Siemens Energy Ag · XETR:ENR
Siemens Energy — Investor Day (September 2020)
52 slides from Siemens Energy's investor day presentation, Sep 1, 2020
Slide 1: Capital Market Day 2020 - CFO Section
Capital Market Day 2020 CFO Section Maria Ferraro, CFO of Siemens Energy Siemens Energy is a registered trademark licensed by Siemens AG. © Siemens Energy, 2020
Slide 2: Notes and forward-looking statements (I)
Notes and forward-looking statements (I) This presentation and the information contained herein are for information purposes only and do not constitute a prospectus or an offer to sell or a solicitation of an offer to buy or subscribe for any securities of Siemens AG or Siemens Energy AG. This prese
Slide 3: Notes and forward-looking statements (II)
Notes and forward-looking statements (II) This presentation contains forward-looking statements. These statements are based on the current views, expectations, assumptions and information of the management of Siemens AG and Siemens Energy AG. Forward-looking statements involve known and unknown risk
Slide 4: Our Management Team - What we stand for
Our Management Team What we stand for Maria Ferraro CFO Clear focus on EBITA & Cash CMD | M. Ferraro | CFO Section 4 2020-09-01 © Siemens Energy, 2020
Slide 5: Siemens Energy
Asset light Global business diversified business with low net across all dimensions capital employed €77 bn Siemens Energy has a strong Net cash position order backlog1 providing visibility foundation with and BBB IG4-Rating significant upside potential €9.5 bn Clear path | 6.5-8.5% margin resilient
Slide 6: We have a clear framework for value creation
We have a clear framework for value creation Performance Portfolio Covered in incentive framework Research and Portfolio Development optimization 6.5-8.5% ≥8% ~€1 bn Resize Adj. EBITA margin before Adj. EBITA margin Siemens annual spending the portfolio Special Items Siemens Energy mid-term target1
Slide 7: Historical performance
1 Historical 2 Sustainable 3 Financial performance value creation outlook CMD | M. Ferraro | CFO Section 7 2020-09-01 Siemens Energy is a registered trademark licensed by Siemens AG. © Siemens Energy, 2020
Slide 8: Historical Performance Summary
Historical Performance Summary Returned to growth in FY19 with Book-to-Bill1 ratio Revenue >1x across all businesses Egypt mega €3.7 bn total order volume2 of which more than one-third project was recognized as revenue in FY17 Profitability Stabilized in FY18/19 in “new normal” environment3 Demonstr
Slide 9: Siemens Energy has returned to growth and stabilized profitability pre COVID-19
Siemens Energy has returned to growth and stabilized profitability pre COVID-19 … Orders (€ bn) Total revenue (€ bn) Adj. EBITA before Special Items (€ bn) SE Book- 1.0x 1.1x 1.2x SE y-o-y (6.9%) 2.8% SE Margin 7.2% 5.2% 5.3% to-Bill1 GP Book- 0.9x 1.0x 1.1x GP y-o-y (14.6)% (1.4)% GP Margin 7.9% 4.
