Siemens Aktiengesellschaft · XETR:SIE

Siemens Aktiengesellschaft — Siemens — Q4 2008 Earnings Presentation

37 slides from Siemens Aktiengesellschaft's earnings presentation, Nov 13, 2008

1. Slide 1: TAP: Focus on Execution – Delivering in 2009

   TAP: Focus on Execution – Delivering in 2009 Peter Löscher, President and CEO Joe Kaeser, CFO Annual Analyst Conference London, November 13, 2008 Copyright © Siemens AG 2008. All rights reserved.

2. Slide 2: Safe Harbour Statement

   Safe Harbour Statement This document contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words such as “expects,” “looks forward to,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,”

3. Slide 3: TAP: Focus on execution – delivering in 2009

   TAP: Focus on execution – delivering in 2009 Our principles… Key takeaways ƒ Solid results in Q4 and FY08 ƒ Company transformation ahead of schedule ƒ Significant progress in resolving legal and regulatory Increase matters – provision of ~€1bn accrued TRANSPARENCY ƒ Focus on management controlled ac

4. Slide 4: Highlights of Q4 2008

   Highlights of Q4 2008 ƒ Solid top line growth 1): order growth +6%, revenue growth +9%, book-to-bill 1.03x ƒ Order growth driven by Energy (+24%): Fossil (+48%), Power Transmission (+62%), Power Distribution (+18%) ƒ High single digit order growth at cyclical businesses such as Industry Automation (

5. Slide 5: Top-line growth exceeds target of 2x GDP

   Top-line growth exceeds target of 2x GDP Order Growth y-o-y 1) Order Revenue growth 1) growth 1) >2x GDP 2) +13% Siemens 6% 9% Europe / C.I.S. / Africa Target Tough Industry 0% 8% 5.6% (therein Germany) +12% comp Q4 07 FY 08 +14% Industry Automation 8% 12% Americas +4% (therein USA) Drive Technologi

6. Slide 6: Guidance delivered in FY08

   Guidance delivered in FY08 Total Sectors Profit €m 6,845 Δ 183m Delivery 174 6,662 Guidance 151 6,520 FY07 Sector Profit Mobility Healthcare Sector Profit FY08 Transformation Transformation FY08 as reported costs costs excl. Transformation costs Note: Osram transformation charges were offset by a €1

7. Slide 7: Transformation ahead of schedule

   Transformation ahead of schedule Focused organization and strong leadership team in place SG&A program on schedule – majority of restructuring charges booked in Q4 Capital allocation – €4bn returned to shareholders in 2008 (out of €10bn targeted for 2010) Streamlining of non-core assets well ahead o

8. Slide 8: Our strength in emerging markets drives growth

   Our strength in emerging markets drives growth Revenue share1) in emerging markets2) Revenue growth 2007-08 2x GDP in % Brazil 29% 31% Russia 25% China 18% 12.5% of India 12% 19% Revenue 19% Other emerging markets Expected GDP growth 2008-10 2.7% World GDP 14% China 8.4% 13% BRIC India 7.3% 5% Russi

9. Slide 9: More resilient portfolio and services reduce cyclicality

   More resilient portfolio and services reduce cyclicality Increased resilience of portfolio Resilient service business Siemens portfolio (% of sales1)) Product related services (€bn revenue4)) 13.5% Focus 100% 100% 100% topic going 3% forward 7%3) 10.7 38% 14% Other2) 47% 8.3 7%3) 28% Healthcare 8% 8

10. Slide 10: Strong order backlog provides visibility

    Strong order backlog provides visibility Strong new order growth Strong backlog €bn New order and revenues – €bn Order backlog 2) trailing 4 quarters 1) 40 85 New 70 7 90 Orders Healthcare 6 45 45 Revenue Energy 34 70 Industry 30 34 50 2007 2008 2009 >2009 2003 2008 ƒ New orders grew stronger than r

11. Slide 11: Comprehensive "Energy Efficiency" portfolio

    Comprehensive "Energy Efficiency" portfolio Generation to Transmission & Distribution Efficient Energy Consumption Fossil Power Integrated Drive Generation ƒ Record efficiency of Technologies ƒ 60–70% maximum >60% for CCPP1) energy savings ƒ CO2 reduction by -40% ƒ 57 Mt CO2 p.a. abatement against g

12. Slide 12: Leading position in high voltage power transmission

    Leading position in high voltage power transmission HVDC 1) electrical power Leading position in transmission fast growing market ƒ Economic and reliable electrical power HVDC market transmission over great distances in €bn 4.0 ƒ High transmission capacity, lowest energy 3.2 losses and corresponding

