58 slides from Siemens Aktiengesellschaft's investor day presentation, Jun 28, 2011
Slide 1: Emerging Market strength as a competitive edge
Emerging Market strength as a competitive edge Dr. Roland Busch Member of the Managing Board for Asia / Australia CEO Infrastructure & Cities Capital Market Days "Emerging Markets" Shanghai, June 28, 2011 Copyright © Siemens AG 2011. 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: Content
Content Winning in Emerging Markets Emerging Market potential is increasing Geared for outperformance in Emerging Markets Sector snapshots in Emerging Markets Winning in the Emerging Markets – The second wave Page 3 Capital Market Days "Emerging Markets", Shanghai, June 28, 2011 Copyright
Slide 4: Consistent and continuous investment in Emerging Markets for more than 100 years
Consistent and continuous investment in Emerging Markets for more than 100 years Siemens footprint in Emerging Markets Siemens investment in Emerging Markets started in the 19th century >100 years of presence Siemens viewed as a local company in Emerging Markets 25% of Pace of investment accel
Slide 5: We have doubled our workforce in BRIC / Middle East in 5 years
We have doubled our workforce in BRIC / Middle East in 5 years Personnel Russia (# of employees) +44% Middle East ~1,500 Siemens in EM 1) ~1,000 +84% +80% 85k ~6,100 46k ~3,400 FY05 FY10 China FY05 FY10 +115% FY05 FY10 India In % of ~25,800 Siemens ~17% ~25% +96% Brazil ~13,600 ~12,000 +72% ~7,000 ~
Slide 6: Huge Capex invests in Emerging Markets with growing manufacturing facilities
Huge Capex invests in Emerging Markets with number of manufacturing facilities steadily growing Manufacturing Russia (# of major facilities) +100% Siemens in EM 1) Middle East 2 1 +83% 117 4 4 64 FY05 FY10 China FY05 FY10 +88% FY05 FY10 India In % of 45 Siemens ~27% ~40% +100% Brazil 24 20 +30% 10 1
Slide 7: Sales in Emerging Markets more than doubled in 5 years
Sales in Emerging Markets more than doubled in 5 years – Now at ~30% of Siemens total Sales Russia (in € bn) +96% Middle East 1.1 Siemens in EM 1) 0.6 +123% +128% 21.7 4.6 9.8 FY05 FY10 2.0 China FY05 FY10 +139% FY05 FY10 India In % of 5.5 Siemens ~20% ~30% +202% Brazil 1.9 2.3 +178% 1.6 0.6 Growth
Slide 8: Since 2005 double-digit annual growth in BRIC / ME
Since 2005 double-digit annual growth in BRIC / ME – Significantly outperforming GDP in this period Sales Russia (GDP +3.4%) (in € bn) +14% Middle East 1.1 Siemens in EM 1) (GDP +6.1%) (GDP +4.9%) 0.6 +17% +18% 21.7 4.6 9.8 FY05 FY10 2.0 China FY05 FY10 (GDP +11.2%) FY05 FY10 India In % of (GDP +7.9
Slide 9: Strong Q2 order intake underlines Siemens' strengths in Emerging Markets
Strong Q2 order intake underlines Siemens' strengths in Emerging Markets New Orders in Emerging Markets, Developed Markets and World New orders growth New orders Q2 FY11 Y-o-Y 1) Emerging Markets +52% 71% 68% 64% Q2 FY10 Q2 FY11 10% 11% 11% 29% 36% Siemens (Cont. Op.) 18% 22% 25% +28% FY05 FY10 H1 F
Slide 10: We are building on trustful and long term relationships in Emerging Markets
We are building on trustful and long term relationships in Emerging Markets Chinese Premier Wen Jiabao visited Siemens Mr. Loescher and Indian Prime Minister Singh in Tianjin on May 14, 2010 "Siemens – manufacturing in China, employing Chinese staff in China, investing in R&D in China and doing busi
Slide 11: Content
Content Winning in Emerging Markets Emerging Market potential is increasing Geared for outperformance in Emerging Markets Sector snapshots in Emerging Markets Winning in the Emerging Markets – The second wave Page 11 Capital Market Days "Emerging Markets", Shanghai, June 28, 2011 Copyright
Slide 12: Investment focus of countries changes with stage of development
Investment focus of countries changes with stage of development Emerging Market development path Changing demand Developed Markets Emerging Markets Demand for standard of Industrialization living Infra- Healthcare structure Environment Energy build up Sustainability demand India Russia South A
Slide 13: China is touching all stages of development now
