Siemens reorganized its board and management in preparation for the long-planned spinoff of its healthcare business. The move comes as profits slip for the conglomerate's healthcare offerings, although revenues for the group continue to grow.
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| Bernd Montag |
As of Feb. 1, Bernd Montag becomes the CEO of Healthcare at Siemens, with Hermann Requardt stepping down from the position. Siegfried Russwurm will be the board-level partner for the separately managed healthcare business. Michael Sen is the CFO of Healthcare at Siemens. The men will hold these positions in the new company after the spinoff. Montag is currently the CEO of Imaging & Therapy Systems within Healthcare.
The business is not in the healthiest state. Healthcare revenues climbed 6% to €2.85 billion in the first fiscal quarter of 2015 from €2.69 billion the same quarter a year earlier. But profits fell, due to a shift in the product mix, the company said. Profits for the quarter in Healthcare were €413 million, a decline of 13% from €473 million a year earlier. That pulled the profit margin for the business down to 14.5% from 17.6%.
"Let me go to the Healthcare margin," Siemens President and CEO Joe Kaeser said on a conference call. "So, first and foremost, it has been in effect on the mix. I mean, obviously, we do have significant differences between service and new equipment. And even within the new equipment there are material differences in profitability, such as MRI versus, for example, ultrasound."
Therefore, he expects the profitability dip for the business could be short-lived. Kaeser continued, "So, there is some pricing matter there, but it does not really materially relate to the margin decline. That's first and foremost coming from the mix effect and, therefore, also should be temporary in nature, at least for the most part."
Siemens made the Healthcare business separately managed within the company as of Oct. 1. Kaeser said the company is on track to "to transfer the business into separate legal entities and optimize the organization such as the go-to-market and the management models."
Last year, Siemens said it would spin off its Healthcare business in 2015, but that it would not conduct an initial public offering for it. This move comes on the heels of 2014 sales of groups within healthcare such as audiology and hospital information systems. The remaining Healthcare business is largely focused on diagnostics.
Siemens was off 3% on its earnings news.
- here is the management release
- and here is the earnings release for the fiscal first quarter of 2015