Siemens Aktiengesellschaft · XETR:SIE
Siemens Aktiengesellschaft — Siemens — Q2 FY2014 Earnings Presentation
46 slides from Siemens Aktiengesellschaft's earnings presentation, May 7, 2014
Slide 1: Siemens – Vision 2020
Joe Kaeser, President and CEO – Ralf P. Thomas, CFO Siemens – Vision 2020 Q2 FY 2014, Analyst y and Press Conference Berlin, May 7, 2014 © Siemens AG 2014. All rights reserved.
Slide 2: Safe Harbour Statement
Safe Harbour Statement This document contains statements related to our future business and financial performance and future events or developments involving Siemens that may constitute forward-looking statements. These statements may be identified by words such as “expect,” “look forward to,” “anti
Slide 3: Q2 FY 2014 – Key figures
Q2 FY 2014 – Key figures Siemens (continuing operations operations, in €m) Q2 FY 13 Q2 FY 14 Change Orders 21,235 18,430 -10%1) Revenue 17,779 17,449 1%1) Book-to-bill ratio 1.19x 1.06x Total Sectors profit 1,348 1,566 16% Net income 1,030 1,153 12% Basic earnings per share net income (in €) 1.20 1.
Slide 4: Energy – Performance held back by lower revenues and execution challenges
Energy – Performance held back by lower revenues and execution challenges Key Figures Energy Main developments in Q2 €bn €m • Book-to-bill at 1.09 despite sharp order decline Orders 1) Revenue 1) Profit 2) in Europe/CAME region -23% • Market environment remains challenging 10.5% 8.6% 8.5 -6% 8.8% •
Slide 5: Healthcare – Continued excellent performance on high level despite currency headwinds
Healthcare – Continued excellent performance on high level despite currency headwinds Key Figures Healthcare Main developments in Q2 €bn €m • Order growth supported by strong service Orders 1) Revenue 1) Profit 2) business and improvement in Europe while revenue growth is broad based 15.3% 15.5% • S
Slide 6: Industry – Profit climbs as short cycle businesses continue stabilizing
Industry – Profit climbs as short cycle businesses continue stabilizing Key Figures Industry Main developments in Q2 €bn €m • Short cycle markets show continuing Orders 1) Revenue 1) Profit 2) stabilization, with positive order growth particularly in Germany and China +12% 10.5% 13.2% +5% • Industry
Slide 7: Infrastructure & Cities – Higher profit on improvements in execution, mix and productivity
Infrastructure & Cities – Higher profit on improvements in execution execution, mix and productivity Key Figures Infrastructure & Cities Main developments in Q2 €bn €m • Positive book-to-bill of 1.05 on tough comps Orders 1) Revenue 1) Profit 2) due to major rail orders 4.7% 7.2% • Transportation &
Slide 8: Lower volume from large orders in Europe while China shows strength
Lower volume from large orders in Europe while China shows strength Regional business split Purchasing Managers Index Q2 FY 14 Order growth y-o-y1) Index US ISM Mfg PMI Eurozone Mfg PMI 65 Expanding economy Europe/C.I.S./Africa/ME -26% 60 ((therein Germany) y) -38% 38% 55 53.72) 50 53.3 Americas +10
Slide 9: Outlook Fiscal 2014
Outlook Fiscal 2014 Basic earnings per share (Net income) • We expect our markets to remain challenging in Fiscal 2014 In € At least 15% • Our short cycle businesses are not growth anticipating a sustainable recovery until 6.55 late in the fiscal year • We expect orders to exceed revenue, 5.08 for a
Slide 10: Siemens – Vision 2020: Strategic focus
Siemens – Vision 2020: Strategic focus 1 Long-term growth agenda in attractive fields 2 Align portfolio along strategic imperatives 3 Cost reduction and business excellence Ownership culture and leadership based on common values © Siemens AG 2014. All rights reserved. Page 10 Berlin, May 7, 2014 Q2
Slide 11: Siemens – Innovating the Electrical World
Siemens – Innovating the Electrical World Global trends Market development (illustrative) Digital transformation Market growth: ~7-9% Networked world of complex and hetero- geneous systems Digitalization Globalization Market growth: ~4-6% Global competition Automation driving productivity & localiza
Slide 12: Stringent resource allocation for growth fields in Electrification, Automation and Digitalization