China is touching all stages of development now Demand for resources to fuel growth Huge energy Need for sufficient energy for economic development demand Fight for natural resources Urbanization Infrastructure ~150 cities >1 m habitants build up By 2035: ~70% of population will live in urba
Slide 14: Spendings of China's Five Year Plan are targeted at Siemens strengths
Spendings of China's Five Year Plan are perfectly targeted at Siemens strengths China Investment: >600 bn USD1) China's 12th Five-Year Plan (2011-2015) Siemens relevant strategic industries New energy Wind, solar, smart grid network for new energy Energy conservation & environmental protection E
Slide 15: India – Energy needs at the center of infrastructure modernization
India – Energy needs at the center of infrastructure modernization India Electricity generation in India 35% of population without energy 1,000 TWh Per capita power consumption at 25% of world Ø +6% Energy deficit of 9% and peak deficit of 13% +9% 4.2 +7% +6% 2.3 0.6 1.0 0.3 Government Progr
Slide 16: Russia – Transport infrastructure development is a major driver
Russia – Transport infrastructure development is a major driver of country's modernization Russia Cumulative Investment plan of Russian Railroad – dominant mode of transport Railways till 2030 1) (passengers & freight) In € bn High investment needs 170 290 Rolling stock equipment is over aged
Slide 17: Brazil – Focus on commercial industrialization and natural resources
Brazil – Focus on commercial industrialization and natural resources Brazil Some industries run at full capacity (e.g. Automotive, Pulp & Paper, Manufacturing Metals & Mining) industries Strong investment in the next years necessary Increased demand for high and mid- range machinery and genera
Slide 18: Middle East – Building local industries and improving standard of living
Middle East – Building local industries and improving standard of living Abu Dhabi Deep "non-oil" trade deficit and need for economic diversification Growing concerns on environmental issues Movement from a commodities based economy to a knowledge and innovation based economy Commitment of f
Slide 19: Siemens / Masdar strategic partnership
Siemens / Masdar strategic partnership Strategic partnership Establish Siemens' Middle Opening 2013 (~1,000 employees extending to 2,000 long-term) 1 East (ME) headquarters Contains Siemens ME HQ, Leadership Development Center and Center of in Masdar City Excellence for Building Technologies D
Slide 20: Our environmental portfolio supports sustainable development
Our environmental portfolio supports sustainable development Fossil power Renewable ener- Power Power Environmental generation gy generation transmission distribution technologies Solutions for Water & Building Healthcare Mobility industry Waste water technology Page 20 Capital Market Days "Emerging
Slide 21: Siemens' offerings match the priorities at each stage of development
Siemens' offerings match the priorities at each stage of Emerging Market development Changing demand Demand for standard of Industrialization living Infra- Healthcare structure Environment Energy build up Sustainability demand Stage of development Page 21 Capital Market Days "Emerging Markets"
Slide 22: Content
Content Winning in Emerging Markets Emerging Market potential is increasing Geared for outperformance in Emerging Markets Sector snapshots in Emerging Markets Winning in the Emerging Markets – The second wave Page 22 Capital Market Days "Emerging Markets", Shanghai, June 28, 2011 Copyright
Slide 23: Markets have different needs – We have what it takes to be successful
Markets have different needs – We have what it takes to be successful in Emerging Markets Siemens products have proven to be the right products for Emerging Markets Products SMART products 1) are an additional lever to fully exploit all market segments in Emerging Markets Siemens’ localized va
Slide 24: SMART is a concept for entry-level products serving local and global markets
SMART is a concept for entry-level products serving both local and global markets SMART market segmentation SMART SMART business boosted in all Sectors to accelerate growth Developed Markets Additional lever to fully exploit High-end entry-level market segments High-end products Growth opportuni
