German industrial conglomerate Siemens expects low profit margins at its energy division in the next couple of years and could close some factories as a result, the head of the division said.

Lisa Davis told the Boersen-Zeitung newspaper the company was reviewing individual sites and it was unclear whether some would be closed or whether they would be used for different products, according to a report in the Gulf Daily News, our sister publication.

'We will see low margins in the power and gas unit in the next two to three years.'

The newly-created Siemens Power and Gas division makes products ranging from gas turbines and compressors to oilfield equipment. Siemens strengthened it this year with the acquisitions of US-based Dresser Rand as well as Rolls Royce's power unit.

The takeovers will help Siemens adjust to a change in energy markets, where small, decentralised units are on the rise to the detriment of large power plants, Davis said.

'By 2030, about a third of our electricity will come from local systems,' she said.

Siemens chief executive Joe Kaeser last month said he expected demand for products such as gas turbines to rebound from 2016, adding the synergies from the deal justified the purchase price.

Siemens expects more than 150 million euros in annual synergies by 2019 from the Dresser Rand transaction. – TradeArabia News Service