Siemens AG detailed a dramatic restructuring that includes spinning off its Osram unit, the world's second-largest lighting company, and creating a new division aimed at better positioning the German engineering giant in the growing market for green infrastructure.
The reorganization, which Chief Executive Peter Löscher presented to the company's supervisory board Monday, marks the most ambitious restructuring effort undertaken by Mr. Löscher since his first year at the helm of Siemens in 2007. The aim, he said in a statement, was to spur faster growth and push Siemens's business volume past €100 billion ($141 billion) within a few years, from €76 billion in sales last fiscal year.
As part of the plan, Siemens plans to take Osram public in the fall of this year in what would probably be one of the largest German initial public offerings in years. Siemens said it planned to retain a minority stake in the light-bulb unit and remain a long-term anchor shareholder.
Osram, which trails only Royal Philips Electronics NV in sales in the lighting industry, is one of Siemens's more profitable businesses, generating a profit of €569 million$802 million) last fiscal year on revenue of €4.7 billion. But analysts said Osram's transition further into light-emitting diodes, or LED, and other energy-efficient technologies, plus growing competition from new rivals, such as electronics companies, will require stepped up capital investments.
"With the IPO, we want to give Osram complete entrepreneurial freedom to comprehensively further develop its leading competitive position in a lighting market being swept by technological changes," Mr. Löscher said in a statement.
The reorganization also calls for pooling an array of businesses from its wide-ranging industry and energy divisions into a fourth company sector, to be called Infrastructure & Cities. The move is a step in Siemens's strategy to reposition and market itself as a giant in green infrastructure, an area where it competes with General Electric Co.
In particular, Siemens has targeted the world's swelling cities, where more than half of the global population now lives, and their growing need for more energy-efficient transportation, power supplies and other infrastructure as a major source of growth. The new division would include Siemens's mobility, building technologies and power distribution subdivisions—which include businesses such as the company's smart-electricity-grid activities—as well as Osram as it prepares that business for the IPO, the company said.
Within Siemens, the move is seen as the culmination of a broad reorganization put in motion by Mr. Löscher shortly after he took the helm of the engineering conglomerate in 2007. Then, Siemens's broad array of businesses, which range from high-speed trains to medical-imaging equipment to wind turbines and power plants, were recarved into three main divisions: industry, energy and health care.
But within the company and among many investors, the industry division—which employs 200,000 people and generated nearly half of Siemens's total revenue last year—has been considered too vast and unwieldy to manage efficiently.
As part of the reorganization, Siemens said it will appoint three new members to its management board. Roland Busch, currently its head of corporate strategies, will become chief executive of the new Infrastructure & Cities division. Klaus Helmrich, head of drive technologies, will become the board's technology chief. Michael Süss, head of its fossil-power generation division, will take over Siemens's energy division, succeeding Wolfgang Dehen, who will leave the board to become Osram's chief executive.
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