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Siemens – Vision 2020 Company Presentation

Siemens – Vision 2020 Company Presentation 6
Joe Kaeser, President and CEO – Ralf P. Thomas, CFO Siemens – Vision 2020 Q2 FY 2014, Analy yst and Press Conference Berlin, May 7, 2014 © Siemens AG 2014. All rights reserved.Safe Safe Harbour Harbour Statement Statement This document contains statements related to our future business and financial performance and future events or developments involving Siemens that may constitute forwardlooking statements. These statements may be identified by words such as “expect,” “look forward to,” “anticipate,” “intend,” “plan,” “believe,” “seek seek,” ” “estimate estimate,” ” “will will,” ” “project” project” or or words words o of f s similar imilar m meaning eaning. We We may may a also lso m mak ake e fforward orwardlooking looking s statements tatements iin n o other ther reports reports, in in presentations presentations, in in material material delivered to shareholders and in press releases. In addition, our representatives may from time to time make oral forwardlooking statements. Such statements are based on the current expectations and certain assumptions of Siemens’ management, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect Siemens’ operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens to be materially different from any future results, performance or achievements that may be expressed or implied by such forwardlooking statements or anticipated on the basis of historical trends. These factors include in particular, but are not limited to, the matters described in Item 3: Key information—Risk factors of our most recent annual report on Form 20F filed with the SEC, in the chapter C.9.3 Risks of our most recent annual report prepared in accordance with the German Commercial Code, and in the chapter C.7 Risks and opportunities of our most recent interim report. Further information about risks and uncertainties affecting Siemens is included throughout our most recent annual and interim reports, as well as our most recent earnings release, which are available on the Siemens website, www.siemens.com, and throughout our most recent annual report on Form 20F and in our other filings with the SEC, which are available on the Siemens website, www.siemens.com, and on the SEC’s website, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements of Siemens may vary materially from those described in the relevant forwardlookinggg statement as being exp pected,, anticip pated,, intended,, p planned,, believed,, soug ght,, estimated or ppj rojected. Siemens neither intends, nor assumes any obligation, to update or revise these forwardlooking statements in light of developments which differ from those anticipated. All underlying margins are calculated by adjusting margins for the effects reported for the respective businesses in the relevant period. These effects are provided to assist in the analysis of the businesses' results yearoveryear and may vary from period to period. Underlying margins are not necessarily indicative of future performance. Other companies may calculate similar measures differently. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. The financial measures identified in this document are in part transitional figures attained by comparison, classification, appreciation and rounding of historical financial measures; these financial measures and their transitional basis must be regarded as preliminary. © Siemens AG 2014. All rights reserved. Page 2 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceQ2 Q2 FY FY 2014 2014 – Key Key f figures igures Siemens Siemens (conti (continuing nuing operations operations, in in € €m) m) Q2 Q2 FY FY 13 13 Q2 Q2 FY FY 14 14 C Ch hange ange 1) Orders 21,235 18,430 10 1) Revenue 17,779 17,449 1 Booktobill ratio 1.19x 1.06x Total Sectors profit 1,348 1,566 16 Net income 1,030 1,153 12 Basic earnings per share net income (in €) 1.20 1.33 11 Free cash flow 1,360 1,390 2 1) Change is adjusted for portfolio and currency translation effects © Siemens AG 2014. All rights reserved. Page 3 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceEnergy – Performance held back by lower revenues and execution execution c challenges hallenges Key Figures Energy Main developments in Q2 €bn €m • Booktobill at 1.09 despite sharp order decline 1) 1) 2) Orders Revenue Profit in Europe/CAME region 23 • • Market Market environment environment remains remains c challenging hallenging 10.5 8.6 6 8.5 • Power Generation – Positive gains 8.8 6.1 6.3 5.6 overcompensate lower contribution due to 551 4.6 decreasingy g revenue mainly from g gas turbine 255 business • Wind – Significantly lower contribution from Q2 13 Q2 14 Q2 13 Q2 14 Q2 13 Q2 14 offshore business and charges related to UUd nderll. defective components Orders Revenue Profit Division profit 1) 1) yoy yoy margin margin • Transmission – Substantial execution Power challenges at two Canadian turnkey projects 14 8 18.4 14.4 Generation result result in in charges charges o of f € €287m; 287m; f further urther low low m margin argin Wind Power 46 13 4.3 0.2 projects Power 7 14 24.2 1.1 Transmission Profit margin Underlying Profit margin 1) Comparable, i.e. adjusted for currency translation and portfolio effects © Siemens AG 2014. All rights reserved. 2) for underlying margin calculation please refer to Flashlight document Page 4 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceHealthcare – Continued excellent performance on high level level despite despite currency currency headwinds headwinds Key Figures Healthcare Main developments in Q2 €bn €m • Order growth supported by strong service 1) 1) 2) Orders Revenue Profit business and improvement in Europe while revenue growth is broad based 15.3 15.5 • Strong profit margin – €66m gain from +1 +5 expected sale of particle therapy installation 16.3 13.6 compensates for strongly adverse FX effects 3.3 3.3 3.3 3.2 531 531 445 445 • Diagnostics – Solid growth and profit development Q2 13 Q2 14 Q2 13 Q2 14 Q2 13 Q2 14 Ud Underll. Orders Revenue Profit Division profit 1) 1) yoy yoy margin margin Diagnostics 3 3 10.8 15.2 1) Comparable, i.e. adjusted for currency translation and portfolio effects Profit margin Underlying Profit margin © Siemens AG 2014. All rights reserved. 