FRANKFURT: German industrial conglomerate Siemens expects low profit margins at its energy division in the next couple of years and could close some factories as a result, the head of the division told the Boersen-Zeitung newspaper.
Lisa Davis said the company was reviewing individual sites and it was unclear whether some would be closed or whether they would be used for different products.
"We will see low margins (in the Power and Gas unit) in the next two to three years," she was quoted as saying.
The newly-created Siemens Power and Gas division makes products ranging from gas turbines and compressors to oilfield equipment. Siemens strengthened it this year with the acquisitions of U.S.-based Dresser Rand as well as Rolls Royce's power unit.
The takeovers will help Siemens adjust to a change in energy markets, where small, decentralised units are on the rise to the detriment of large power plants, Davis told the paper.
"By 2030 about a third of our electricity will come from local systems," she was quoted as saying.
When announcing the Dresser Rand deal last month, Siemens Chief Executive Joe Kaeser said he expected demand for products such as gas turbines to rebound from 2016, adding the synergies from the deal justified the purchase price.
Siemens expects more than 150 million euros in annual synergies by 2019 from the Dresser Rand transaction, which complements its business in turbo compressors, downstream and industrial applications as well as larger steam turbines.
Davis indicated the group may not have to wait that long.
"We have calculated the synergies rather conservatively. It is well possible that we will see positive surprises," she told the paper.
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