Siemens changes CEO in bid for rosier future

31st July 2013, Comments 0 comments

German engineering giant Siemens replaced its chief executive Wednesday in a drive to bring the conglomerate back on track after a profit warning sparked the ejection of his predecessor.

The company said chief financial officer Joe Kaeser, 56, had been unanimously approved by the supervisory board to replace Peter Loescher after six years at the helm and whose contract had been due to run another four years.

The turbulence came days after the company, which makes a wide range of products from equipment for rail transport, to gas and steam turbines, generators and healthcare items, announced its second profit warning in two months.

In a surprise statement late Saturday, the supervisory board revealed it would decide on the "early departure" of 55-year-old Loescher at Wednesday's long-scheduled meeting and vote on replacing him with a member of the management board.

It said in a statement after that meeting that Kaeser, a Siemens veteran, would kick off in his new role Thursday.

"The current CEO Peter Loescher will resign his position at the end of the day today and leave the managing board of Siemens AG by mutual consent," it said.

Kaeser said in the statement that the company was "certainly not in crisis, nor is it in need of major restructuring".

"However we've been too preoccupied with ourselves lately and have lost some of our profit momentum vis-a-vis our competitors," he said.

His aim, he said, was to get Siemens "back on an even keel" and would provide information on further refining the company's restructuring plan and medium-term prospects towards the end of the year.

Even Chancellor Angela Merkel, via her spokesman, had commented on the Siemens saga, saying she viewed the group as a "flagship" of the German economy.

"Therefore it's important to her that this global company returns to calm waters," Georg Streiter told reporters on Monday. He said after the announcement he "hoped" that was now the case.

Shortly after announcing the changes, the company released its results a day early for its fiscal third quarter, posting a 43-percent jump in net profit to 1.1 billion euros ($1.5 billion) mostly due to the spin-off of lighting company Osram.

Nevertheless profit from continuing operations fell 13 percent in the April to June period, to 1.0 billion euros, while sales dropped two percent to 19.2 billion euros, hit by its wind energy activities in the United States.

Siemens, which employs 370,000 people, said for its 2013 fiscal year it expected "clear" growth in orders, with its third-quarter showing a 19-percent rise helped by a major train contract in Britain.

Loescher, who came from the US pharmaceutical company Merck to take over the reins of Siemens in 2007, had faced criticism for some time amid disappointing results, a company strategy deemed vague and missed deadlines.

But last week's terse warning that it no longer expected to reach a profit margin of at least 12 percent by the 2014 business year, citing "lower market expectations", was the final straw and sparked incomprehension among investors.

It had already trimmed its full-year target in May.

Above all, last week's warning underlined that a 12-percent margin target, one of the main goals under a six-billion-euro ($8.0-billion) savings plan over two years, launched in late 2012, was being abandoned.

Kaeser told reporters Wednesday it was too early to speculate on a new margin target and highlighted the need to complete structural measures under the company plan and close the gap with competitors.

Loescher, who had previously said he was not the kind of person to abandon ship, said the decision to leave early had been "difficult".

"However during the past week I came to the conclusion that the foundation of trust necessary for me to remain was lacking," he said in a statement.

Gerhard Cromme, supervisory board chairman, said the 55-year-old Austrian had restored Siemens' "high reputation" and provided leadership for two of its most successful years.

Loescher was the first Siemens chief executive recruited from outside the company which at the time was seeking to draw a line under a far-reaching corruption scandal.

Kaeser, who joined the group more than three decades ago and became financial director in 2006, had been his expected successor.

Shares in Siemens were showing a gain of 0.9 percent to 81.40 euros in late afternoon trading while the Frankfurt DAX index was flat.

© 2013 AFP

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