Siemens in transition
Werner von Siemens, who discovered the dynamo-electric principle 150 years ago, laid the foundation for several developments: The electrification of Central Europe, the induction electric motor and the growth of the Siemens Group. The Siemens stock corporation continuously developed new business areas and supplied almost everything that had to do with electricity, from streetcars to power plants, washing machines and cell phones.
The diverse business areas made Siemens shares a reliable dividend earner, but prevented the share price from developing dynamically. The company was restructured in the late 1990s in order to satisfy shareholders. Partnerships were formed with smaller companies such as MOLL-MOTOR and business units were spun off. The most recent spin off is the motor division, which was given the name Innomotics. The decision to make this independent motor division was not taken until 2023. This was probably due to the central importance of induction electric motors for the history of Siemens.
Siemens is continuing to develop its business model in the direction of automation, digitalization and software, with a focus on Industrial IoT, MindSphere and Siemens Xcelerator. This business promises investors increased earnings with low cost growth.
Innomotics brings movement
The Innomotics motor division was heavily integrated into the Siemens Group and was not originally a clearly defined unit. This affiliation was characterized by an uncompromising focus on quality, precise documentation and the Siemens name as a door opener for major customers. However, electric motors were only a small part of a large portfolio. When the focus on electronics and data grew, they became marginalized within the Group.
The spin-off therefore has good aspects, as it gives Innomotics employees the opportunity to re-enter the market as an independent company. Motors and drives are at the center of the company. The same employees in the same offices and factories, in Nuremberg, the Czech Republic and 14 other locations worldwide, are leading Innomotics into a new era. Quality and customer base are maintained, new structures are established under a new brand name.
Decisive support for establishing an independent Innomotics brand came from Siemens headquarters. The company decided to sharpen its core brand Siemens. Although brand rights have been granted for various products in recent decades and good margins have been achieved, there are two sides to every coin. Even decades later, potential investors still think of products with this well-known name that have long since nothing to do with Siemens AG’s business. The rapid transition to the sole use of the Innomotics brand will ensure that the traditional industrial business with electric motors is perceived as an independent unit.
KPS Capital Partners promises stability
Major investors allocate their capital to different sectors of the economy. Instead of putting together a portfolio of companies themselves, they use investment companies with a clear focus on the desired sector. At KPS Capital Partners, this focus is on the manufacturing industry, whereby various sectors are covered: Basic Materials, Branded Goods, Healthcare and Automotive Parts.
Innomotics is also a manufacturing company. Its future earnings must continue to be generated from products for which raw materials are purchased and processed. The owners are aware of this fact. In addition to income, they have specifically looked for an investment opportunity that also promises economic robustness and tangible assets.
As the other KPS companies have a similar structure, Innomotics can benefit from their know-how. At the same time, these companies have a different focus, so there is no need to fear radical steps to leverage synergies. The well-coordinated processes can continue and be gently adapted to new corporate concepts.
Continuity for customers
Customers who previously trusted Siemens motors also trust Innomotics Motors. Those responsible at Siemens and Innomotics have ensured this at many customer meetings. Around 4000 companies with numerous branches all over the world, such as Tetrapak, Mondi, Saint Gobain and Linde Gas, have already listed Innomotics where Siemens was previously listed.
The smooth transition has also been completed in the service network. The product features remain unchanged, as do all the modification kits used by partners such as MOLL-MOTOR. In a few months, the new brand will have established itself in the drive market.
Innomotics has thus become the worthy successor to Siemens motors, and the 150-year legacy will remain with us in the future.
