Troubled Siemens ditches chief

German engineering giant Siemens is due to dramatically oust its chief executive Wednesday and immediately replace him to help restore investor confidence hard on the heels of a profit warning.

Troubled Siemens ditches chief
Photo: DPA

After six years at the helm, Peter Löscher is due to be given his marching orders by the supervisory board and is expected to be replaced by a Siemens veteran, chief financial officer Joe Kaeser.

The turbulence comes days after the conglomerate, whose products include equipment for rail transport, gas and steam turbines and generators, announced its second profit warning in two months.

In a surprise late Saturday statement, the supervisory board announced it would decide on the “early departure” of 55-year-old Löscher at this week’s long scheduled meeting and vote on replacing him with a member of the management board.

Since then, media reports have indicated a power struggle between supervisory board president Gerhard Cromme and his deputy, former Deutsche Bank chief Josef Ackermann, over Kaeser’s appointment.

Even Chancellor Angela Merkel, via her spokesman, commented on the saga, saying she viewed the group as a “flagship” of the German economy.

“Therefore it’s important to her that this global company returns to calm waters,” Georg Streiter told reporters.

The board’s Wednesday meeting was scheduled to sign off on quarterly results due the following day.

Löscher, who took over the reins of Siemens in 2007 from the US pharmaceutical company Merck, has faced criticism for some time amid disappointing results, a company strategy deemed vague and missed deadlines.

A Deutsche Bahn order for delivery of high-speed trains is several years behind schedule.

But last week’s terse and surprise warning that it no longer expected to reach a profit margin of at least 12 percent by the 2014 business year, citing “lower market expectations”, was the final straw and sparked incomprehension among investors.

It had already trimmed its full-year target in May.

Analysts at Deutsche Bank questioned last Thursday’s explanation over the warning, stressing Siemens, which employs some 370,000 people, was active on multiple and varied markets.

Above all, the announcement underlined that one of the main goals under a vast six-billion-euro savings plan over two years, launched in late 2012, was being abandoned.

Löscher, an Austrian, was the first Siemens chief executive recruited from outside the company. By bringing in a new face, the group hoped to draw a line under a far-reaching corruption scandal.

Now expectations rest on Kaeser, who joined the group more than three decades ago.

“An eminence grise who’s stepping out from the shadows,” Die Welt daily wrote of the 56-year-old, whose rise through the ranks of the Munich-based group saw him take over as financial director in 2006.

He was last year voted the best financial director of a Dax-listed company by journalists and is also known by investors.

“He knows Siemens very well and has a good reputation within the investment community,” Jasko Terzic, an analyst at DZ Bank, said.


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‘We’ll continue our protests’: Environmental activists confront Siemens bosses in Munich

Siemens chief executive Joe Kaeser faced environmental protests inside and outside the group's annual shareholder meeting on Wednesday.

'We'll continue our protests': Environmental activists confront Siemens bosses in Munich
Demonstrators in Munich on Wednesday. Photo: DPA

Outraged by the group's sticking to a contract to supply rail equipment to a massive Australian coal mining project, demonstrators were rallying outside the Munich Olympiahalle ahead of the 10:00am kickoff.

A group of around 100 were on the scene from early in the morning, some forming a human chain.

Late Tuesday, Greenpeace had draped a banner from the company's headquarters reading “Bush fires start here”.

“We will continue our protests for as long as Siemens doesn't back down,” said Helena Marschall, a representative of the movement, at a Tuesday press conference.

Marschall herself is slated to speak inside the venue later Wednesday, while the demonstrators plan to urge the company to “abandon coal” at a larger protest in the afternoon.

Kaeser kept activists and observers on tenterhooks for weeks as he decided whether to uphold a contract with India's Adani group related to its Carmichael mine project in Australia.

In the end, he stuck to Siemens' agreement to supply the rail signalling equipment for the massive open-cast mine, not far from the iconic natural landmark of the Great Barrier Reef.

READ ALSO: Outrage in Germany as Siemens back Aussie mine project

'Fulfil contractual obligations'

Groups like Extinction Rebellion and Fridays for Future have homed in on the shareholder meeting as an opportunity to renew the pressure on Siemens.

“What's more important: a small financial loss in the short term, or the disastrous consequences such a project will have for generations?” Marschall said.

She and other environmentalists have been invited to speak inside the cordon by a group of Siemens shareholders.

In mid-January, CEO Kaeser met leading German Fridays for Future activist Luisa Neubauer after protests across the country against Siemens.

But he later said in a statement: “We must fulfil our contractual obligations” relating to the 18-million-euro ($22 million) deal.

Protesters at the meeting. Photo: DPA

“Only being a credible partner whose word counts also ensures that we can remain an effective partner for a greener future,” Kaeser insisted.

Nevertheless, the company plans to create a “Sustainability Committee” with powers to block environmentally questionable projects.

Siemens says it backs the 2015 Paris Agreement and aims to become carbon-neutral by 2030.

27 mn tonnes of coal

The open-cut Carmichael mine is set to become operational next year and produce up to 27 million tonnes of coal annually.

Adani spent years trying to secure private finance for the coal mine before announcing in 2018 it was self-financing a trimmed-down, $2 billion version of the  project.

Supporters say the mine will bring hundreds of much-needed jobs to rural Queensland in eastern Australia.

But conservationists say the project threatens local vulnerable species and notes that the coal will have to be shipped from a port near the already damaged Great Barrier Reef.

Much of the coal from the mine will be burned in India, a country with some of the world's highest levels of air pollution.

By Ralf Isermann with Tom Barfield in Frankfurt