2) for underlying margin calculation please refer to Flashlight document Page 5 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceIndustry – Profit climbs as short cycle businesses continue continue stabilizing stabilizing Key Figures Industry Main developments in Q2 €bn €m • Short cycle markets show continuing 1) 1) 2) Orders Revenue Profit stabilization, with positive order growth particularly in Germany and China 10.5 13.2 +12 • Industry Automation – Margin improvement +5 due to higher capacity utilization 4.8 7.9 10.3 4.4 4.4 4.4 • Drive Technolog gies – Impp proved cost position 456 456 345 and volume growth support gross margins • Metals Technologies burdened by a project in Q2 13 Q2 14 Q2 13 Q2 14 Q2 13 Q2 14 the US; Joint venture with MitsubishiHitachi Ud Underll. Heavy Machinery signed Orders Revenue Profit Division profit 1) 1) yoy yoy margin margin Industry 11 6 15.8 18.1 Automation Drive 14 5 9.5 9.9 Technologies 1) Comparable, i.e. adjusted for currency translation and portfolio effects Profit margin Underlying Profit margin © Siemens AG 2014. All rights reserved. 2) for underlying margin calculation please refer to Flashlight document Page 6 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceInfrastructure Cities – Higher profit on improvements in in execution execution, m mix ix and and productivity productivity Key Figures Infrastructure Cities Main developments in Q2 €bn €m • Positive booktobill of 1.05 on tough comps 1) 1) 2) Orders Revenue Profit due to major rail orders • • T Tr ransport ansporta ation tion Logistics Logistics – Improved Improved project project 4.7 7.2 12 execution of large rolling stock orders +7 5.2 7.3 4.7 4.4 • Power Grid Solutions Products – Mainly 4.1 benefitting g from favourable mix and ‘Siemens 0 02 .2 325 2014’ related productivity improvements 6 • Building Technologies – Continued Q2 13 Q2 14 Q2 13 Q2 14 Q2 13 Q2 14 improvement from successful implementation Ud Underll. of 'Siemens 2014' measures Orders Revenue Profit Division profit 1) 1) yoy yoy margin margin Transportation 29 21 7.0 8.3 Log gistics Power Grid Solutions 9 1 8.2 8.2 Products Building 6 6 1 1 6.9 6.9 6.9 6.9 Th Technollogiies 1) Comparable, i.e. adjusted for currency translation and portfolio effects Profit margin Underlying Profit margin © Siemens AG 2014. All rights reserved. 2) for underlying margin calculation please refer to Flashlight document Page 7 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceLower volume from large orders in Europe while China China s shows hows strength strength Regional business split Purchasing Managers Index 1) Q2 FY 14 Order growth yoy Index US ISM Mfg PMI Eurozone Mfg PMI 65 Expanding economy 60 Europe/C.I.S./Africa/ME 26 2) 53.7 55 ((y therein Germany)) 38 38 53.3 50 45 Americas +10 Contracting economy 40 (therein USA) +6 35 30 Asia/Australia Asia/Australia +20 +20 (therein China) 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 (Apr) +22 2) US as of March; flash reading for EZ in April 1) Q2 FY 14 Revenue growth yoy China Industry Value Added In 2 Europe/C.I.S./Africa/ME (therein Germany) 1 20 Americas 1 15 15 (therein USA) 2 10 8.8 Asia/Australia 9 (therein China) 19 5 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 (Mar) 1) Change is adjusted for currency translation and portfolio effects © Siemens AG 2014. All rights reserved. Page 8 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceOutlook Outlook Fiscal Fiscal 2014 2014 Basic earnings per share (Net income) • We expect our markets to remain challenging challenging in in Fiscal Fiscal 2014 2014 In € • Our short cycle businesses are not At least 15 anticipating a sustainable recovery until growth 6.55 late late in in the the fiscal fiscal year year • We expect orders to exceed revenue, for a booktobill ratio above 1 5.08 4.74 •Ai Assuming t thhatt revenue on an organib ic basiis remains level yearoveryear, we expect basic earnings per share (Net Income) for Fiscal 2014 to grow by at least 15 from € €50 5.08 8 iin F Fiiscall 2013 2013 • This outlook is based on shares outstanding of 843 million as of September 30, 2013 • Furthermore it excludes impacts related to legal and regulatory matters FY FY 201 2011 1 FY FY 2012 2012 FY FY 2013 2013 FY FY 2014e 2014e © Siemens AG 2014. All rights reserved. Page 9 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceSiemens Siemens – Vision Vision 2020: 2020: Strategic Strategic focus focus Longterm growth agenda in attractive fields 1 Align portfolio along strategic imperatives 2 2 Cost reduction and business excellence 3 3 Ownership culture and leadership based on common values © Siemens AG 2014. All rights reserved. Page 10 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceSiemens Siemens – Innovating Innovating the the Electrical Electrical World World Global trends Market development (illustrative) Digital transformation Market growth: 79 Networked world of complex and hetero Digitalization Digitalization g ge eneous neous sy system stems s Globalization Market growth: 46 Global competition Automation driving productivity localizat localizatio ion n Urbanization Infrastructure invest Electrification Market growth: 23 ment needs of urban agglo agglom merat eratio ion ns s Demographic change Today Mid term2020 Decentralized demand of a growing andi d aging popullattiion Power Imaging Climate Power change Transmission, Efficient Energy InVitro Generation Distribution Application Diagnos Higher resource efficiency in an all Smart Grid tics electric world © Siemens AG 2014. All rights reserved. Page 11 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceStringent resource allocation for growth fields in Electrification Electrification, Automation Automation and and Digitalization Digitalization Selected growth fields Digitalization Business Analytics Datadriven Services Software