Siemens eyes faster growth in smart building business

Siemens' building technologies arm will be folded into a new Smart Infrastructure operating company next year, with parts of its energy management and digital factories businesses.
Siemens' building technologies arm will be folded into a new Smart Infrastructure operating company next year, with parts of its energy management and digital factories businesses.PHOTO: REUTERS

Division targeting Asia, and focusing on digital buildings

ZUG • Siemens wants to grow its building technologies business faster than the overall construction market next year, possibly with help from acquisitions, its building technologies business chief executive Matthias Rebellius said on Tuesday.

The business, which has its head office in Zug, Switzerland, makes devices and software to control the heating, lighting, energy use and security in so-called smart buildings.

Mr Rebellius said he expected the overall construction market to grow by around 3 per cent next year, with Siemens taking market share from rivals that include Johnson Controls and Honeywell.

"We want to grow 1 percentage point above the market," he told journalists at an event in Zug, where the business is due to open an office building and production site yesterday after investing 250 million Swiss francs (S$343 million).

The division is targeting faster growth in Asia, where it currently gets around 10 per cent of its sales, as well as focusing on digital buildings - which sense, collect and analyse data to improve their energy use, for example.

During Siemens' 2018 financial year, the building technologies business' profit slipped to €755 million (S$1.2 billion) from €784 million a year earlier, while its sales rose 6 per cent to €6.6 billion. It achieved a profit margin of 11.4 per cent, above its target range of 8 to 11 per cent.

Next year, it will be folded into a new division called Smart Infrastructure, taking in parts of Siemens' energy management and digital factories businesses, with a higher profit goal.

  • 11.4% 

  • Profit margin of Siemens' building technologies business for the 2018 financial year. Profit slipped to €755 million from €784 million a year earlier, while its sales rose 6 per cent to €6.6 billion.

The new operating company - one of three under Siemens' new simplified structure announced in August - will have a profit margin of 10 to 15 per cent.

Smart Infrastructure will remain a "central part of the new core" for Siemens, Mr Rebellius said, and would exploit trends like population growth, urbanisation and artificial intelligence.

He said the company would consider acquisitions. It bought three companies this year to boost its expertise in smart buildings.

Siemens would not rule out larger deals, Mr Rebellius said, although acquisitions were not needed to meet the company's goals. He declined to identify potential targets.

Under the new business, which will employ around 71,000 people globally, Mr Rebellius will be chief operating officer and report to Siemens board member Cedrik Neike.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 06, 2018, with the headline 'Siemens eyes faster growth in smart building business'. Print Edition | Subscribe