May 7 - German engineering giant Siemens has unveiled a long-awaited strategic overhaul. But as Hayley Platt reports it says it won't be forced into making a formal offer for the energy assets of French rival Alstom.
When you're Europe's biggest engineering firm even small changes matter. And the new strategic overhaul at Siemens was much anticipated. It came from CEO Joe Kaeser after the German company posted weaker than expected second quarter earnings. (SOUNDBITE) (German) SIEMENS CHIEF EXECUTIVE, JOE KAESER, SAYING: "Overall, we are happy. The company is making progress and this is also reflected in the net profit which rose by 12 percent, compared to the same period last year. So things are moving in the right direction but we could do better and we are still making too many mistakes. We have to change that and we will change that." Buying energy assets from Rolls Royce for 950 million euros is one change. So too is transferring a majority stake in its Austrian metals business to Japan's Mitsubishi. But what about Alstom? U.S. giant General Electric wants to buy the French firm and Siemens has been given access to its books. (SOUNDBITE) (English) SIEMENS CHIEF EXECUTIVE OFFICER, JOE KAESER, SAYING: "We got the opportunity to have a look into the assets for four weeks and then we'll be deciding whether or not we make an offer for something. And that's all there is. Nothing else." The Rolls Royce deal also makes an Alstom one less likely, says IG's Alastair McCaig. (SOUNDBITE) (English): ALASTAIR MCCAIG, MARKET ANALYST, IG, SAYING: "Alstom have a number of issues coming their way. The fact that they've suspended dividend payments. They see a fall in orders by 10 percent and they've seen their debt increase by about 28 percent all points to a company that is really struggling and needs a big brother to come in and really bail them out and Siemens arguably have got their hands tied themselves at the moment." But the French government isn't keen on an American tie-up at Alstom. And Olaf Storbeck from Reuters Breakingviews says Siemens would be a suitable alternative. (SOUNDBITE) (English): OLAF STORBECK, REUTERS BREAKINGVIEWS, SAYING: "Alstom is one of the most important rivals in energy if it comes up for sale they definitely have to look at it, it makes sense to keep GE off their backyard in Europe." Kaeser's "Vision 2020" plan is as much about restoring pride in the near 170-year-old company as driving growth. In recent years Siemens has lagged the likes of GE and Philips on profitability and innovation. Under its former chief its complex portfolio proved a problem. Kaeser is reducing it and will focus on electrification, automation and digitalisation. That does cover Alstom's assets but GE has offered $16.9 billion for them - any counter bid by Siemens would have to be a hefty investment.