German multinational Siemens reported a strong-second quarter profit and announced it plans to list its struggling power and gas station business as part of its latest de-consolidation moves. Siemens announced the plan on Tuesday to de-consolidate its gas and power units as part of a move to prepare for the future. The move is said to be the company’s biggest spinoff. In addition, it also plans to cut 10,000 jobs.
Its orders grew six percent to €23.6 billion and revenue rose four percent to €20.9 billion. The job reduction at its chief divisions will save the company €2.2 billion by 2023. This will include 4,900 jobs at the digital industries, 3,000 at the smart infrastructure, and 2,500 jobs at the central corporate unit, Bloomberg reported. Also, Siemens plans to recruit 20,500 new employees.
“It’s about the next steps of a business that is fundamentally changing,” Siemens Chief Executive Officer Joe Kaeser said. Previously, Kaesar had merged the healthcare division with Gamesa, a Spanish wind power company.
According to Bloomberg, the company will retain ‘somewhat less than 50 percent’ of the new entity which includes its 59 percent stake in Siemens Gamesa Renewable Energy. The move, in turn, will create a company worth €30 billion in business volume.
Morgan Stanley analyst Ben Uglow said in a note that the structural revamp is a big step in the company’s history. “Management is doing what many companies struggle to do in more forgiving labor environments,” he said.
The revamping efforts come after the company’s gas and power unit recorded the lowest profit margin across all divisions last year.