Siemens to launch large-scale cost cutting

German engineering giant Siemens has announced it will cut several billion euros in operating costs over the next two years. The move comes on the back of a steep drop in full-year profits. Engineering heavyweight Siemens of Germany reported on Thursday it would launch a program to cut 6.0 billion euros ($7.7 billion) in costs over the next two years as the company prepares for even fiercer competition in global markets. Chief Executive Peter Löscher said the measure would also affect jobs, but he did not specify how many might be at stake in the months to come. "The cost-saving scheme will affect the size of the workforce, but it's first and foremost about structural adjustments in the company," Löscher said. He spoke of a "fitness program" in which employers and employees were requested to roll up their sleeves and help raise the firm's productivity as head winds from international rivals were getting stronger. Sobering earnings "We didn't fully succeed in significantly boosting our performance vis-à-vis our competitors," Löscher admitted in presenting fourth-quarter and full-year results. Siemens, which operates its business year from October to September, reported a 27 percent drop in net profit throughout the fiscal year, with orders suffering a 10 percent slump. Of the group's four major divisions, only the healthcare sector was able to log an increase in profit. Meanwhile, earnings in the energy segment tumbled due to extra costs related to power transmission platforms being installed in the North Sea for wind farms. Siemens said it would sell its water technology unit as it no longer fitted in the company's overall structure. At the same time, the company would acquire Belgian software firm LMS International, a specialist in the modeling and testing of mechatronic systems for vehicles and aircraft.