The Munich-based conglomerate Siemens is celebrating its third consecutive record-breaking year, even as the broader economy faces a challenging period. However, the company is also initiating another significant restructuring and maintains a cautious outlook.
Siemens announced in Munich that it earned a net profit of 10.4 billion euros in the just-completed fiscal year, marking a 16 percent increase from the previous year. CEO Roland Busch described the figures as a “milestone.” He stated, “For the third time in a row, we have achieved a record in profit after tax and have grown in the mid-single-digit percentage range for both orders and revenue.” Busch added that Siemens is “stronger than ever.”
Key Drivers Behind the Earnings Jump
This profit surge was driven by several factors. A significant boost came from a multi-billion-euro special gain realized in the first quarter from the sale of Innomotics. Alongside this one-off effect, Siemens saw booming business from its Smart Infrastructure division. Furthermore, the company’s Digital Industries division, which focuses on automation technology and had been lagging, is showing signs of recovery, posting slight gains in the fourth quarter.
Major Changes Ahead for Healthineers
The subsidiary Siemens Healthineers also contributed positively to the bottom line. Despite this, Siemens is planning a major strategic shift and intends to give up its majority stake. The company announced Wednesday evening its plan to spin off shares currently valued at around 15 billion euros to its own shareholders. This move is designed to reduce Siemens’ stake in Healthineers by 30 percentage points, down from the current 67 percent.
Specific details of the transaction are not yet public, but the goal is to allow Healthineers to concentrate more effectively on high-growth markets. CEO Busch explained that the business operations of Siemens and Healthineers are diverging, noting that digitalization in the healthcare sector is proceeding differently than in Siemens’ core industrial segments.
The ‘One Tech Company’ Initiative
This isn’t the only significant change on the horizon. Paired with its annual figures, Siemens unveiled its “One Tech Company” program, an initiative aimed at accelerating growth. Busch explained that this program will usher in the “next phase of growth,” increasing the company’s medium-term revenue growth ambition to a new range of six to nine percent.
The plan involves simplifying internal structures and development processes. Busch offered software development as a prime example: Siemens’ 30,000 software developers currently use roughly 900 different versions of development programs. The company plans to slash this number to just a few dozen standardized tools, a move expected to significantly boost productivity.