Siemens cuts another 4,500 jobs as oil decline burdens profit
By Bloomberg
Siemens AG, Europe’s largest engineering company, will cut another 4,500 jobs after second-quarter profit fell more than estimated by analysts, burdened by the declining oil price.
Profit from so-called industrial operations fell 4.9 percent to 1.66 billion euros ($1.9 billion), the Munich-based company said in a statement. That missed the 1.71 billion-euro average estimate of analysts surveyed by Bloomberg. Revenue increased 8.1 percent to 18 billion euros.
“With the initiation of these measures, the company’s structural reorganization has been completed for the most part,” Chief Executive Officer Joe Kaeser said in the statement. “The profitability of our industrial business shows that we must still improve some businesses.”
Kaeser has already announced 9,000 job cuts in the past six months as he seeks to achieve one billion euros in annual savings by next year. The former chief financial officer’s strategy to focus on energy generation and distribution is facing mounting investor pressure after his decision to spend $7.6 billion acquiring oil and gas equipment specialist Dresser- Rand Inc.
Since the dollar-denominated deal was agreed in September, the euro has tumbled 12 percent against the dollar and oil has fallen 29 percent, placing the rationale of the takeover in question. Dresser-Rand said Feb. 28 it would cut 8 percent of its workforce. The deal is awaiting regulatory approval from the European Commission.
Siemens reaffirmed today it expects earnings per share to increase by at least 15 percent from 2014’s 6.37 euros, and a profit margin of between 10 percent and 11 percent at the industrial business.