On the Goal Line for Fit4More
Citigroup’s
20th Annual Global Industrial Manufacturing Conference
March 6, 2007
Joe Kaeser
CFO
Disclaimer
This document contains forward-looking statements and information – that is, statements related to future, not past,
events. These statements may be identified by words as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” “will” or words of similar meaning. Such statements are based on our current expectations and certain
assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are
beyond Siemens’ control, affect its operations, performance, business strategy and results and could cause the actual
results, performance or achievements of Siemens worldwide to be materially different from any future results,
performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular
uncertainties arise, among others, from: changes in general economic and business conditions (including margin
developments in major business areas); the challenges of integrating major acquisitions and implementing joint
ventures and other significant portfolio measures; changes in currency exchange rates and interest rates; introduction
of competing products or technologies by other companies; lack of acceptance of new products or services by
customers targeted by Siemens worldwide; changes in business strategy; the outcome of investigations and legal
proceedings as well as various other factors. More detailed information about certain of these factors is contained in
Siemens’ filings with the SEC, which are available on the Siemens website, www.siemens.com and on the SEC’s
website, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking
statement as expected, anticipated, intended, planned, believed sought, estimated or projected. Siemens does not
intend or assume any obligation to update or revise these forward-looking statements in light of developments which
differ from those anticipated.
Page 2
March 2007
Investor Roadshow
We offer a comprehensive spectrum in electrical engineering
Information and
Communications
Automation
and Control
Power
Transportation
Medical
Lighting
Siemens Business
Services
€ 5.2 bn*
Automation and
Drives
€ 12.8 bn*
Power Generation
€ 10.1 bn*
Transportation
Systems
€ 4.5 bn*
Medical Solutions
€ 8.2 bn*
OSRAM
€ 4.6 bn*
Industrial
Solutions
and Services
€ 8.8 bn*
Power
Transmission and
Distribution
€ 6.5 bn*
Siemens VDO
Automotive
€ 10.0 bn*
PSE
SISL
DIP
BIC
Siemens Building
Technologies
€ 4.8 bn*
* All numbers FY2006 total sales according to IFRS
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March 2007
Investor Roadshow
Fiscal year 06 was characterised by strong growth and portfolio changes
+16%
2005
84.7
+17%
2006
76.3
72.8
65.1
ƒ Com moved into
Discontinued Operations
ƒ Initiated acquisitions of some
€ 6.6 billion
+25%
3.3
2.7
New Orders
Revenue
Net Income
* FY2006, IFRS, EUR in billion
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March 2007
Investor Roadshow
We benefit from our global reach
Regional distribution
Growth rates
1996 vs. 2006
2005 – 2006
Siemens
Siemens
GDP
33%
2x GDP growth = 7.8%
Europe
5.8%
8%
50%
66%
Europe
Americas
Siemens
7.0%
20%
36%
Asia/Pacific
26%
17%
11%
6%
1996
10.4%
28%
Americas
Asia/
Pacific
15%
25%
ME,A, CIS
9%
7%
2006
2006
2x GDP growth 2005 – 2006
Page 5
2x GDP
March 2007
+ 7.8%
MiddleEast,
Africa, CIS
12.0%
Sales growth 2005 – 2006
Regional sales split based on US GAAP, i.e. including the Com business.
33%
+ 16%
Investor Roadshow
Fit4More established a solid foundation for sustainable success
Initial situation beginning 2005
April 2005 – Start Fit4More Program
Fit4More: Profit & Growth Program
• Structural portfolio challenges
• Margin targets of “Operation
2003” partially reached
• Need for accelerated growth
Performance
and Portfolio
Operational
Excellence
People
Excellence
ƒ Solve Mobile Devices
ƒ Finalize strategic
reorientation of I&C
(Com, SBS)
ƒ Strategic reorientation
of L&A
ƒ Reach target margins
at all Groups
ƒ Build Portfolio for 2x
GDP growth
ƒ Execute Siemens
Management System
(powered by top+)
with focus on:
ƒ Innovation
ƒ Customer Focus
ƒ Global Competitiveness
ƒ Achieve high
performance culture
ƒ Establish Leadership
Excellence Program
ƒ Increase global talent
pool
ƒ Strengthen expert
careers
• Need to address business
performance enablers
March 2007
ƒ Achieve best-inclass in:
ƒ Corporate
Governance
ƒ Business
Practices
ƒ Sustainability
ƒ Corporate
Citizenship
Execution by April 2007!
