In the first quarter, profits from Siemens PG came in at 1.4 percent – a sharp drop from a 3.8 percent profit rate in Q1-2019. Hence, some 70 percent of the cost saving target is meant to be achieved already by 2021.
The stringent and rigorous savings program is part of Siemens’ Vision 2020+ that is meant to transform the company by mid-2021, or early 2022, before leading to an “ultimate value creation” in all businesses. In this context, 320 million in savings at Digital Industries being “accelerated” and a further 300 million Euros will be cut at the Smart Infrastructure division.
Responding to “disruptive” market transformation
Energy, as well as oil and gas markets, are undergoing a “disruptive transformation at high speed”, Roland Busch, Siemens Chief Technical Officer (CTO) noted.
“The 10 to 20-year market and technology cycles we were used to have been contracting radically,” he said, stressing “the driving forces behind this change are decarbonization, decentralization and digitalization.”
Rapid adaption to these changes is vital for any energy company or manufacturer. The planned spinoff of Siemens Energy will help give the overall company „a leaner and thus more agile setup” and reduce costs in all areas.
“In implementing lean and effective governance, we’re aiming to achieve savings of around €500 million. Here, we’re on track,” Busch noted. At Global Business Services, Siemens is “confident” to achieve savings of about €90 million.
As for Siemens Energy, more specific details about target achievement will be disclosed when the new company has been fully carved out. The legal separation is meant to be completed by the end of March.