Siemens has announced veteran finance chief Joe Kaeser will replace CEO Peter Loescher four years before the end of his contract.
Loescher had promised that Siemens, whose products range from gas turbines to fast trains and ultrasound machines, would grow faster than rivals such as ABB, General Electric and Philips, but profitability was held back by bungled acquisitions, charges for project delays and a focus on sales growth.
Last week the German firm abruptly abandoned its target of boosting its core operating profit margin to at least 12 per cent from 9.5 per cent by 2014, which turned out to be the final straw for supervisory board members, most of whom voted for his dismissal at a meeting today.
Kaeser will start his new task of turning around Germany's second-biggest company by market value and a symbol of its industrial backbone on Friday, with Loescher remaining on hand to help handle some on-going issues until 30 September.
He has earned a reputation as a hands-on pragmatist during his 33 years at Siemens, seven of them as CFO, and analysts say he has an understanding of its business and culture that they judged was lacking in Loescher, an Austrian who was the first external candidate ever to get the top job.
"Joe Kaeser is, in our opinion, the best choice in this situation," said Christoph Niesel, a fund manager at Union Investment, which holds about 1 per cent of Siemens shares.
"His most urgent task will be to convince Siemens' workers, even more than in the past, that radical and sustainably profitable restructuring is necessary," he added.
Loescher had only last year announced a plan to save €6bn (£5.2bn) over two years to boost its core operating profitability before dropping the 2014 margin target last week.
In its fiscal third quarter through June, its profit margin shrank to 6.5 per cent from 9.2 per cent a year earlier, weighed down by costs related to the savings programme, charges related to wind power and rail projects.
"We've been too preoccupied with ourselves lately and have lost some of our profit momentum vis-a-vis our competitors," Kaeser said in a statement today.
He vowed to put Siemens back on an "even keel" and create a high-performance team that would be able to refine Siemens's savings programme and address medium-term prospects this autumn.
"You'll see, there'll also be a Siemens after 2014," Kaeser said, a swipe at Loescher's now-failed 'Siemens 2014' programme.
Analysts have said they expect Kaeser to tighten project control by selling off more non-core businesses, such as those that make rail technology or healthcare software, and to set more conservative and realistic targets.
Industrial companies like Siemens have been suffering from a slowdown in the global economy, and weak manufacturing data from China has fanned concern that a recovery will not materialise until next year. Loescher had been criticised for being too slow to react to the downturn.
Siemens' rivals have been making less heavy weather of that backdrop. GE recently unveiled a surprise jump in its backlog of orders for locomotives, X-ray machines and scores of other industrial products, while Dutch rival Philips also reported robust orders for ultrasound and scanning products.