Troubled Siemens ditches chief

Troubled Siemens ditches chief
Photo: DPA
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.

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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