News Column

Siemens to Save $7.7 billion as Annual Profits Slump

Nov. 8, 2012

German electronics and engineering giant Siemens unveiled Thursday a tough savings drive as profits slumped amid a weak global economy.

By 2014, Germany's most valuable company aims to save six billion euros ($7.7 billion), said chief executive Peter Loescher, presenting results for the group's fiscal year to September.

The belt-tightening of the "Siemens 2014" programme was tougher than analysts had expected.

Net profit for the year dropped 27 per cent to 4.6 billion euros from 6.3 billion euros in its previous fiscal year, Siemens said.

The stock market rewarded the effort with Siemens shares jumping 3.55 per cent to 81.65 euros in late morning trading in Frankfurt.

Loescher said the cost-cutting campaign "will in the end have an effect on jobs," without specifying how many positions may be lost.

Speaking in a TV interview, the Siemens chief said the global economic headwinds facing Munich-based Siemens AG were unlikely to abate in 2013, adding "we have to roll up our sleaves."

Siemens said it plans to sell off interests in the solar power and waste water sectors and save three billion euros by streamlining design, development and production.

At the same time, the company plans to spend some 680 million euros acquiring Belgian industrial software maker LMS International.

Siemens said profits were hit by delays in bringing North Sea offshore wind energy parks online, and by lost orders in Iran, which has been hit by western sanctions over its nuclear programme.

Group revenue rose 7 per cent year-over-year to 78.3 billion euros, while orders slumped 10 per cent to 76.9 billion euros as global demand lost momentum.

In the medium term, Siemens said it stuck to its goal of 100 billion euros turnover a year, a target the company first set in 2011 without specifying a time frame.

The "Siemens 2014" programme aimed at raising the total sector profit margin to at least 12 percent, Loescher said, vowing: "We know what we have to do - and we're doing it."

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Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH

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