Siemens unveils $7.7-bn cost cutting plan

Siemens AG yesterday unveiled a €6-billion ($7.7 billion) cost cutting plan, which includes asset sales and job cuts, in order to compete with rivals amid a deteriorating global economy.         

Revealing its fourth quarter results in Berlin yesterday, Siemens said its income declined 2 per cent to €1.48 billion, while revenues rose 7 per cent to €21.7 billion compared with the same quarter in the previous year.

Siemens expects net profit from continuing operations to drop to between €4.5 billion and €5 billion for 2013 - including the €1 billion in restructuring costs - from €5.184 billion in 2012.

Siemens will cut costs by €5 billion and an additional €1 billion from improving marketing and less complexity. The cost cutting exercise will cost the company €1 billion in 2013.

Siemens declined to reveal the number job cuts in its massive restructuring plan, but its chief financial officer, Joe Kaeser said that the company has set aside hundreds of millions of euros for severance payments.

The move comes after the company increased its global workforce by 23,000 to 370,000 between April 2011 and June 2012, in order to achieve revenue target of €100 billion in the coming years set by chief executive officer Peter Loescher.