Slide 10: All Gas and Power divisions turning the corner
… with all Gas and Power divisions turning the corner and recording Book-to-Bill ratios above 1x in FY19 Generation Industrial Applications Transmission Book-to-Bill 0.8x 1.0x 1.1x 1.1x 1.2x 1.3x 1.1x 0.9x 1.1x 10.9 Total revenue 8.5 8.2 5.6 5.2 5.1 6.1 5.9 5.8 (€ bn) Adj. EBITA margin before 9.5% 2
Slide 11: Siemens Energy demonstrated resilience despite COVID-19
Siemens Energy demonstrated resilience despite COVID-19 Stable top-line development Current trading under COVID-19 Q1 FY20 Q2 FY20 Q3 FY20 9M FY19 9M FY20 • All businesses affected: Largest impact in Mar/Apr • Most of impacted manufacturing facilities reopened Total revenue (€ bn) 13.3 13.3 and run
Slide 12: In 2020, Gas and Power delivered a robust top-line across all divisions
In 2020, Gas and Power delivered a robust top-line and positive operational profitability across all divisions Generation Industrial Applications Transmission Book-to-Bill 1.0x 1.1x 1.3x 1.2x 1.1x 1.2x (1.9)% 4.0% 0.2% Total revenue 5.8 5.7 4.1 4.1 (€ bn) 3.7 3.8 Adj. EBITA margin before 3.7% 0.4% 3
Slide 13: Sustainable value creation
1 Historical 2 Sustainable 3 Financial performance value creation outlook CMD | M. Ferraro | CFO Section 13 2020-09-01 Siemens Energy is a registered trademark licensed by Siemens AG. © Siemens Energy, 2020
Slide 14: Value creation
Siemens Energy Value creation CMD | M. Ferraro | CFO Section 14 2020-09-01 © Siemens Energy, 2020
Slide 15: Strong top-line provides solid business foundation
Sustainable value creation Strong top-line provides solid business foundation High diversification across regions and businesses Large order backlog for Gas and Power of which 25%1 converts within 12 months New Unit orders stabilization – especially in Generation Resilient, recurring service busines
Slide 16: Siemens Energy is well diversified across all dimensions
Siemens Energy is well diversified across all dimensions By business By type (FY19) SGRE 35%1 Gas and Power 65%1 Service • Gas and Power 33% service share: 42% Service Central New Unit Distributed New Unit • SGRE Central Power 67% service share: 16% Generation Service New Unit New Unit Revenue FY19
Slide 17: Our increasing order backlog provides strong visibility
Our increasing order backlog provides strong visibility Order backlog by segment and type (€ bn) Order backlog conversion one year forward (€ bn) Share of Gas and Power backlog expected to be converted within 1 CAGR: 5% year forward 77 70 71 29% 27% 25% 26 SGRE 21 23 14 13 13 Gas and Power – 32 33 3
Slide 18: New Unit revenue has stabilized; strong orders in FY19
New Unit revenue has stabilized; Gas and Power with strong orders in FY19 across divisions New Unit revenue by business (€ bn) New Unit orders by business (€ bn) Gas and Power Gas and Power 14.5 11.4 10.8 12.0 10.0 12.3 New Unit revenue New Unit orders 21.2 22.3 19.0 19.4 19.4 18.7 SGRE 6.8 10.0 7.7
Slide 19: Service revenue continues to grow
Service revenue continues to grow with large share in Generation and Industrial Applications Service revenue by business (€ bn) Service revenue share by business1, FY19 Gas and Power 7.8 7.6 7.9 service revenue 60% CAGR: 4% 51% 8.9 9.1 9.5 SGRE 1.1 1.4 1.6 0.4 0.4 0.5 Transmission 3.2 3.1 3.2 Indust
Slide 20: Our initiatives pave a clear path to margin improvement
Sustainable value creation Our initiatives pave a clear path to margin improvement Deliver ~€1 bn announced run-rate savings by FY23 Footprint and portfolio initiatives for additional min. €300 m savings Project excellence in selection and execution Additional stand-alone opportunities in new struct
Slide 21: Significant cost base reduction compensated by volume decline
Significant Gas and Power cost base reduction so far was compensated by business volume decline Cost structure before Special Items (€ bn) Costs in % of total revenue Gas and Power Gas and Power 20.5 R&D R&D 92% 96% 96% 0.9 18.2 17.9 5% 4% 2.1 4% 10% 10% 0.9 0.8 €(0.1) bn 9% 2.0 1.9 SG&A SG&A +105 b
Slide 22: We have already spent ~€700 m resizing since FY17