IT solutions 8 Image 'Digital twin' guided Distribution Software Road City Therapy, Grid Key Mobility, Molecular Automation Verticals tolling Diagnostics, Software Flexible e.g. Automation etc. Small Small GT GT OG OG, FB FB 7 6 8 8 7 7 8 810 10 6 Electrification Offshore 18 Power to Drive energy Efficient Shape Grow in Next x Est. market growth last manage g ment urban Industrie Process Generation 20132020 (CAGR) mobility 4.0 Industries Healthcare © Siemens AG 2014. All rights reserved. Page 12 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceAcquisition of RollsRoyce's Aero Derivative Gas Turbine Turbine business business offers offers great great value value 3) Transaction scope Transaction rationale • Acquisition of 100 of RollsRoyce's aeroderivative gas 1 Excellent fit – complementary technologies turbine (ADGT) and compressor business including Strengthens focus area Oil Gas and related services business 2 Decentralized Power • Only part of RollsRoyce's Energy Business Innovation Innovation leader leader with with '''best 'best iin n b breed'' reed'' gas gas turbines turbines 3 ADGT's are an attractive power supported by access to aerotechnology supply option e.g. for offshore 4 Worldclass global service platform oil gas and for decentralized power generation 5 Significant synergies and enabling business Selected RollsRoyce ADGT business financials Transaction facts (2013) 1) • Purchase price of £785m • Sales: £871m, thereof 60 service • Additional £200m for 25 years exclusive access to future • Installed fleet: 2,,500 ADGT RollsRoyce aerotechnology developments and • EBIT: £72m (8.3 EBIT margin) preferred access to supply and engineering services • Ramp up to £50m+ annual gross cost synergies until • Employees: 2,400 2) FY2017 (2/3 of longterm runrate gross cost synergies) • EVA accretive in FY2020 • Closing expected by end of December 2014 subject to regulatory approvals Portfolio completion with key aeroderivative gas turbine technology for growth in in the the oil oil gas gas industry industry and and in in decentralized decentralized power power supply supply 1) On a cashanddebtfree basis; 2) Pre integration transformation cost 3) Transaction rationale details – see slides in appendix © Siemens AG 2014. All rights reserved. Page 13 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceAutomation Automation is is key key to to success success Nano grids Decentral generation Intelligen Intelligentt grid grid e eg .g. W Wind ind, in one building Photovoltaics Industrial, Data centers, etc. Micro grids Grid storage Campus with island Utilities Commercial e.g. batteries function function ( (generation generation Pb Publilic consumption) Controllable transformers Grid automation Transmission and Grid operators Grid Grid coupli couplin ng g distribution distribution Connect grids with different operating Grid stabilization parameters Voltage regulation While power electronics is a key enabler, integration and automation make the difference • Integration of renewables such as PV, Wind and storage systems • Mitigation of negative effects on power quality by mass renewable integration • Enabling semi/full autonomous prosumers ranging from large campuses to buildings • Better utilization of existing power grid infrastructure © Siemens AG 2014. All rights reserved. Page 14 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceDigitalization: Digitalization: From From data data to to business business Digitalization Attractive Attractive m marke arket t i in n S Siemens iemens verticals verticals Substantial Substantial profit profit m margins argins achievable achievable 1 Market (€bn) IT enhanced 30 Services 100 So Softtwa are e SSf ofttware CAGR 56 20 products +8 Vertical IT Solutions Combined SW Automation 15 2012 2020 HW solutions Innovative business models Key enablers • Meter data management • Cloud strategy it in thhe clld oud • Data analytics platform Business • Data Analytics enriched model • Applications on top of platforms plant control Electrification innovation • Siemens remote service • Strong partnerships platform across divisions 1) Source internal: Siemens market for vertical IT © Siemens AG 2014. All rights reserved. Page 15 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceUnconventional Oil Gas opportunities in North America America r remain emain very very a attractive ttractive Global unconventional OG supply development Regional capex split for unconventionals, top top 5 5 c countries ountries in in 2025 2025, USD USD b billion illion Production Production, in in Mbbl Mbbl/d /d 1.1 +3 40 4.1 272 257 257 35 +7 9.3 210 30 110 190 119 25 25 +17 147 118 20 99 51 +9 8 52 15 78 7 7 75 5 7 10 8 45 46 13 6 36 6 88 5 5 5 2 60 20 5 2 2 12 12 32 32 17 15 0 2000 2005 2010 2015 2020 2025 2011 2013 2015 2020 2025 United States China Australia Unconventional liquids Unconventional gas Canada Venezuela Sum Others Source: Rystad Ucube 2014 © Siemens AG 2014. All rights reserved. Page 16 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceHealthcare with higher entrepreneurial flexibility – separately separately m managed anaged under under t the he Siemens Siemens u umbrella mbrella Strong position, resilient performance Distinct trends at work • Customer market structures in tran Margin range sition (e.g. valuebased reimbursement, Profit 16.3 1519 convergence of diagnosis therapy) 14.6 excl. ppa • • Long Long term term paradigm paradigm shifts: shifts: in in o off 12 12.0 0 35 p.a. revenue • Potential disruptive technological changes (e.g. Big data analytics, 13.6 13.6 12.5 knowledge based HC, molecular DX) • • Point Point of of Care/Mobile Care/Mobile HC HC Revenue in €bn FY 2011 FY 2012 FY 2013 FY 2020e Healthcare with individual setup to succeed in changing environment • Focus flexibly on market requirements • Invest in growth opportunities to respond to paradigm shifts in the system • Focus resource allocation to address distinct Healthcare industry characteristics • Going public of Audiology © Siemens AG 2014. All rights reserved. Page 17 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceGoing