(REUTERS) — German engineering company Siemens has reported a worse-than-expected 10 percent drop in quarterly industrial profit and signaled a tough year ahead as it restructures its turbine and wind power businesses. As Reuters' Sonia Legg reports, some staff fear for their jobs.
If Germany is the euro zone's engine, then Siemens is in the driving seat of both.
The engineering firm is one of the region's largest. And an unexpected 10 percent Q4 drop in industrial profit to 2.2 billion euros ($2.55 billion dollars) hurt. Shares fell almost 2 percent to two-week lows.
“Demand will markedly decrease and will be directed towards Asia, Latin America and Africa,” CEO Joe Kaeser said during a press conference. “This is why here too, we will do what has to be done and adapt our capacities carefully.”
Siemens is already shedding operations in an attempt to turn itself into an industrial software company. It's listing its health care business and its wind and rail businesses into joint ventures.
But Kaeser added Siemens is a very large company and many of its divisions are doing extremely well. He told a British television show that it will be a solid year overall, but, “something can be and should be improved.”
There were plenty of positives — revenue was up 1 percent and orders up 16 percent.
But profit from Power and Gas—Siemens' second-biggest business line after healthcare—plunged 40 percent due to overcapacity and falling prices.
Some employees are worried. During his television interview, Kaeser would not say how many jobs will be cut, but referred to them as “painful.”
“We want to show that while Mr. Kaeser is presenting brilliant figures for Siemens for the past business year, there are considerable problems,” IG Metall Union spokesman, Hagen Reimer, responded. “Thousands of employees currently fear for their jobs.”
Siemens has scheduled a meeting with labor representatives for next week.
Tagged with job cuts, profit, results, siemens, tED