German engineering giant Siemens AG appears set to replace CEO Peter Loescher following the announcement of another reduction in the company's profit expectations despite ambitious cost-cutting plans.

In a statement, Siemens said a meeting of company’s supervisory board would be convened on July 31 to “decide on the early departure of the president and CEO,” Peter Loescher and select his replacement.

The Austrian-born Loescher was appointed CEO of Siemens in 2007 following a lengthy career in the pharmaceutical industry and a stint as president of global human health with drugs conglomerate Merck and Co.

He was the first company outsider to assume leadership of Siemens, and at the time of his appointment was expected to help the company weather a huge bribery scandal which had severely damaged both its balance sheet and reputation.

High hopes for Loescher quickly dwindled, however, following multiple blunders when assessing demand in Siemens’ key markets.

These include a $418 million acquisition of solar power assets in 2009 just prior to a decline in prices for photovoltaic panels and cuts in spending on renewable energy by sun-drenched countries.

Joe Kaeser

Joe Kaeser

Despite the broad gamut of products that Siemens provides, a list that includes high speed trains, wind turbines and medical diagnostic equipment, Siemens continues to struggle due to weak demand overseas, which has led to Germany’s biggest fall in exports in May since the end of 2009.

Loescher’s credibility was further eroded last week by the company’s announcement that its core operating profit margin would fall below prior targets based on the introduction of an extensive cost-cutting plan which hopes to save 6 billion euros over two years.

Loescher’s departure arrives four years prior to the expiration of his contract. Details have not yet emerged with respect to whether he voluntarily resigned or was forcibly ousted.

Inside sources told Reuters that Siemens chief financial officer Joe Kaeser is the most likely candidate to replace Loescher and that he enjoys the majority support of Siemens 20-member supervisory board.

Rumors spread in the past year that Kaeser, a veteran of Siemens’ management board, had ambitions to replace his colleague in the top position, despite the amiable working relationship reportedly shared by the pair.

Siemen’s CFO previously said that he and Loescher complemented each other like “light and dark” when asked about the rumors towards the end of last year.