We have already spent ~€700 m resizing Gas and Power since FY17 Reconciliation of Adj. EBITA before Special Items (€ m) 9M Gas and Power FY17 FY18 FY19 FY20 Restructuring costs Personnel measures to reduce headcount Gas and Power leading to severance charges Adj. EBITA before Special Items 1,746 815
Slide 23: Our cost programs drive profit improvement across Siemens Energy
Our cost programs drive profit improvement across Siemens Energy Gas and Power SGRE PG2020 and Accelerating Impact LEAP1 GP2020+ Productivity Supply Existing Reshaping Portfolio Project chain programs our footprint streamlining excellence excellence Operational Excellence Focus of next pages 1 LEAP
Slide 24: New company programs to accelerate profit improvements
New company programs launched at Gas and Power to accelerate profit improvements Gas and Power: Annual gross cost savings by FY23 PG2020 and GP2020+1 Accelerating Impact Realized savings ~€500 m Offset by lower business volume Savings to come >€500 m Full impact on bottom line Already identified >€3
Slide 25: PG2020 and GP2020+ programs provide high visibility on savings
PG2020 and GP2020+ programs provide high visibility on €500 m incremental savings by FY23 Gross cost savings target1 (€ m) Modules Comments >1,000 • Severance agreements signed to a large extent Function optimization Corporate function cost reductions • Related savings only partially >500 reflected
Slide 26: We have identified >€300 m savings potential
We have identified >€300 m savings potential in our Accelerating Impact program so far Gross cost savings target1 (€ m) Modules Less complex, more Reshaping our footprint agile and flexible >300 Portfolio streamlining Leaner, simpler product line-up Globally Project excellence Better execution, be s
Slide 27: As a stand-alone company we target significant cash flow upside
Sustainable value creation As a stand-alone company we target significant cash flow upside Asset light business model Working capital reduction Disciplined capital allocation CMD | M. Ferraro | CFO Section 27 2020-09-01 © Siemens Energy, 2020
Slide 28: Asset light business model with low operating net capital employed
We operate an asset light business model with an inherently low operating net capital employed Net Capital Employed by segment (€ m, June 20) Comments Gas and Power SGRE Property, plant and equipment 1,352 2,127 Operating net working capital 3,543 (956) Incl. 24% stake in Siemens India Investments a
Slide 29: We can do better in cash conversion
We can do better in cash conversion Rolling three year target of 1-revenue growth Reconciliation of Free cash flow (€ m) FY17 FY18 FY19 9M FY20 Gas and Power FY18: Mainly Adj. EBITA decline Gas and Power – Free cash flow 722 212 651 133 FY19: Increasing Adj. EBITA and ONWC reduction SGRE – Free cash
Slide 30: Laser-focus on asset management: ~€1.2 bn ONWC reduction by FY23
Laser-focus on asset management We target ~€1.2 bn ONWC reduction by FY23 Operating net working capital as % of total revenue Comments Gas and Power Target 24% 22% Reduce and prevent overdue receivables FY23 18% through operational excellence 23% 21% 19% Trade receivables 18% Optimize inventory via
Slide 31: We will actively manage our equity investments
We will actively manage our equity investments Overview of equity investments (FY19, € m) Overview of Siemens India Siemens India Various Total Selected financials for Siemens India (FY19) (listed) investments incl. investments Investment Voith Hydro, Ethos, etc. €1.1 bn €1.7 bn Market value of Tota
Slide 32: Our spin-off capitalization provides a strong basis for value creation
Sustainable value creation Our Spin-off capitalization provides a strong basis for value creation Solid investment grade rating Net cash position CMD | M. Ferraro | CFO Section 32 2020-09-01 © Siemens Energy, 2020
Slide 33: Strong balance sheet and investment grade rating
Strong balance sheet and investment grade rating support the operating business Net cash as of June 30, 2020 Siemens Energy excl. SGRE SGRE Siemens Energy Undrawn credit line of €3.0 bn1 Undrawn credit lines BBB investment of €2.8 bn1 grade rating Net debt: €0.3 bn (0.1) (1.2) Loans €3.1 bn Loans 1.
