It’s probably easier to name the things this engineering titan doesn’t do. Siemens is one of the largest electronics and industrial engineering companies in the world, and operates nine billion-dollar segments: Power and Gas; Wind Power and Renewables; Energy Management; Building Technologies; Mobility; Digital Factory; Process Industries and Drives; Healthineers (formerly Healthcare); and Financial Services. 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.
Power and Gas is Siemens' biggest segment at around 20% of total sales but such is the size of the company that even its smallest segment, Financial Services at 1%, brings in over a billion dollars. The Healthineers segment is separately managed, and the Financial Services segment supports Siemens' seven main segments while conducting external business as well.
Power and Gas makes products that generate electricity from fossil fuels, including gas and steam turbines, compressor trains, power plants, and instrumentation and control systems. Wind Power and Renewables (5% of total) designs, manufactures, and installs onshore and offshore wind farms. It offers two product platforms for each. These two segments are assisted by the Power Generation Services segment, which conducts maintenance, customer training, and professional consulting.
Energy Management (15% of revenue) supplies products, systems, equipment, and services for transmission and distribution of electrical energy. Digital Factory (12%) offers automation technology, industrial switchgear, industry software, and services primarily to the manufacturing industry. Process Industry and Drives (11%) produces drive technology. Mobility (10%) provides passenger and freight transportation systems and services. Building Technologies (7%) manufactures and supplies energy-efficient buildings and infrastructure systems.
Siemens is headquartered in Munich, Germany, and is active in virtually every country across the globe. All in all, the company operates through more than 290 major production and manufacturing plants in 200 countries worldwide. The EMEA (Europe, the Middle East, and Africa) region accounts for over 50% of its net sales. Other major markets include the Americas (30%) and Asia and Australia (20%).
Sales and Marketing
Siemens serves customers in engineering, manufacturing, chemicals, construction, power production, transportation and logistics, oil and gas and pharmaceuticals sectors.
In fiscal 2016, revenue climbed 5% to €79.6 billion. All bar two segments (Energy Management and Process Industries and Drives) recorded revenue growth, with the strongest growth found in the Power and Gas segment. The segment’s revenue was pushed up by larger order volumes and the contribution from the acquired Dresser-Rand and the Rolls-Royce Energy gas turbine compressor businesses, and strong contributions from project execution on orders from Egypt. By region, the Europe, CIS, Africa, and Middle East region recorded the strongest growth at 8%, or around three quarters of company-wide growth. Germany and China both declined.
Net income fell 24% on prior year to €5.6 billion, mostly due to exceptional gains in 2015 relating to the sales of its hearing aid business and its stake in appliance manufacturer BSH.
Siemens is turning its attention to the tech world as rapidly increasing digital sophistication opens new industries. The company created a new unit in 2016 called next47, with a remit to drive innovation by forging partnerships with startups, particularly in the fields of artificial intelligence, distributed electrification, autonomous machines, blockchain applications, and connected electric mobility. The unit was granted autonomy and has a budget of €1 billion over five years.
Its wider R&D activities also place a major focus on tech, particularly the possibilities afforded by software in developing and enhancing its traditional product offerings. Its machinery is gathering more data and putting it to use in applications such as preventative maintenance and operational efficiency.
In order to keep up with wind majors Goldwind, Vestas, and General Electric, Siemens in conjunction with Spain’s Gamesa reached a milestone agreement to merge in 2016. The combined company will be the world’s largest wind farm manufacturer by market share and have a combined installed capacity of 75GW.
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.
Mergers and Acquisitions
In 2017 Siemens closed its $4.5 billion acquisition of
. The move filled out a part of Siemens strategy for building out its software capabilities. With Mentor Graphics, Siemens can handle a wide range of work for electronics products. In 2016, the company agreed to merge its wind power business with Gamesa, a large Spanish player in the industry. Siemens is paying €1 billion for a 59% stake in the combined business.