11.30.-1
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 until 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 also has been affected by a series of one-time charges related to project delays and other issues.
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.
Before he left, Loescher offered some parting words in a prepared statement:
“I came to the conclusion that the foundation of trust necessary for me to remain was lacking,” Loescher said. “A foundation of trust, and unity between a supervisory board and a managing board, is necessary for every company. The good of the company takes precedence over the interests of any individual, including me. It would be disastrous for the company’s future, and for its employees, if its progress in setting a new course, resolving past mistakes, returning to profitable growth, and creating a new company culture were jeopardized by this lack of trust.”
Siemens Targets Russis for Growth Opportunity
Siemens’ Healthcare division has been active in recent months working to provide medical technology to under-served regions in Europe. The Russian constitution guarantees all citizens free healthcare, which is why there is a proliferation of hospitals across the nation. Those hospitals, however, are under-equipped and underfunded. According to calculations by Germany Trade and Invest, the volume of financing in the Russian healthcare sector in 2010 was equal to about 4.1 percent of gross domestic product. That is only half as much as in western countries.
In March 2011, Russian President Vladimir Putin, then the prime minister, declared healthcare to be the Russian government’s main priority. Since then, funding has been significantly increased, faced with pressure from the health ministry, all 83 of Russia’s top-level political divisions, the federal subjects, had to establish programs to modernize healthcare within their regions. The Yaroslavl region was one of them, investing almost 150 million euros over the past two years into the so-called “modernization program.” Last December, the region brought in 38 Siemens Acuson X300 ultrasound systems, premium editions, to replace outdated medical equipment. The equipment was distributed to 35 regional hospitals following the New Year holiday.
“The quality difference is huge,” said a local doctor, Tamara Klokova, M.D. “I don’t even want to think about working without the new system anymore.”
Klokova is a retiree, but still practices medicine to supplement her pension. Initial successes in Yaroslavl already are visible: Mortality from cardiovascular disease has declined by 9 percent.
The head of diagnostic ultrasound for the Yaroslavl region, Sergey Lavlinsky, M.D., called the modernization program “a miracle.” Life expectancy in Russia is still relatively low. This is especially true of men, who reach an age of just 64.3 years on average. The most common causes of death include cancer, trauma due to accidents, and alcoholism. But the most common cause of death—affecting nearly 57 percent of Russians—is heart attack or other cardiovascular disease.
“Myocardial infarction in a patient in his mid-30s does not surprise us,” Lavlinsky says. That is exactly where the new ultrasound units are intended to help. “With [the units], we will be able to identify cardiac disease much earlier and then treat it more effectively.”
Klokova learned how to use the newly purchased equipment properly immediately, during a three-day course held at the hospital in Yaroslavl in early January. Under the leadership of a Siemens employee, participants also took part in hands-on activities as doctors from all of the regional hospitals examined each other.
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 also has been affected by a series of one-time charges related to project delays and other issues.
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.
Before he left, Loescher offered some parting words in a prepared statement:
“I came to the conclusion that the foundation of trust necessary for me to remain was lacking,” Loescher said. “A foundation of trust, and unity between a supervisory board and a managing board, is necessary for every company. The good of the company takes precedence over the interests of any individual, including me. It would be disastrous for the company’s future, and for its employees, if its progress in setting a new course, resolving past mistakes, returning to profitable growth, and creating a new company culture were jeopardized by this lack of trust.”
Siemens Targets Russis for Growth Opportunity
Siemens’ Healthcare division has been active in recent months working to provide medical technology to under-served regions in Europe. The Russian constitution guarantees all citizens free healthcare, which is why there is a proliferation of hospitals across the nation. Those hospitals, however, are under-equipped and underfunded. According to calculations by Germany Trade and Invest, the volume of financing in the Russian healthcare sector in 2010 was equal to about 4.1 percent of gross domestic product. That is only half as much as in western countries.
In March 2011, Russian President Vladimir Putin, then the prime minister, declared healthcare to be the Russian government’s main priority. Since then, funding has been significantly increased, faced with pressure from the health ministry, all 83 of Russia’s top-level political divisions, the federal subjects, had to establish programs to modernize healthcare within their regions. The Yaroslavl region was one of them, investing almost 150 million euros over the past two years into the so-called “modernization program.” Last December, the region brought in 38 Siemens Acuson X300 ultrasound systems, premium editions, to replace outdated medical equipment. The equipment was distributed to 35 regional hospitals following the New Year holiday.
“The quality difference is huge,” said a local doctor, Tamara Klokova, M.D. “I don’t even want to think about working without the new system anymore.”
Klokova is a retiree, but still practices medicine to supplement her pension. Initial successes in Yaroslavl already are visible: Mortality from cardiovascular disease has declined by 9 percent.
The head of diagnostic ultrasound for the Yaroslavl region, Sergey Lavlinsky, M.D., called the modernization program “a miracle.” Life expectancy in Russia is still relatively low. This is especially true of men, who reach an age of just 64.3 years on average. The most common causes of death include cancer, trauma due to accidents, and alcoholism. But the most common cause of death—affecting nearly 57 percent of Russians—is heart attack or other cardiovascular disease.
“Myocardial infarction in a patient in his mid-30s does not surprise us,” Lavlinsky says. That is exactly where the new ultrasound units are intended to help. “With [the units], we will be able to identify cardiac disease much earlier and then treat it more effectively.”
Klokova learned how to use the newly purchased equipment properly immediately, during a three-day course held at the hospital in Yaroslavl in early January. Under the leadership of a Siemens employee, participants also took part in hands-on activities as doctors from all of the regional hospitals examined each other.