Objectives
Page 6
Corporate
Responsibility
Levers
Investor Roadshow
... build a portfolio for sustainable 2 x GDP growth
ƒ
MEGATRENDS
STRENGTH
x
ƒ Urbanization
ƒ Demographic change
ƒ Globalization
+
ƒ # 1 or # 2
ƒ Innovation & IPR
ƒ Strong Cash Flow
SIEMENS‘ FUTURE POWER
Energy & Environmental Care
Automation & Control, Industrial & Public Infrastructures
Healthcare
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March 2007
Investor Roadshow
Clear M&A focus on our Areas of Strength
Application areas
Energy &
Environmental Care
Acquisitions
VA Tech (7/2005)
Wheelabrator (10/2005)
Market position
T&D # 4
U.S. leader in flue gas
desulphurization
Sustec (5/2006)
leading in gasification
Kühnle, Kopp & Kausch (7/2006) leading in ST<5MW
Bonus Energy (10/2004)
worldwide # 5
offshore # 1
USFilter (5/2004)
U.S. # 1
Flender (3/2005)
Industry & Wind # 1
Automation & Control,
Robicon (7/2005)
Industrial & Public
VA Tech (7/2005)
Infrastructures
Electrium (12/2005)
UGS (01/2007)
Healthcare
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March 2007
MV converters # 1
VAI # 1
UK # 3
leading in PLM software
CTI Molecular Imaging (3/2005)
Diagnostic Products (4/2006)
Bayer Diagnostic (6/2006)
#2
IVD overall # 3
ImmunoD # 2
Investor Roadshow
Key Figures Q1 FY 2007 – Operational Leverage is kicking in
in millions of euros
New orders
(continuing operations)
Revenue
(continuing operations)
Group profit from Operations
(continuing operations)
Income from continuing operations
EPS from continuing operations (in euros)
(basic, attributable to shareholders of Siemens AG)
Net Cash from operating and investing
activities (continuing operations)
Q1
FY 20071)
Δ
24,582
+ 4%
19,068
+ 6%
1,631
+51%
714
+18%2)
0.75
(1,160)
+0.11
—
1) Q1 FY2007 IFRS – new organization
2) Includes € 423 million GIS charge. +87% year-on-year change excluding this charge.
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March 2007
Investor Roadshow
The Fit4More program delivers results
FQ 1/2007:
FQ 2/2007:
Siemens
Overall
- Organic growth > 2x GDP
- Income from Continuing Operations* +87% year-on-year
- Highest share price (86,12 € on 01/30/07) since 2001
Operating
Groups
- All profitable first time since 2000
- All Groups EVA positive (first time in current structure)
From the End Zone to Fit4More Touchdown!
* IFRS, without GIS charge of € 423 million
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March 2007
Investor Roadshow
We focus our financial ressources on value creating segments
Top Groups
Profiteers
Capital Efficiency
high
CAPEX Target Range below/
moderate above 100%
CAPEX Target Range
significant above 100%
SiemensAverage
Substance
Keepers
CAPEX Target Range
significant below 100%
CAPEX Target Range
above 100%
High Growth Groups
low
1x GDPworld
Growth
Legend: Size of bubble = Value contribution of Groups
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March 2007
2x GDPworld
Growth
Organic Growth
Investor Roadshow
Cash flow generation is a focus matter
Volume in € bn
100 bn
12 bn
1,2
New Orders*
Cash Conversion*
10 bn
90 bn
8 bn
Sales*
80 bn
6 bn
4 bn
70 bn
1,2
60 bn
2002
-751
Net Debt in € million
1,3
0,8
2003
2004
379
2,357
0,5
0,1
2005
2006
-2,525
-4,764
up
2007
2 bn
0 bn
-6,877
(Q1 2007)
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March 2007
* All figures based on US GAAP, except for Q1 07 net debt.
IFRS year-end FY 06 net debt amounts to € 4,487 million.
Investor Roadshow
We take clear actions on cash
TARGETS AND MEASURES
PPE Capex
Depreciation
x 100%*
144%
122%
ƒ Reduce capex/depreciation rate from
115%
106%
Target
Range
144% in 2000 to < 115% in 2007
ƒ Divisional net working capital
programs
98%
2003
ƒ Concentrate on operational excellence
95%
2004
2005
2006
2007
NWC turns*
and organic growth
7.4
ƒ Shift top management incentive from
EVA only to an EVA/cash mix
6.9
2006
2005
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March 2007
* All figures US GAAP. NWC turns for Total Operations Groups,
Investor Roadshow
excluding Com and Other Ops.
