Siemens Aktiengesellschaft · XETR:SIE
Siemens Aktiengesellschaft — Siemens — Q2 2008 Earnings Presentation
30 slides from Siemens Aktiengesellschaft's earnings presentation, Apr 30, 2008
Slide 1: Executing Our TAP Agenda
Executing Our TAP Agenda Peter Löscher, President and CEO Joe Kaeser, CFO Q2 2008 Analyst Conference London, April 30, 2008 Copyright © Siemens AG 2008. All rights reserved.
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,”
Slide 3: Executing our Strategic Agenda
Executing our Strategic Agenda Our Principles … Key takeaways Execution of TAP agenda on track Increase Project issues under control TRANSPARENCY Full visibility on EPC problems at Energy (Fossil Power Generation): Fixes in place, Enforce transparency on change in business mix ACCOUNTABILITY
Slide 4: Second Quarter 2008 Financial Highlights
Second Quarter 2008 Financial Highlights Very strong organic order growth1) of 15% across all regions, with a book-to-bill of 1.3x 2% organic sales growth, but orders will drive 2x GDP growth for the year Strongest organic growth at PTD (+13%), A&D (+11%), and Osram (+6%) Growth rates at PG,
Slide 5: Order growth in Q2 confirms strong position in attractive markets
Order growth in Q2 confirms strong position in attractive markets Regional order growth 1) Continued strong order growth 2 x GDP (regional) Africa/NME/GUS 54% Germany 21% Asia / Pacific 19% China and Germany main growth Russia: +119% drivers Americas 10% China: +23% Rest of Europe 6% USA: +8% Contin
Slide 6: Major customer wins across all sectors
Major customer wins across all sectors Energy 130 Wind Turbines for two wind farms in Washington State Largest ever order (~€300m) for Medium Voltage from China Light & Power Two combined cycle units in Portugal for a value of ~€600m incl. service contract Health- Building and operation of a
Slide 7: Key value drivers show strong earnings conversion
Key value drivers show strong earnings conversion A&D Med PTD +310 bp +100 bp 17.5% 15.3% 16.3% +350 bp 14.4% 11.6% 8.1% 16.7% 14.2% 13.4% 12.5% Q2 2007 Q2 2008 Q2 2007 Q2 2008 Q2 2007 Q2 2008 PPA - € 10m PPA - € 35m PPA - € 37m PPA - € 50m OTC - € 2m OTC - € 9m OTC - € 52m Margin improvement driven
Slide 8: PG project review completed – no additional material impact
PG project review completed – no additional material impact Project Review completed Main actions taken Volume1) (€ bn) 12.6 Rigorous Limits of Authority process √ (100%) Single cycle Projects close to completion 80% Selective intake of new turnkey contracts 'Core business' combined cycle
Slide 9: Business mix will drive higher Fossil PG margins
Business mix will drive higher Fossil PG margins Backlog in Fossil Turning turnkey backlog into sales € 22.5 bn Backlog in € bn 08/03/31 6.6 New orders in 07-08 5.9 more profitable than 2,2 1,8 1,5 older projects 3,0 71% 29% 1,3 0,5 Challenges from Turnkey Olkiluoto - project 4Q 07 Turned New 2Q 08
Slide 10: TS projects with limited additional charges so far
TS projects with limited additional charges so far Status of project review Main actions taken Backlog1) (€ bn) 14.0 Remaining Projects Strengthening of Limits of Authority process 10.6 (73%) Proactive contract management Increased investments in development of platforms, e.g. Desiro Mainline
Slide 11: SG&A target translated into € 1.2 bn cost reduction plan
SG&A target translated into € 1.2 bn cost reduction plan Main drivers SG&A cost reduction € bn, as reported1) Reporting dates Milestones (deliverables) November 2007 New organization approved Supervisory Board Managing Board incl. Sector CEO approved Sector CFO named December 2007 Division C
Slide 12: Accountability of business leaders for SG&A reduction
Accountability of business leaders for SG&A reduction Breakdown of reported SG&A costs, FY 2007, € bn 1.7 12.1 0.7 2.0 1.0 1.7 1.7 0.3 1.4 8.9 6.0 0.3 5.1 3.2 0.7 0.9 Corporate Industry Energy Healthcare Cross-sector Total SG&A businesses and Sales cost others G&A cost Page 12 April 2008 Q2 2008 Ana
Slide 13: Key G&A improvement areas and levers
Key G&A improvement areas and levers Reported G&A cost, € bn Key improvement areas Baseline FY 2007 ∼3.2 Leverage new Consolidation of headquarter central functions from 8 Groups into 3 Sectors (e.g., sector organization in accounting, controlling, communication) Leverage new regional Bundling o
Slide 14: Levers for sales cost reduction and efficiency gains
Levers for sales cost reduction and efficiency gains Reported sales cost, € bn Key improvement areas Bundling of infrastructure in Clusters FY 2007 ∼8.9 Integration of legal entities Streamlining of sales mgt. structures Discontinuation of major IT projects Bundling of shared services to d
Slide 15: SG&A reduction targets are clearly defined
SG&A reduction targets are clearly defined SG&A target costs, FY 2010, € bn 1.5 10.9 0.7 2.1 0.8 1.9 1.7 0.2 1.5 8.4 5.0 0.2 4.3 0.6 0.7 2.5 0.6 Corporate Industry Energy Healthcare Cross-sector Total SG&A businesses and Sales cost others G&A cost Page 15 April 2008 Q2 2008 Analyst Conference Copyri
