German industrial giant Siemens announced on Thursday that it plans to sell its electrical motors business, Innomotics, to the private US equity firm KPS Capital Partners for 3.5 billion euros (equivalent to USD 3.8 billion).
Innomotics is a subsidiary that manufactures motors and other systems. These products are utilized in various industries such as chemicals, oil, utilities, and automotive. The company has a workforce of approximately 15,000 employees.
The group announced that the sale had been approved by its managing and supervisory boards. The transaction is expected to be completed in the first half of fiscal year 2025.
“By selling Innomotics to KPS, I am pleased that we have made further significant progress in optimising our portfolio,” said Siemens chief financial officer Ralf Thomas.
Innomotics was launched in 2023. It was established as a separate entity, fully owned by Siemens.
Siemens announced late last year that it was planning a public listing of Innomotics. However, it has dropped those plans by selling it to KPS.
The news of the sale came when Siemens, a company that produces a variety of products including trains and factory equipment, reported a 38% decrease in second-quarter net profit compared to the previous year, amounting to 2.2 billion euros.
Revenues slipped by one% year-on-year from January to March. Orders also decreased by 13% during the same period. The company’s fiscal year runs from October to September.
Siemens has suffered in recent months due to customers “destocking’ goods, after they had built up excess stocks.
Business in the key market of China performed badly during the second quarter, experiencing a 25% decrease in orders and a 20% decline in revenues.
The “digital industries’ unit — which supplies technologies for factory automation and had previously been a key growth driver — saw a 13% fall in sales.
The “smart infrastructure’ division, which deals with areas like data centres, however saw sales increase slightly.
The “mobility’ unit, which produces trains, recorded a six-percent rise in revenues but a 49% fall in orders.
The Munich-based group has been a producer of heavy industrial equipment for a long time. In recent years, they have been aiming to change their focus towards digital technology and factory automation.
