Siemens Energy plans to reduce its global workforce by about 7,800 jobs in its gas and power segment as the energy spin-off from German conglomerate Siemens continues a slow phase-down of its core fossil business.

“The energy market is significantly changing which offers us opportunities but at the same time presents us with great challenges,” said chief executive Christian Bruch.

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“With this program we want to regain our competitiveness and financial strength to shape the energy world of tomorrow.”

The company, which had its €16bn ($19.3bn) debut on the Frankfurt stock exchange in September 2020, bundles the former Siemens gas and power segment (mainly gas turbines) and owns the majority in wind turbine manufacturer Siemens Gamesa.

Siemens Energy is also increasingly betting on green hydrogen technologies, in part jointly with Siemens Gamesa by placing electrolysers to produce hydrogen from wind power directly at offshore wind turbines.

The job cuts are planned by the end of 2025, with a large part to be implemented by the end of 2023. Most reductions are foreseen in Germany (3,000 jobs) and the US (1,700 jobs), with the remaining 3,100 posts to be lost in other locations around the world.

The company hopes to reduce costs in is gas and power segment by at least €300m, and with that improve its competitiveness and enhance its long-term cost structure.

Siemens Energy has started to reshape its portfolio by modifying its range of aero-derivative gas turbines. The company last year had already said it would no longer bid on contracts for new coal-fired power plants.

Despite the restructuring, Siemens Energy’s orders in the first quarter of its fiscal year ending in December 2020 plunged by 25.9% from the year earlier to €7.4bn, mostly due to a sharp decline in Siemens Gamesa orders.

Revenue, however, rose by 2.6% to €6.6bn, and the company posted a net profit of €99m, compared to a net loss of €195m a year earlier.