Siemens AG is committed to its gas-turbine unit while recognising that it has to reduce capacity and cost amid a market slowdown, according to a memo with instructions on how to respond to media inquiries about the future of the business.
The memo was sent by Lisa Davis, managing board member responsible for the power and gas division, according to a person familiar with the document. It was sent in the wake of a Bloomberg News report this week that the company is considering options including a possible sale of the turbine-manufacturing operation housed in the division she oversees.
“There is no truth to the rumours. Siemens is committed to the power generation business for the long term!” read an excerpt under the heading “Background guidance for journalists” that was seen by Bloomberg. “And of course this is also true for our large gas turbines.”
Siemens shares dropped as much as 1.5 percent in Frankfurt. The shares were trading at 119.88 euros, down 0.8 percent, as of 4:30 p.m. in Frankfurt, valuing the company at 101.9 billion euros ($118 billion.)
The business, once a flagship operation within the power and gas division, makes turbines that form the core of energy plants that dot the globe. It’s been struggling recently with a shift towards renewable energy, which has cut into demand.
Bloomberg reported earlier this week that no final decision has been made about the gas-turbine unit and the company could end up keeping it and weathering the slowdown.
“Overall, the market environment for power and gas remains tough,” the memo continued. “This requires to stay focused on reducing our capacities and cost. We have a clear path in place and are dealing with the challenges in a forthright and urgent manner.” A spokesman for Siemens said the company doesn’t comment on communication with individual customers. The company had declined to comment on the June 13 Bloomberg report.