* CFO Joe Kaeser to become CEO on Aug. 1
* CEO Loescher resigns, to stay as adviser until Sept. 30
* Kaeser to focus on performance relative to competitors
* Shares up 1.1 percent
By Maria Sheahan
FRANKFURT, July 31 German engineering giant
Siemens named finance chief Joe Kaeser, a 33-year
company veteran, as its new boss after dumping Chief Executive
Peter Loescher four years before the end of his contract
following a series of profit warnings.
Kaeser, 56, faces the challenge of whipping into shape a
lumbering conglomerate with 78 billion euros ($104 billion) of
annual sales and products ranging from gas turbines to
high-speed trains and ultrasound machines.
Years of breakneck expansion and forays into new businesses,
including an ill-fated detour into solar energy which led to a
billion-euro loss, have left Siemens in disarray and lagging
rivals such as General Electric in terms of
Just as a downturn in the global economy hurts demand for
its bread-and-butter industrial products, the Munich-based group
has been hit by big charges due to delays in offshore wind power
and high-speed train projects.
Kaeser must now formulate a long-term strategy for Siemens,
shed non-core units like those making hearing aids or healthcare
software, and return control of the firm's far-flung businesses
to top management.
He has earned a reputation as a hands-on pragmatist during
more than three decades at Siemens, seven of them as CFO, and
analysts say he has an understanding of its business and culture
that was lacking in Loescher, an Austrian who was the first
external recruit ever to run the company.
Loescher was ousted in a boardroom battle after the company
issued its second profit warning of the year last week.
"His most urgent task will be to convince Siemens' workers,
even more than in the past, that radical and sustainably
profitable restructuring is necessary," said Christoph Niesel, a
fund manager at Union Investment, which holds about 1 percent of
BACK TO THE ROOTS
Kaeser gave a first glimpse of his plans at a news
conference on Wednesday, indicating a return to the roots of the
166-year-old company and dismissing Loescher's overly ambitious
profit margin target.
"Whether we have 12 percent or only 10 percent in the end is
not the only relevant aspect," Kaeser, dressed in a dark suit
and blue tie, told journalists at Siemens headquarters.
"What is really important is that we close the profitability
gap with competitors and that all measures are structurally
goal-oriented beyond 2014," he said.
Siemens shares were up 1.1 percent at 81.58 euros by 1440
GMT, while Germany's DAX index was up 0.1 percent.
Loescher had promised that Siemens, the second biggest
German company by market value after Volkswagen, would
grow faster than rivals such as GE, ABB and Philips
. He set his sights on increasing annual sales by about
a third to 100 billion euros.
By comparison, GE has focused on boosting profits since the
2008/9 recession by slashing costs and expanding into growth
areas such as energy.
"During the five years since the recession, the
transformation of (GE's industrial portfolio) has been
significant and positive," said Jack DeGan, chief investment
officer at Harbor Advisory Corp, which owns GE shares.
Investors have taken notice. Over the past two years, GE
shares have risen nearly 40 percent, while those of Siemens have
Last year, Loescher applied the brakes to his aggressive
expansion, announcing plans to save 6 billion euros over two
years to boost the company's core operating profit margin to at
least 12 percent by 2014.
Last week, Siemens abruptly abandoned that target, which
turned the supervisory board against Loescher and led to his
dismissal. Loescher will remain on hand to help handle some
ongoing issues until Sept. 30, Siemens said.
Kaeser, a Bavarian who speaks with a southern German lilt,
vowed to put Siemens back on an "even keel" and create a
high-performance team to refine the firm's savings programme. He
said he would lay out a more detailed outlook for the company
and its 400,000 employees, a third of whom are in Germany, this
But some investors remain sceptical that the man who has
been at Loescher's side for years and at the company since 1980
is the right person to get its problems under control, even with
an autocratic management style that demands loyalty.
"Kaeser has been the behind-the-scenes CEO at Siemens
anyway, so he too is responsible for all decisions that Siemens
made," said a fund manager at a top holder of Siemens stock who
"Nothing will change now. Siemens has had an execution
problem, and I do not expect that to change."