Siemens Industry Sector - which includes its metals technologies, industry automation and drive technologies groups - reported fourth quarter revenue growth of 2%, with higher revenue in the Americas more than offsetting modest decreases in other regions. Orders, however, came in 3% lower than a year-ago, due primarily to a sharp decline in the metals technologies business. In a challenging market environment, fourth-quarter profit in the sector declined year-over-year, to €726 million, due in part to higher expenses for marketing, selling and general administrative expenses compared to the prior-year period and lower contributions from the sector’s renewable energy offerings.

Siemens AG reported overall revenue for the fourth quarter rose 7% year-over-year to €21.5 billion. Income from continuing operations was $1.5 billion. For fiscal 2012, revenue rose 7% year-over-year to $78.3 billion, while orders came in 10% lower at €76.9 billion due to significantly lower volume from large orders compared to the prior year.

"A strong fourth quarter enabled us to fulfill our expectations for fiscal 2012 and achieve one of our best years ever. Even so, we didn’t fully succeed in signficantly boosting our performance vis-a-vis competitors, as we did in recent years. To get back to reaching our own goals, we’ve launched "Siemens 2014," a company-wide program aimed at raising our Total Sectors profit margin to at least 12%. We know what have to do - and we’re doing it," commented Peter Loscher, president and CEO of Siemens AG.

"Siemens 2014" company program
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% 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:

Cost reduction
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.

Strengthen core activities
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.

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

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

Simplified governance
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.