Bloomberg News

Siemens Wind-Power Unit Aims to Return to Margin Exceeding 10%

September 29, 2011

Sept. 29 (Bloomberg) -- Siemens AG, Europe’s largest engineering company, aims to return to a profit margin of at least 10 percent of revenue in its wind power operations by cutting costs and streamlining operations.

“We’ll have double-digit margins once we are the cost leader,” Michael Suess, the head of Siemens’s energy businesses, told reporters today at an energy conference in Fuschl am See, Austria.

Profitability at the renewable-energy division, once among Siemens’s stellar performers, has fallen by half, with operating profit at 7 percent of sales in the quarter ended June 30 versus as much as 14.2 percent 10 quarters earlier. Suess said that excess capacity in countries like the U.S., as well as aggressive pricing in markets such as China, led to the decline at the renewables unit.

Siemens will industrialize and standardize production processes and will “drive consolidation” based on cost leadership, Suess said. The Munich-based company has a target of ranking among the world’s three largest wind companies by installed capacity by 2012. It was the sixth largest for land- based capacity and biggest in offshore units in 2009.

The manufacturer said on Aug. 4 that it will split the renewable-energy division in two, separating wind-related activities from solar and hydroelectric power, as the development stages of these markets differ greatly.

The wind-power division had 3.2 billion euros ($4.4 billion) in sales in the year through September 2010, and as of this month employed 7,800 people and had an order book of almost 11 billion euros.

--Editors: Tom Lavell, David Risser

To contact the reporters on this story: Zoe Schneeweiss in Hof, Austria, via zschneeweiss@bloomberg.net; Richard Weiss in Munich via rweiss5@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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