Siemens looks for faster growth in ‘smart’ buildings, eyes acquisitions

ZUG, Switzerland (Reuters) – Siemens (SIEGn.DE) wants to grow its building technologies business faster than the overall construction market next year, possibly with help from acquisitions, the business’ chief executive Matthias Rebellius said on Tuesday.

The business, which has its head office in Zug, Switzerland, makes devices and software to control the heating, lighting, energy use and security in so-called smart buildings.

Rebellius said he expected the overall construction market to grow by around 3 percent next year, with Siemens taking market share from rivals that include Johnson Controls (JCI.N) and Honeywell (HON.N).

“We want to grow 1 percentage point above the market,” he told journalists at an event in Zug, where the business is due to open an office building and production site on Wednesday after investing 250 million Swiss francs ($251 million).

The division is targeting faster growth in Asia, where it currently gets around 10 percent of its sales, as well as focusing on digital buildings – which sense, collect and analyze data to improve their energy use, for example.

During Siemens’ 2018 financial year, the building technology business’s profit slipped to 755 million euros from 784 million a year earlier, while its sales rose 6 percent to 6.6 billion euros. It achieved a profit margin of 11.4 percent, above its target range of 8 to 11 percent.

Next year, it will be folded into a new division called Smart Infrastructure, taking in parts of Siemens’ energy management and digital factories businesses, with a higher profit goal.

The new operating company – one of three under Siemens’ new simplified structure announced in August – will have a profit margin corridor of 10 to 15 percent.

Smart Infrastructure will remain a “central part of the new core” for Siemens, Rebellius said, and would exploit trends like population growth, urbanization and artificial intelligence.

He said the company would consider acquisitions. During 2018 it bought three companies to boost its expertise in smart buildings.

Siemens would not rule out larger deals, Rebellius said, although acquisitions were not needed to meet the company’s goals. He declined to identify potential targets.

Under the new business, which will employ around 71,000 people globally, Rebellius will be chief operating officer and report to Siemens board member Cedrik Neike.