Stringent resource allocation for growth fields in Electrification Automation and Digitalization Electrification, Selected growth fields Digitalization Business Analytics & Data-driven Services Software & IT solutions 8% 'Digital twin' Image Distribution Software guided Grid Road & City Key Therapy,
Slide 13: Acquisition of Rolls-Royce's Aero Derivative Gas Turbine business offers great value
Acquisition of Rolls-Royce's Aero Derivative Gas Turbine business offers great value Transaction scope Transaction rationale 3) • Acquisition of 100% of Rolls-Royce's aero-derivative gas 1 Excellent fit – complementary technologies turbine (ADGT) and compressor business including related services bu
Slide 14: Automation is key to success
Automation is key to success Nano grids Decentral generation Intelligent grid e g Wind e.g. Wind, in one building Industrial, Photovoltaics Data centers, etc. Micro grids Grid storage Campus with island Commercial & Utilities e.g. batteries function (generation & P bli Public consumption) Controllab
Slide 15: Digitalization: From data to business
Digitalization: From data to business Digitalization Attractive market in Siemens verticals Substantial profit margins achievable Market (€bn)1 IT enhanced >30% Services 100 So t a e Software Software S ft & 56 CAGR >20% +8% products Vertical IT Solutions Automation Combined SW 2012 2020 >15% & HW s
Slide 16: Unconventional Oil & Gas opportunities in North America remain very attractive
Unconventional Oil & Gas opportunities in North America remain very attractive Global unconventional O&G supply development Regional capex split for unconventionals, Production in Mbbl/d Production, top 5 countries in 2025, 2025 USD billion 1.1% +3% 40 4.1% 272 257 35 +7% 9.3% 30 210 110 190 119 25
Slide 17: Healthcare with higher entrepreneurial flexibility – separately managed under the Siemens umbrella
Healthcare with higher entrepreneurial flexibility – separately managed under the Siemens umbrella Strong position, resilient performance Distinct trends at work Margin • Customer & market structures in tran- range sition (e.g. value-based reimbursement, Profit 16.3% 15-19% convergence of diagnosis
Slide 18: Going public of Hearing Aids business creates an opportunity
Going public of Hearing Aids business creates an opportunity • Attractive Att ti market:k t Secular growth, good margins • Strong Siemens performance Success factors ✓ in place p • Competitive technological g basis • Highly respected brand Timing is right: Receptive stock Attractive market • However
Slide 19: In depth analysis of businesses has led to specific conclusions
In depth analysis of businesses has led to specific conclusions Portfolio analysis Conclusions Cumulated Profit Focus • Fix underperforming businesses starting with 'bottom 10' businesses • Decide along the Strategic Imperatives • Organic structural realignment Cumulated Revenue • Strategic partners
Slide 20: JV with Mitsubishi-Hitachi Heavy Machinery creates a global prime supplier of metals technologies
JV with Mitsubishi-Hitachi Heavy Machinery creates a global prime supplier of metals technologies Siemens Metals Technologies Transaction Structure • One of the world's leading life-cycle partners to the metallurgical industry, headquartered in Linz (Austria) Siemens MHI Hitachi IHI • FY 2013 revenu
Slide 21: Simplification leads to reduction of overhead and support function cost by ~€1bn
Simplification leads to reduction of overhead and support function cost by ~€1bn Target Key actions Functional cost reduction • Remove additional layers (Cluster, Sectors) • Combine certain Divisions and Businesses ~€1bn • Stringent management governance through all levels of the organization (Corpo
Slide 22: Flat and market driven organization along the value chain will capture growth opportunities
Flat and market driven organization along the value chain will capture growth opportunities Go-to-marrket Middle Europe, Asia, Global Americas East, CIS1) Africa Market Australia Healthcare Separately managed Healthcare Power Wind Energy Building Mobility Digital Process Financial and Gas Power and
