Siemens to sell post and parcel automation division

German engineering giant Siemens has decided to sell off its postal and parcel sorting business, as part of a major restructuring of the company. The firm told investors yesterday that after reviewing the business over the past month, it came to the conclusion that the division would fit better into a “mid-sized company” than remain within Siemens.

The company is selling off the mail part of its business along with its baggage and air cargo handling division to increase its profitability, and is now searching for a buyer with expectation of a sale next year.

The sell-off of a “comprehensive portfolio in mail and parcel logistics” comes as Siemens has agreed to a EUR 2.2bn acquisition of a rail automation business, Invensys Rail.

Roland Busch, CEO of Siemens Infrastructure & Cities, said yesterday that the company was looking to focus more on its core business activities.

“We are exiting a non-core business with limited synergy potential while strengthening a resilient and high return business by combining two organizations with similar cultures and attractive synergy potential,” he said.

“Few synergies”

Siemens said that although it is one of the leading players in postal automation and parcel sorting systems, the activity offers few synergies with the rest of its business.

This was because of the high mechanical nature of the business compared to Siemens’ other divisions, and because the logistics business was seen by the company as a “highly-specialised niche business” dominated by mid-size companies.

However, the company said there were “promising growth dynamics” in the parcel and baggage handling fields.

“We believe that there are potentially better owners that should be able to create synergies and take advantage of leading market positions in postal automation, parcel and airport logistics, and a global installed base,” said Dr Busch.

It said the division being sold off had a turnover of about EUR 900m, and a profit margin in the mid-single digits. About 3,600 employees globally would be affected by a sale.

The Siemens CEO said while his company looks for a buyer, business will continue as usual, and “all contracts will be fulfilled”.

Siemens is more interested in its IT divisions, and the railways market with the growing urbanisation levels across the world bringing high demand for mass transit and rail automation.