Siemens plans savings of €6 billion by 2014

With over 1,200 employees and revenue of more than €140 million for the first nine months of 2012 (January 1 to September 30), LMS is business partner for around 5,000 companies in the automobile, aerospace and other industries. The private company, headquartered in Leuven, Belgium, sells simulation software in 15 countries for evaluating the acoustics, vibrations, oscillations, operational stability and dynamics of mechatronic systems. LMS International is the only provider worldwide offering a complete software platform for modeling, simulating and testing mechatronic systems in vehicles, airplanes and other complex products. With the acquisition of LMS, Siemens will hold a top position in this software segment and can decisively improve the innovative strength and speed of its customers. The takeover of LMS is subject to approval of the authorities.

For details refer to "Siemens to acquire leading provider of mechatronic simulation" at www.siemens.com/press/pi/I20121155e

In the water business, Siemens will in the future concentrate on solutions related to its core electrotechnical competencies, which lie in automation and drive technologies for operating water and wastewater treatment plants as well as desalination plants. The business in the Industrial Automation Systems Business Unit providing efficient solutions for the control, management and instrumentation of water processes will remain unchanged with Siemens. On the other hand, the business with the mechanical, biological and chemical treatment and processing of water and wastewater – currently bundled in the Water Technologies Business Unit that showed revenue of roughly €1 billion in fiscal 2012 – will be sold. The largest share of this business centers on local solutions in a highly fragmented market environment and thus has little in common with Siemens' global sales setup. Moreover, there are few synergies with the automation and industry software business.

Details refer to "Siemens to focus its water business on automation technology in the future" at www.siemens.com/press/pi/I20121156e

Although Siemens achieved one of the best operating results in the company's history in fiscal 2012, the company lagged behind its own high objectives defined in the One Siemens target system. Siemens therefore plans to achieve a Total Sectors profit margin of at least 12 percent by fiscal 2014. To reach this target, the company plans to reduce its costs by €6 billion, increase its competitiveness, and become faster and less bureaucratic with the help of a two-year company-wide program.

"Siemens 2014" concentrates on five levers:

This lever will contribute the largest share of the planned savings of €6 billion. Savings of around €3 billion are expected from the improved integration of the key processes of design, development and production. Around €1 billion is to be saved by improving the global capacity utilization and presence. And a further €1 billion in savings is to be achieved by improving the efficiency and quality of processes.

This includes both reinforcements through acquisitions as well as the divestment of businesses whose profits remain below company's expectations over a longer period. For example, the company announced on October 22 that it would sell its solar business and concentrate fully on the renewables of wind and water. The company's announcement of its acquisition of LMS and plans to restructure the water business marked two further measures designed to strengthen core activities in the Industry Sector.

The sales setup will be more flexibly adapted to regional circumstances and potentials. An improved sales setup will optimize regional market access.

The company's worldwide infrastructure will be further optimized and redundant functions and duplicate processes will be eliminated.

The complexity of processes and regulations will be reduced in order to give the company's businesses greater entrepreneurial freedom and optimize their work with customers.