Siemens May Disband Cities Unit Next Year, Manager Magazin Says

Siemens AG Chief Executive Officer Joe Kaeser may disband the Infrastructure and Cities division created by his predecessor, to streamline the company and narrow the profitability gap with competitor General Electric Co., Manager Magazin reported.

The change could happen as soon as October 2014, with Munich-based Siemens dividing its existing four sectors into between five and eight divisions, the German magazine said, citing an unidentified company manager. A Siemens spokesman declined to comment on the report to Bloomberg News.

The infrastructure and cities division, set up by Loescher in 2011, is the least profitable at Siemens, with profit representing 6.3 percent of sales last year. Headed by former strategy chief Roland Busch, the sector pools units including building automation, rail and power distribution.

Former finance chief Kaeser took over as CEO of Germany’s biggest engineering company in August after a six-year stint under Austrian Peter Loescher, when the stock declined 22 percent amid five missed profit targets and margins that lagged behind competitors ABB Ltd. and GE.

Kaeser is set to present a new sales structure to 600 top managers in Berlin this evening. The company will probably give more control to country managers, undoing the regional “clusters” set up under Loescher. Siemens merged the power plant building division with the oil and gas unit earlier this month, spokesman Alfons Benzinger said.

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