For Siemens, one of the largest electronics and industrial engineering companies in the galaxy, everything comes down to seven segments: Power and Gas; Wind Power and Renewables; Energy Management; Building Technologies; Mobility; Digital Factory; and Process Industries and Drives. Siemens makes everything from automation equipment and building technologies for manufacturers and construction companies to diagnostic and imaging systems for hospitals and clinics. Other products include power generation and distribution equipment for the oil and gas and renewable energy sectors. Siemens Energy, Siemens Healthcare, Siemens Industry, and Siemens Infrastructure & Cities are a few of its primary segments.
All in all, the company operates through more than 290 major production and manufacturing plants in 200 countries worldwide. The EMEA region accounted for 54% of its net sales in 2014. Other major markets include the Americas (26%) and Asia and Australia (20%).
Siemens in late 2014 restructured its operations from four segments to seven: Power and Gas (PG); Wind Power and Renewables (WP); Energy Management (EM); Building Technologies (BT); Mobility (MO); Digital Factory (DF); and Process Industries and Drives (PD).
PG offers products for generating electricity from fossil and renewable fuels and for transporting oil and natural gas, and WP offers products and services for on- and offshore wind power. EM is a supplier of products, systems, equipment, and services for transmission and distribution of electrical energy, while BT manufactures and supplies energy-efficient buildings and infrastructure systems. MO is a provider of passenger and freight transportation systems and services; DF offers automation technology, industrial switchgear, industry software, and services primarily to the manufacturing industry; and PD offers process products, systems, and services to industry sectors.
In addition to its main segments, Siemens operates a financial services division that offers corporate financing, fund management, insurance, and risk management services. It also makes hardware and software for the communications industry through its enterprise communications business.
While its operations are diverse, Siemens' long-term strategy focuses on developing and producing products that are attuned to global trends. Addressing climate, environmental, and energy concerns, the company makes wind turbines for the renewable energy industry and energy-efficient building technologies for the construction industry. Siemens' products are also used to build transit systems, water and wastewater facilities, and other systems that, in effect, facilitate population growth in mature and emerging urban markets.
After experiencing two straight years of revenue growth, Siemens saw its revenue dip 11% from $103 billion in 2013 to $91 billion in 2014. Profits jumped 17% from nearly $5.8 billion in 2013 to $6.8 billion in 2014 driven by a decrease in expenses. (Note the company's 2013 annual revenue was restated due to discontinued operations.)
Siemens' declines for 2014 primarily reflected weaker orders in power generation and fewer orders from power transmission products. Its former health care segment experienced declines due to reduced orders in Asia, Australia, and the Americas in addition to a decline in the company's diagnostics business.
Siemens' focus on urbanization in emerging markets has been growing particularly more intense in recent years, especially in China, India, and Russia, where economies and urban populations have been exploding. The company has been bolstering its presence in these markets by entering into joint ventures and partnerships with native companies. The company also has a growing presence in emerging markets in South America through subsidiaries in Brazil, Argentina, Chile, and other countries.
Siemens has been selling various operations in an effort to weather the turbulence in the global economy and refocus its operations on its core business segments. In 2015 it sold its hospital information system business to Cerner for $1.3 billion. The business was focused on administrative hospital IT and electronic patient records, not the lab and medical equipment-based IT software that is more aligned with Siemens' business. The divestiture included 6,000 employees in the US, Europe (particularly Germany), and Asia.
To bolster its railroad operations, Siemens in 2013 bought Invensys Rail, the rail signaling business of British engineering firm Invensys. Shelling out $2.8 billion for the purchase, Siemens enhanced its market share in the rail automation sector and merged Invensys Rail with its Siemens Infrastructure & Cities segment.
Mergers and Acquisitions
In 2016 Siemens agreed to acquire Mentor Graphics for $4.5 billion. The move fills out a part of Siemens strategy for building out its software capabilities. With Mentor Graphics, Siemens can handled a wide range of work for electronics products.