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.