Siemens Aktiengesellschaft · XETR:SIE
Siemens Aktiengesellschaft — Siemens — Q2 FY07 Earnings Presentation
39 slides from Siemens Aktiengesellschaft's earnings presentation, Apr 26, 2007
Slide 1: Siemens Analyst presentation
Siemens Analyst presentation April 26, 2007 Klaus Kleinfeld / Joe Kaeser
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words as “expects”, ”looks forward to”, “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will” or wor
Slide 3: Key figures – Q2 FY07
Key figures – Q2 FY07 Δ In millions of euros Q2 FY07 (in %, except for Q2 FY06 EPS) New orders 23,469 +9 21,529 Sales 20,626 +10 18,824 Group profit 1,964 +49 1,314 (from Operations) Net income 1,259 +36 923 Earnings per share 1.34 +0.36 0.98 (in €, not diluted; change in €) Net cash (901) — 538 (co
Slide 4: All Groups reached or exceeded their margin ranges
All Groups reached or exceeded their margin ranges Profit margin Groups Margin ranges Status Q2 FY07 IFRS SBS 5.2% 5–6% A&D 14.2% 11–13% I&S 4.6% 4–6% SBT 7.5% 7–9% PG 10.7% 10–13% PTD 8.1% 5–7% TS 5.0% 5–7% SV 6.3% 5–6% Med 13.4% 11–13% Osram 10.5% 10–11% SFS* 52.6% 18–22% * Return on equity Page 4
Slide 5: Fit4More – Short term action program started in April 2005
Fit4More – Short term action program started in April 2005 Initial situation beginning 2005 April 2005 – Start Fit4More Program Fit 4More: Profit & Growth Program • Portfolio optimization Performance and Portfolio Operational Excellence People Excellence Corporate Responsibility necessary Solve Mo
Slide 6: Two-pronged strategy successfully implemented
Two-pronged strategy successfully implemented in bn. € +60% - 33% ~ 80 ~ 75 ~ 50 e.g. Sale of Dematic Acquisitions Reorientation of I&C incl. Organic growth JV Nokia Siemens SIS Reorganization Restructuring SBS Sales Strategic Sales after Strengthening Q2 FY07 2004 Reorientation strategi
Slide 7: We significantly strengthened our strongest businesses
We significantly strengthened our strongest businesses Application fields Acquisitions Market position VA Tech (7/2005) T&D # 4 Wheelabrator (10/2005) U.S. leader in flue gas Energy & desulphurization Environmental Care Sustec (5/2006) leading in gasification Kühnle, Kopp & Kausch (7/2006) leading i
Slide 8: Fit4More – A great success
Fit4More – A great success Achieved what we set out to do • All Groups reached their margin ranges • Fostered profitable growth • Revenue growth of > 15% p.a.1) • Company value substantially increased • Company value increased 54%2) • Successful reorientation of major parts of portfolio • Two-pronge
Slide 9: Accelerating Profit & Growth
: Accelerating Profit & Growth People Portfolio Excellence Develop talent globally Build on our strengths in Strengthen leadership Energy & Environmental development People Care Attain high performance Portfolio Automation & Control, Excellence culture Industrial & Public Strengthen ex
Slide 10: Company targets address all value drivers
Company targets address all value drivers Growth Profitability Cash • Outpace world economic growth • Improved profitability on Group • Stronger focus on cash to finance with a growth rate level through new margin ranges future growth and investments > 2 x GDP • Additional target to optimize Siemens
Slide 11: Margin ranges increased for nine out of eleven Groups
Margin ranges increased for nine out of eleven Groups New margin Margin ranges ranges Q2 FY07 Fit4More Fit4 2010 SIS 5-6% 5.2% 5-7% A&D 11-13% 14.2% 12-15% I&S 4-6% 4.6% 5-7% SBT 7-9% 7.5% 7-9% PG 10-13% 10.7% 10-14% PTD 5-7% 8.1% 7-10% TS 5-7% 5.0% 5-7% SV 5-6% 6.3% 7-9% Med 11-13% 13.4% 13-15% Osr
Slide 12: Our strategy: Strong businesses in attractive markets
Our strategy: Strong businesses in attractive markets High quality of our businesses Os- PG PTD ram A&D I&S SBT TS SV Med SIS No. 1 or No. 2 position Attractive markets with tailwind from Application fields megatrends Increasing scarcity of Megatrends Energy & natural resources Environmental Care Gr
Slide 13: Power Generation: Growth through innovations and acquisitions
Power Generation: Growth through innovations and acquisitions Wind revenues New H-Frame turbine: +51% • World's most efficient turbine, efficiency > 60% (CCPP) • Reduces CO2 emissions by 40.000 t p.a. compared SGT5-8000H to today's best in class Siemens Wind Power H1 06 H1 07 • Entry into strongly g
Slide 14: Automation: High energy savings through new drive systems
