Siemens to cut 10,000 jobs in major overhaul

FILE - This June 24, 2016 file photo shows the logo of German industrial conglomerate Siemens at the new headquarters in Munich, Germany. German industrial equipment maker Siemens said Tuesday May 7, 2019, it will cut some 10,000 jobs in a major restructuring that will involve spinning off its oil, gas and power generation business and creating new areas of growth. (AP Photo/Matthias Schrader, file)

FRANKFURT, Germany — German industrial equipment maker Siemens says it will cut some 10,000 jobs in a major restructuring that will involve spinning off its oil, gas and power generation business and creating new areas of growth.

News of the moves to increase profitability and address the struggling power business sent the company's share price up 4.6% to 107.30 euros ($120.20) in morning trading in Europe on Wednesday.

The company said it would spin off its division that makes power turbines to increase its entrepreneurial freedom, while embarking on a sweeping cost-cutting effort at its remaining operations.

The gas and power division has been under pressure due to a broader trend toward renewable energy such as sun and wind power. Competitors in the power business such as Boston-headquartered General Electric and Japan's Mitsubishi have struggled as well.

Siemens said in the announcement late Tuesday that it would keep a significant stake of less than 50 percent in the spun-off company and would bundle in a majority stake in its renewable energies company. That would create what Siemens CEO Joe Kaeser called "a powerful pure play in the energy and electricity sector" that could offer products across the entire scope of the energy market from a single source.

Kaeser also announced sweeping cost cuts to increase profitability at the company's remaining businesses, which range across factory automation, energy infrastructure such as power grid control, and high-speed trains.

The company plans to take out 2.2 billion euros in costs by 2023, in the course of which it will drop some 10,400 positions. The company says it expects growth to create some 20,500 new jobs by 2023, for a net gain of around 10,000. When it comes to job cuts, Siemens said that "all measures worldwide are to be implemented in as socially responsible a manner as possible."

Siemens AG said Wednesday that its net profit fell to 1.92 billion euros ($2.15 billion) in the first three months of the year, from 2.02 billion a year earlier, when earnings were boosted by 900 million euros by a share transfer. Revenue rose 4% to 20.93 billion euros.

Other News

Dominican leader assumes 2nd term, pledges tech revolution

Aug 16, 2016

The president of the Dominican Republic has been sworn in for a second term as leader of the country boasting the best economic grown in Latin America and the Caribbean

Lowe's cashes in on housing rally, just not as much as rival

Aug 17, 2016

In the two-way competition for customers during a housing boom, Lowe's appears to be coming in second

Asian stocks climb on signs US rate hike off table for now

Aug 18, 2016

Asian stocks rose Wednesday after Wall Street edged higher on news the U.S. Federal Reserve is in no hurry to raise interest rates

The Budget Report seeks to provide comprehensive coverage and analysis on the current economic, financial issues around the world. First hand finance and economic news all day, every day.

Contact us: sales@thebudgetreport.com