Slide 16: Cutting and growing
Cutting and growing SG&A reduction (absolute) SG&A reduction with growth at 2x GDP SG&A in EUR billions, as reported1) SG&A in terms of sales -20% (%)2) 16,7% 13,4% -10% GDP growth = 2% p.a. 12,1 10,9 -24% 16,7% 12,6% GDP growth = 3% p.a. -28% 16,7% 11,9% GDP growth = 4% p.a. 2007 2010 2007 2010 Mar
Slide 17: Execution roadmap for SG&A program
Execution roadmap for SG&A program Milestones Deliverables January / February 2008 Official launch: Global G&A Program and Siemens Sales Project March 2008 Alignment on binding cornerstones of future G&A setup Decision on regional clusters and governance model April 30, 2008 Overview on program goal
Slide 18: Ahead of schedule to exit Other Operations by 2009
Ahead of schedule to exit Other Operations by 2009 Reporting dates Milestones (deliverables) November 2007 New organization approved Supervisory Board Managing Board incl. Sector CEO approved Other Operations FY 07 revenues of € 2.9 bn Sector CFO named December 2007 Division CEO and CFO name
Slide 19: Share buyback tranche successfully executed
€ 2 bn share buyback tranche successfully executed Reporting dates Milestones (deliverables) November 2007 New organization approved Supervisory Board Managing Board incl. Sector CEO approved Sector CFO named December 2007 Division CEO and CFO named January 2008 New target margins for Ener
Slide 20: Development of Industrial Net Debt (adjusted)
Development of Industrial Net Debt (adjusted) Therein: Therein:. Pension deficit +1.0 bn Pension deficit 0.0 bn OPEB +0.8 bn OPEB +0.6 bn Credit guarantees +0.4 bn Credit guarantees +0.5 bn Hybrid adj. -1.0 bn Hybrid adj. -0.9 bn SFS adj. -6.7 bn SFS adj. -7.2 bn 1.5 bn 0.5 bn Ne
Slide 21: Clear improvement in CAPEX ratios and NWC turns
Clear improvement in CAPEX ratios and NWC turns Net Working Capital turns CAPEX ratios Total Groups (Operating Business) Capex/ NWC1) Turns X 100% Depreciation 10 150% 144% 9.4 140% 9 8.8 9.2 127% 130% 131% 8.3 8.0 122% 8 8.0 120% 115% 115% 7.4 7.4 7.2 110% 109% 106% Target 7 110% 109% Range 6.9 100
Slide 22: Fit4 2010 status – Q2 2008
Fit42010 status – Q2 2008 Margin (based on Q2 2008 YTD) Cash Conversion Rate (Cont. Op.) 1.18 A&D 16.0% CCR CCR 0.31 0.32 I&S 7.0% Target Target SBT 7.0% 0.87 0.96 Osram 10.0% 0.87 0.86 TS -7.0% PG -2.0% PTD 11.0% Q2 2007 YTD Δ Q2 2008 YTD Med 13.0% FCF3) 2.259 bn - 853 m 1.406 bn SIS 1.0% Profit4)
Slide 23: Consistent Execution against our Plan
Consistent Execution against our Plan Reporting dates Milestones (deliverables) November 2007 New organization approved Supervisory Board Managing Board incl. Sector CEO approved Sector CFO named December 2007 Division CEO and CFO named January 2008 New target margins for Energy and Indust
Slide 24: Outlook 2008
Outlook 2008 Organic revenue growth for the fiscal year will be twice the rate of GDP growth Group Profit from Operations will match prior year’s level Income from Continuing Operations will match prior year’s level This outlook excludes earnings impacts that may arise from legal and regulator
Slide 25: Outlook 2010
Outlook 2010 Restructuring story intact Project management under control Commitment to 2010 targets Page 25 April 2008 Q2 2008 Analyst Conference Copyright © Siemens AG 2008. All rights reserved.
Slide 26: Financial Calendar
Financial Calendar May 20, 2008 May EPG conference – Joe Kaeser, CFO June 2008 Post Q2 roadshows with CEO and CFO in Paris (June 3), New York and Boston (June 9-10), London (June 12), Frankfurt (June 13) June June 4, 2008 Deutsche Bank German & Austrian Corporate Conference – Joe Kaeser, CFO June 12
Slide 27: Reconciliation and Definitions for Non-GAAP Measures (I)
Reconciliation and Definitions for Non-GAAP Measures (I) Group profit from Operations is reconciled to Income before income taxes of Operations under Reconciliation to financial statements on the table Segment Information. See our Financial Publications at our Investor Relations website under www.si
Slide 28: Reconciliation and Definitions for Non-GAAP Measures (II)
Reconciliation and Definitions for Non-GAAP Measures (II) Average calculation for CE*: Year-to-Date Q1 2 Point average: (CE ending Q4 Prior year + CE ending Q1) / 2 Q2 3 Point average: (CE ending Q4 Prior year + CE ending Q1 + CE ending Q2) / 3 Q3 4 Point average: (CE ending Q4 Prior year + CE endin
Slide 29: 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
Slide 30: Siemens Investor Relations Team
Siemens Investor Relations Team Michael Sen +49-89-636-33780 Gerald Brady +1-408-492-4439 Florian Flossmann +49-89-636-34095 Sabine Groß +49-89-636-35755 Dr. Martin Meyer +49-89-636-33693 Christof Schwab +49-89-636-32677 Dr. Gerd Venzl +49-89-636-44144 Susanne Wölfinger +49-89-636-30639 Webpage: htt