Siemens Aktiengesellschaft · XETR:SIE
Siemens Aktiengesellschaft — Siemens — Investor Day (November 2007)
30 slides from Siemens Aktiengesellschaft's investor day presentation, Nov 9, 2007
Slide 1: TAP the potential of Siemens
TAP the potential of Siemens TRANSPARENCY – ACCOUNTABILITY – PERFORMANCE Peter Löscher, President and CEO Joe Kaeser, CFO Annual Analyst Conference London, 9th November 2007 Copyright © Siemens AG 2007. 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: TAP the potential of Siemens: Principles and Execution
TAP the potential of Siemens Principles Execution starts now Capital structure target: 0.8x – 1.0x Increase adj. industrial net debt / EBITDA TRANSPARENCY Share buy back of up to € 10 bn by 2010 announced Enforce Clear priority on organic growth ACCOUNTABILITY Focus on three business sectors
Slide 4: Highlights of Q4
Highlights of Q4 Group Profit from Operations of €1.990 bn Outperforms strong Q2 result of this year All Groups within target margin ranges Significant margin expansion of key businesses Strong organic top-line growth1) (new orders +19%, sales +8%) shows strong competitive position in attr
Slide 5: All Groups are within their target margin ranges
All Groups are within their target margin ranges Margin Ranges Margin Margin Ranges Margin Fit4More Q2 FY07 Fit4 2010 Q4 FY07 A&D 11-13% 14.2% A&D 12-15% 13.8% I&S 4-6% 4.6% I&S 5-7% 5.2% SBT 7-9% 7.5% SBT 7-9% 7.5% Osram 10-11% 10.5% Osram 10-12% 10.6% TS 5-7% 5.0% TS 5-7% 5.1% PG 10-13% 10.7% PG 1
Slide 6: Top-line growth in Q4 confirms strong position in attractive markets
Top-line growth in Q4 confirms strong position in attractive markets Asia and Europe as Main Growth Engines Very satisfactory Performance in all Sectors Orders growth1) Order growth1) Revenue growth1) Asia / Pacific 61% A&D +18% +16% Rest of +3% +2% 31% I&S Europe SBT -2% -1% Germany 9% China: +87%
Slide 7: The priorities of our portfolio are clearly defined
The priorities of our portfolio are clearly defined Portfolio Priorities 1 Organic Growth 2 Streamlining Exploit global growth Selective opportunities 3 investment Three sectors: Energy, Exploit potential from Industry and Healthcare past acquisitions Value creation (> EUR 20 billion over
Slide 8: Integrated technology company focused on three Sectors
Integrated technology company focused on three Sectors Three Sectors Improved focus Cross- Sectors sectoral Energy Customer centric Businesses from Siemens IT Solutions and Services ~€20bn1) Power Generation Power Transmission & Distribution Growth markets Siemens Financial Services Industry
Slide 9: Energy: Complete, unique and unmatched portfolio
Energy: Complete, unique and unmatched portfolio Sector Energy: Market growth of 11% p.a.1) Unique positioning for a carbon constrained environment Energy market Trends & market drivers € bn Siemens worldwide installed fleet • Demographic change, population growth and urbanization (20% of total in
Slide 10: Industry: Clear focus drives profitability
Industry: Clear focus drives profitability Sector Industry: Market to grow 5% p.a.1) Industry: Unique trendsetting solutions Industry market Trends & market drivers € bn TIP4) and building-oriented automation Demographic change, +5% 478 urbanization and shortening of platform OSRAM 397 74 25 nat
Slide 11: Healthcare: The Integrated Workflow Company is best positioned for growth
Healthcare: The Integrated Workflow Company is best positioned for growth Important role in an Partner of choice for our customers Best positioned for growth attractive market through strategy and portfolio and profitability Worldwide Healthcare How to best improve healthcare efficiency Leading posi
Slide 12: Leadership based on accountability and P&L responsibility
Leadership based on accountability and P&L responsibility Schematic of proposed new leadership structure Key benefits Managing Board Clean accountability Chief Executive Officer Global Global Function Heads for Sectors, Regions Functions Global Sector Heads and Global Functions CEO CEO CEO Global
Slide 13: We will cut SG&A cost by 10-20% until 2010
We will cut SG&A cost by 10-20% until 2010 SG&A cost reduction Key activities 1 Streamlining organization with 17.9% potential to reduce SG&A cost 16.7% Reduction by 10 to 20 % 2 Optimizing G&A cost across Corporate functions, Sectors SG&A1) and Regions Increase efficiency of Marketing 3 and Sales p
Slide 14: Going even further
Going even further Closing the performance gaps Target margins will be increased has become the baseline due to the strong cycle Yardstick is the best competitors’ performance New target margin of Healthcare: 14 – 17% Increase alignment of management compensation with shareholders’ inter
