German industrial giant Siemens has reported a 12% slump in profits for the fourth quarter of 2012, driven in part by a €150 million (US$200 million) loss at its solar panel business.
The company, Germany's biggest engineering group, had a €1.2 billion ((US $1.6 billion) profit for the three months to 31 December. But its solar panel manufacturing business recorded huge losses of €150 million after buckling under increased competition from Asia as global demand fell.
Chief Executive Peter Löscher told shareholders that he is banking on a restructuring plan that calls for Siemens to jettison underperforming businesses and slash €6 billion in costs over the next two years, after the company underestimated the sluggishness of growth in Europe, its main market. The first-quarter results included €50 million in restructuring costs.
Last year PV-Tech reported that the German manufacturer was planning to mothball its solar business activities as part of a reorganisation of its energy division and was already in talks with a number of potential buyers.
At the time the company said that as part of the restructuring, it would discontinue its solar and hydro division. The divestment of the solar business activities will enable Siemens to focus its renewable energy activities only on wind and hydro power, the company said.
During a heated annual meeting with shareholders Peter Löscher faced mounting criticism over the company's disappointing performance.
Löscher acknowledged that the conglomerate “has lost ground against its peers” in recent quarters and must catch up.
“The mood in Europe calmed down in the second half of 2012, but economic output in the euro zone will most likely decline once again,” he said. “The economic forecasts for the U.S. are still very cautious.”