German industrial giant Siemens said on 7 May that it will cut a further 4,500 jobs world-wide, on top of the 7,400 announced in February as part of completing its restructuring programme.
The Munich-based firm, which employs more than 300,000 people in total, said that around 2,200 of the latest job cuts will be in Germany. A spokesman said: “These measures are being taken in response to the persistently difficult environment in the global power generation market.”
Chief executive Joe Kaeser (pictured) initially unveiled a plan in May 2014 to reduce the number of divisions and management levels by 2016.
He said the company expects to make savings of about one billion euros and to boost profitability by focusing on divisions such as energy, medical equipment and digitalised systems for industry and transport. Announcing the latest job cuts, he said: “The profitability of our industrial business shows that we must still improve some divisions.”
Siemens’ group revenues increased by 8% to 18 billion euros in the second quarter (ended 31 March) of its financial year, while its net income more than trebled to 3.9 billion euros.
Meanwhile, the deficit in its pension scheme rose to 11 billion euros (from 9.6 billion euros at the end of December). The weaker euro is expected to boost earnings in the second half of the company’s financial year.
Peter Reilly, industry analyst at investment consultants Jefferies, said: “It is clear that operational head-winds have increased. Siemens is not alone in finding organic growth hard to come by. If there is no growth, then price pressure and rising costs such as materials and wage inflation start to put pressure on margins.”
Mr Reilly said that Germany’s “push towards renewable energy” has caused utilities to halt orders for large gas-fired power stations, while Siemens has been “caught out” by the trend for decentralised electricity
generation, which requires much smaller turbines.
“The company is also feeling the effect of lower crude prices, as oil-exporting countries such as Russia invest less in infrastructure projects.