Manufacturers

Siemens Raises Synergy Target for Dresser-Rand, Rolls-Royce Energy Units

Siemens Raises Synergy Target for Dresser-Rand, Rolls-Royce Energy Units

Despite a material downturn in the sector, Siemens expects the acquisition of Dresser-Rand and Rolls-Royce’s former energy business to generate considerably greater synergies than originally anticipated. At the Energy and Oil & Gas Capital Market Day in Houston, Texas, Siemens Managing Board member Lisa Davis explained that the integration of the two companies was expected to generate synergies of approximately $406 million by fiscal 2019 – or more than $183 million above the planned figure. Rolls-Royce’s former energy business would contribute synergies of nearly $128 million in fiscal 2019, up from the $55.6 million originally communicated at the Capital Market Day in December 2014. Annual synergies from Dresser-Rand are now expected to hit almost $280 million by fiscal 2019 – about $111 million more than planned in September 2014.

“Dresser-Rand and Rolls-Royce Energy are perfectly complementing our offerings in the oil and gas business. On the revenue side, we’re realizing substantial synergy potential with our expanded product portfolio, cross-selling and services. On the cost side, we’re achieving this primarily by consolidating R&D and procurement, and optimizing our footprint,” said Davis.

Through the planned merger of its wind power activities with Gamesa, Siemens also plans to become the world’s leading supplier in the wind power business, thus achieving a further considerable expansion of its installed base. This is important for generating incremental customer value through economies of scale. The acquisition of Dresser-Rand and Rolls-Royce’s former energy business already expanded the installed base of Siemens products in the energy business by around 100,000 units to more than 140,000 units in fiscal 2015. From the end of fiscal 2014 to the end of the first half of fiscal 2016, the order backlog at Power Generation Services had already grown 28 percent to more than $41 billion.

 

 

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