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Is Siemens a Green Stock?
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Germany's Siemens (SI) is one of the world's industrial and heavy engineering giants, with a product span that ranges from lightbulbs and computers to medical equipment, trains and power plants. It is also deeply involved in renewable energy, and of course this is a field in which Germany leads the world. It is included in the Dow Jones Sustainability Index.
But just how similar is it to General Electric, which is also sometimes touted as a green stock, but which is involved in so many businesses that its cleantech activities - for example, GE has become one of the world's largest manufacturers and suppliers of wind power turbines - are not a major contributor to total turnover?
Siemens boasts what it calls its environmental portfolio, and says:
Climate and environmental protection form important and valuable opportunities for our company and our stakeholders. With the Siemens environmental portfolio of energy-efficient products and solutions, renewable energy solutions, and environmental technologies, we can help customers to reduce their CO2-footprint as well as lifecycle costs. Additionally we can leverage this portfolio to strengthen our presence in future markets with outstanding potential for growth.
It adds:
The Siemens’ environmental portfolio covers the whole energy chain plus environmental technologies: Low-emission power generation with high-efficiency combined cycle (GuD) power plants, intelligent power transmission and distribution networks, wind power plants, energy-efficient lighting, Corex®-based steel production, and advanced, Green Mobility trains are just a handful of examples.
Environmental revenues rose from 14.7 billion euros ($19.8 billion) in 2006 to 16.9 billion euros ($22.8 billion) in 2007 - nearly a quarter of total turnover - and the target is for 25 billion euros ($33.7 billion) by 2011.
As with GE, wind turbines are a major activity. Siemens entered this business in 1980 and has since sold some 6,600 turbines worldwide. It also connects wind farms to power grids.
In August 2008 it announced a contract to connect the Greater Gabbard project - the world's largest offshore wind farm - to the British power grid. Siemens will also supply 140 turbines.
In the same month it announced an order for 44 wind turbines for the Keenan wind farm in Oklahoma, and in September 2008 it announced its largest-ever single wind power deal, with an order from German company E.ON for 500 turbines for projects in Europe and the US.
The September 2007 annual report provides a lot of information about Siemens' activities, and it is possible to discern from this a little detail of its green business.
Total company revenues of 72.2 billion euros ($97.4 billion) rose nine per cent from the previous year. The power generation division recorded revenues of 12.2 billion euros ($16.5 billion), up 20 per cent from the previous year.
According to the company:
Highlights include a significant rise in earnings in the fossil services business and a sharply higher 9.5 per cent margin in the wind power business, where earnings more than tripled.
The Osram lighting division saw revenues of 4.7 billion euros ($6.3 billion), up seven per cent on the previous year, with the company noting a positive impact from the trend towards energy-efficient lighting.
According to the report:
Osram was successful in innovative compact fluorescent lamps, high-intensity discharge lamps and LEDs. Energy-efficient products already account for 60 per cent of revenue, and Osram intends to increase this to 80 per cent over the next 10 years. Osram's main focus for research and development is to make further advances in optical semiconductors (LED and OLED) and energy efficiency, for example with energy-saving lamps and with high-intensity discharge lamps.
Investors will have to make their own call on whether, on the evidence above, Siemens is a green stock. I am happy to classify it as such.
October 7th, 2008
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