MAN Energy Solutions expects sustainable energy solutions to account for 50% of its business by 2030.
MAN Energy Solutions is launching an extensive restructuring process to ensure the future viability of the company. The significant cost-cutting programme – entitled Program for the Future – is also intended to accelerate the group’s transformation into a sustainable energy solutions provider.
Under the proposed plan, MAN ES will achieve cost savings of EUR450 million and improve its cash and liquidity position by 2023. This goal includes the preparation for a prolonged period of stagnant sales as a result of the Covid-19 pandemic.
The company’s executive board expects that the programme will lead to the loss of 3,000 positions in Germany and 950 abroad. The executive board has initiated talks with the works council regarding the programme and the associated effects on employees.
The programme will focus on reducing the cost of materials and equipment, optimising the service network, streamlining the product range, cutting costs within the group functions, and focusing research and development on next-generation technologies.
It will also involve some alteration to existing production arrangements. The company indicated halting steam turbine production in Hamburg was under consideration, for example.
“We need to prepare ourselves for a market environment that will remain difficult for a long period of time,” said Dr. Uwe Lauber, CEO of MAN Energy Solutions. “Some of the company’s key areas of business, such as the cruise ship business, have been directly affected by the economic impact of the COVID-19 pandemic and we do not expect to see a recovery to pre-crisis levels until 2023. The program is designed to address these negative market influences and make lasting improvements to MAN Energy Solutions’ ability to respond to market fluctuations.
We have already begun to combat negative market influences in recent years and, as a result of the measures we have introduced, we have achieved and even exceeded our revenue targets. In terms of earnings, however, we haven’t yet reached our goal. Therefore, increasing our profitability and improving our competitive ability are key to continue successfully implementing our strategy for the future.”
The company is targeting an operating margin of 9%. The Motorship notes that the Power Engineering Business area within Volkswagen AG reported negative margins of 2.3% in 2019, while increasing sales to EUR4 billion last year.