Siemens Aktiengesellschaft · XETR:SIE
Siemens Aktiengesellschaft — Siemens — FY2004 Earnings Presentation
41 slides from Siemens Aktiengesellschaft's earnings presentation, Nov 12, 2004
Slide 1: Profit and Growth
Profit and Growth Heinrich v. Pierer, CEO Heinz-Joachim Neubürger, CFO Analyst conference November 12, 2004
Slide 2: Safe Harbor Statement
Safe Harbor Statement s This presentation contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified either orally or in writing by words as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “esti
Slide 3: Key figures – FY04
Key figures – FY04 s in billions of euros Q4 FY New orders 21.6 80.8 Sales 20.8 75.2 Group profit from Operations 1.322 4.998 Net income 0.654 3.405 EPS (in euros) 0.73 3.82 Net cash 3.262 from operating and investing activities 0.609 Dividend (proposed; in euros) -- 1.25 3
Slide 4: Performance – FY04
Performance – FY04 s Success stories: A&D, Med, PG, Osram, SFS, SV, PTD Turnaround at SBT, I&S, L&A Well on track I&C groups in the black Outstanding results at ICM N Challenges for ICM MP TS results affected by high provisions and charges 4
Slide 5: Stepping forward within the Siemens Management System
Stepping forward within the Siemens Management System s Innovation: Outstanding examples in FY04: Med: Magnetom Espree with Total Image Matrix (TIM) SV: Tire Guard II; Gasoline Fuel Injection ICM: IP Multimedia System (IMS) International R&D competence network and rigorous patent strategy Custom
Slide 6: Global presence
Global presence s Germany Europe (excl. Germany) Asia- Americas Pacific Middle East, Africa, C.I.S. Employees by region (in thousands) 300 Germany 250 200 International 150 FY 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 6
Slide 7: Twelve Points for Profit and Growth in China
Twelve Points for Profit and Growth in China s Market penetration: Growth strategies for all business areas: 1) Increase of regional offices 3) I&C with focus on ICN and ICM from 28 to 60 4) A&C 2) "One Siemens" concept for 5) Power market clusters 6) Transportation 7) Medical 8) Lighting CHINA FY04
Slide 8: Strategic goals of M&A activities
Strategic goals of M&A activities … s Complement existing business portfolio adjacencies Create growth platforms by broadening the existing portfolio Enhance regional presence fitting to worldwide strategy Speed up consolidation / market penetration Gain selected specific R&D competence … support ou
Slide 9: Track record of major M&A activities
Track record of major M&A activities s in billions of euros Significant Purchase Year strategic goal price (EV) Assessment 2003 Strengthening position 0,9 success Alstom in industrial turbines Strengthening position Efficient 2001 in DSL broadband 1,6 write-off access market Strengthening position 2
Slide 10: Recent M&A activities hit all goals (I)
Recent M&A activities hit all goals (I) s Huntsville: Increasing NAFTA sales for SV by some 50 percent – joining the group of first tier supplier Regional sales split much more balanced Boosting the interior & infotainment business Trench: Important step to add new High Voltage products to P
Slide 11: Recent M&A activities hit all goals (II)
Recent M&A activities hit all goals (II) s Power Machines: First step via JV for power generation with Russian market leader Next steps defined Penetrating the regional market with interesting growth potential Bonus Energy: Round-up of PG’s portfolio by entering the growth market of wind gen
Slide 12: Back on growth track
Back on growth track s Organic growth rates et before currency and consolidation effects targ 0% (4)% 3% 6% 15% 87.0 6% 84.0 10% 78.4 75.2 74.2 11% 68.6 6% 60.2 54.7 48.2 45.4 CAGR: ~6% Sales as reported in billions of euros FY95 96 97 98 99 00 01 02 03 04 05 12
Slide 13: Portfolio changes effect profits positively
Portfolio changes effect profits positively s Revenue split by market position 52% Improvements due to: 65% Innovation drives 20% 13% strong Portfolio activities medium 28% 22% weak 1998 2004 Gross Margin from Operations Gross margin improvements: % +150 bps 28 Rigorous cost reductions Volum
Slide 14: Adjusted WACC due to changes in the economic environment
