Siemens CEO defends job cuts as core business declines

Source: Xinhua| 2018-02-01 03:39:05|Editor: yan
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BERLIN, Jan. 31 (Xinhua) -- Siemens Chief Executive Officer Joe Kaeser on Wednesday defended the job cuts at the German industrial behemoth's power plant division, describing it as "unavoidable".

Speaking at the Munich-based firm's Annual General Meeting (AGM) with investors, Kaeser argued that falling revenue and earnings in the Siemens core business in the first quarter (Q1) of the 2017/18 fiscal year only made the drastic measures "even more urgent".

He pointed to an unexpectedly poor performance during Q1 during which earnings from industrial operations had fallen by 14 percent to 2.2 billion euros.

However, Siemens' profits still soared by 12 percent during the same period to 2.2 billion euros due to the sale of the Siemens lighting technology subsidiary Osram, as well as effects of the recent U.S. corporate tax reform. Revenue rose by 3 percent to 19.8 billion euros, driven largely by the fusion with Spanish wind energy firm Siemens Gamesa.

"Overall, Siemens is hence in a very good and robust condition," Kaeser said. Nevertheless, it was necessary to cut thousands of jobs in the unprofitable power plant division and close factories.

As a potential solution for the corporate plant in Goerlitz, Saxony, Kaeser suggested the creation of an "Industry Concept Oberlausitz". According to this plan, the affected plant would gain more independence and seek to reorient itself towards industrial products for which there was more demand.

Kaeser emphasized that the plan could only come to fruition with the support of federal and regional governments.

Siemens employees have been demonstrating against the planned job cuts for weeks, but Kaeser insists that the declining sales in fossil-fuelled power plants are not just a temporary phenomenon.