Siemens AG (SIE.XE) plans to divest its solar business, the German industrial conglomerate said Monday, a first step in an overhaul to bolster profits.
Siemens AG (SIE.XE) plans to divest its solar business, the German
industrial conglomerate said Monday, a first step in an overhaul to bolster
profits.
"Due to the changed framework conditions, lower growth and strong price
pressure in the solar markets, the company's expectations for its solar energy
activities have not been met," Siemens said in a statement.
Earlier this month, Siemens said it would initiate a program to strengthen
profitability and efficiency, and would review underperforming operations. It
will disclose further details on Nov. 8.
The exit from the solar business, which doesn't meet the group-wide aim of 15%
to 20% return on capital employed, will slim Siemens' energy business down
further. Last year it said it would exit the nuclear segment, and sold its
stake in the nuclear joint venture Areva NP to
France
's
Areva S.A. (AREVA.FR).
Overcapacity among producers of solar equipment and competition, in particular
from Chinese companies, is denting the sector's profitability and has led to
the insolvencies of several German makers of photovoltaic equipment, such as
Q-Cells and Solon.
Siemens said it is already in talks with potential buyers. Its solar business
is rather small, with revenues last fiscal year of less than 300 million euros
($409 million), a small fraction of the group's EUR73.52 billion total revenue.
Overall, Siemens' energy segment had sales last year of EUR24.9 billion.
Siemens is active in solar thermal energy generation, using technology that
converts sunlight to heat, which drives a heat engine. Siemens expanded in this
field three years ago with the acquisition of Israel-based Solel Solar Systems
for EUR284 million.
Siemens doesn't make photovoltaic cells or modules, which use semiconductors to
convert sun rays into electricity.
The divestiture plan affects 680 employees, 400 in
Israel
and
around 180 in
Germany
.
Siemens will focus its renewable energy activities on wind energy and hydro
power. More than 7,000 of its employees work in the wind power division and
another 2,000 work in the related service business.
An analyst says Siemens' exit is a logical step. "Solar thermal energy
hasn't been able to compete with photovoltaic since 2011 due to declining
prices of modules," said Leonard Herbig of the Berlin-based Center for
Solar Research. Siemens has entered the solar business too late and operated it
only half-heartedly, Mr. Herbig added.
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