BERLIN (AP) -- German industrial conglomerate Siemens said Thursday it was launching a new cost-cutting program and productivity push aimed at saving EUR6 billion ($7.7 billion) by 2014 in a bid to increase competitiveness.
The program came as the company reported a 2 percent dip in fourth quarter net profits from continuing operations to EUR1.479 billion. Profits were dragged down by EUR327 million in charges related to its oil and gas business in Iran due to new U.S. and European Union trade sanctions.
Still, the result was slightly better than expected and with the announcement of the cost-cuts Siemens shares were up 3.6 percent in morning Frankfurt trading to EUR81.71 to lead the DAX.
CEO Peter Loescher said the strong quarter had enabled Siemens to meet its 2012 targets, but that the company "didn't fully succeed in significantly boosting our performance vis-a-vis competitors as we did in recent years."
In order to meet those goals, Loescher announced the two-year "Siemens 2014" cost-cutting program, which is aimed at raising profit margins for its four core businesses to 12 percent from 2012's 9.5 percent.
"We know what we have to do, and we're doing it," Loescher said.
The program, which is expected to cost EUR1 billion in 2013 to be implemented, aims at strengthening the company's core activities.
As part of the strategy, Siemens said it was acquiring Belgium-based LMS International NV for around EUR680 million -- a company that produces simulation software used for testing vehicles, aircraft and other complex products.
It said it would also restructure its water business, to focus on automation and drives while selling units involved in processing and treating water and wastewater.
Already, Siemens announced in October that it would sell its solar business and concentrate on wind and water power in its renewables focus.
Revenue for the fourth quarter was up 7 percent to EUR21.7 billion, while orders rose 2 percent to EUR21.5 billion.
For fiscal 2012, orders were down 10 percent at EUR76.913 billion but revenue was up 7 percent to EUR78.296 billion, thanks to a strong backlog of orders.
Siemens said it expects net profit from continuing operations to drop to between EUR4.5 billion and EUR5 billion for 2013 -- including the EUR1 billion in restructuring costs -- from EUR5.184 billion in 2012.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Ryan Gosling is breaking hearts at the Cannes Film Festival.
Clothes have a starring role at the Cannes Film Festival. (Photos)
Doctors saved this boy's life with a medical first involving a printer.
This cutie needs a new home. She's WTOP's Pet of the Week.