Slide 23: The Management model drives resource allocation and Ownership culture makes the difference
The Management model drives resource allocation and Ownership culture makes the difference Customer and business focus People and leadership Ownership Governance culture Management g model One Siemens Financial framework Operating system – Corporate Memory Customer Business People proximity Innovati
Slide 24: One Siemens Financial Framework sets the aspiration
One Siemens Financial Framework sets the aspiration One Siemens Financial Framework Siemens Capital efficiency Capital structure Growth: (ROCE2)) (Industrial net debt/EBITDA) Siemens > most 15-20% up to 1.0x relevant competitors1) (Comparable revenue growth) Total cost productivity3) Dividend payout
Slide 25: Rigorous Operating System reinforces business excellence
Rigorous Operating System reinforces business excellence Enabler Priorities & Results (by metrics) • Key account management Customer proximity • Market development boards • Software architecture and platforms Innovation • New technology driven growth areas • Mandatory elements of top+ framework (Ben
Slide 26: Corporate Memory for Project Management
Corporate Memory for Project Management Lessons Actions for Learnings g applied: pp BORWIN 3 l learned d from f project j t bid & legacy projects execution phase Offshore grid-connection platform • Extended project duration (5 years) Typical risks and root causes • Focus on HVDC grid – not a steel i
Slide 27: Foster ownership culture through equity ownership and leadership based on shared values
Foster ownership culture through equity ownership and leadership based on shared values Leadership based Foster equity ownership on shared h d values l Employees owning shares from Siemens Share plans (in thousand) “It is not the >50% 52% strategy which 140 makes the 92 difference, but the culture o
Slide 28: Value creation & Cultural change
Siemens – Vision 2020 Value creation & Cultural change Siemens – Vision 2020 1. Stringent company governance with effective support functions (cost reduction ~€1bn) 2. 'Underperforming' businesses fixed 3. Solid execution of our financial target system • Capital efficiency: ROCE 15-20% • Growth > mo
Slide 29: Clear milestones until 2016
Siemens – Vision 2020 Clear milestones until 2016 Until Execution steps p Q4 2014 Execution of ‘Siemens 2014’ measures Implementation p of new organization, g , start in new structure on Oct 1 Introduction of Incentive System 2015 Sharpening p g brand message g starting g in Oct 2014 Q2 2015 Update
Slide 30: Appendix
Appendix © Siemens AG 2014. All rights reserved. Page 30 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press Conference
Slide 31: Overview of businesses (I)
Overview of businesses (I) €14bn1) ~€14bn €5bn1) ~€5bn Power and Gas Wind Power and Renewables CEO: Roland Fischer CEO: Markus Tacke Strongly positioned in core markets: Unique competitive position: Gas Turbines, Generators, Products Clear #1 position in fast growing Offshore Wind Steam Turbines, So
Slide 32: Overview of businesses (II)
Overview of businesses (II) €12bn1) ~€12bn Power Generation Service Energy Management CEO: Randy Zwirn CEO: Ralf Christian, Jan Mrosik High margin/constant flow of revenue: Seamless offering Service, modernization and upgrades of Transmission (High Voltage Products, Solutions) (T) Large Gas Turbines
Slide 33: Overview of businesses (III)
Overview of businesses (III) €6bn1) ~€6bn €7bn1) ~€7bn Building Technologies Mobility CEO: Johannes Milde CEO: Jochen Eickholt Strong technology base and integrated solutions Strengthened portfolio Products & Systems Mobility Management (Rail Automation, Road and Solutions & Services City Mobility)
Slide 34: Overview of businesses (IV)
Overview of businesses (IV) €9bn1) ~€9bn €11bn1) ~€11bn Digital Factory Process Industries and Drives CEO: Anton Huber CEO: Peter Herweck Shaping future of manufacturing Bundling process know-how Factory Automation (IA) Large Drives, Mechanical Drives (DT) Motion Control (DT) Process Automation (IA)
Slide 35: Overview of businesses (V)