public of Hearing Aids business creates creates an an opportunity opportunity • Att Attracti tive mark ket t: Secular growth, good margins Success factors • Strong Siemens performance in place • Compg petitive technological basis Timing is right: ✓✓ • Highly respected brand Receptive stock • However, no synergetic value – Attractive market markets, com business can better realize full petitive petitive position position € €bn bn CAGR 4 id industtry pottentitiall outtsidide off 4.0 Siemens Story is right: ✓ 3.3 3.2 3.1 • Distinct customers and gotomarket Leading global pureplay hearing • Hearingg g aids growth areas far from FY2012 FY2013 FY2014e FY2020e Siemens core: Implants, retail, aids player Profit Pool 1722 EBIT consumer electronics Execution ✓ 1) Main competitors Revenue reported • Independently listed company is right: 1 Sonova CHF 1.8bn • • Build Build on on strengths strengths of of the the business business Siemens Siemens e experience perience, ≈ €1.5bn • Focus management attention determined to succeed 2 WDH DKK 7.9bn ≈ €1.0bn • Raise capital dedicated to build 3 GN Resound DKK 4.2bn business ≈≈ € €006 .6bbn n 1) WDH and GN ReSoundHearing Aids CY2013; Sonova as of FY12/13 © Siemens AG 2014. All rights reserved. Page 18 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceIn depth analysis of businesses has has led led to to specific specific conclusions conclusions Portfolio analysis Conclusions Cumulated • Fix underperforming businesses Focus Profit starting with 'bottom 10' businesses • Decide along the Strategic Imperatives • Organic structural realignment Cumulated • Strategic partnerships Revenue • Divestment (best owner concept) 1. Areas of growth • Stringent resource allocation supported by 2. Potential profit pool performance culture and One Siemens framework framework 3W 3. Whhy Si Siemens 'Siemens – Vision 2020' 4. Synergetic value 5. Paradigm shifts in technology/markets © Siemens AG 2014. All rights reserved. Page 19 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceJV with MitsubishiHitachi Heavy Machinery creates a a g global lobal p prime rime supplier supplier o of f m metals etals t technologies echnologies Siemens Metals Technologies Transaction Structure • One of the world's leading lifecycle partners to the metallurgical industry, headquartered in Linz (Austria) MHI Hitachi IHI Siemens • FY 2013 revenues of €2bn and 8,900 employees 56 34 10 • B Business siness m mainl ainly acq acquiired red b by Siemens Siemens as as part part o of f VA Technologie AG in 2005 MHMM • Siemens contributes whole business unit MT excl. HoldCo the services business for Electrics/Automation Board: 2 Siemens/3 MHMM The Joint Venture 51 49 NewCo (HQ in England) • Mitsubishi Heavy Industry (MHI), Hitachi and IHI Metaltech contribute their metals machinery JV MHMM • MHMM focuses on the hot and cold rolling mills and MT MHMM processing lines metals machinery business with revenues of €550m in 2013 • MT and MHMM with complementary regional footprint and and product product portfolio portfolio • Siemens to receive 49 ownership in the JV • The JV will become a fullline supplier of metals • 51 of the JV shares to be held by the HoldCo MHMM technologies products and services on a global scale • Closing expected by the end of calendar year 2014 • Strategic supply agreements between JV and Siemens (e (e.g g. C Components omponents, automation) automation) © Siemens AG 2014. All rights reserved. Page 20 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceSimplification leads to reduction of of overhead overhead and and support support function function cost cost by by € €1bn 1bn Ta Tar rg ge et t Key Key actions actions Functional cost reduction • Remove additional layers (Cluster, Sectors) • • Combine Combine certain certain Divisions Divisions and and B Businesses usinesses €1bn • Stringent management governance through all levels of the organization (Corporate Core) • Optimization of Corporate Services on highest possible level • Full savings to mainly materialize in FY 2016 FY FY 2014 2014e TTt arget © Siemens AG 2014. All rights reserved. Page 21 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceFlat and market driven organization along the value chain chain w will ill capture capture growth growth opportunities opportunities Middle Global Europe, Asia, Americas 1) East, CIS Africa Australia Healthcare Market Separately managed managed Healthcare Power Wind Energy Building Mobility Digital Process Financial and Gas Power and Manage Techno Factory Industries Services Renewables ment logies and Drives PG PG WP WP Power Generation Services PS EM BT MO DF PD HC SFS Corporate Services Corporate Core Managing Board 1) Commonwealth of Independent States © Siemens AG 2014. All rights reserved. Page 22 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press Conference Diivisions (G Global PL) Gotomar rketThe Management model drives resource allocation and and Ownership Ownership culture culture makes makes the the difference difference Custo Customer mer and and business business focus focus Ownership People and leadership Governance culture Manag gement model One Siemens Financial framework Operating system – Corporate Memory People Customer Business Innovation excellence proximity excellence and care Sustainability Sustainability and and Citizenship Citizenship © Siemens AG 2014. All rights reserved. Page 23 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceOne Siemens Financial Framework sets sets t the he aspiration aspiration One One Siemens Siemens Financial Framework Siemens Capital Capital e efficiency fficiency Capital Capital structure structure 2) (Industrial net debt/EBITDA) (ROCE ) Growth: Siemens most 1520 up to 1.0x 1) relevant competitors (Comparable revenue growth) 3) Total cost productivity Dividend payout ratio 4) 35 p.a. 4060 5) 5) Profit Profit Margin Margin ranges ranges o of f b businesses usinesses (excl (excl. PP PPA) A) 6) PG EM MO PD SFS 1115 710 69 812 1520 WP BT DF HC 58 811 1420 1519 1) ABB, ALSTOM, GE, Rockwell and Schneider, weighted 