By Georgina Prodhan
MUNICH (Reuters) - German trains-to-turbines group Siemens (DE:SIEGn) plans a public listing of its $15 billion healthcare business, it said on Thursday, in a further step to focus on its core strengths of factory automation, industrial software and energy technology.
Executives signaled that Siemens would initially hold on to a majority of the business, which will need increased investments in coming years, but would not commit to how much it might want to float or when.
"We want to control it, to direct it," Chief Executive Joe Kaeser told Bloomberg TV.
The move, which follows a carve-out of the business from the rest of the group, takes Siemens in a different direction from global rivals General Electric (N:GE) and Philips (AS:PHG), who are doubling down on healthcare as they shed financial services and lighting respectively.
The news overshadowed a cautious outlook for the current fiscal year and a large drop in fourth-quarter orders, lifting Siemens shares 3.6 percent to a two-month high, outperforming a 1.3 percent rise in the German blue-chip DAX (GDAXI).
"Sentiment could be helped by the announced Healthcare listing," UBS analysts wrote in a note, calling fourth-quarter profits in-line, orders weak and 2017 guidance below expectations. They kept their "neutral" recommendation.
Siemens has in past decades carried out partial listings, spin-offs, joint ventures and outright sales of its units as it exited the semiconductor, lighting, automotive and communications businesses, among others.
Siemens said it expected a modest rise of 1-2 percent in sales in its current fiscal year to end-September, and for orders to outpace revenues, provided that the market environment for high-margin, short-cycle businesses stabilizes.
For Siemens, that means its industrial software unit Digital Factory, its most profitable unit excluding Healthineers. Oil and gas-dependent Process Industries and Drives, its other short-cycle business, was the only unit to miss its profit target in the quarter.
SILVER LINING
"Current geopolitical developments require our attention to a particularly high degree," Kaeser told a news conference at the group's Munich headquarters. "We continue to anticipate headwinds for macroeconomic growth and investment sentiment in our markets."
Kaeser said, however, that the shock victory of Donald Trump in the U.S. presidential election could have a silver lining for Siemens, given Trump's campaign promises to rebuild infrastructure and despite his anti-globalization rhetoric.
Siemens makes $22 billion or a quarter of its revenue in the United States.
"Give him a chance, let's see what we can do together and take the positive out of it," Kaeser said in an interview on Bloomberg TV.
For its fourth quarter, Siemens reported an 18 percent rise in net income to 1.18 billion euros ($1.29 billion), in line with expectations, and flat industrial business profit of 2.45 billion euros that beat the average estimate of 2.41 billion euros in a Reuters poll.
But a 13 percent drop in order intake to 20.3 billion euros - which Siemens put down to a tough comparison with the year-ago period when it won large contracts including a German wind-power deal - fell short of the 21.4 billion euros poll average.