Siemens Energy (ENR.DE) announced plans to cut 7,800 jobs in its gas and power segment to improve its “long-term competitiveness” as it looks to focus on green energy. Its shares ticked up roughly 0.8% Tuesday morning.
The company, which was spun off last year by German industrial giant Siemens AG (SIE.DE) and currently employs 90,000 people globally, also said it will no longer bid on contracts for new coal-fired power plants.
The move come on top of an earlier plan to reduce costs by a minimum of €300m (£264m, $362m) in the same area.
“The energy market is significantly changing which offers us opportunities but at the same time presents us with great challenges,” said CEO Christian Bruch.
“With this program we want to regain our competitiveness and financial strength to shape the energy world of tomorrow. We are fully aware that this is a challenging program for our employees. Hence, we will undertake these measures in the most socially responsible way possible.”
Around three-quarters of the job cuts will be made in management, administration and sales. There will be around 3,000 cuts in Germany and 1,700 in the US while the rest will be spread across other regions.
The reductions are planned by the end of the 2025 financial year, with a large part to be implemented by the end 2023.
The company said non-recurring costs associated with the proposed job reductions will amount to “a mid to high triple digit million euro in line with previous guidance.”
The measures it announced today range from cost reductions related to external service providers, purchasing and logistics, to streamlining the IT landscape.
The company said estimated restructuring costs will amount to a mid to high triple digit euro million amount for the fiscal years 2020 to 2023.
Meanwhile it said its revenue for the first quarter of its 2021 financial year increased by 2.6% to €6.5bn and posted a net income of €99m, compared to a loss in the prior-year quarter.
However, orders were at €7.4bn, substantially below the high basis of comparison in the first quarter of the prior year, driven by a sharp decline at Siemens Gamesa Renewable Energy.
For the full year it expects revenue growth rate to be in the range of 2% to 12% but it said its guidance assumes no further financial impact from COVID-19.
WATCH: Shell targets power trading and hydrogen in climate drive