2) Based on continuing and discontinued operations 3) Productivity measures divided by functional costs (cost of sales, RD, SGAexpenses) of the group 4) Of net income excluding exceptional noncash items 5) excl. acquisition related amortization on intangibles 6) SFS based on Return on equity after tax © Siemens AG 2014. All rights reserved. Page 24 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceRigorous Operating System reinforces business business excellence excellence Enabler Priorities Results (by metrics) • Key account management Customer proximity • Market development boards • Software architecture and platforms Innovation • New technology driven growth areas + • Mandatory elements of top framework (Benchmarking, productivity programs) • Lean manag gement Business excellence • Project risk management • Service platforms • • Ownership Ownership culture culture People excellence • Continuous development learning, and care employability • Integgy rity comp pliance © Siemens AG 2014. All rights reserved. Page 25 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceCorporate Corporate M Memory emory f for or Project Project Management Management Lessons Actions for Learninggp s appplied: BORWIN 3 lld earned ffrom projt ject bid bid Offshore gridconnection platform legacy projects execution phase • Extended project duration (5 years) T Ty ypical pical risks risks and and • Focus on HVDC grid – not a steel root causes identified platform • Partner accountable for platform; High High S Speed peed T Tr rains ains EEl arly warniing cable separately tendered mechanisms defined • Experience based pricing and contract desig gn Mitigation measures • Avoid the 'resource trap' Offshore Grid conn. identified Concept for Corporate Memory Particle Therapy py © Siemens AG 2014. All rights reserved. Page 26 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceFoster ownership culture through equity ownership and and leadership leadership based based on on shared shared values values Leadership based Foster Foster equity equity ownership ownership on shhd ared vallues Employees owning shares from Siemens Share plans (in thousand) “It is not the 50 50 strategy which 52 makes the 140 difference, but the 92 culture culture of of a a company, its Ownership values and what it FY 2009 FY 2013 Target culture stands for" • 3 of shares are held by current employees • 107k employees participated in share matching plan 2014, up 5 from 2013 "Always Always act act as as if it were your own company" Broad implementation of a Siemens Profit Sharing Pool Pool (sha (share re based) based) planned planned © Siemens AG 2014. All rights reserved. Page 27 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceSiemens – Vision 2020 Value Value c creation reation Cultural Cultural change change Siemens – Vision 2020 1. Stringent company governance with effective support functions (cost reduction €1bn) 2. 'Underperforming' businesses fixed 3. Solid execution of our financial target system • Capital efficiency: ROCE 1520 • Growth most relevant competitors 4. Global and decentralized management structures: more than 30 of Division and BU management outside Germany 5 5. P Parttner off ch hoiice ffor custtomers (NPS (NPS up ≥≥20) 20) 6. Employer of choice (Siemens Engagement Survey: Employee Engagement Index, Leadershipy p and Diversity Index: 75) ) 7. Ownership culture: Increase number of employee shareholders by at least 50 Innovating Innovating the the electrical electrical world world NPS: Net Promoter Score © Siemens AG 2014. All rights reserved. Page 28 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceSiemens – Vision 2020 Clear Clear milestones milestones until until 2016 2016 Until Execution step ps Q4 2014 Execution of ‘Siemens 2014’ measures Impg plementation of new organization,, start in new structure on Oct 1 Introduction of Incentive System 2015 Sharppg ening brand messag ge starting g in Oct 2014 Q2 2015 Update on cost reduction (stringent governance, efficient support functions) Prog ogress ess update update o on po porttfo olio o opt optimizat atio on Q4 2015 Update on cost reduction (stringent governance, efficient support functions) Update Update o on n performance performance in in growth growth ffields ields Share buyback executed (up to €4bn) Q4 2016 Update Update o on n portfolio portfolio optimization optimization and and cost cost reduction reduction © Siemens AG 2014. All rights reserved. Page 29 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceAppendix Appendix © Siemens AG 2014. All rights reserved. Page 30 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceOverview Overview of of businesses businesses (I) (I) 1) 1) € €14bn 14bn € €5bn 5bn Power and Gas Wind Power and Renewables CEO: Roland Fischer CEO: Markus Tacke Strongly positioned in core markets: Unique competitive position: Gas Gas T Tu urbines, rbines, Generators, Generators, Clear Clear 1 1 positi positio on n in in fast fast grow growing ing Offshore Offshore W Wi ind nd Products Products Steam Turbines, Solutions, Onshore Wind with selective approach on 40 40 Service Compressors, profitable projects Instrumentation Electrical 20 Solutions (S (Split lit esti timatted d bbd ased on FY 2013 revenues) Priorities Priorities • Maintain leading position with superior business model • Remain world leader in sustainable offshore business through innovation and industrialization (e.g., new offshore facility in • Strengthen competitiveness through operational excellence Hull/GB) and cost out programs • In offshore further drive down Levelized Cost of Energy • Technology leadership throughout portfolio via focused (LCoE) to reach 0.1 EUR/kWh by 2020; onshore to reach innovation and selective MA grid parity • Strong local presence to secure market proximity and • Onshore: Margin improvement and consecutive growth customer care • Manage backlog execution thoroughly across value chain • Hig gh market share and solid p profit marg gin 1) Estimated revenue based on FY 2013 financials (incl. Service) © Siemens AG 2014. All rights reserved. Page 31 