Slide 25: Medium-voltage switchgear is a great example for a Siemens SMART product
Medium-voltage switchgear is a great example for a Siemens SMART product SMART example Sector Energy: Medium-voltage switchgear New customer segments India: Utility, Industrial customers Medium-voltage switchgear China: OEMs addressed through locally 8BK20 developed products (Global product, mai
Slide 26: Simple + Maintenance-friendly + Affordable + Reliable + Timely-to-market
Simple + Maintenance-friendly + Affordable + Reliable + Timely-to-market = strong growth and solid returns SMART market perspective and Siemens volume and margin 1) SMART Market view The global entry-level market currently grows at a rate of 7% In China and India the entry-level market grows at
Slide 27: SMART is rolling out at a more rapid pace with >160 products in market
SMART is rolling out at a more rapid pace with currently >160 products in market Development of SMART products 2005-2010 EX # of SMART AM PL Projects E 300 Steam turbine Localization reached at target costs 250 Launched 2010 with positive margin from the start 200 Boost SMART 150 EX AM 100 PL E
Slide 28: Exporting SMART products to profit from global entry-level market
Exporting SMART products to profit from global entry-level market EX AM PL E Product Country of origin Success story State-of-the-art to local MRI Magnetom 1.5T MRI system Local ESSENZA Manufactured in China >550 systems sold Exporting to Europe, MSC Mechanical Asia / Pacific, Latin Switched C
Slide 29: Localization reduces costs and enhances competitiveness
Localization reduces costs and enhances competitiveness – Product design is key for SMART Localization steps and their respective cost saving potentials Value General Management chain Product Delivery, Sales & R&D Sourcing Manufacturing Management Service SMART Locali- 4 3 2 1 zation steps Product r
Slide 30: Investing in world-class Emerging Market production sites – Example Turkey
Investing in world-class Emerging Market production sites – Example Turkey EX AM PL E Manufacturing Gebze Campus – Turkey Production area: 16,000 m2 Main Machinery Equipment Î extension to 110,000 m2 by 2014 Production Lines (MV & LV panels, VCB 2)) Total investment: € ~100 m Punching & Bend
Slide 31: Localization continues to move up the value chain
Localization continues to move up the value chain EX AM PL E Manufacturing Russia China Sector Industry: Sector Energy: Mobility Renewable Production of double-section electric freight First factory opened in 2010 in Lingang, locomotives since 2010 Shanghai Capacity: 60 locomotives p.a. Inve
Slide 32: Emerging Market supplier "EcoSystem" continues to grow
Emerging Market supplier "EcoSystem" continues to grow EX AM PL E Sourcing Share of sourcing from Emerging Markets Example Cross-sector pooling of iron casting % of global purchasing volume 24% 20% FY08 FY10 Company-wide program in all sectors and country organizations >100 single purchasing pro
Slide 33: Committed to world class R&D in Emerging Markets
Committed to world class R&D in Emerging Markets EX AM PL E Research & development Example: Brazil Optimized use of resources Development of a new market Customers in sugar and ethanol process industry are diversifying into energy production by using the remaining biomass Siemens offering Local
Slide 34: Research and development at the heart of localization
Research and development at the heart of localization EX AM PL E R&D center for numerical control in Nanjing, China Joint venture 80% Siemens SINAMICS V10 won the "Product 20% Corinco (CNGC) Innovation Award" in CAMRS Established in 1996 in Nanjing, China (China Automation Marketing Scope Seminar) a
Slide 35: R&D on a fast track in BRIC / ME
R&D on a fast track in BRIC / ME R&D1) Russia (# of R&D employees) +117% Middle East ~120 Siemens in EM 2) +81% ~55 +61% ~15,500 ~1,200 ~8,600 ~800 FY08 H1 FY11 China FY08 H1 FY11 India +34% FY08 H1 FY11 ~4,100 +22% ~3,000 Brazil ~4,900 +177% ~4,000 ~1,300 Growth abs. +x% FY08 H1 FY11 Color code of
Slide 36: Siemens selects the right partner to outperform in its key markets