Slide 34: Financial outlook
1 Historical 2 Sustainable 3 Financial performance value creation outlook CMD | M. Ferraro | CFO Section 34 2020-09-01 Siemens Energy is a registered trademark licensed by Siemens AG. © Siemens Energy, 2020
Slide 35: Clear path to 6-8% margin in Gas and Power
We are embarking on a clear path to 6-8% margin in Gas and Power Adj. EBITA margin before Special Items Siemens 5.3% (1)-1% 6.5-8.5% Energy SGRE 6.7% (3)-(1)% 8-10% >300 >500 6-8% Gas and 4.5% Power 0-2% FY19 COVID-19 Other effects 1 FY20 COVID-19 PG2020 Accelerating Target impact recovery and GP202
Slide 36: Financial outlook
Financial outlook Actuals Near-term guidance 3-year guidance Mid-term target FY19 9M FY20 FY20 FY21 FY23 Total revenue €18.7 bn €13.3 bn (5)%-(3)% 2%-11% Gas and Power % Growth y-o-y2 (1.4)% 0.1% Adj. EBITA before Special Items €836 m €212 m 0%-2% 3.5%-5.5% 6%-8% % Margin before Special Items 4.5 %
Slide 37: Conclusion
Conclusion We are focused on 1 Strong business foundation with large order backlog and resilient service business sustainable shareholder value creation 2 Clear path to margin improvement with ongoing cost programs Asset excellence – Cash upside from 3 rigorous working capital management CMD | M. Fe
Slide 38: Appendix
Appendix CMD | M. Ferraro | CFO Section 38 2020-09-01 Siemens Energy is a registered trademark licensed by Siemens AG. © Siemens Energy, 2020
Slide 39: Profit and Loss Statement FY17-19 | 9M FY19/20
Profit and Loss Statement FY17-19 | 9M FY19/20 Siemens Energy In € m FY17 FY18 FY19 9M FY19 9M FY20 Revenue 30,086 28,023 28,797 20,503 19,828 % Growth (6.9)% 2.8 % NA (3.3)% Cost of sales (24,832) (23,876) (24,615) (17,420) (18,364) Gross profit 5,254 4,147 4,181 3,084 1,463 % Margin 17.5% 14.8% 14
Slide 40: Cash Flow Statement FY17-19 | 9M FY19/20
Cash Flow Statement FY17-19 | 9M FY19/20 Siemens Energy In € m FY17 FY18 FY19 9M FY19 9M FY20 Net income 960 645 282 202 (1,469) Amortization, depreciation and impairments 1,139 1,281 1,209 858 1,656 Income tax expenses 349 (493) 35 67 (203) Interest (income) expenses, net 186 215 248 215 103 (Incom
Slide 41: Statement of Financial Position
Statement of Financial Position September 30, 2019 and June 30, 2020 Sep. 30, Jun. 30, Sep. 30, Jun. 30, Siemens Energy – Assets (in € m) 2019 2020 Siemens Energy – Liabilities and equity (in € m) 2019 2020 Cash and cash equivalents 1,871 2,352 Short-term debt and current maturities of long-term deb
Slide 42: Performance indicator landscape Gas and Power
Performance indicator landscape Gas and Power FY17-19 | 9M FY19/20 Gas and Power In € m FY17 FY18 FY19 9M FY19 9M FY20 Order backlog1 (€ bn) 49 48 52 51 Orders 21,029 19,283 21,187 15,075 14,897 Total revenue 22,228 18,982 18,709 13,315 13,326 Adj. EBITA 1,703 440 589 506 (539) Special Items (43) (3
Slide 43: Performance indicator landscape SGRE
Performance indicator landscape SGRE FY17-19 | 9M FY19/20 SGRE In € m FY17 FY18 FY19 9M FY19 9M FY20 Order backlog1 (€ bn) 21 23 26 32 Orders 8,768 11,875 12,749 9,674 12,172 Total revenue 7,922 9,122 10,227 7,283 6,615 Adj. EBITA 330 478 481 355 (631) Special Items (103) (176) (206) (90) (352) A |
