Siemens to cut 4,500 jobs but keep units
German industrial group Siemens will cut a further 4,500 jobs as it battles to cope with subdued economic growth and weak demand from energy customers.
The cuts come on top of 7,400 job losses already announced and were unveiled yesterday alongside a 5pc drop in first-quarter profit at its industrial businesses.
The trains-to-turbines group currently employs around 340,000 people worldwide, including about 115,000 in Germany where it is one of the country's biggest employers.
Chief executive Joe Kaeser did not say where the new cuts would be geographically.
Siemens has to tread carefully cutting jobs in Germany, where trade unions are strong, and it has reduced previously announced job losses by a few hundred.
However Mr Kaeser, who is trying to trim the company to help it close a profitability gap with rivals General Electric and ABB, said he would keep underperforming businesses that account for €15bn in sales and zero profit.
This, combined with the lacklustre quarterly results that made Siemens' full-year targets look ambitious, pushed its shares down more than 2pc.
"It might seem slow to you but I know of no other company that has effected such a fundamental change in such a small space of time," said Mr Kaeser, who took over in 2013 after a messy boardroom coup, on a call with journalists.
Mr Kaeser has already agreed the most expensive acquisition in Siemens' history, that of US oilfield equipment maker Dresser-Rand for $7.6bn, as well as beginning to hive off healthcare and firing a host of senior managers.
But he is fighting on many fronts as sluggish economic growth in major markets dampens infrastructure spending, while weak demand and a drive for more renewable power hurt the energy businesses that account for about 40pc of Siemens' sales. "The power and gas division is having to cope, among other things, with regulatory changes, massive price erosion, aggressive competitors and regional overcapacities," Siemens said.
Siemens' key industrial profit margin, where it is targeting 10-11pc of sales this fiscal year, fell to 9pc in the quarter from 10.3pc a year earlier.
The target is far below General Electric's 14.6pc industrial margin in the first quarter or Swiss engineer ABB's 13.5pc operating margin.
"What Siemens presented today is anything but inspiring numbers," said fund manager Christoph Niesel of Union Investment. "The numbers ... confirm a continuing difficult business environment for capital-goods companies."