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceOverview Overview of of businesses businesses (II) (II) 1) € €12bn 12bn Power Generation Service Energy Management CEO: Randy Zwirn CEO: Ralf Christian, Jan Mrosik High margin/constant flow of revenue: Seamless offering Service, Service, modernization modernization a and nd upgrades upgrades o of f T Tr ransmission ansmission (High (High V Voltage oltage Products, Products, S Solutions) olutions) (T) (T) Large Gas Turbines, Large Steam Turbines, Transformers (T) Generators, Industrial Turbines (e.g. OilGas) Low and Medium Voltage (LMV) and Wind Turbines (onshore/offshore) Energy Automation (SG) Software Solutions Services (SG) Priorities Priorities • Continuously building up highly profitable backlog by strong • Optimized gotomarket addressing all types of customers increase in growth regions (e.g., Middle East, South Korea) seamlessly • Grow footprint in Oil Gas industry • Extend leadership in digitalization • RD investment to make fleet more valuable for customers • ‘Transform to win’ productivity program until 2015: (e. g., condition based maintenance through data analytics) Stabilize execution of legacy projects • Expand flexible value added service portfolio for • Continue optimization of LMV Wind Power • Expand power electronics business to distribution grid app pplications 1) Estimated revenue based on FY 2013 financials ( ) Organizational home division of business until Sep 2014 © Siemens AG 2014. 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Page 32 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceOverview Overview of of businesses businesses (III) (III) 1) 1) € €6bn 6bn € €7bn 7bn Building Technologies Mobility CEO: Johannes Milde CEO: Jochen Eickholt Strong technology base and integrated solutions Strengthened portfolio Products Products S Systems ystems Mobili Mobility ty Management Management (Rail (Rail A Automation, utomation, Road Road and and Solutions Services City Mobility) (MOL) Building Performance Business Continuity Turnkey Projects (MOL) and Electrification (SG) Mainline Transport (High Speed, Commuter Rail, Locomotives) (RL) Urban Urban T Transport ransport (RL) (RL) Priorities Priorities • Selective country approach (products in emerging countries • Ensure stringent project execution of order backlog to solutions/services in mature markets) • Expand on market leadership in Rail Automation, • Focus on organic growth in China deliver on synergies of €100m until 2018 • Advanced Services through IT and SWbased analytics • Integrated turnkey projects with high Siemens product content • Expand joint gotomarket with Energy Management (e.g., LMV for Data Centers) • Grow services e.g., remote monitoring 1) Estimated revenue based on FY 2013 financials ( ) Organizational home division of business until Sep 2014 © Siemens AG 2014. 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Page 33 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceOverview Overview of of businesses businesses (IV) (IV) 1) 1) € €9bn 9bn € €11 11b bn n Digital Factory Process Industries and Drives CEO: Anton Huber CEO: Peter Herweck Shaping future of manufacturing Bundling process knowhow Factory Factory A Automation utomation (IA) (IA) Large Large D Drives, rives, Mechanical Mechanical Drives Drives (DT) (DT) Motion Control (DT) Process Automation (IA) Product Lifecycle Management (IA) Upstream and Midstream (P) Services (CS) Metals Technologies (MT) Services (CS) Priorities Priorities • Digital Revolution changes product development and • Growth momentum due to focused approach on strong manufacturing process (‘Industrie 4.0’) growing key verticals such as OG, FB, chemicals • Secure customer retention by leveraging PLM software • Invest in growth with lifecycle business – and automation product offering service capabilities and local setup • Ongoing expansion of the product portfolio and • Expand software offering for digital engineering and installed base operations • Develop business in datadriven services • Further optimize efficiency and cost position (field devices and drive train) 1) Estimated revenue based on FY 2013 financials ( ) Organizational home division of business until Sep 2014 © Siemens AG 2014. 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Page 34 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceOverview Overview of of businesses businesses (V) (V) 1) 2) € €13.6bn 13.6bn € €18.7bn 18.7bn Healthcare Financial Services CEO: Hermann Requardt CEO: Roland ChalonsBrowne Personalized and affordable Healthcare Combine industrial and financial logic Imaging Imaging Commercial Commercial Finance Finance Clinical Products Project Structured Finance Diagnostics Insurance Customer Solutions Financing Investment Management Audiology Venture Capital T Tr reasury easury Priorities Priorities • Individual setup to succeed in changing environment • Financing as strategic differentiator and earnings contributor • React more flexibly to customers' requirements and improve market penetration • Close alignment with Divisions to offer a joint customer and market approach • Invest in growth opportunities to respond to paradigm shifts • Sound financial risk management and portfolio diversity • Focus resource allocation to address distinct • Respected partner to the financial markets Healthcare industry characteristics • Going gp public of Audiology gy 1) Revenue FY 2013; 2) Total Assets Sep 30, 2013 ( ) Organizational home division of business until Sep 2014 © Siemens AG 2014. All rights reserved. Page 35 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceOne Siemens cockpit – H1 FY 2014 ROCE ROCE in in target target corridor corridor despite despite impact impact on on Energy Energy margins margins Financial target system 1) Growth Margins compared to industry benchmarks Revenue growth (rolling 4 quarters Q2 FY 14) EBITDA Margins (H1 FY 2014) 10 10 15 15 Energy Energy 85 8.5 Siemens 1.9 Healthcare 20.2 1520 4.3 1117 Industry 14.0 Infrastr. Cities 9.0 812 Competitors 2.4 EBITDA margins of respective markets throughout business cycles