Alex Webb
Bloomberg News

Siemens AG’s chief executive officer said Europe’s largest engineering company will eliminate at least 11,600 positions as it cuts about 1 billion euros ($1.34 billion) in costs.

The positions include 7,600 that will go as the company streamlines and creates a new divisional structure, plus 4,000 people working in superfluous positions for regional clusterings of countries, CEO Joe Kaeser told analysts and investors in a webcast conference from New York today. Some of the employees will be assigned other roles, he said.

“A certain amount of people do stuff for co-ordinating things, analyzing things,” said Kaeser. “About 20 percent of those we believe can be put to work elsewhere, but not there. They can be taken out of the system because the work goes away.”

Kaeser, who was previously chief financial officer at Munich-based Siemens, started a strategy review soon after becoming CEO in August as he sought to rebuild investor confidence following missed profit targets under predecessor Peter Loescher. The resulting plan, revealed this month, will establish nine divisions to replace the company’s previous structure around four sectors.

Health Care

At the time, Kaeser also said the 167-year-old company would focus on electrification, automation and digitalization, and its health-care operations would be managed separately. The new setup will cut about 1 billion euros from costs by the end of 2016, Siemens estimates.

“We do not intend to sell the health-care business but we are flexible in being prepared for anything that comes along,” Kaeser said today. He added that Siemens has invested too much in acquisitions in health-care diagnostics, which include the 2007 takeover of Dade Behring Holdings Inc. for $7 billion.

General Electric Co. is competing with Siemens to buy the energy assets of France’s Alstom SA. Fairfield, Connecticut- based GE has offered $17 billion for the maker of France’s power grid. Siemens has said it plans to present an official bid by June 16.

Alstom has “a good installed base in gas and in steam turbines,” Kaeser said today. The CEO said he’s keen to find more deals like Siemens agreement this month to buy most of Rolls-Royce Inc.’s energy assets for $1.3 billion.