Green focus looks less than rosy for German firms
Ventures into environmental services have not been kind to Siemens and Bosch
As the UK government launched its Green Deal late last month, aimed at encouraging home owners to make their properties more energy efficient, two German engineering giants illustrated some of the potential pitfalls of jumping on the environmental services bandwagon.
Reporting their respective financials, both Bosch and Siemens indicated that they had been stung by investing in solar photovoltaic (PV) technologies. The global oversupply of these products – together with low-price competition from China – has impacted on these and other firms in this marketplace.
Bosch estimates that it has taken a roughly €1bn hit in losses and impairments from its PV activities. It says it is working on a solution involving the “strategic realignment” of the PV business, but admits that it has yet to find a way out of the problem.
Meanwhile Siemens has already “discontinued” its loss-making solar business after suffering a €115m “impairment” from it. It has also had to make writedowns for its offshore wind activities.
However, in overall financial terms, both companies are faring reasonably well in the face of the European economic crisis. Siemens, which has just reported first-quarter results, saw a small 1 per cent fall in net profits from continuing operations to €1.3bn, compared with the same quarter last year. Sales rose 2 per cent to €18.1bn in the period.
Reporting preliminary full-year 2012 figures, Bosch said its sales grew by 1.6 per cent to €52.3bn, against 2011. Profit figures were not available, but the company said its earnings margin was a relatively low 2 per cent, thanks in part to the impairments. While the US market was strong for the company, this was counteracted by falling sales in Europe and South America, the company said, and predicted “modest” growth globally for 2013.
For Siemens, this year will be very much about cost-cutting. The company has a target of achieving a profit margin from core operating divisions of at least 12 per cent by 2014. This translates into cuts of around €6bn, according to some reports.
Following a recent shareholder vote in favour of the plan, Siemens is also pushing ahead with its strategy to spin off into a publicly listed entity its Osram lighting business, which now makes mostly low-energy lamps. The aim is to help give Osram – the number two player globally behind Philips Lighting – a “sharper” public profile, says Siemens.
Meanwhile, despite the unresolved problems arising from its PV business, Bosch foresees lots of mileage in the broader environmental building services sector. It recently set up a whole new fourth unit called Energy and Building Technology (alongside the automotive, industrial and consumer divisions). The new entity brings together some existing activities, but the aim is to grow this business area.
So it seems that, while the UK is seeking to inject more life into its environmental services sectors, industrial firms in Germany (a more developed green marketplace) are already well ahead of the game.
"Immigration is no longer the elephant in the room. These days, everyone is talking about it. They are just not saying all the right things."
- Tactile internet: 5G and the Cloud on steroids
- £20m to get UK rid of polluting cabs
- Facebook’s secret drone test flight in the UK
- UK’s first commercial drone delivery trial completed
- Air-purification unit for cities cuts pollution by 40 per cent
- UK and Norway submerged interconnector to boost green power
- Test [06:22 pm 20/03/15]
- Test [06:20 pm 20/03/15]
- What to Specialise in Electronics Engineering?? [03:02 am 03/04/14]
- Britain to have just one remaining coal pit by the end of 2015 [01:11 am 03/04/14]
- LV Generator Star point earthing - UK [08:35 pm 02/04/14]
The essential source of engineering products and suppliers.