13. Slide 13: Increased efficiency and flexibility of cost base

    Increased efficiency and flexibility of cost base Headcount in low-cost countries 1) in % ƒ Increasing market presence in LCC headcount: emerging markets + 11% p.a. 25% ƒ Strong manufacturing footprint (40–60%) in low cost countries to reduce COGS 14% ƒ Further investments to grasp market opportunit

14. Slide 14: LCC sourcing – key productivity driver

    LCC sourcing – key productivity driver Siemens LCC Sourcing FY 2008 ƒ Currently only ~20% of LCC ~€40bn purchased in LCC 1) Sourcing ƒ LCC sourcing will become ~20% additional strategic priority of TAP in 2009 as part of new supply chain initiative ~80% HCC Sourcing Sectors LCC sourcing share FY 200

15. Slide 15: Year of transition 2008 incurred significant charges

    Year of transition 2008 incurred significant charges Project charges Charges Q4 08 Q1 & Q2 08 €m €m ~1,100 1,081 Total Cash Outflow from FY08 charges ~1,000 ~1,000 2008 2009 ≥ 2010 €m €m €m ~1,780 ~2,430 ~810 390 151 174 162 129 133 PG, TS, SIS Mobility Healthcare Osram Other Fossil, SG&A Siemens Le

16. Slide 16: Strong underlying earnings conversion

    Strong underlying earnings conversion FY08 underlying incremental margins1) Drivers in % 2010 Target range Industry: ƒ Driven by IA and DT with excellent 28% earnings conversion above 25% 22% Energy: 20% ƒ Driven by Power Transmission (37%) 18% and Power Distribution (25%), and adversely affected by

17. Slide 17: Update on our financial cockpit

    Update on our financial cockpit Capital structure Cash conversion Adj. industrial net debt / EBITDA 1 – growth rate 0.8x – 1.0x 3.09 0.76 1.73 Cash Capital 0.42 structure FY 2007 FY 2008 FY 2007 FY 2008 Growth Capital efficiency >2x GDP ROCE 14 – 16% Capital Growth 10% efficiency 12.7% 9% 11.0% 6.2%

18. Slide 18: SG&A cut – supporting margins in the downturn

    SG&A cut – supporting margins in the downturn SG&A cost reduction Margin impact with growth at 2x GDP €bn, as reported1) Percentage of sales2) 170 bp -10% 16.7% 15.0% GDP growth 12.1 = 0% p.a. 10.9 330 bp 16.7% 13.4% GDP growth = 2% p.a. 480 bp 16.7% 11.9% GDP growth = 4% p.a. 2007 2010 2007 2010 1)

19. Slide 19: SG&A program on schedule

    SG&A program on schedule SG&A in €bn ƒ Absolute SG&A costs slightly down on a comparable basis2) despite strong sales growth and cost inflation 13.6 0.9 Restructuring ƒ Relative SG&A costs reduced from charges4) 16.7% to 16.4% of sales3) 12.7 ƒ Restructuring charges4) of ~€900m Portfolio booked as S

20. Slide 20: IT cost reduction of €300m in 2009

    IT cost reduction of €300m in 2009 IT cost in SG&A in € bn Top IT cost reduction areas Status -23% 1 Global Infrastructure: ƒ Negotiation of global supplier contracts (e.g. voice, network, desktop) 1.3 0.3 ƒ Deployment of IT market standards 2 Global Projects & Services: ƒ Streamlined IT portfolio m

21. Slide 21: Other Operations – consolidation ahead of schedule

    Other Operations – consolidation ahead of schedule Breakdown of OOP Target scenarios Implementation status OOP business activities OOP business activities OOP business activities Revenue Implementation status by activities in €bn ƒ 187 business activities Exit via 2.3 ƒ Primary outside Germany ramp-

22. Slide 22: Tight grip on Working Capital & Capex

    Tight grip on Working Capital & Capex Net Working Capital turns Capex ratios Total Groups Total Sectors Total Groups Total Sectors Capex / NWC1) Turns Depreciation 10 150% 145% 9 8.6 140% 135% 8.0 8 130% 127% 7.4 7.2 125% 7 120% 116% 115% 6.9 115% 6.5 Target 6 As reported 110% 110% 113% Range Compar

23. Slide 23: Cash Conversion exceeds target across all sectors

    Cash Conversion exceeds target across all sectors …but transformation charges will materialize in Excellent Cash Conversion 1) in Q4 … 2009 and beyond 2.89 Q4 08 FY08 FY09 FY10 Industry2) €m 2.22 2.06 Mobility in Motion -151 1.87 (P&L impact) Expected cash 0 ~50% ~12% outflow (%) Energy €m Fossil pr

24. Slide 24: Financial flexibility and healthy liquidity position

    Financial flexibility and healthy liquidity position Liquidity analysis FY08 €bn Strong Cash generation 11.2 13.0 ƒ FCF of €2.8bn in Q4 driving the cash position to €6.9bn EUR 6.1bn undrawn credit facilities Cash and 6.9 equivalent ƒ USD 3bn, maturity Aug 2013 ƒ USD 5bn, maturity March 2012 ƒ €450m,

