© Reuters. FILE PHOTO: Siemens logo is seen near computer motherboard in this illustration taken January 8, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
By John Revill
ZURICH (Reuters) – Two of Siemens’s largest investors have called for the German engineering group to simplify its operations by cutting its investments at Siemens Energy and Siemens Healthineers.
Union Investment, a German fund manager with just under 1% stake in Siemens, and Deka Investment, an asset manager for Germany’s unlisted banks, say Siemens’s complexity weighs on its share price.
Despite a strong operational performance last year, Siemens’s total shareholder return has lagged rivals, prompting calls for a rethink.
Both want Siemens to reduce its stakes in Siemens Energy and Siemens Healthineers where Siemens AG (OTC:) currently holds stakes of 17.1% and 75% respectively.
“The Group must be further unbundled,” said Ingo Speich from Deka, which holds 1% in Siemens. “The conglomerate structure must be reduced and the Group streamlined,”
Siemens has suffered from a so-called conglomerate discount in recent years, he said in prepared comments for Siemens shareholders meeting which is due to take place on Thursday.
“Since the last Annual Shareholders’ Meeting in 2023, Siemens shares have taken off with a performance of around 20%,” said Speich from Deka, which has just under 1% in Siemens.
“However, if we look at direct competitors such as Schneider Electric (EPA:), we have to realize that the valuation gap of more than 30% still exists and that Schneider’s share price has performed better.”
Siemens, which is also due to report its first-quarter figures earlier on Thursday, said it would respond to the points raised at the AGM.
Union Investment said Siemens’s profit margins were being diluted by laggards like the train making Mobility business.
“They need to get out of Siemens Energy as soon as possible … the company also needs to reduce its stake in Healthineers and eventually let the company free – put it on the market, sell it or spin it off to shareholders,” said portfolio manager Vera Diehl.
“I know all the long history of Siemens and the company’s attachment to its various divisions, but it’s time to let its children go.”