Overview of businesses (V) €13.6bn1) ~€13.6bn €18.7bn2) Healthcare Financial Services CEO: Hermann Requardt CEO: Roland Chalons-Browne Personalized and affordable Healthcare Combine industrial and financial logic Imaging Commercial Finance Clinical Products Project & Structured Finance Diagnostics I
Slide 36: ROCE in target corridor despite impact on Energy margins
One Siemens cockpit – H1 FY 2014 ROCE in target corridor despite impact on Energy margins Financial target system Growth1) Margins compared to industry benchmarks Revenue growth (rolling 4 quarters Q2 FY 14) EBITDA Margins (H1 FY 2014) Energy 8 5% 8.5% 10-15% Siemens -1.9% Healthcare 20.2% 15-20% -4
Slide 37: Decent performance in Q2 after a weak start in Q1
Free Cash Flow Decent performance in Q2 after a weak start in Q1 €m Operating Working Capital (OWC) turns Total Sector 5,328 9.0 7.7 4,700 7.1 FY 2012 FY 2013 Q2 FY 2014 992 703 291 -699 -61 FY 2012 FY 2013 - 676 - 1,204 FY 2014 -1,395 O Oct N Nov D Dec J Jan F b Feb M Mar A Apr M May J Jun J l Jul
Slide 38: Excellent fit – complementary technologies
1 Excellent fit – complementary technologies Product portfolio with full power output range Complementary technology strengths for both technologies MW 0 20 40 60 Only on-site service possible Good G d gas fuel f l flflexibility ibilit SGT- SGT- SGT- 100 300 500 SGT-700 SGT-800 Stable proven D
Slide 39: Strengthens focus area Oil & Gas and Decentralized Power
2 Strengthens focus area Oil & Gas and Decentralized Power Rolls-Royce ADGT Business Siemens Rolls-Royce ADGT Business' new equipment1) Siemens new equipment revenue by sector revenue by sector Industrial Power Oil & G Gas Generation • Improved access for ~1/4 Siemens to the Oil & Gas sector and the
Slide 40: Innovation leader with 'best in breed' gas turbines supported by access to aero technology
3 Innovation leader with ''best in breed'' gas turbines supported by access to aero technology Rolls-Royce: ADGTs Industrialisation of ADGTs: Improved competitiveness through industrial instead of aero parts Significant innovation potential through combined technology know-how to develop Siemens: IG
Slide 41: World-class global service platform
4 World class global service platform World-class Strong combined service platform Large installed fleet Sites over 5 FTEs ~5,600 employees in total Small & medium industrial gas Aero derivative turbines Compressors gas turbines >10,000 units ~2,250 units ~2,500 units >1,700 units Siemens ~4,600 4,6
Slide 42: Significant synergies and enabling business
5 Significant synergies and enabling business Cost • Purchasing synergies: Savings through higher synergies purchase volume and broader supplier base • Process optimisation & design to cost: Industrialisation £50m+ annual gross of ADGT parts cost synergies in FY2017 with further • Manufacturing syne
Slide 43: Financial calendar
Financial calendar May May 7, 2014 Q2 Earnings Release and Strategy Update (Berlin) May 21, 2014 Roadshow France (Paris) May 22, 2014 Roadshow Germany (Frankfurt) May 28 28, 2014 Roadshow Canada (Montreal) May 29, 2014 Bernstein Conference (New York) June June 12, 2014 g Conference ((London)) JP Mor
Slide 44: Siemens press contacts
Siemens press contacts Marc Langendorf +49 89 636-41360 636 41360 Alexander Becker +49 89 636-36558 I Ivonne Junghänel J hä l +49 49 89 636 636-33929 33929 Wolfram Trost +49 89 636-34794 Internet: www.siemens.com/press Email: press@siemens com [email protected] Phone: +49 89 636-33443 Fax: +49 89 63
Slide 45: Siemens Investor Relations contact data
Siemens Investor Relations contact data IR H tli IR-Hotline: +49 89 636 32474 +49-89-636-32474 Fax: +49-89-636-32830 Internet: http://www.siemens.com/investorrelations Email: [email protected] © Siemens AG 2014. All rights reserved. Page 45 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Pre
Slide 46: Reconciliation and Definitions for Non GAAP Measures
Reconciliation and Definitions for Non GAAP Measures Non-GAAP This document includes supplemental financial measures that are or may be non-GAAP financial measures. Orders and order backlog; adjusted or organic growth rates of revenue and orders; book-to-bill ratio; Total Sectors profit; return on e