Slide 15: What has been on the CFO's mind
What has been on the CFO's mind Focus on organic growth Cash conversion Optimize Capital structure Convertible Target & Metric EPS Growth > Growth of Operational Profit Wise consideration of the M&A sellers' market Mixed basket Prioritize resources for improved capital efficiency Ong
Slide 16: Completed target system drives shareholder value
Completed target system drives shareholder value Cash conversion Capital structure Adj. industrial net debt / EBITDA 1 – growth rate Criteria for selecting a target leverage: Optimize shareholder value 1.73 Access to capital markets Support of operating business Strategic flexibility for org
Slide 17: Share buy back to reach capital structure target
Share buy back to reach capital structure target Optimize capital structure … … via returns to shareholders Adj. industrial net debt / EBITDA 0.7x -1.5x Buy back shares Dade Behring VDO up to €10bn until 2010 0.8x-1.0x 0.8x 0.4x Drive EPS growth Create shareholder value -0.1x FY FY FY 2006 2007
Slide 18: Calculation of adjusted industrial net debt
Calculation of adjusted industrial net debt 11.3 (6.7) Numbers for FY 20072) in € bn 1.0 0.8 0.4 (1.0) (6.2) (0.4) Net debt SFS debt 1) Pension deficit OPEB Credit Hybrid adj. Cash impact of Adj industrial (as reported) guarantees Dade Behring net debt baseline & VDO 1.5x -0.1x Group Net Debt Adj. I
Slide 19: Very strong Q4 for 'primary level' of Operations
Very strong Q4 for 'primary level' of Operations1) Strong conversion of growth into earnings and cash, € bn 135% 165% 12% 20.8 2.072 3.194 18.6 0.882 1.204 Q4 2006 Q4 2007 Q4 2006 Q4 2007 Q4 2006 Q4 2007 Revenues1) Group Profit1) Free Cash Flow1) 1) Operations Groups excluding Strategic Equity Inves
Slide 20: FY 2007 with significant improvement of growth conversion
FY 2007 with significant improvement of growth conversion … ... into earnings ... ... and cash Incremental Margin by Group 1) Cash Conversion by Group 3) 177% 1.8 1.8 49% 1.0 1.0 0.98 1.0 0.95 0.93 0.9 0.97 0.80 0.8 0.94 0.8 0.92 31% 0.84 27% 28% 0.79 26% 17% 0.1 n/m 2) n/m 2) SIS A&D4) I&S SBT PG P
Slide 21: Asset Management remains in focus
Asset Management remains in focus NWC1) turns up Capex rate down as reported Additions to PPE comp. w/o SV Depreciation Add. to intangibles & PPE Depr.& amortization 144% 8,0 131% 7,4 122% 8,0 6,9 127% 115% 6,9 Target 6,5 110% 109% Range 95% incl. SV excl. SV 2005 2006 2007 2005 2006 2007 1) Net Wor
Slide 22: Issues below the 'primary level' of Operations will be addressed
Issues below the 'primary level' of Operations will be addressed € bn €(861)m VDO, incl. €(1)bn tax expenses 2,072 (11) (71) 1,990 (451) €(588)m Com activities, incl. €(201)m fine (117) 119 (147) €(45)m centrally carried 1,394 (1,468) regional costs plus centrally held operat- €(484)m corporate item
Slide 23: Benchmarking calls for more efficient Resource Management
Benchmarking calls for more efficient Resource Management Revenue per employee, in thousand € Earnings per 4.4 7.4 10.1 73.5 employee 341 CAGR 0% 182 184 188 2001 2006 2007 2006 US-based Competitor Page 23 Annual Analyst Conference 2007 Copyright © Siemens AG 2007. All rights reserved.
Slide 24: What is on the CFO's agenda
What is on the CFO's agenda Still on What else Move down break-even Proactive Controls point of businesses From remediate to Unlock more cash prevent Prioritize resources for Risk management & improved capital flexible liquidity efficiency Quality disclosure Focus on organic growth P
Slide 25: Sector Outlook 2008
TRANSPARENCY – ACCOUNTABILITY – PERFORMANCE Siemens Outlook 2008 Revenue growth at “ GDP2 ” Energy Margin increase despite of low margin project backlog Quality growth and Sector Outlook 2008 earnings conversion Double market growth in Industry Automation (A&D Group) Revenue growth Industr
Slide 26: Financial calendar
Financial calendar December 2007 (tbd) December Post Q4 Roadshow with CEO and CFO in London, New York, Boston (tbd), Frankfurt January 24, 2008 January Annual General Meeting and Q1 FY 08 (Conference Call) February 2008 (tbd) February Capital Market Day “Healthcare” Page 26 Annual Analyst Conference
Slide 27: Siemens Investor Relations Team
Siemens Investor Relations Team Michael Sen +49-89-636-33780 Florian Flossmann +49-89-636-34095 Sabine Groß +49-89-636-35755 Irina Pchelova +49-89-636-33693 Christof Schwab +49-89-636-32677 Dr. Gerd Venzl +49-89-636-44144 Susanne Wölfinger +49-89-636-30639 Webpage: http://www.siemens.com/investorrel
Slide 28: 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 29: 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 30: 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