25. Slide 25: Strong balance sheet and conservative maturity profile

    Strong balance sheet and conservative maturity profile Leverage (total debt / capital1)) in % 38% 37% ƒ Strong balance sheet: Low 35% 36% 35% 34% leverage ~33% even during 32% last recession 29% ƒ Conservative financial 25% policy: 2000 2001 2002 2003 2004 2005 2006 2007 2008 ƒ Long-term loan and bo

26. Slide 26: Capital efficiency (ROCE)

    Capital efficiency drives resource allocation high Profiteers Top Divisions Capital efficiency (ROCE) O CE 16% R – 14 Industry Substance Energy Keepers High Growth Divisions low Healthcare 2x GDP growth Organic growth Page 26 November 13, 2008 Annual Analyst Conference 2008 Copyright © Siemens AG 20

27. Slide 27: Significant increase of payout to shareholders

    Significant increase of payout to shareholders Payout to shareholders in €bn Dividend paid 5.38 Share buyback €4bn out of €10bn Dividend per share (in €) until 2010 – quarterly decisions 4.00 Dividend CAGR ~7.0% 1.29 1.46 1.11 1.20 0.89 0.90 0.99 1.38 2001 2002 2003 2004 2005 2006 2007 2008 1.00 1.0

28. Slide 28: Since 2009 guidance macro environment deteriorates

    Since 2009 guidance macro environment deteriorates Global GDP growth 2009E 1) ISM Purchasing Manager Index -28% -22% 3.5% 3.5 3.2% 55 50.7 50.0 2.9% 48.6 3.0 50 45 2.5 Guidance 2.1% Guidance 38.9 2009 40 2009 2.0 35 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Euro-zone Manufactur

29. Slide 29: What we expect in 2009

    What we expect in 2009 ƒ Growth target remains unchanged despite macro economic adversity: 2x global GDP growth ƒ Income targets become more ambitious due to market conditions ƒ Total Sectors unchanged: €8.0–8.5bn ƒ Growth in income from continuing operations expected to exceed growth in Total Secto

30. Slide 30: TAP – consistent execution against plan

    TAP – consistent execution against plan Reporting dates Milestones (deliverables) November 2007 ƒ New organization approved Supervisory Board ƒ Managing Board incl. Sector CEO approved ƒ Sector CFO named December 2007 ƒ Division CEO and CFO named January 2008 ƒ New target margins for Energy and Indu

31. Slide 31: Thank you for your attention

    Thank you for your attention Page 31 November 13, 2008 Annual Analyst Conference 2008 Copyright © Siemens AG 2008. All rights reserved.

32. Slide 32: Financial calendar

    Financial calendar November 24, 2008 November Post-Q4 roadshows with IR in Paris December 2-4, 2008 Post-Q4 roadshows with CEO / CFO in London and New York December December 17-18, 2008 Capital Market Days "Industry", Munich January 27, 2009 January Q1 financial report and analyst conference call An

33. Slide 33: Questions and Answers

    Questions and Answers Annual Analyst Conference London, November 13, 2008 Copyright © Siemens AG 2008. All rights reserved.

34. Slide 34: Siemens investor relations contact data

    Siemens investor relations contact data Michael Sen +49-89-636-33780 Munich Office +49-89-636-32474 US Office +1-408-464-2004 Internet: http://www.siemens.com/investorrelations Email: [email protected] Fax: +49-89-636-32830 Page 34 November 13, 2008 Annual Analyst Conference 2008 Copyrig

35. Slide 35: Reconciliation and Definitions for Non-GAAP Measures (I)

    Reconciliation and Definitions for Non-GAAP Measures (I) Profit Total Sectors is reconciled to "Income from continuing operations before income taxes" under “Reconciliation to consolidated financial statements" in the table "Segment Information." See our Financial Publications at our Investor Relati

36. Slide 36: Reconciliation and Definitions for Non-GAAP Measures (II)

    Reconciliation and Definitions for Non-GAAP Measures (II) Average Capital employed and average Assets for the fiscal year is calculated as a "five-point average" obtained by averaging Capital employed and Assets at the beginning of the first quarter plus the final figures for all four quarters of th

37. Slide 37: Reconciliation and Definitions for Non-GAAP Measures (III)

    Reconciliation and Definitions for Non-GAAP Measures (III) Our capital structure target is based on an Adjusted industrial net debt divided by EBITDA (adjusted). For the calculation of Adjusted industrial net debt, we subtract from Net debt (defined as Long-term debt plus Short-term debt and current

Siemens — Q4 2008 Earnings Presentation on 6ix