MUNICH (Reuters) - Germany’s Siemens has no plans for further restructuring measures after the engineering group’s massive 6 billion euro ($8.1 billion) savings program ends next year, its new Chief Executive Joe Kaeser said.
In a letter sent to Siemens employees on Tuesday, Kaeser sought to reassure workers following news that the savings program would cost 15,000 jobs.
“All measures have been discussed with the affected units. Beyond that, there are no further plans or measures,” Kaeser said in the letter, which was obtained by Reuters.
His comments come two months after he took the helm at Siemens, Germany’s second-biggest company by market value, and vowed to put the company back on an “even keel” and end years of continual restructuring.
He replaced Peter Loescher, who was ousted in a fierce boardroom battle following a string of profit warnings and a struggle to close the gap with more profitable rivals such as U.S.-based General Electric and Switzerland’s ABB.
Since Kaeser was named CEO, Siemens stock has gained 12.5 percent in value but it still trades at a discount to GE, ABB, French engineering group Schneider Electric and Dutch rival Philips.
“We have to face the realities of global competition and secure our company’s ability to compete,” Kaeser said in his letter, adding the savings program would help bring the strength of Siemens’ earnings closer to the level of its rivals.
In its fiscal third quarter through June, Siemens posted a core operating profit margin of 5.2 percent. By comparison, GE and ABB posted operating margins of 15.3 percent and 15.2 percent, respectively.
Under Loescher, Siemens had set itself a goal of pushing up its margin to at least 12 percent by next year, but stubbornly weak demand forced it to abandon that target in July. It will publish results for its year ended on Monday on November 7.
($1 = 0.7387 euros)
Reporting by Jens Hack and Maria Sheahan; Editing by Louise Heavens