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MAN ENERGY SOLUTIONS LOOKS TO A SLIMMER LOW-COST FUTURE

Thursday, July 23, 2020 

The executive board of MAN Energy Solutions is launching a comprehensive programme intended to ensure the future viability of the company, involving extensive cost-cutting and restructuring measures - including job losses - to transform the company into a sustainable solutions provider.

These changes are partially brought about as a result of preparation for a prolonged period of stagnant sales as a result of the Covid-19 pandemic, but are additionally part of its previously-announced new strategy in 2018, to move from being a component supplier to a provider of sustainable energy solutions. These new solutions are expected to account for 50% of its business by 2030.

To achieve its goals, the company plans to cut its costs by €450m 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 optimising the production network with a focus on core value creation and greater flexibility is a key component of the programme. In this context, the company 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 programme will 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.

Dr. Uwe Lauber, CEO MAN Energy Solutions, said: “We need to prepare ourselves for a market environment that will remain difficult for a long period of time. 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 programme 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 executive board expects that the implementation of the programme will result in the elimination of up to 3,000 positions in Germany and 950 abroad. The company hopes that this reduction in the workforce will be carried out in a socially responsible manner as far as possible, although compulsory redundancies cannot be completely ruled out. The executive board has initiated talks with the works council regarding the programme and the associated effects on employees.

Martin Rosik, Board Member responsible for Human Resources, said:  “In the light of the effects the Covid-19 pandemic has on our target markets, we must act fast. The company and the employee representatives are therefore negotiating under great pressure. Our focus is on structural improvement and on reaching the cost down target. We will negotiate the feasible options to get there with the employee representatives in a very timely manner.”

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