Siemens to Slash a Further 4,500 Jobs -- Update

By Christopher Alessi 

MUNICH--German engineering giant Siemens AG announced on Thursday an additional 4,500 job cuts world-wide, targeting its embattled power and gas division and a group of underperforming businesses it hopes to turn around.

The new cuts--roughly 2,200 of which are expected to be in Germany--come just months after Siemens said it would reduce its global head count by 7,800, a number it brought down to 7,400 following labor negotiations.

The total of nearly 12,000 job losses is part of a company-wide restructuring being led by Chief Executive Joe Kaeser, which includes selling off noncore businesses and focusing more on energy.

"With the initiation of these measures, the company's structural organization has been completed for the most part," Mr. Kaeser said.

Siemens said the job cuts in the power and gas business were a result of a challenging power generation market that has been plagued by regulatory changes, price erosion, stiffer competition and overcapacities.

The announcement came as Siemens reported a surge in net profit in the three months to end March, driven largely by gains it booked from the sale of its stake in a household-appliances joint venture with Robert Bosch GmbH and the disposal of its hearing-aid unit and hospital-information business.

Net profit for the period, Siemens's fiscal second quarter, rose to EUR3.89 billion ($4.41 billion) from EUR1.12 billion during the same period last year, beating analysts' expectations. Analysts had forecast a net profit of EUR2.01 billion, according to a recent poll by The Wall Street Journal.

Revenue rose by 8% to EUR18.05 billion from EUR16.7 billion last year, helped by the euro's weakness against major currencies. New orders climbed by 16% to EUR20.75 billion, boosted by large domestic contracts at Siemens' train business.

However, overall profitability was squeezed due to macroeconomic headwinds such as low global oil prices. The overall industrial profit margin dropped to 9% from 10.3% during the same period last year.

The Germany group's CEO Mr. Kaeser has faced pressure from investors to justify Siemens's planned $7.6 billion acquisition of U.S. oil-equipment maker Dresser Rand Group Inc., announced last September, which some have judged expensive as oil prices have tumbled.

Siemens reiterated its guidance for the 2015 fiscal year, saying its expects to attain a profit margin for its industrial businesses between 10% and 11%.

Write to Christopher Alessi at [e-mail]

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