Siemens Said to Approach Kaeser to Become Chief Executive
Siemens AG (SIE) Chief Financial Officer Joe Kaeser is in talks with the company’s supervisory board to become chief executive and take over from Peter Loescher, according to a person familiar with the matter.
At the same time, Loescher is negotiating his exit, said the person, who asked not to be named as the talks are not public. Siemens spokesman Oliver Santen declined to comment.
The company announced on July 27 plans to replace Loescher after Europe’s biggest engineering company repeatedly missed profit targets and charges mounted for failed power and train projects. The supervisory board is scheduled to meet tomorrow to appoint a new CEO. Siemens rose as much as 2 percent to 81.07 euros in Frankfurt trading today, valuing the company at 71 billion euros ($94 billion.)
“There aren’t so many options if you look at the managing board,” said Societe Generale analyst Gael de Bray, who rates Siemens a hold. “Joe Kaeser was probably the best candidate. He’s probably more of a cost-cutter, so the portfolio streamlining efforts will likely continue and even accelerate.”
Siemens agreeed to sell its share in a six-year phone gear venture to Nokia Oyj for 1.7 billion euros earlier this month, with Kaeser leading the negotiations for the German company.
Kaeser, 56, joined Siemens in 1980, holding a series of administrative and financial jobs in a career that took him to Malaysia and California. He became chief strategy officer in 2004 before being promoted to the top finance job in 2006.
Siemens also this year separated from its Osram lighting business as part of a drive to sell units with low profitability or growth prospects. Earmarked for sale are also a water business and units offering parcel automation, airport logistics and airfreight.
While other German industrial champions have prospered during the European credit crisis thanks to their strength in export markets, Siemens has floundered.
Since Loescher, who was recruited by Chairman Gerhard Cromme, took over in July 2007, the shares have declined 22 percent. Volkswagen AG (VOW) has more than doubled in that period, while BASF SE (BAS), the world’s biggest chemical company, jumped 37 percent and Germany’s largest drugmaker Bayer AG (BAYN) climbed 51 percent.
Since assuming the CEO role in 2007 with a remit to clean up after the biggest corruption scandal in German history, the now 55-year-old Loescher cut a profit forecast on July 25 for the fifth time in his six-year tenure. The Austrian national, who joined Siemens from drugmaker Merck & Co. (MRK) as the company’s first external appointment as CEO, has had to write down the value of several acquisitions, and drove a failed push into environmentally friendly energy that led to spiraling costs.
Loescher’s failure to meet a profit goal of 12 percent of sales underlines the challenges for his successor. Siemens’s 60 sub-units, manufacturing products as diverse as trains, gas turbines, medical scanners and factory automation gear, pose oversight challenges as an executive seeks to understand each market. That has prompted investors to ask whether a focus on fewer businesses may help to boost profitability.
The company had ten divisions, which Loescher streamlined to fewer sectors, following a strategy developed by his predecessor Klaus Kleinfeld. Still, each of the four sectors averaged about 20 billion euros in sales last year. That figure is more than the sales of the thirteen smallest companies by revenue in Germany’s benchmark DAX Index of 30 companies.
Within each sector, there remains a plethora of sub-companies, totaling 15 further divisions and 60 units.
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