German industrial conglomerate Siemens said it was launching a new cost cutting programme and productivity push aimed at saving €6 billion by 2014 in a bid to increase competitiveness.
The programme came as the company reported a 2% dip in fourth quarter net profits from continuing operations to €1.479 billion.
Profits were dragged down by €327m in charges related to its oil and gas business in Iran due to new US and European Union trade sanctions.
Chief executive Peter Loescher said the strong quarter had enabled Siemens to meet its 2012 targets, but that the company "didn't fully succeed in significantly boosting our performance vis-a-vis competitors as we did in recent years."
In order to meet those goals, Loescher announced the two-year "Siemens 2014" cost-cutting programme, which is aimed at raising profit margins for its four core businesses to 12% from 2012's 9.5%.
"We know what we have to do, and we're doing it," Loescher states.
The programme, which is expected to cost €1 billion in 2013 to be implemented, aims at strengthening the company's core activities.
As part of the strategy, Siemens said it was acquiring Belgium-based LMS International for around €680m - a company that produces simulation software used for testing vehicles, aircraft and other complex products.
It said it would also restructure its water business, to focus on automation and drives while selling units involved in processing and treating water and wastewater. Already, Siemens announced in October that it would sell its solar business and concentrate on wind and water power in its renewables focus.
Revenue for the fourth quarter was up 7% to €21.7 billion, while orders rose 2% to €21.5 billion. For the full year of 2012, orders were down 10% at €76.913 billion but revenue was up 7% to €78.296 billion, thanks to a strong backlog of orders.
Siemens said it expects net profit from continuing operations to drop to between €4.5 billion and €5 billion for 2013 - including the €1 billion in restructuring costs - from €5.184 billion in 2012.
