Struggling Siemens set to close offices and cut jobs

Electronics giant Siemens may be forced to close offices and cut thousands of jobs, as CEO Peter Löscher (above) prepares a drastic savings plan to arrest the company’s financial slide.

Reuters reports that the German firm is expecting to record its lowest quarterly gross profit margin in two years when results are published on 8 November, with revenue growth slowing to just four per cent. The disappointing figures may force Löscher’s hand in making severe cutbacks and the German media suggests a program to save 2 to 4 billion euros (£1.61 billion to £3.22 billion) could be introduced next month.

"It has become obvious that the margin gap between Siemens and its competitors has opened again," said HSBC analyst Michael Hagmann.

Siemens’ slump is being partly attributed to Europe’s economic crisis as customers refrain from ordering engineering equipment produced by the company. Underperforming units such as wind and solar power and the new Infrastructure & Cities sector are also blamed.

"We see the formation of Infrastructure & Cities as a strategic error and a waste of management time," Redburn analyst James Moore said of the sector that was introduced a year ago.

Reuters claims Löscher could outline the cuts and closures to company managers as early as today. The CEO may wish to focus purely on the offices that are recording the greatest profits, closing the struggling divisions and unfortunately shedding employees in the process.