Siemens appoints finance chief Kaeser as CEO

Germany's Siemens appoints longtime finance chief Joe Kaeser as CEO, replacing Peter Loescher

Associated Press
Siemens appoints finance chief Kaeser as CEO
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The logo of German industrial conglomerate Siemens is pictured outside their headquarters in Munich, southern Germany, Wednesday, July 31, 2013. Siemens AG has appointed longtime finance chief Joe Kaeser as its new chief executive, replacing Peter Loescher after a series of missed profit targets at the German industrial conglomerate. Siemens said its supervisory board unanimously chose the 56-year-old Kaeser on Wednesday. (AP Photo/Matthias Schrader)

BERLIN (AP) -- Siemens appointed finance chief Joe Kaeser as its new chief executive on Wednesday, handing a manager with over 30 years' experience at the industrial conglomerate the task of improving its fortunes after missed profit targets led to the departure of predecessor Peter Loescher.

Siemens AG said its supervisory board unanimously chose the 56-year-old Kaeser, who will take office Thursday. It said a new chief financial officer will be appointed "in due course."

It added that Loescher would leave the board "by mutual agreement." The company had said Saturday night that the supervisory board would meet Wednesday to decide on his departure — a terse announcement that was followed by media reports of infighting.

The prospect of trouble even prompted Chancellor Angela Merkel to express concern. Spokesman Georg Streiter said earlier this week the German leader considered it important that the company — a "flagship" of German industry — return to "calm waters."

Munich-based Siemens makes industrial machinery such as power generation and transmission equipment, high-speed trains, and medical diagnostic scanners. It has 370,000 employees, including 56,500 in the United States, and is active in 190 countries.

Last Thursday, the company said it would miss its 2014 goal of a 12 percent profit margin, blaming "lower market expectations."

"During the past week I came to the conclusion that the foundation of trust necessary for me to remain was lacking," Loescher said in a statement explaining his decision to offer his resignation. He had a contract through 2017.

"This company is on the right course," he added, wishing his successor "good luck and much success."

Kaeser, unlike Loescher, has spent his career with Siemens, which he joined in 1980. He has been chief financial officer since May 2006.

"Our company is certainly not in crisis, nor is it in need of major restructuring," Kaeser said. "However, we've been too preoccupied with ourselves lately and have lost some of our profit momentum vis-a-vis our competitors."

He pledged "to put Siemens back on an even keel and create a high-performance team" and said that, by this fall, Siemens will "address the medium-term prospects and our vision for the company."

Siemens said shortly after announcing the leadership change that its net profit rose 43 percent in the April-June period, its fiscal third quarter, after it spun off its lossmaking light bulb business. Net earnings were up to 1.1 billion euros ($1.46 billion) from 770 million euros a year earlier, when light-bulb business Osram cost Siemens 354 million euros.

However, other measures of profit sagged as the company took charges totaling 436 million euros for a restructuring program aimed at restoring its profit levels and a 91 million euros charge related to inspecting and refitting wind turbine blades.

Siemens' profit margin fell to 6.5 percent from 9.2 percent a year earlier, while revenues slipped 2 percent to 19.25 billion euros. But the company reported a 19 percent rise in new orders to 21.14 billion euros, thanks largely to a major British train contract.

Siemens shares were 0.8 percent lower at 80.01 euros in Frankfurt trading after the announcements.

Loescher, a company outsider hired in 2007 from drug company Merck & Co., Inc., helped Siemens move past a major corruption scandal.

Siemens agreed to pay more than $1 billion in fines in Germany and the United States, for, among other charges, allegedly giving customers payments to secure business, especially internationally. Supervisory board chairman Gerhard Cromme said that "Peter Loescher restored Siemens' high reputation."

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AP Business Writer David McHugh contributed from Frankfurt.

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