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 christopher.alessi@wsj.com
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