Siemens investors set bar high for CEO's new strategy
Munich, January 29, 2014
Siemens shareholders told chief executive Joe Kaeser they expected him to deliver radical change at the German engineering group that will permanently close the gap with more profitable rivals.
Kaeser got the top job at Germany's second-biggest company by market value when his predecessor was pushed out in a boardroom battle last July. He has promised to present a new strategy in May, but investors are growing impatient.
"Since Kaeser is taking so much time to formulate his plan, we investors will expect him to unveil a major move," Henning Gebhardt, a fund manager at Deutsche Asset & Wealth Management, said.
Siemens, whose products range from gas turbines to fast trains and industrial automation software, published quarterly financial results yesterday that showed Kaeser is starting to turn the company around.
Siemens lost ground to competitors including Switzerland's ABB and US-based General Electric under former chief executive Peter Loescher as it focused on sales growth and poor project management resulted in a series of costly charges.
Kaeser is continuing his predecessor's plan to save six billion euros ($8.2bn) over two years and has worked to improve the way the company handles big risky projects.
That helped boost core operating profit by 15pc and raised margins in the financial first quarter ended December.
Revenue fell 3 per cent to 17.3 billion euros, as the strong euro hurt sales.
Analysts also welcomed a 9 per cent rise in Siemens's quarterly new orders, which indicates a return to revenue growth, after the company signed a big contract to deliver subway trains to Saudi Arabia and won its biggest order for onshore wind power equipment ever from the US.
The company affirmed its full-year outlook for flat revenue and an increase in earnings per share of at least 15 per cent. Since Kaeser took over, Siemens' stock has outperformed the market with a 17 per cent gain.-Reuters