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.
Write to Ursula Quass at ursula.quass@dowjones.com
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