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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--German engineering giant Siemens AG (NYSE:SI) (Munich, Germany) is to axe another 4,500 jobs, as it attempts to boost profitability at the power generation business of its Power and Gas Division, and restructure other industrial units that are making no profits at all.
The cuts--representing around 2% of Siemens' current workforce--were announced as part of the company's reporting of second-quarter financial results, which were marginally up on the same period in 2014 and healthier than those of the first quarter.
Profits in its Power and Gas Division, which accounts for about 40% of the company's total business, fell 34% against the same period in 2014. The company said that the division has had to cope with regulatory changes, massive price erosion, aggressive competitors and regional overcapacities. However, the fall was less than expected.
In February, after releasing its first-quarter results, Siemens announced 7,800 job cuts in a move that it claimed would bring its aggressive restructuring process to an end. For additional information, see February 12, 2015, article - Siemens Axing 7,800 Jobs.
Overall, Siemens' total revenues for the quarter were up 8% to 18 billion euros ($20.06 billion). Profits for the period almost trebled to 3.9 billion euros ($4.34 billion) against second-quarter 2014, but this was largely attributable to asset sales.
"With the initiation of these measures, the company's structural reorganization has been completed for the most part," said Joe Kaeser, president and chief executive officer of Siemens AG. "Our Vision 2020 concept will enable us to get our company back on a sustainable growth path and close the profitability gap to our competitors. Our strategic reorientation has enabled us to considerably streamline our organization and remove entire intermediate levels. These steps will bring our businesses closer to our customers and make us significantly faster. As a result, certain tasks and functions will be completely eliminated. We're going to tackle this challenge together and implement the resulting measures responsibly."
Within its Power and Gas Division, the company highlighted certain areas of difficulty. It experienced lower margins in the large gas turbine and compression businesses alongside higher R&D expenses, in particular for the development of new gas turbines. In the wind power and other renewables, the unit saw lower volume from large orders, particularly in the offshore wind business; losses from ongoing high production and installation costs; and burdens related to inspecting and replacing main bearings.
The period also saw expenses for ramping-up commercial-scale production of a new turbine offering:the 6-megawatt (MW) SWT-6.0-154 direct-drive turbine. Last week, Industrial Info reported on the final installation of the turbines at the 210-MW Westermost Rough offshore windfarm in the U.K., which is the first commercial windfarm to use 6-MW turbines. For additional information, see May 8, 2015, article - U.K.'s Latest Offshore Windfarm Completes Turbine Installation.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
The cuts--representing around 2% of Siemens' current workforce--were announced as part of the company's reporting of second-quarter financial results, which were marginally up on the same period in 2014 and healthier than those of the first quarter.
Profits in its Power and Gas Division, which accounts for about 40% of the company's total business, fell 34% against the same period in 2014. The company said that the division has had to cope with regulatory changes, massive price erosion, aggressive competitors and regional overcapacities. However, the fall was less than expected.
In February, after releasing its first-quarter results, Siemens announced 7,800 job cuts in a move that it claimed would bring its aggressive restructuring process to an end. For additional information, see February 12, 2015, article - Siemens Axing 7,800 Jobs.
Overall, Siemens' total revenues for the quarter were up 8% to 18 billion euros ($20.06 billion). Profits for the period almost trebled to 3.9 billion euros ($4.34 billion) against second-quarter 2014, but this was largely attributable to asset sales.
"With the initiation of these measures, the company's structural reorganization has been completed for the most part," said Joe Kaeser, president and chief executive officer of Siemens AG. "Our Vision 2020 concept will enable us to get our company back on a sustainable growth path and close the profitability gap to our competitors. Our strategic reorientation has enabled us to considerably streamline our organization and remove entire intermediate levels. These steps will bring our businesses closer to our customers and make us significantly faster. As a result, certain tasks and functions will be completely eliminated. We're going to tackle this challenge together and implement the resulting measures responsibly."
Within its Power and Gas Division, the company highlighted certain areas of difficulty. It experienced lower margins in the large gas turbine and compression businesses alongside higher R&D expenses, in particular for the development of new gas turbines. In the wind power and other renewables, the unit saw lower volume from large orders, particularly in the offshore wind business; losses from ongoing high production and installation costs; and burdens related to inspecting and replacing main bearings.
The period also saw expenses for ramping-up commercial-scale production of a new turbine offering:the 6-megawatt (MW) SWT-6.0-154 direct-drive turbine. Last week, Industrial Info reported on the final installation of the turbines at the 210-MW Westermost Rough offshore windfarm in the U.K., which is the first commercial windfarm to use 6-MW turbines. For additional information, see May 8, 2015, article - U.K.'s Latest Offshore Windfarm Completes Turbine Installation.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.
