Struggling French engineer Alstom underlined why predators are circling today as it unveiled sliding orders and scrapped its dividend.
The company is at the centre of a politically sensitive €12.4 billion (£10.2 billion) bid for its power business from US conglomerate General Electric, which French president François Hollande had labelled “unacceptable” on national interest grounds.
Alstom, whose rail business makes carriages for the London Underground, made no comment on the bid from GE for the power business, which generates 70% of its revenues. But group orders slipped 10% to €21.4 billion last year and the firm, burning through cash at a rapid rate, has shelved plans for a dividend.
The French firm is also considering a more politically acceptable offer from Germany’s Siemens involving a swap of power and rail assets. Siemens chief executive Joe Kaeser said today he had discussed a bid with Chancellor Angela Merkel but a decision over a deal would “not be forced on us”.
Kaeser, who pushed out predecessor Peter Loescher last year following a string of profit warnings, also posted weaker-than-expected results today but announced the results of his strategic review to revive the sprawling business.
His Vision 2020 plans to close the gap on GE and ABB by focusing on electrification and automation, including growth areas such as small gas turbines and offshore wind turbines, as well as digitisation in the design and manufacturing process.
As part of the plans it confirmed today its swoop for Rolls-Royce’s gas turbine and compressor business for €950 million.
Siemens’ 16 operating divisions will be bundled into nine to save around €1 billion a year.