Our share price reflects improved focus and execution
Siemens Share – Last 2 Years (from 2nd March 05)
Siemens Share – FY 2007 (from 1st October 06)
Siemens
Siemens
MSCI World
S&P 500
MSCI World
S&P 500
01/10/2006
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March 2007
Investor Roadshow
An IPO of SV offers excellent opportunities
ƒ
+
Zero emissions
Always on
ƒ
Future trends and basic
requirements
Zero accidents
ƒ
ƒ
Siemens automotive systems –
A success story
EUR 10 billion global business
Average growth of 10% a year
(1989 - 2006)
Target margins reached every
year since 2003
Outstanding position in highgrowth automobile electronics sector
ƒ Investments to further strengthen
technology position and regional set-up
intended IPO
ƒ
ƒ
ƒ
ƒ
Siemens as majority shareholder
Excellent access to capital markets, sector specific capital structure
Creation of acquisition currency
Realization of full growth- and innovation potential
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March 2007
Investor Roadshow
Outlook for fiscal 2007
1. We will reach our Fit4More goals
ƒ Growth of 2x global GDP
(w/o effects from deconsolidation)
ƒ All Groups expected to reach target margins
2. Expect a New Target System
including Capital Efficiency Goal for Siemens
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March 2007
Investor Roadshow
Appendix
Page 17
March 2007
Investor Roadshow
30 years history of continuous dividend payment
dividend / share (€)
2.0
1.6
977
1
R
CAG
1.2
.9%
5
:
6
–200
special dividend
€ 0.67 Infineon IPO
0.8
0.4
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
0.0
20 years of regular dividend increases
Page 18
March 2007
Investor Roadshow
All Groups on track
Profit margin
Q1 2007 IFRS
Groups
Target margin
SBS
2,0%
5–6%
A&D
13,3%
11–13%
I&S
4,3%
4–6%
SBT
5,9%
7–9%
PG
6,2%
10–13%
PTD
7,5%
5–7%
TS
4,4%
5–7%
SV
6,0%
5–6%
Med
14,5%
11–13%
Osram
10,5%
10–11%
SFS*
31,9%
18–22%
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March 2007
* Return on equity
Status
Investor Roadshow
A&D invests in process automation and regional setup
12.8
Sales in € bn
12.8
Sales in € bn
+49%
Electrical
Installation
for Buildings
+49%
8.6
8.6
Others
Process
Automation
Asia/Pacific
Factory
Automation
Europe
2002
Page 20
+214%
Americas
+115%
March 2007
2006
2002
2006
Investor Roadshow
We are connecting the “Digital Factory” with the
real manufacturing world
Development/
Construction
Digital Factory
UGS
ƒ Revenue 2005: ~US$ 1.2 bn
ƒ Workforce: >7,000
ƒ Leading Supplier of
Industrial Software
(Product Lifecycle Management)
ƒ Headquarter: Plano / Texas
Page 21
March 2007
+
Real Factory
Siemens A&D
ƒ Global Market Leader in Industrial
Automation
ƒ Trendsetter in the area of Digital
Factory
ƒ Comprehensive Portfolio in
Automation Technology
Investor Roadshow
PG - Driving profitable growth
through optimized business mix
Sales in € bn
+4% p.a
10.1
ƒ Service segment growth
7.8
Service
30%
ƒ Focus on components
21%
- GT/ST
Components
33%
48%
- Compressors
- Oil&Gas solutions
- Wind
- Air Pollution Control
Turnkey (EPC)
46%
22%
Profit margin
Page 22
2000
2006
0.9%
7.8%
March 2007
ƒ World class EPC
Investor Roadshow
Clean energy offers multiple growth opportunities
Geothermal Power Stations
Wind
ƒ
ƒ
ƒ
ƒ
ƒ
2.3 MW onshore turbine
3.6 MW offshore turbine
+ 195% orders
+ 350% profit
Europe's largest wind park
€ 350 mn order value
ƒ Conversion of heat from low-temperature springs
into electrical energy
ƒ CO2-emission free base load supply
ƒ Additional Service business opportunities
Clean
Energy
Gasification
Air Pollution Control
SGT5-8000H
Efficiency increase targets
ƒ
ƒ
ƒ
ƒ
Wheelabrator
Advanced Burner Technology
Orders +56%
Book to Bill >2
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Sustec Î IGCC
CO2-free power plant (option)
Fuel flexibility
Lower emissions
Reduction of investment cost
Increase of efficiency
43% Î >50% (lignite)
47% Î >53% (hard coal)
58% Î >60% (CCPP)
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March 2007
Investor Roadshow
Medical hits profit target for six years in a row
and outpaces market growth
Group profit
margin
in € bn
15.1%
7,8 7,4
New
orders*
14.8%
8,1
7,1
12.8%
12.9%
8,6
9,3 8,3
7,6
ƒ Continuing
introduction of
trendsetting
“firsts”, e. g.
