Siemens 'actively' seeking purchases for power units
Siemens AG, Europe's largest engineering company, said its power transmission and distribution units are "actively" seeking acquisitions to expand in regions with faster economic growth and add environmentally friendly technologies.
Russia, China, India and South America are some of the most interesting markets for expansion and investment, Udo Niehage, head of the company's power transmission unit, said yesterday in a joint interview with Ralf Christian, head of power distribution.
"Mergers and acquisitions are certainly a goal," Christian said in the interview in Erlangen, where the units are based. "It's an opportunity that we're actively following and when we see interesting business possibilities then we'll certainly seize them."
Locally, Siemens has facilities in Buffalo Grove, Deerfield, Chicago, Hoffman Estates, Schaumburg, Glen Ellyn, Elk Grove, Mundelein, Oak Brook, Rolling Meadows and Wood Dale
The Munich-based company is juggling the need to meet profit goals as well as expand. Chief Executive Officer Peter Loescher is cutting administration costs and plans savings in purchasing to meet margin targets, while also saying the economic crisis creates opportunities for acquisitions. Any investment, internal or external, has to pay off very quickly, Niehage said yesterday.
The engineering company's shares fell 0.6 percent to 38.83 euros as of 1:50 p.m. in Frankfurt trading. They have lost 45 percent in the past six months, cutting Siemens's market value to 35.5 billion euros ($44.9 billion).
Energy-Saving Products
Siemens aims for 10 percent annual increases in sales of products that save energy and cut pollution, targeting 25 billion euros in revenue from products such as energy-efficient motors and lighting as well as wind turbines and high-voltage transmission systems in 2011.
"Environmental technologies are a big growth field and they are also urgently needed," Christian said. "We're going to continue to nurture that through our own development, although we're also looking to see if one or other interesting external technologies are available."
The units, which make transformers and switching equipment, are sticking to their margin targets for 2010, the managers said. While competition is becoming intense and orders fell in the first quarter, demand remains high for power equipment, Niehage said. The manager expects to post higher orders than sales for the year as a whole and predicted a bigger order backlog going into the fiscal year that starts in October.
Stimulus Packages
The company will benefit from economic stimulus packages, as power grids are at least as important as roads in many countries' basic infrastructure, Christian said. Swiss rival ABB Ltd. said last month that power generation, transmission and distribution were among the key growth drivers at its Indian unit in the final quarter of last year.
It's not just emerging markets with growing populations that will be forced to spend on installing power grids, Niehage said. Developed countries also need to refurbish systems that date in some cases to before World War II, he said, adding the integration of renewable energy sources will also drive growth.