Siemens selects the right partner to outperform in its key markets EX AM PL E Joint Ventures and partnerships China Russia 8 JVs with Shanghai Electric since RZD and Siemens JV produce 240 foundation in 1996 regional trains (1.200 coaches) Equipment for power plants with a Manufacturing of 1
Slide 37: Siemens has set up a strong partnership model with Shanghai Electric
Siemens has set up a strong partnership model with Shanghai Electric Principles of partnership model with Shanghai Electric in fossil power Steam turbine Gas turbine Westinghouse technology Siemens technology Siemens technology Chinese International Chinese International Chinese No customer customer
Slide 38: We have the feet on the street in Emerging Markets
We have the feet on the street in Emerging Markets Sales Force ~27% of global EM1): (# of employees) sales force Russia: ~450 Middle China: ~4,000 ~950 East: India: ~1,400 Brazil: ~1,100 Color code of map: Developed Markets Emerging Markets BRIC / Middle East 1) EM: Emerging Markets Page 38 Capital
Slide 39: Account Management is driving order intake in Emerging Markets
Account Management is driving order intake in Emerging Markets Number of corporate and regional accounts in Emerging Markets and respective order intake in € bn Corporate accounts Regional accounts in € bn in € bn +231% 5.4 2.8 1.6 0.004 FY05 FY10 FY05 FY10 # corporate # regional 1 40 225 246 accoun
Slide 40: We are the partner of choice for lighthouse projects
We are the partner of choice for lighthouse projects EX AM PL E EXPO 2010 Shanghai Yas Marina Circuit Abu Dhabi Siemens wins orders The PKE 1) and > € 1 bn for EXPO Siemens-consortium and EXPO related powers up the Yas projects Marina Circuit Abu Dhabi Siemens project scope Siemens project scope P
Slide 41: Our staff quality and retention lead the industry
Our staff quality and retention lead the industry Key challenges Siemens approach Getting the More than 70% of Chinese right people Management team are locals In all Emerging Market countries at least 50% are locals University liaisons with top 10 universities in China, e.g. Tsinghua and Tongj
Slide 42: Content
Content Winning in Emerging Markets Emerging Market potential is increasing Geared for outperformance in Emerging Markets Sector snapshots in Emerging Markets Winning in the Emerging Markets – The second wave Page 42 Capital Market Days "Emerging Markets", Shanghai, June 28, 2011 Copyright
Slide 43: Healthcare – Expanding our presence in Emerging Markets
Healthcare – Expanding our presence in Emerging Markets Sector snapshot Clear market leader globally and in Emerging Markets, in terms of Therapy Sys. Imaging & market share and installed base Global products to leverage our global scale, with local responsibility for R&D, sourcing & manufacturi
Slide 44: Industry – Clear market leader in Automation and Drives in BRIC
Industry – Clear market leader in Automation and Drives in BRIC Sector snapshot Industry Autom. Strong growing machine building market (e.g. in China) and basic industries (e.g. in India) Clear market leader in Industry Automation and Drive Technologies in BRIC and other Emerging Markets based o
Slide 45: Energy – Answering Emerging Market needs throughout the energy chain (I/II)
Energy – Answering Emerging Market needs throughout the energy chain Sector snapshot (I/II) Energy Extremely good portfolio (generation, transmission, distribution) Customized footprint strategy defined and in implementation Renewable China is the biggest market for wind in the world Strong
Slide 46: Energy – Answering Emerging Market needs throughout the energy chain (II/II)
Energy – Answering Emerging Market needs throughout the energy chain Sector snapshot (II/II) Entry-level markets successfully addressed via JV partners and licensees Fossil Strong partnering activities with EPCs 1) in Asia, Brazil and Middle East to strengthen product sales channel Steam segme
Slide 47: Content
Content Winning in Emerging Markets Emerging Market potential is increasing Geared for outperformance in Emerging Markets Sector snapshots in Emerging Markets Winning in the Emerging Markets – The second wave Page 47 Capital Market Days "Emerging Markets", Shanghai, June 28, 2011 Copyright