Adjusted WACC due to changes in the economic environment s After more than six years of stability adjustments are appropriate Parameters have changed (interest rates, equity risk premium, betas, tax rate and capital structure) Material changes in Groups' product / business portfolio and improv
Slide 15: Changes in EVA WACC, however margin targets remain unchanged
Changes in EVA WACC, however margin targets remain unchanged s until 2004 from 2005 onwards Flat tax rate 35% Flat tax rate 30% WACC WACC ICN 10% ICM COM 10% 8.5% SBS 10% 7.5% A&D 9% 6.5% I&S 9% 7.0% L&A 9% 7.0% SBT 8% 7.0% PG 9% 7.0% PTD 9% 7.0% TS 9% 7.0% SV 9% 7.0% Med 9% 7.0% Osram 8% 6.5% SFS1)
Slide 16: Other considerations
Other considerations s M&A market: competitive environment Investment criteria faced: • Private Equity – Treasury bond +500 bps or pay-back • EPS • EVA Conclusion: Siemens will continue its disciplined M&A approach but has to consider changed market environment. 16
Slide 17: Siemens will adopt IFRS by end of FY06
Siemens will adopt IFRS by end of FY06 s Our US-GAAP financial statements are compatible with most IFRS standards Areas requiring adjustments are few (e.g. pension, R&D) The effect on earnings is expected to be positive 17
Slide 18: Key figures – pension
Key figures – pension s in billions of euros FY02 FY03 FY04 FY05 Projected benefit obligation (PBO) 1) 19.5 20.9 20.8 Accumulated benefit obligation (ABO) 1) 17.8 19.8 20.0 Discount rate 2) 6.0% 5.4% 5.5% Fair Value of plan assets 14.5 15.9 17.7 Funded status 1) (5.0) (5.0) (3.1) Additional contribu
Slide 19: Pension – BSAV effect
Pension – BSAV effect 1) s Curtailment gain amortized over 15 years Defined contributions initially higher than past year service cost (about €50 mill.); breakeven expected from 2012 onward, ceteris paribus NPPC carried centrally reduced to about €630 mill. in fiscal 2005 from €730 mill. in 20
Slide 20: Raw Material: Impacts on Siemens Groups
Raw Material: Impacts on Siemens Groups s Raw Price Impact Material Change* on Group costs ICN Plastics 5-7% o COM ICM Plastics 5-7% o SBS - - o A&D Steel > 10% o I&S - - o L&A Steel > 10% o SBT Copper < 40% o PG Steel 10% o PTD Copper < 40% o TS Aluminum 1% o SV Plastics 5-7% o Med Copper < 40% o O
Slide 21: Financial assumptions for FY05
Financial assumptions for FY05 s Tax rate: ~ 25 percent Ongoing adjustments to pension asset allocation Capex: ~ 100 percent ball-park Cash flow from Operations lower Cash flow of Financial Services in line with growth opportunities 21
Slide 22: Outlook 2005
Outlook 2005 s Pursuing further operational improvements at our Groups Business Environment: Weakening USD (€ > 1,35) Rising commodity prices create challenge Geopolitical uncertainties Challenges: TS: resolving technical issues SBS: tackling earnings weakness COM: preparing budget; we w
Slide 23: Go for Profit and Growth – directive in 2005
Go for Profit and Growth – directive in 2005 s Growth in regions like Germany, U.S., China, Russia, India as well as Central and Eastern Europe Leverage of top+ programs: Innovation, Customer Focus and Global Competitiveness More specific outlook with Q1-FY05 release 23
Slide 24: Appendix
SIEMENS Appendix
Slide 25: Key figures – 2004
Key figures – 2004 s in billions of euros Q1 Q2 Q3 Q4 FY New orders 20.5 19.7 19.1 21.6 80.8 Sales 18.3 17.8 18.2 20.8 75.2 Group profit from Operations 1.361 1.076 1.239 1.322 4.998 Net income 0.726 1.210 0.815 0.654 3.405 EPS (basic; in euros) 0.82 1.36 0.91 0.73 3.82 Net cash from operating and i
Slide 26: Siemens Communications (COM)
Siemens Communications (COM) s End2End powerhouse Sales Group profit in billions of euros, not consolidated margin Performance and growth drivers 8-11% Customer Focus 24.2 - End to end solution provider for pure play as 20.7 well as converged play - Cross selling initiatives within COM and Siemens
Slide 27: Siemens Business Services (SBS)
Siemens Business Services (SBS) s Moving SBS forward Sales Group profit margin in billions of euros Performance drivers 5-6% Growth 6.0 - Europe: Improve market presence 5.8 5.2 4.7 - USA: Growth focused on IT outsourcing - Portfolio: Expand Business Process 1.7% Outsourcing (BPO) with an initial
Slide 28: Automation & Drives (A&D)
Automation & Drives (A&D) s World leader in automation Sales Group profit margin in billions of euros Performance and growth drivers 12.2% 11.0% World leader in Factory Automation 8.4% 9.6% 11-13% 8.9 Leading supplier for discrete, hybrid and 8.6 8.4 8.8 continuous process automation and electri
