Siemens cuts another 4,500 jobs as oil decline burdens profit

Siemens, Europe's largest engineering company, will cut another 4,500 jobs after second-quarter profit fell more than estimated by analysts, burdened by the declining oil price. -- PHOTO: REUTERS
Siemens, Europe's largest engineering company, will cut another 4,500 jobs after second-quarter profit fell more than estimated by analysts, burdened by the declining oil price. -- PHOTO: REUTERS

MUNICH (Bloomberg) - Siemens, Europe's largest engineering company, will cut another 4,500 jobs after second-quarter profit fell more than estimated by analysts, burdened by the declining oil price.

Profit from so-called industrial operations fell 4.9 per cent to 1.66 billion euros, the Munich-based company said in a statement. That missed the 1.71 billion-euro average estimate of analysts surveyed by Bloomberg. Revenue increased 8.1 per cent to 18 billion euros.

"With the initiation of these measures, the company's structural reorganization has been completed for the most part," Chief Executive Officer Joe Kaeser said in the statement. "The profitability of our industrial business shows that we must still improve some businesses."

Kaeser has already announced 9,000 job cuts in the past six months as he seeks to achieve one billion euros in annual savings by next year. The former chief financial officer's strategy to focus on energy generation and distribution is facing mounting investor pressure after his decision to spend US$7.6 billion acquiring oil and gas equipment specialist Dresser- Rand Inc.

Since the dollar-denominated deal was agreed in September, the euro has tumbled 12 per cent against the US dollar and oil has fallen 29 per cent, placing the rationale of the takeover in question. Dresser-Rand said Feb. 28 it would cut 8 per cent of its workforce. The deal is awaiting regulatory approval from the European Commission.

Siemens reaffirmed today it expects earnings per share to increase by at least 15 per cent from 2014's 6.37 euros, and a profit margin of between 10 per cent and 11 per cent at the industrial business.