MUNICH (Reuters) - Members of Siemens’ (SIEGn.DE) supervisory board will meet at the weekend to discuss the future of the German engineering group’s management, two people familiar with the matter said on Friday, a day after the firm abandoned its 2014 profit target.
There was some respite for Chief Executive Peter Loescher on financial markets, with shares in one of Europe’s biggest industrial producers rising 1.4 percent after sinking around 8 percent on the profit warning a day earlier.
But with concern among financial investors growing about Loescher’s ability to turn around one of Europe’s biggest industrial producers, sources told Reuters that supervisory board members representing workers and shareholders had called separate emergency meetings for this weekend.
The agenda for both meetings - which come ahead of a joint meeting scheduled for Wednesday, a day before the company releases third-quarter results - includes an item on “the future composition of management”, one of the sources said.
Siemens’ supervisory board has 20 members and, as is customary in Germany, half of them represent the interests of workers and the other half those of shareholders in one of Germany’s three biggest companies by market value.
“I‘m facing headwinds now, but it’s never been like me to give up or strike the sails quickly,” Loescher told German daily Sueddeutsche Zeitung in a preview of an interview due to run on Saturday.
Loescher has faced criticism for being too slow to react to the global economic downturn, and his credibility has been undermined by a string of profit warnings as management over-estimated the speed of economic recovery.
A symbol of Germany’s industrial backbone and the high added-value economic model that makes it the envy of the rest of Europe, Siemens is suffering from the stuttering global demand that saw German exports fall the most since late 2009 in May.
But while that substantially reflects the problems of the rest of the euro zone and a slowdown in China, some of Siemens’ competitors seem to be showing improvement where the German firm is not.
General Electric (GE.N) last week unveiled a surprise jump in its backlog of orders for locomotives, X-ray machines and scores of other products, and Dutch rival Philips (PHG.AS) has reported robust orders for ultrasound and scanning products.
Loescher last year launched a program to save 6 billion euros ($8 billion) over two years. But Siemens, whose products range from gas turbines to fast trains and hearing aids, has so far failed to make the progress Loescher promised.
On Thursday, the company said in a very brief statement it no longer expected to reach a target of raising its core operating profit margin to at least 12 percent from 9.5 percent by 2014.
“We have to face the tough reality of a weak global economy, especially in Siemens’ important core markets, and realize that the 12 percent is not reachable from today’s point of view,” Loescher said in the interview with Sueddeutsche Zeitung.
Siemens is scheduled to release third-quarter results on Thursday, and analysts expect Loescher to elaborate at that time on what prompted the company to scrap its margin target.
German media are speculating on who could replace Loescher if push came to shove. Magazine Manager Magazin said that shareholder representatives favor Siegfried Russwurm, chief executive of Siemens’ bread-and-butter Industry business.
Newspaper Die Welt said one option was to name finance chief Joe Kaeser as CEO, while another was for supervisory board Chairman Gerhard Cromme, who brought Loescher to Siemens six years ago, to take the helm on an interim basis.
Another possibility is that CFO Kaeser and Russwurm could share the job as co-CEOs, Sueddeutsche Zeitung said.
Reporting by Jens Hack; Writing by Maria Sheahan; Editing by Patrick Graham