Slide 29: Industrial Solutions and Services (I&S)
Industrial Solutions and Services (I&S) s Improving customer productivity Sales Group profit margin in billions of euros Performance drivers 4-6% Impacts in FY04 - portfolio adjustments (SEAR, FEAG) 4.6 4.5 4.3 - profit oriented order selection 4.0 2.1% 2.2% Development of product families for t
Slide 30: Logistics and Assembly Systems (L&A)
Logistics and Assembly Systems (L&A) s Worldwide leader in logistics and assembly Sales Group profit margin in billions of euros Restructuring measures 7-9% Implement the SMS with a ten point program to go for profit and growth and enhance : 2.5 3.0 2.6 2.3 1.5% 0.1 1. Creation of standardized Mecha
Slide 31: Siemens Building Technologies (SBT)
Siemens Building Technologies (SBT) s Turning market position into profitability Sales Group profit margin in billions of euros Performance drivers 7-9% Exploit market leadership in fire safety and building automation by focusing on growing the installed base 5.5 5.6 Grow service business with i
Slide 32: Power Generation (PG)
Power Generation (PG) s Meeting the market challenges Sales Group profit margin in billions of euros Siemens Management System at PG Innovation: 9.4 16.8% - Harmonize GT product line 8.6 10-13% - New large GT family 7.5 7.0 - Optimize steam turbine family 16.7% 12.8% Customer focus: - Partnering
Slide 33: Power Transmission and Distribution (PTD)
Power Transmission and Distribution (PTD) s Sustainable improvement Sales Group profit margin in billions of euros Performance drivers 5-7% Clear No. 2 in T&D with well-balanced global 6.6% set-up; reliable partner for our customers 6.1% through utilizing the SMS: 4.1* 4.2* 3.4 3.6 Innovation - Te
Slide 34: Transportation Systems (TS)
Transportations System (TS) s Profitable growth with efficient rail solutions Sales Group profit margin in billions of euros Performance drivers 5-7% Consequent continuation and implementation of TS program 4.7 4.3 4.4 Intensification of quality initiative with focus on 4.0 “fire fighting”, rigo
Slide 35: Siemens VDO Automotive (SV)
Siemens VDO Automotive (SV) s First-tier supplier of applied automotive electronics & mechatronics Sales Group profit in billions of euros margin Performance drivers 5-6% Rigorous implementation of WIP 8.5 8.4 9.0 lead to further cost savings of almost 5.7 1 bn EUR in 2004 - Improve quality and pr
Slide 36: Medical Solutions (Med)
Medical Solutions (Med) s Profitable growth path Sales Group profit margin in billions of euros Our Strategy 15.1% 14.8% Increase quality and decrease cost of 13.4% healthcare delivery Æ improve workflow 11-13% 11.2% Innovation Leadership Continuing high investment in R&D 7.2 7.6 7.4 7.1 (9 % of
Slide 37: Osram
Osram s Leading world market position through new technology Sales Group profit margin in billions of euros Performance drivers 10.5% 10.2% Growth by innovation 9.8% 10-11% 8.4% - Drive systems business lamps and electronic ballasts 4.5 4.4 4.2 4.2 - Expand leading position in opto semi- conductor
Slide 38: Siemens Financial Services (SFS)
Siemens Financial Services (SFS) s Boosting profitable growth in internal and external business Total assets ROE (before taxes) in billions of euros Future performance drivers Continuing focus on growth while 24.9% 24.6% 18-22% sustaining high level of profitability 23.2% - Turnaround in asset gro
Slide 39: Financial Calendar FY05
Financial Calendar FY05 s November 11 November 12 November Press conference Analyst conference January 27 January First quarter results FY05 – conference call – and AGM April 27 April Semiannual results FY05 – conference call July 28 July Third quarter results FY05 – conference call 39
Slide 40: Reconciliations and definitions
Reconciliations and definitions s ”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 Reports/Fiscal 2004, Quarter 4 / Financial Statements” at our Investor Relati
Slide 41: Siemens Investor Relations Team
Siemens Investor Relations Team s Marcus Desimoni +49-89-636-32445 Dr. Constantin Birnstiel +49-89-636-36165 Irina Pchelova +49-89-636-33693 Christina Schmöe +49-89-636-32677 Webpage: http://www.siemens.com Investor Relations e-mail: investorrelations@siemens.com Fax: +49-89-636-32830 41