Peter Loescher, chief executive officer of the German group Siemens, was replaced Wednesday by chief financial officer Joe Kaeser, because he failed to meet profit targets. Kaeser will take over as CEO on August 1st, reports MarketWatch.
Supervisory Board of Siemens officials demanded Loescher’s resignation last week after the company reduced its profit target for the fifth consecutive year, hit by investments in renewable energy and acquisitions pursued by the CEO. The chief executive officer failed to lead Siemens for the profit target of 12 percent of sales.
“During the past week I came to the conclusion that the foundation of trust necessary for me to remain was lacking,” said Loescher in a statement, adding: “This company is on the right course,” and wished his successor “good luck and much success.”
Loescher, 55, was appointed CEO in 2007 after Siemens had undergone a series of corruption scandals. Previously, he worked in the executive management of Merck & Co group.
Siemens has 60 divisions and departments that produce a wide range of products, from trains and gas turbines to medical equipment and industrial robots. Oversight of operations is a difficult task for the CEO, who has to be familiar with the subtleties of each of the many markets of the group.
Some investors believe that the focus of Siemens on fewer products would increase its profitability.
Siemens decline is particularly visible in the context of German economic growth after the crisis. The company’s shares fell by 25% in July 2007 when Loescher took office, while Volkswagen shares have doubled in value, BASF shares rose by 35 percent and Bayer by 53 percent.
Siemens announced Wednesday a 31% decrease in operating profit of its four main divisions (health, industry, infrastructure and energy) in the third fiscal quarter to €1.26 billion ($1.68 billion) from €1.82 billion ($2.42 billion) one year ago.
Meanwhile, sales fell 2 percent to €19.3 billion ($25.66 billion).
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