Shares in German engineering group Siemens (SIEGY) rose on Thursday as it announced it would spin off its health care business and released quarterly and full-year results that beat expectations.
The spinoff decision comes as analysts predict that Siemens' health care business , the company's largest unit by revenue, will reap the benefits of a repeal by the incoming Trump Administration of President Obama's health care reforms. Jefferies analysts on Wednesday noted that the U.S. accounts for over half of the unit's business as they reiterated their buy rating on Siemens stock. Siemens calls the division Siemens Healthineers.
Siemens shares were up 3.5% in Frankfurt at €108.20.
Siemens reported an 18% rise in fourth-quarter net profit to €1.2 billion as revenue rose 3% to €22 billion. A closely watched measure of earnings that Siemens calls industrial profit was stable at just under €2.45 billion, more than the €2.41 billion consensus among analysts polled by Bloomberg. Full-year net profit came in at €5.6 billion, down from €7.4 billion, after fiscal 2015 results were flattered by disposal proceeds.
Siemens' results exceeded its own forecasts, which it had upgraded twice, and CEO Joe Kaeser declared that the figures were the company's best ever, after stripping out the impact of divestitures. The executive has been restructuring Siemens under a five-year plan to cut costs, simplify operations and focus on digital products, and has come under pressure in recent months to demonstrate his turnaround plan is working.
The health care spinoff -- for Kaeser didn't set a timeframe -follows the 2013 listing of Siemens' Osram Licht (OSAGF) lighting business . It's spun off a series of businesses in recent years, including semiconductor maker Infineon Technologies (IFNNY) in 2000.