Siemens will cut 11,600 jobs to calm investors after missing profit targets

Engineering giant reacts to missed profit targets with a plan to save €1 billion by 'streamlining'

PUBLISHED : Saturday, 31 May, 2014, 12:59am
UPDATED : Saturday, 31 May, 2014, 4:32am

Siemens' chief executive said Europe's largest engineering company will eliminate at least 11,600 positions as it cuts about €1 billion (HK$11.6 billion) in costs.

The positions included 7,600 that would go as the company streamlined and created a new divisional structure, plus 4,000 people working in superfluous positions for regional clusters of countries, Joe Kaeser told analysts and investors in a webcast conference from New York.

Some of the employees would be assigned other roles, he said.

"A certain amount of people do stuff for coordinating things, analysing things," said Kaeser. "About 20 per cent of those we believe can be put to work elsewhere, but not there. They can be taken out of the system because the work goes away."

Kaeser, previously the chief financial officer at Munich-based Siemens, started a review soon after becoming chief executive in August as he sought to rebuild investor confidence following missed profit targets under predecessor Peter Loescher.

The resulting plan, revealed this month, will establish nine divisions to restructure the company around four sectors.

At the time, Kaeser also said the 167-year-old company would focus on electrification, automation and digitalisation, and that its health-care operations would be managed separately.

The new setup will cut about €1 billion from costs by the end of 2016, Siemens estimates.

"We do not intend to sell the health-care business but we are flexible in being prepared for anything that comes along," Kaeser said yesterday.

He said Siemens had invested too much in health-care diagnostics, which included the 2007 takeover of Dade Behring Holdings for US$7 billion.

General Electric is competing with Siemens to buy the energy assets of France's Alstom. Fairfield, Connecticut-based GE has offered US$17 billion for the maker of France's power grid.

Siemens plans to present an official bid by June 16.

Alstom had "a good installed base in gas and in steam turbines", Kaeser said.

He said he was keen to find more deals like Siemens' agreement this month to buy most of Rolls-Royce's energy assets for US$1.3 billion.