MAN Energy Solutions has announced the launch of what it calls a comprehensive program to ensure the future viability of the company. It stated that extensive cost-cutting and restructuring measures are the necessary next steps on the way to the company’s transformation into a solutions provider for sustainable energy supply. In addition, the company is preparing for a prolonged period of stagnant sales as a result of the Covid-19 pandemic.
To achieve this, according to MAN, it plans to cut costs by 450 million euros and increase its operational flexibility, among other objectives. The aim is to achieve an operating margin of 9% and improve the company’s cash and liquidity position by 2023, even taking the global economic impact of COVID-19 into account.
Adapting and optimizing the production network with a focus on core value creation and greater flexibility is said to be a key component of the program. In this context, the company stated it intends to halt steam turbine production in Hamburg and is also considering closing the production facility in Berlin and relocating production currently conducted there to another site.
The program will also focus on reducing the cost of materials and equipment, optimizing the service network, streamlining the product range, cutting costs within the group functions, and focusing research and development on next-generation technologies.
“We need to prepare ourselves for a market environment that will remain difficult for a long period of time,” said Dr. Uwe Lauber, CEO. “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. 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 announced a new strategy in 2018 designed to transform the company from a component supplier to provider of sustainable energy solutions. These new solutions are expected to account for 50% of its business by 2030.
Meanwhile, according to MAN, it expects that the implementation of its cost cutting and restructuring efforts will result in the elimination of up to 3,000 positions in Germany and 950 abroad.