Slide 48: Emerging Market potential goes beyond BRIC and Middle East
Emerging Market potential goes beyond BRIC and Middle East Share of global GDP Classification of countries in USD tr 126 Rest of emerging 8% (165 countries) "Second wave" Poland 8% (9 countries) 4% ME (16 countries) Turkey Mexico Vietnam Thailand Colombia Indonesia BRIC 30% (4 countries) Chile South
Slide 49: We are actively pushing growth into the "Second Wave Emerging Countries"
We are actively pushing growth into the "Second Wave Emerging Countries" 9 focus Emerging Markets – The Second Wave Sales (in € bn) +95% 3.4 Poland 1.8 Turkey Mexico Vietnam FY05 FY10 Thailand Employees Colombia Indonesia +38% Chile ~18,100 South Africa ~13,100 Developed Markets BRIC Emerging Market
Slide 50: New Sector "Infrastructure & Cities" is growth opportunity
New Sector "Infrastructure & Cities" is growth opportunity for both Emerging and Developed Markets Dedicated units for Infrastructure & Cities with focus on IT and Solution, strong product business and services Mobility and logistics offerings for efficient transportation of people and goods Combini
Slide 51: Powerful Emerging Market platform in place – More success to come
Powerful Emerging Market platform in place – More success to come Keep fast pace in developing right products with right setup 1 in Emerging Markets 2 Further enhance customer intimacy 3 Put more emphasis to acquire & retain the best talents in the countries 4 Continuously outperform competitors All
Slide 52: Reconciliation and Definitions for Non-GAAP Measures (I)
Reconciliation and Definitions for Non-GAAP Measures (I) To supplement Siemens’ Consolidated Financial Statements presented in accordance with International Financial Reporting Standards, or IFRS, Siemens presents the following supplemental financial measures: New orders and order backlog; Adjus
Slide 53: Reconciliation and Definitions for Non-GAAP Measures (II)
Reconciliation and Definitions for Non-GAAP Measures (II) New orders and order backlog (continued) Order backlog represents an indicator for the future revenues of our Company resulting from already recognized new orders. Order backlog is calculated by adding the new orders of the current fiscal yea
Slide 54: Reconciliation and Definitions for Non-GAAP Measures (III)
Reconciliation and Definitions for Non-GAAP Measures (III) Return on equity (after tax), or ROE (after tax) In line with common practice in the financial services industry, Financial Services, or SFS uses return on equity (after tax), or ROE (after tax), as one of its key (after tax) profitability m
Slide 55: Reconciliation and Definitions for Non-GAAP Measures (IV)
Reconciliation and Definitions for Non-GAAP Measures (IV) Free cash flow and cash conversion rate Siemens defines Free cash flow as Net cash provided by (used in) operating activities less Additions to intangible assets and property, plant and equipment. The IFRS financial measure most directly comp
Slide 56: Reconciliation and Definitions for Non-GAAP Measures (V)
Reconciliation and Definitions for Non-GAAP Measures (V) Adjusted EBITDA margins at the Sector level Siemens defines adjusted EBITDA margins on the Sector level as the ratio of adjusted EBITDA to revenue (as presented in the “Notes to Consolidated Financial Statements”). Siemens intends to maintain
Slide 57: Reconciliation and Definitions for Non-GAAP Measures (VI)
Reconciliation and Definitions for Non-GAAP Measures (VI) Limitations on the usefulness of Siemens’ supplemental financial measures The supplemental financial measures reported by Siemens may be subject to limitations as analytical tools. In particular: With respect to new orders and order backlog
Slide 58: Revenue growth - Performance against competition
Revenue growth - Performance against competition Definition Revenue growth - Performance against competition To illustrate management’s perspective on the Company’s performance against competition, Siemens compares its own revenue growth rate with the weighted average revenue growth rate of its Sect