November 17, 2009 / 11:01 AM / 10 years ago

UPDATE 1-Siemens says needs to adjust costs

* CFO says industry markets won’t return to 2008 levels soon

* Says cost structures need to be adjusted

* Shares down 0.65 pct, weaker than broader market (Adds background, comment)

FRANKFURT, Nov 17 (Reuters) - German conglomerate Siemens (SIEGn.DE) said it needs to adjust cost structures to offset market weakness in what analysts saw as the latest hint that more job cuts are in the offing.

“The weak market development in Industry Sector” has short and potentially medium term implications, according to presentation slides by Finance Director Joe Kaeser published on the company’s website on Tuesday.

Kaeser was one of the speakers at a conference in Tokyo.

Industry markets will not recover to 2008 levels anytime soon, and “cost structures have to be adjusted to the new mid-term activity level”, the slides said.

But the energy and healthcare sectors offer stability, it added.

Siemens is a bellwether of Germany’s economy due to a range of products from fast trains and engine turbines to light bulbs and hearing aids.

Metzler analyst Eerik Budarz said the slides “sound pretty much with our expectations and what Siemens has been communicating”.

“They have said, for instance, that Industry Automation and Drive Technologies have reached a certain bottom but they do not sound that optimistic about a swift recovery. So what they’re saying there is a different way of wording it,” he added.

“If things are not looking good then the next logical step is to adjust capacity and cost structures. This aspect is also not hugely new. They indicated after the (September) elections that there would be some job cuts,” he added.

Chief Executive Peter Loescher said last month Siemens is planning to reduce headcount in some divisions to offset the impact of the global economic crisis. [ID:nLP693007]

Birgit Steinborn, a works council official at Siemens (SIEGn.DE) has said the company might cut as many as 10,000 jobs. [ID:nB273766]

Kaeser has previously said job cuts in the industry segment are unavoidable but has not given any figures.

Siemens announced plans last year to cut 17,000 jobs in administrative and sales functions around the world.

JPMorgan analyst Andreas Willi said Siemens also needs to shift 35,000 employees in high-wage countries such as Germany to low-cost nations.

“Given the reduced demand, we expect Siemens will need to cut back deeper than just implied by the lower demand while maintaining investments in developing countries to improve its footprint,” Willi said. Siemens has also launched a supply chain cost initiative and is disposing some its non-core businesses.

By 1055 GMT, Siemens shares were 0.65 pct lower at 65.36 euros while the blue chip index .GDAXI was off 0.2 percent.

Editing by David Cowell

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below