Siemens raises targets, plans 3b euro share buyback

Munich

SIEMENS AG raised financial targets and announced its first share buyback since 2015 as the German industrial giant's new chief executive officer pivots towards software to boost shareholder returns.

Siemens will buy back as much as three billion euros (S$4.81 billion) of shares over a five-year period starting from 2022, the Munich-based manufacturer said on Thursday in a statement.

The company also hiked targets for revenue and profit over its three- to five-year business cycle with an expected boost to earnings per share of just under 10 per cent annually.

"Digitalisation, automation and sustainability are growth engines for our business," CEO Roland Busch said in the statement accompanying Thursday's capital markets day. "As a focused technology company, we want to strengthen our position in all our markets."

Siemens said it's targeting acquisitions to break into "highly attractive" new markets "adjacent" to its existing businesses that offer as much as 120 billion euros in potential revenue. In May, the company agreed to pay US$700 million to buy supply-chain management firm SupplyFrame Inc that provides intelligence on factory outages and material-cost changes.

The new financial goals and share buyback mark the first significant step by Mr Busch, 56, who took the helm in February to succeed long-term leader Joe Kaeser. After an era marked by spin-offs and disposals that streamlined Siemens' conglomerate structure, Mr Busch is working to boost profitability and close a valuation gap with rivals - a feat that eluded his predecessor.

While the company's share price has gained amid the spinoffs of Siemens Healthineers AG and Siemens Energy AG, profit margins continue to lag those of competitors like Schneider Electric SE. Siemens on Thursday confirmed its earnings guidance for fiscal 2021.

The manufacturer serving customers in transportation, healthcare and infrastructure is also betting on growing demand for software-as-a-service offerings to spur higher recurring revenues than the hardware-based products that made the firm a byword for German engineering prowess. BLOOMBERG