Automation: High energy savings through new drive systems Robicon Perfect Harmony medium-voltage converter • Compact design, even smaller footprint • Enabling exact control of motor speed according to requirements • Potential energy savings of up to 50% by replacement of conventional drives with var
Slide 15: Acquisition of UGS is on track
Acquisition of UGS is on track UGS Siemens A&D Factory Automation Digital Factory: #2 design 4) design Factory automation: #1 3) TIA PLM CAx1) : #2 TIP5) Process automation: #3 Product cPDM2): #1 Manufacturing Electrical installation tech.: #2 design Closing expected in Q3 FY07 Integration preparati
Slide 16: Healthcare: Strong organic growth through innovations
Healthcare: Strong organic growth through innovations Leadership in innovations (examples) Market share gains1) Tim2) technology: • Most successful innovation in MR • Higher image quality, more patient comfort, Magnetic +14% p. optimized workflow in MR Resonance • 50% higher patient throughput, up t
Slide 17: IPO preparations for SV on track
IPO preparations for SV on track Siemens automotive systems – Future trends and basic requirements A success story Zero emissions Zero accidents EUR 10 billion global business Always on Average growth of 10% a year (1989 – 2006) Margin range reached every year since + 2003 Outstanding positi
Slide 18: Outlook: We believe we can do even better
Outlook: We believe we can do even better Compliance: Zero tolerance Strong focus on cash and capital efficiency Continued profitable growth FY07: Maintain operating momentum built up in first half year Page 18 March 2007 Q2 Analyst Conference
Slide 19: Financial Performance & Priorities
Financial Performance & Priorities Joe Kaeser
Slide 20: Significant improvement in Net Cash
Significant improvement in Net Cash € in billion; YTD 2007 therein: +0.8 (0.2) (0.2) CAPEX (PPE) (1.0) EUR +2.2 (5.5) +1.8 (1.0) Acquisitions (4.5) EUR thereof: Bayer (net of cash) (4.2) EUR (4.5) +1.3 (1.7) (3.8) Income from Depreciation Net Working Other CF Provided by CF Used in SFS, SRE, Discont
Slide 21: We take clear actions on cash: Trend in Capex reversed
We take clear actions on cash: Trend in Capex reversed PPE Capex* x 100% Depreciation 144% 122% 121% 106% 115% Target 100% Range 98% 95% 2003 2004 2005 2006 YTD FY07 2007 * Capital expenditures on property, plant and equipment of Siemens‘ Operating Groups. 2003 to 2006 are US GAAP numbers, The 2006
Slide 22: We take clear actions on cash: 9 of 10 Groups have improved their Turns
We take clear actions on cash: 9 of 10 Groups have improved their Turns NWC turns* Ranking NWC Turns 2006 and Q2 FY07 FY06 Ranking vs. PY Q2 Q2 vs. PQ 1 PG Ò 1 Ò 7.6 7.4 2 SV Ô 2 Ò 3 I&S Ò 3 Ò Q2 FY07 4 TS Ò 4 Ò FY06 5 SBS Ô 5 Ò 6.9 6 Osram Ò 7 Ò 7 Med Ô 9 Ô FY05 8 A&D Ò 6 Ò 9 PTD Ò 8 Ò * Last 12 Mo
Slide 23: Growth, profit and cash define current performance, active portfolio management drives future success
Growth, profit and cash define the current performance, active portfolio management drives future success Profitability/ Capital Efficiency Group Profit Margins/ ROCE Value Creation Growth Cash 2 x GDP Growth Cash Conversion Page 23 March 2007 Q2 Analyst Conference
Slide 24: Our targeted ROCE has not been reached in any of the last 6 years
Our targeted ROCE has not been reached in any of the last 6 years ROCE* 16% >14-16% Target Range 14% 12,9% 13,2% 12,4% 12% 10,0% 10% 9,1% 8,4% 8% 5,7% 6% 4% 2% 0% 2001 2002 2003 2004 2005 2006 YTD 2007** % Change Attributable to Change in Profit* 2.0% (0.3)% 3.8% (1.0)% (0.5)% 4.1 % Capital Employed
Slide 25: We focus our financial resources on value creation
We focus our financial resources on value creation* Top Groups high Profiteers C E R O ROCE** 1 6% 4 – >1 Substance Keepers High Growth Groups low 1x GDPworld 2x GDPworld Growth Growth * Size of bubble = Value contribution of Groups (EVA) Organic Growth ** ROCE = Group EBIT / avg. business assets Pa
Slide 26: On Transparency: Refined Segment Reporting for better Tracking
On Transparency: Refined Segment Reporting for better Tracking OLD NEW Group Profit Group Profit “Net Cash from Operating and “Free Cash Flow” by Group Cash Conversion Investing Activities” by Group 9 Cash Flow from Operations by Group Unchanged 9 Capex as defined below Operating CF Capex
Slide 27: We are committed to providing shareholder return
We are committed to providing shareholder return Net Dividend Payments in EUR Balance Sheet Considerations 1.80 € G R 1.60 € CA 1. Share buyback: % 1.40 € 10 Don‘t expect a share buyback in the short-term GR 1.20 € C A 2. Convertible: 1.00 € 6% Multiple options 0.80 € 3. Gearing: 0.60 € Debt capac
Slide 28: What else is on the CFO's mind?
