When Christian Bruch took over as CEO of Siemens Energy in May a year ago, he was promised a speedboat. Joe Kaeser, the then CEO of Siemens AG, pushed ahead with his strategy of splitting the traditional German company into small units and thus turning Siemens, the “clumsy tanker”, into a “powerful and flexible fleet association”. Only: the energy business, once a proud flagship, was getting on in years. And so Bruch got an old steamer rather than a nippy runabout.
Bruch, 51, from the Rhineland and with a doctorate in engineering, was faced with a major challenge: He had to pimp up the boat for the planned IPO and make the company, which had benefited for many years from the dirty coal business, sustainably geared for the future. A task that required tough decisions and cuts.
A loss of 1.9 billion euros
The energy business has always been at the core of Siemens. In 2020, the area was separated from the group, creating Siemens Energy AG. The company operates along the energy value chain; its products include gas turbines, steam turbines, generators, transformers and compressors. The company employs more than 90,000 people worldwide. Sales in the past financial year were 27.5 billion euros, but the margins have been low for years. Last year there was a loss of 1.9 billion euros on the books. The IPO came in September 2020, and only six months later, in March 2021, the company was promoted to the Dax. And: After losing billions, the company was back in the black in the first quarter of fiscal year 2020/2021.
How did Bruch do it?
“The speed of light” the new CEO got used to, reported the “Handelsblatt” with reference to a confidante. Bruch convince in internal rounds with specialist knowledge. “He’s talking to us all against the wall, that’s how he knows his way around,” said one participant in the meetings of the “Handelsblatt”. The “Wirtschaftswoche” also quoted employees. Bruch asked “exactly why we do which processes in the plant”. He can “listen well” and wants to “get to the bottom of things”. “Wirtschaftswoche” experienced the CEO in an interview like this: “Bruch, three-day beard, two-piece in slim fit format and the initials CB on the shirt sleeve, need neither water nor coffee to get going.”
Reduce costs, increase efficiency, increase profitability
Bruch is carrying out a classic restructuring. That means: reducing costs, increasing efficiency, increasing profitability. Before going public, he announced in an interview with the “Handelsblatt” a rigid austerity course and said: “I am not at all satisfied with the profitability of the company.” The cost base has to go down, the complexity out. He announced to investors that he wanted to save a further 300 million euros. The consequences of the strict austerity program became apparent in February of this year. Siemens Energy announced the shedding of 7,800 jobs worldwide – 3,000 of them in Germany. The fossil fuel division “Gas and Power” is affected. It has to give up when it comes to the change to renewable energies. “We are aware that our plans demand a lot from parts of the workforce. It is therefore our goal to carry out these measures as socially acceptable as possible, ”said Bruch. Whole locations shouldn’t be closed.
The fact that Jürgen Kerner, IG Metall’s main cashier and supervisory board member at Siemens Energy, still finds warm words for Bruch in an interview with NewsABC.net, speaks for the manager. Bruch “set the right accents within a very short time,” said Kerner. It is not easy for someone who comes to Siemens from outside the company. Bruch is “very down to earth” and “very suitable for the company”. But where the two will still argue violently “is at work that is to migrate from German plants abroad. It is understandable that the management says you have to be competitive. But we will lead this discussion hard, ”said Kerner. Now the “days of truth” would come.
“Hydrogen can be a billion dollar business for us”
But in addition to restructuring, Bruch also has to break new ground and define new areas of business. He found what he was looking for. “Hydrogen can be a billion dollar business for us,” Bruch told the “Handelsblatt”. The way is mapped out: the way from fossil to renewable energy. But there is still a long way to go. Above all, clever marketing will be necessary on the route to distract from conventional business. “Spiegel” reported last year that Bruch had to give the company a “green cloak”. Because the share of sales with conventional energy technologies would still be around 65 percent.
In an interview with the “Süddeutsche Zeitung”, Bruch said: “In the future we will get out of coal, there will be no discussion.” Siemens Energy has announced that it will no longer participate in tenders for new, exclusively coal-fired power plants. But there will be no immediate exit; the services for existing coal-fired power plants, for example, are too lucrative. According to Bruch, you have to remain realistic: “There is still a large proportion of coal-fired electricity in the world, and it will stay that way for the time being. What happens when we say: We’ll go out there right now, without compromise? What would the alternative be – that someone else would deliver a worse turbine that is nowhere near as efficient and therefore environmentally friendly as ours? “
“An impressive performance”
Bruch’s strategy may seem too lax to climate protectionists, but it is received positively in the financial world. Vera Diehl, fund manager at Union Investment, told NewsABC.net that Siemens Energy “mastered the spin-off with flying colors” and “delivered an impressive performance”. The road to a “green company” is still a long one, but the company is working hard and is “focusing its business on renewable energies such as wind and hydrogen – away from fossil fuels”. Bruch had “already demonstrated impressively at Linde Engineering that he can manage a turnaround”. Diehl said: “We trust him and his team that he will be able to do this.”
After a year, Christian Bruch still doesn’t have a speedboat, but he has painted his steamer green and has given it up. On May 5th he will announce the results for the second quarter. Then it could show whether he is really on the right course. Until then, Bruch can continue to take credit. The Siemens Energy Supervisory Board and trade unionist Jürgen Kerner said to NewsABC.net: “For the first year, to be fair, I have to pay him respect. I have already met completely different managers. “