Siemens AG share price down, eliminates 7 800 jobs to complete restructuring

Siemens AG, Europes largest engineering company, announced that it intends to cut around 7 800 jobs, representing about 2% of its global workforce.

The layoffs come as a finishing touch to Siemens CEO Mr. Joe Kaesers restructuring program aimed at streamlining operations to cut expenses and boost profitability. According to the company’s statement, about 3 300 of the jobs are to be eliminated from Siemens’ Germany-based operations.

“This completes the restructuring of our company,” Mr. Kaeser said in the statement. “Our Vision 2020 concept will enable us to get our company back on a sustainable growth path and close the profitability gap to our competitors.”

The headcount reduction will pare the companys costs by about €1 billion ($1.1 billion). The layoffs come at a moment when the health-care and energy generation units are becoming a threat for the turnaround strategy of Mr. Kaeser.

He shared at an investor conference last year that the organizational reshuffling could affect a total of 11 600 jobs at Siemens. Then, a new structure was adopted by the company in October 2014, trimming the number of the company’s units from 16 to 9.

The job cuts, most of which among management employees, were discussed at the meeting of Siemens’s management and labour council. They will benefit the company by helping streamline its administrative and overhead functions, as the Germany-based engineering company shared its plans to scrape off layers of its management structure.

Siemens AG fell 1.04% on Friday in Frankfurt to close at €95.30 per share, marking a one year change of +2.51%. The company is valued at €79.60 billion. According to the Financial Times, The 27 analysts offering 12-month price targets for Siemens AG have a median target of €100.00, with a high estimate of €135.00 and a low estimate of €85.00. The median estimate represents a 4.93% increase from the last price of €95.30.