens Healthineers where Siemens AG (OTC:SIEGY) currently holds stakes of 17.1% and 75% respectively.

"The Group must be further unbundled," said Ingo Speich from Deka, which holds 1% in Siemens. "The conglomerate structure must be reduced and the Group streamlined."

Union Investment said Siemens's profit margins were being diluted by laggards like the train making Mobility business.

"They need to get out of Siemens Energy as soon as possible ... the company also needs to reduce its stake in Healthineers and eventually let the company free – put it on the market, sell it or spin it off to shareholders," said portfolio manager Vera Diehl.

"I know all the long history of Siemens and the company's attachment to its various divisions, but it's time to let its children go," she told Reuters before asking CEO Roland Busch at the company's Munich AGM on Thursday what his plan for Healthineers and Energy was.

Siemens, which reported first-quarter results earlier on Thursday, said it would continue to reduce its Energy stake but wanted to remain the majority shareholder at Healthineers.

Busch told the AGM that Healthineers was a "very attractive and innovation driven business".

© Reuters. FILE PHOTO: Siemens logo is seen near computer motherboard in this illustration taken January 8, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

Other parts of the Siemens business benefited from being able to share technology while cost savings could be achieved by joint services, purchasing and supply chain management.

"You could also see this...when it came to the crisis...and how we were able to supply our businesses with the respective electronics when other companies couldn't," he said, referring to the post-pandemic shortage of many components.

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