What else is on the CFO’s mind? “In times of a robust cycle, it is time to look ahead” Focus on organic growth Wise consideration of the M&A sellers market Cash conversion through Moderate Capex spend Streamline NWC turns Move down “break-even point” of business segments Prioritize res
Slide 29: Appendix
SIEMENS Appendix
Slide 30: New orders – Strong growth with 9%
New orders – Strong growth with 9% Q2 FY07 Δ Q2 FY07 Δ Groups Regions (in mio. €) (in %) (in mio. €) (in %) SBS 964 -29 Europe excl. Germany 8,105 19 A&D 4,154 18 Germany 3,826 5 I&S 2,434 -1 Americas 6,332 12 Asia-Pacific 3,396 19 SBT 1,364 3 PG 5,017 54 Middle East / C.I.S. / Africa 1,810 -29 PTD
Slide 31: Revenue +10% – Outstanding growth in the Power Groups
Revenue +10% – Outstanding growth in the Power Groups Q2 FY07 Δ Q2 FY07 Δ Groups Regions (in mio. €) (in %) (in mio. €) (in %) SBS 1,206 -13 Europe excl. Germany 6,795 16 A&D 3,711 16 Germany 3,860 6 I&S 2,172 2 Americas 5,376 1 Asia-Pacific 2,892 8 SBT 1,335 14 PG 3,072 25 Middle East / C.I.S. / Af
Slide 32: Estimated underfunding of Siemens pension plans improved by €1.2 bn
Estimated underfunding of Siemens pension plans1) improved by € 1.2 bn Despite the negative impact of interest rate increases on fixed income investments Siemens was able to generate an Actual Return of 7.3% annualized (€ 0.8 bn) over the last six months, mainly due to strong equity markets Incr
Slide 33: SFS: Assets and Liabilities as of 31 March 2007
SFS: Assets and Liabilities as of 31 March 2007 Almost all SFS assets, and consequently SFS debt, are related to business with external customers except for the internal receivables financing business Assets Liabilities SFS debt for € in billion 9.6 bn 1.0 bn financing of operating 7.8 bn groups App
Slide 34: SFS: Net Debt as of 31 March 2007
SFS: Net Debt as of 31 March 2007 In order to reflect SFS in the SOTP, the internal debt component has to be reflected in the SFS net debt for the enterprise value calculation € in billion 7.8 bn 1.6 bn 6.2 bn SFS adapted net debt Equity value SFS Equity value SFS net debt SFS debt for Enterprise SF
Slide 35: ROCE Definition
ROCE Definition Income from Continuing Operations (post tax), before net interest expense Post-tax ROCE from Continuing Operations = Capital Employed (for Siemens, including SFS, SRE and Treasury) Source Income (loss) from continuing operations (i.e. post tax) (Profit and Loss Statement) +/– Other i
Slide 36: Cash Conversion Rate Definition
Cash Conversion Rate Definition Free Cash Flow Cash Conversion Rate (Continuing Operations) = Income from Continuing Operations Source Cash Flow from Operations (Continuing Operations) (Cash Flow Statement) + Additions to intangible assets and property, plant and equipment (Continuing Operations) (f
Slide 37: Financial calendar FY07
Financial calendar FY07* June 21-22 June Capital Market Days 2007, Berlin July 26 July Third quarter financial results FY07 – conference call November 8 November Preliminary figures for FY07 January 24 January Annual General Meeting * Preliminary, updates will be posted at: www.siemens.com/financial
Slide 38: Reconciliations and definitions
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, FY07 Q2, Financial Statements” at our Investor
Slide 39: Siemens Investor Relations Team
Siemens Investor Relations Team Marcus Desimoni +49-89-636-32445 Roland Bischofberger +49-89-636-36165 Irina Pchelova +49-89-636-33693 Christof Schwab +49-89-636-32677 Susanne Wölfinger +49-89-636-30639 Webpage: http://www.siemens.com Investor Relations e-mail: [email protected] Telephon