Siemens AG (USOTC:SIEGY)
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German industrial conglomerate Siemens AG (SIE.XE, SI) said Tuesday it expects the company's energy business to account for more than half of its announced goal of cutting six billion euros ($7.8 billion) in costs by 2014.
Siemens expects improvement in productivity to help save up to EUR3.2 billion in its energy business, including positive effects from efficient procurement practices.
From cost-cutting measures only, Siemens aims to save around EUR2.2 billion in its energy business.
By 2014, the company aims to raise the profit margin of the energy business to at least 12%, from 7.8% in fiscal year 2012.
The power transmission unit, a segment of Siemens's energy business, will cut another 800 jobs by 2015, Power Transmission Unit Chief Executive Karlheinz Springer said. The company aims to reduce the number of employees by 8% by 2015, he added. Overall, 1,900 of the unit's 23,500 employees world-wide will be affected.
Power Transmission's French site in Grenoble will be closed, while employee numbers at its German sites in Nuremberg and Berlin will be reduced, Mr. Springer said.
However, new jobs will be created in China, India and Mexico, the company said, without providing any details.
Siemens may consider restructuring its product portfolio to cut costs, as well. The company may withdraw from the manufacturing of nonnuclear components used in nuclear power plants, said Michael Suess, a Siemens board member responsible for the energy business.
The company may also re-evaluate its business offering power generation solutions using steam turbines. However, the company doesn't plan "too many" portfolio changes, Mr. Suess said.
Recently, Siemens had announced plans to exit the solar-thermal energy business.
"We are well-placed and will focus on our core business and other lucrative market segments in the next two years," Mr. Suess said at the company's Energy Capital Market Day.
--Tapan Sharma contributed to this article.
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