In this news, we discuss the Siemens’ record 16 billion euro spin-off falls in Frankfurt debut.
FRANKFURT / MUNICH (Reuters) – Shares of Siemens Energy ENR1n.DE opened lower than expected on the first day of trading on the Frankfurt Stock Exchange, as Germany’s largest spin-off braces for a difficult future independent of the parent company Siemens SIEGn. OF.
Shares of Siemens Energy – which makes gas turbines, power transmission systems and owns a 67% stake in Siemens Gamesa SGREN.MC – opened Monday at € 22.01 each, giving the company a market value of 16 billion euros (18.6 billion dollars).
A source previously said the estimates were for a market valuation of between € 21 billion and € 22 billion.
At 13:52 GMT, the shares were trading at 20.86 euros, down 5% from the first market price, after trading in a range of 19.21 to 22.98 euros during the meeting so far.
“I have repeatedly stressed that we expected volatility to be high in the first few weeks,” Ralf Thomas, chief financial officer of Siemens, told Reuters. “This is not a specific situation at Siemens Energy, it is the same with each spin-off.”
Siemens Energy is the largest spin-off ever in Germany, even surpassing Lanxess LXSG.DE and Covestro 1COV.DE, both from Bayer BAYGn.DE.
For Siemens AG investors, the transaction paid off: they received one share in Siemens Energy for two shares they hold in the former parent company. Still, Siemens shares were only trading 1.7% below Friday’s closing price, a small discount given that a substantial part of the conglomerate was moved into a separate listing.
Thomas said it would take at least until mid-October to get a first impression of how Siemens Energy, which competes with General Electric GE.N and Mitsubishi Heavy Industries 7011.T, will be evaluated.
Separated from Siemens due to low profit margins, the unit expects an adjusted margin of no more than 1% in 2020 on earnings before interest, taxes, depreciation and amortization before special items, due to the coronavirus crisis and weaknesses of its onshore wind activity. .
This is expected to drop to between 6.5% and 8.5% in 2023, helped by more than € 1.3 billion in cost cuts which, according to a source, will include the closure of some of the group’s production plants.
Siemens Energy expects its sales to fall by € 1.4 billion to € 27.4 billion this year, before growing again in the 2-12% range in 2021.
“We are now doing everything in our power to seize the opportunities offered by the global energy transformation,” said Christian Bruch, CEO of Siemens Energy.
Siemens AG initially divested 55% of Siemens Energy to its shareholders, but plans to significantly reduce its remaining direct stake to 35.1% within 12 to 18 months of listing. The Siemens pension fund owns 9.9% of Siemens Energy.
Siemens CFO Thomas said the company wants to retain the right to influence key decisions of Siemens Energy for at least the next five years, adding a 20% to 28% stake could achieve that.
(1 USD = 0.8589 euros)
Writing by Christoph Steitz and Caroline Copley; Editing by Michelle Adair, Susan Fenton and David Evans
Original © Thomson Reuters