C Capi it tall effi fficiiency Ci Capittall sttructture ROCE adjusted (continuing operations) Adjusted industrial net debt/EBITDA 1.0x 16.4 1520 13.9 13.9 05 0.510 1.0x 0.6x Q2 Q2 FY FY 13 13 Q2 Q2 FY FY 14 14 H1 FY 13 H1 FY 14 1) As reported © Siemens AG 2014. All rights reserved. Page 36 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceFree Cash Flow Decent Decent performance performance in in Q2 Q2 after after a a weak weak start start iin n Q Q1 1 Operating Operating Wo Working rking Capital Capital (OWC) (OWC) turns turns € €m m Total Sector 5,328 9.0 7.7 4,700 7.1 FY 2012 FY 2013 Q2 FY 2014 992 70 703 3 291 699 FY 2012 61 FY 2013 676 FY 2014 1,204 1,395 O Oct N Nov D Dec J Jan Fb Feb M Mar A Apr M May J Jun Jl Jul A Aug S Sep © Siemens AG 2014. All rights reserved. Page 37 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press Conference1 1 Excellent Excellent fit fit – complementary complementary technologies technologies Product portfolio with full power output range Complementary technology strengths for for both both technol technologies ogies MW06 20 400  Only onsite service possible  G Good d gas ffuell fl flexibilit ibility SGT SGT SGT SGT700 SGT800  Stable proven DLE systems 100 300 500 IGT (Siemens)  Designed for efficient SGT SGT SGT600 SGT750 200 400 combined cycle power plants Main application: Industrial power generation  Light cores and fast core chang ge for service (changeable within 24h) ADGT 501 RB211 G62 TRENT 60  Quality level inherited from (Rolls RB211 GT61 aero engines Royce)  Designed Designed f for or high high number number of cycles with high efficiency Main application: Offshore production platforms • Customers can choose from different technologies in the full output range • • Joint Joint portfolio portfolio will will be be strong strong alternative alternative ffor or customers customers c compared ompared to to other other players players iin n tthe he sector sector DLE = Dry Low Emissions: Emissions combustion system to minimize the emissions to atmosphere © Siemens AG 2014. All rights reserved. Page 38 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press Conference2 Strengthens focus area Oil Gas and Decentralized Decentralized Power Power RollsRoyce ADGT Business Siemens 1) Siemens new equipment revenue by sector RollsRoyce ADGT Business' new equipment revenue by sector Industrial Power Power Oil Oil G Gas Generation • Improved access for Siemens to the Oil 1/4 Gas sector and the 1/3 field of decentralized power generation • Improved opportunities to sell 2/3 into industrial power 3/ 3/4 Industrial Industrial generation generation sector sector Oil Gas Power Generation  RollsRoyce acting mainly in the Oil Gas sector Siemens acting mainly in the IPG sector • Complementary strengths in different sectors • Improved coverage to both Oil Gas and industrial power generation sectors 1) Excluding aftermarket services business © Siemens AG 2014. All rights reserved. Page 39 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press Conference3 Innovation leader with ''best in breed'' gas turbines supported supported b by y access access to to aero aero t technology echnology RollsRoyce: ADGTs Industrialisation of ADGTs: Improved competitiveness through through industrial industrial iinstead nstead of aero parts Significant innovation potential through com combined bined t technology echnology knowhow to develop Siemens: IGTs 'best in breed' hybrid gas turbines Application of aero technology technology to to IGTs: IGTs: Improved competitiveness through increased efficiency Access to aero derivative technology for Siemens and significant innovation potential of of combining combining lleading eading technologies technologies © Siemens AG 2014. All rights reserved. Page 40 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press Conference4 4 World Worldclass class global global service service platform platform Strong combined service platform Large installed fleet Sites over 5 FTEs 5,600 employees in total Small medium industrial gas Aero derivative turbines Compressors gas turbines 10,000 units 2,250 units 2,500 units 1,700 units 4,600 4,600 serv service ice e employ mployees ees (Siemens (Siemens Oil Oil and and Gas Gas Serv Serviice), ce), Siemens Siemens thereof 1,700 employees within transaction scope RollsRoyce 1,000 service employees Siemens fleet RollsRoyce fleet ADGT Business • Transaction strongly utilizes Siemens' worldclass sales and service organization • Customers benefit from powerful global platform with further improved customer proximity • Focus on longterm relationship with customers regarding service benefits both customers and and service service business business © Siemens AG 2014. All rights reserved. Page 41 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press Conference5 5 Significant Significant synergies synergies and and enabling enabling business business • Purchasing synergies: Savings through higher Cost purchase purchase volume volume and and broader broader supplier supplier base base synergies £50m+ annual gross • Process optimisation design to cost: Industrialisation cost synergies in of ADGT parts FY2017 with further • Manufacturing Manufacturing s synergies: ynergies: IImplementing mplementing operational operational 1) 1) upside upside t thereafter hereafter excellence (in FY2017 2/3 of • Integration of sales force and service sites longterm runrate • • Siemens Siemens' sales sales fforce orce and and industrial industrial power power generation generation gross gross c cost ost synergies synergies S Sales sector access to place ADGT products reached) synergies • Siemens to improve access to Oil Gas sector Significant through comprehensive product range and the Rolls additi additional onal upside upside Royce ADG GT Business' sector access from sales synergies • New equipment sales synergies will drive corresponding service synergies The scope and scale of Siemens' Energy business will enable the acquired business to to realize realize significant significant profit profit potential potential 1) Pre integration