Siemens is citing negative market forces for its decision to temporarily shut down its power and gas division later this month.
The company, one of the world’s largest gas power turbine manufacturers, said it plans to temporarily shut the division’s operations worldwide in an effort to cut costs.
In a statement, the company said, “The shutdowns are part of a comprehensive package of measures, which also includes issues such as travel costs, sponsoring, [and] participation in trade fairs and investments.”
“Against the background of an ongoing unprecedented downswing in the market for power generation equipment, the power and gas division (PG) is planning temporary shutdowns.”
At the end of last year, Siemens announced that would be cutting 6.900 jobs, mostly in its power generation division, along with the closure of manufacturing sites in Europe.
Siemens added that the closures would depend on local regulation, but would generally effect “all PG locations worldwide within the current quarter,” and would last for seven days.
Siemens reported its PG division profit margin fell from 12 per cent to 7.6 per cent in its fiscal first quarter, which ended in December 2017. The unit’s target range is 11-15 per cent. The company said profits in the P&G division had dropped by nearly half. German media said the PG division accounts for about 18% of Siemens’ overall revenues.
Analysts in a Reuters poll mostly said they expect the company’s struggles will have continued in the fiscal second quarter, or the first three months of this year
Siemens CEO Joe Kaeser in January of this year said while there would continue to be a global market for gas turbines, it would be smaller, and the focus would move away from Europe.
Power online reports that Mitsubishi Hitachi Power Systems received more than half of all global orders for gas turbines in the first quarter of 2018, far outpacing both Siemens and GE, according to research from London, UK-based Barclays Plc.
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