Siemens CEO Departs After Second Profit Warning for the Year

After Germany-based Siemens AG issued its second profit warning this year, CEO Peter Loescher was voted off the island by the company’s supervisory board on July 31. Replacing him will be Joe Kaeser, who till now served as the company’s chief financial officer (CFO). As Reuters reports, there have been rumors in the past of Kaeser eying the chief exec role, but the two insist there is no bad blood between them. Late last year, when questioned about the rumors, the CFO said the two complemented each other “like light and dark.”

Loescher was named CEO in 2007 and was the first person appointed from outside the company to take on the job. He joined the company from U.S. pharmaceutical company Merck & Co. He was, at the time, hailed as a hero who would lead Siemens out of prominent bribery and price fixing scandals that had blackened both its image and finances.

Loescher did drag the company out of that mire, but lost credibility after repeated misjudgments around demand in Siemens’ main markets. A company with assets totaling $143 billion, Siemens is often viewed as a bellwether of Germany’s economy, and it has been suffering since German exports fell in late 2009. The company has also been affected by a series of one-time charges related to project delays and other issues.

Siemens is scheduled to release third quarter results, for which the profit warning was issued, on Aug. 1. Analysts expect Loescher to further elaborate on why Siemens decided to scrap its margin target.

According to company officials, Loescher is departing in agreement with the board’s decision.

“Peter Loescher restored Siemens’ high reputation and helped it achieve a series of impressive successes,” said Gerhard Cromme, board chairman. “Under his leadership, Siemens experienced two of the most successful years in its history.”

“Our company is certainly not in crisis, nor is it in need of major restructuring,” Kaeser said. He did allow, however, that Siemens has lost some profit momentum compared with competitors and said he wanted to put the company back on an “even keel.”

“By the fall, the Siemens team will provide information on the further refinement of our company program and address the medium-term prospects and our vision for the company,” he said.