SOMATOM
Definition CT
ƒ Further market share
Sales*
2003
Enterprise
Value
Development
Highlights
2004
2005
+50%
2006
€ 16.3 bn
gains in 2006, notably
in CT and MI
ƒ Enhanced position in
In-vitro diagnostics
through DPC
€ 10.9 bn
(post Q3 vs. post Q3)
*Including effects from portfolio transactions: 2001 Acuson, Shared Medical Systems;
2003 Draeger joint venture; 2004 Divestment of Life Support Systems; 2005 CTI Molecular Imaging, 2006 DPC
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March 2007
Investor Roadshow
Med - World’s first integrated diagnostics company
ƒ Leading position in attractive In-vitro diagnostics market (IVD)
ƒ Rapid growth
ƒ Attractive margins
ƒ Strong Cash flow
ƒ Number 3 position1) in IVD, almost level with number 2
ƒ Strong position in immunodiagnostics
and gene based analysis
Workflow-oriented IT
Diagnosis
Prevention,
early detection
In-vitro
diagnostics
(IVD)
Pflege
In-vivo
diagnostics
(Imaging)
Therapy
Care
DPC & Bayer
Diagnostics
Sales 2005:
~ € 1.8 bn
Already covered by Siemens Medical Solutions
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March 2007
1) excluding “Personal Monitoring” (Blood Glucose) and Blood Screening
Investor Roadshow
Financial calendar FY 07*
April
April 26
Semiannual financial results FY07
June
June 21-22
Capital Market Days 2007
July
November
July 26
Third quarter financial results FY07 – conference call
November 8
Preliminary figures for FY07
* preliminary, updates will be posted at: www.siemens.com/financial_calender
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March 2007
Investor Roadshow
Reconciliations and definitions
”Group profit from Operations” is reconciled to ”Income before income taxes” of Operations under ”Reconciliation to financial
statements” on the table ”Segment information”. See ”Financial Publications/Quarterly Reports, FY2007Q1, Financial Statements” at
our Investor Relations website under www.siemens.com
ROE (Return on equity) margin for SFS was calculated as SFS' income before income taxes divided by the allocated equity for SFS.
Allocated equity for SFS as of September 30, 2006 was € 1,131 million.
The allocated equity for SFS is determined and influenced by the respective credit ratings of the rating agencies and by the expected
size and quality of its portfolio of leasing and factoring assets and equity investments and is determined annually. This allocation is
designed to cover the risks of the underlying business and is in line with common credit risk management banking standards. The
actual risk profile of the SFS portfolio is monitored and controlled monthly and is evaluated against the allocated equity.
Siemens ties a portion of its executive incentive compensation to achieving economic value added (EVA) targets. EVA measures the
profitability of a business (using Group profit for the Operating Groups and income before income taxes for the Financing and Real
Estate businesses as a base) against the additional cost of capital used to run a business (using Net capital employed for the
operations Groups and risk-adjusted equity for the Financing and Real estate businesses as a base). A positive EVA means that a
business has earned more than its cost of capital, whereas a negative EVA means that a business has earned less than its cost of
capital. Depending on the EVA development year-over-year, a business is defined as value-creating or value-destroying. Other
organizations that use EVA may define and calculate EVA differently.
Page 27
March 2007
Investor Roadshow
Siemens Investor Relations Team
Page 28
Marcus Desimoni
+49-89-636-32445
Roland Bischofberger
+49-89-636-36165
Frank Heffter
+49-89-636-34095
Irina Pchelova
+49-89-636-33693
Christof Schwab
+49-89-636-32677
Susanne Wölfinger
+49-89-636-30639
Webpage:
http://www.siemens.com
e-mail:
[email protected]
Telephone:
+49-89-636-32474
Fax:
+49-89-636-32830
March 2007
Investor Relations
Investor Roadshow