transformation cost, synergy investments and allocations © Siemens AG 2014. All rights reserved. Page 42 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceFinancial Financial calendar calendar May May 7, 7, 2014 2014 May May Q2 Earnings Release and Strategy Update (Berlin) May 21, 2014 Roadshow Roadshow France France ( (Paris) Paris) May 22, 2014 Roadshow Germany (Frankfurt) May May 2 28 8, 2014 2014 Roadshow Canada (Montreal) May 29, 2014 Bernstein Bernstein Conference Conference (New (New Yo York) rk) June 12, 2014 June JP Morg( gan Conference (London) ) July 31, 2014 July Q3 Earnings Release and Analyst Call © Siemens AG 2014. All rights reserved. Page 43 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceSiemens Siemens p press ress contacts contacts Marc Marc Langendorf Langendorf +49 +498 8996 636 3641360 41360 Alexander Becker +49 89 63636558 IJ Ivonne Junghähänell +49 49 89 89 636 63633929 33929 Wolfram Trost +49 89 63634794 Internet: www.siemens.com/press Email: Email: presssiemens presssiemens.com com Phone: +49 89 63633443 Fax: +49 89 63635260 © Siemens AG 2014. All rights reserved. Page 44 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceSiemens Siemens IInvestor nvestor Relations Relations contact contact data data IR IRHHt otliline: +49 +4989 89636 63632474 32474 Fax: +498963632830 Internet: Internet: http://www.siemens.com/investorrelations Email: investorrelationssiemens.com © Siemens AG 2014. All rights reserved. Page 45 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press ConferenceReconciliation and Definitions for Non NonGAAP GAAP Measures Measures This document includes supplemental financial measures that are or may be nonGAAP financial measures. Orders and order backlog; adjusted or organic growth rates of revenue and orders; booktobill ratio; Total Sectors profit; return on equity (after tax), or ROE (after tax); return on capital employed (adjusted), or ROCE (adjusted); Free cash flow, or FCF; adjusted EBITDA; adjusted EBIT; adjusted EBITDA margins, earnings effects from purchase price allocation, or PPA effects; net debt and adjusted industrial net debt are or may be such nonGAAP financial measures. These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens’ net assets and financial positions or results of operations as presented in accordance with IFRS in its Consolidated Financial Statements. Other companies that report or describe similarly titled financial measures may calculate them differently. Definitions of these supplemental financial measures, a discussion of the most directly comparable IFRS financial measures, information regarding the usefulness of of Siemens Siemens’ supplemental supplemental financial financial m measures easures, the the limitations limitations associated associated with with these these m measures easures and and reconciliations reconciliations to to the the m mos ostt c comp omparable arable IIFRS FRS financial financial m measures easures are available on Siemens’ Investor Relations website at www.siemens.com/nonGAAP. For additional information, see supplemental financial measures and the related discussion in Siemens’ most recent annual report on Form 20F, which can be found on our Investor Relations website or via the EDGAR system on the website of the United States Securities and Exchange Commission. Revenue growth Performance against competition (Fiscal 2014) To To illustrate illustrate management management’s s perspective perspective on on the the C Company ompany’s s performance performance against against c competition ompetition, S Siemens iemens compares compares its its o own wn revenue revenue gro growth wth rate rate with with the the weighted weighted average revenue growth rate of its Sectors’ most relevant competitors, including, among others, ABB, GE, Philips, Rockwell and Schneider. Revenue growth for Siemens and its competitors is calculated as the actual growth rate over a rolling four quarter period compared to the same period a year earlier. Siemens competitors revenue growth is derived as the weighted average growth rate of dedicated competitor baskets defined for each Siemens Sector. Each Sector basket's growth rate is based upon the most recent reported competitor revenues publicly available at the time of calculation. The Sector competitor baskets revenue growth rates are weighted by the revenue of the respective Siemens Sector. This This meas measure re ma may pro provide ide usef sefull information information tto o iin nve estors stors wiith th respect respect tto o m management’s anagement’s vie iew on on Siemens’ Siemens’ g gro rowth th compared compared to to com compet petitor itor gro growth th. Ho Howe ever er, we e caution investors, that this measure is subject to certain limitations, which include the following: The metric is defined by Siemens and, as such, is not based on a generally accepted framework that is also relevant for other companies; accordingly, other companies may define a similarly titled measure differently. In calculating this measure, Siemens relies on data published by its competitors for which Siemens assumes no responsibility. In addition, the data may not be directly comparable as a result of differing presentation currencies and reporting standards being used by our competitors in the data’s presentation. Furthermore, subject to limited exceptions, no adjustments are made for currency translation effects, portfolio changes and changes in reporting structure for either the Siemens or or the the competitor competitor data data. Because Because the the public public availability availability o of f r relevant elevant competitors competitors’ data data at at the the time time of of calculation calculation m may ay not not coin coincid cide e w with ith tthe he availability availability o of f S Siemens iemens’ data data, some competitor data used may relate to a different time period than the Siemens data. © Siemens AG 2014. All rights reserved. Page 46 Berlin, May 7, 2014 Q2 FY 2014, Analyst and Press Conference
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