Slide 44: Performance indicator landscape Siemens Energy
Performance indicator landscape Siemens Energy FY17-19 | 9M FY19/20 Siemens Energy In € m FY17 FY18 FY19 9M FY19 9M FY20 Order backlog1 (€ bn) 70 71 77 82 Orders 29,673 31,046 33,734 24,570 27,014 Total revenue 30,086 28,023 28,797 20,503 19,828 Adj. EBITA 2,028 905 1,064 857 (1,211) Special Items (
Slide 45: Performance indicator landscape for service business
Performance indicator landscape for service business Siemens Energy FY17-19 | 9M FY19/20 Service order backlog1 (€ bn) Service orders (€ m) Service revenue (€ m) FY17 FY18 FY19 9M FY19 9M FY20 FY17 FY18 FY19 9M FY19 9M FY20 FY17 FY18 FY19 9M FY19 9M FY20 Gas and 32 33 35 NA 33 8,982 9,323 8,893 6,64
Slide 46: Bridge from Adj. EBITA to EBT
Bridge from Adj. EBITA to EBT FY17-19 | 9M FY19/20 Adj. EBITA to EBT Reconciliation (€ m) Comments 9M 9M In € m FY17 FY18 FY19 Adj. EBITA FY19 FY20 1 • Gas and Power: Reflects spin-off scope; deviates Gas and Power 1,703 440 589 506 (539) from Siemens AG segment reporting • SGRE: Consistent with Sie
Slide 47: Historical capital expenditure development
Historical capital expenditure development Capital expenditure development (€ m) Gas and Power FY17 FY18 FY19 Gas and Power • Stable tangible investment around €300-350 m p.a. Additions to property, plant and equipment1 308 334 311 • Focused on product development (e.g. SGT-9000HL % of Gas and Power
Slide 48: Gas and Power divisional performance (1/2)
Gas and Power divisional performance (1/2) Order backlog (€ bn)1 Orders (€ m) Book-to-Bill FY17 FY18 FY19 9M FY19 9M FY20 FY17 FY18 FY19 9M FY19 9M FY20 FY17 FY18 FY19 9M FY19 9M FY20 Generation 32 32 33 NA 32 8,455 8,848 8,594 5,822 6,044 0.8x 1.0x 1.1x 1.0x 1.1x Industrial 9 9 11 NA 10 5,897 5,994
Slide 49: Gas and Power divisional performance (2/2)
Gas and Power divisional performance (2/2) Total revenue (€ m) Adj. EBITA before Special Items (€ m) Adj. EBITA Margin before Special Items FY17 FY18 FY19 9M FY19 9M FY20 FY17 FY18 FY19 9M FY19 9M FY20 FY17 FY18 FY19 9M FY19 9M FY20 Generation 10,940 8,472 8,161 5,825 5,714 1,044 225 293 214 22 9.5%
Slide 50: Siemens Energy – Pension overview
Siemens Energy – Pension overview Pension overview (€ m, June 30, 2020) Pension liabilities/assets by region (€ bn, June 30, 2020) Defined benefit obligation 3,380 1.5 Fair value of plan assets 2,315 1.0 1.0 Asset ceiling 1 Net defined benefit balance 1,067 0.6 0.6 t/o provisions for pensions and si
Slide 51: Trademark license fees and service agreements
Trademark license fees and service agreements Usage of Siemens brand Service agreements with Siemens • Corporate identity of Siemens Energy and SGRE continues to include “Siemens” brand • Transitional service agreements (“TSA”) • Initial tenure of trademark license agreement: 10 years • Siemens Ener
Slide 52: Project financing and parent company guarantees
Project financing and parent company guarantees Continued customer project financing from Siemens Parent company guarantees issued by Siemens Existing parent company guarantees (“PCG”) Equity financing issued by Siemens AG Siemens Financial Services commitment €1.5 bn Resulting sales €23.7 bn procee