Siemens. June 21, Deutsche Bank 10th German Corporate Conference. Joe Kaeser, CFO

Transcription

1 Siemens Deutsche Bank 10th German Corporate Conference June 21, 2007 Joe Kaeser, CFO

2 Disclaimer This presentation contains forward-looking statements and information that is, statements related to future, not past, events. These statements may be identified by words as expects, looks forward to, anticipates, intends, plans, believes, seeks, estimates, will or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens control, affect its operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens worldwide to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from: changes in general economic and business conditions (including margin developments in major business areas); the challenges of integrating major acquisitions and implementing joint ventures and other significant portfolio measures; changes in currency exchange rates and interest rates; introduction of competing products or technologies by other companies; lack of acceptance of new products or services by customers targeted by Siemens worldwide; changes in business strategy; the outcome of pending investigations and legal proceedings; our analysis of the potential impact of such matters on our financial statements; as well as various other factors. More detailed information about our risk factors is contained in Siemens filings with the SEC, which are available on the Siemens website, and on the SEC s website, Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed sought, estimated or projected. Siemens does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated. Page 2 June 2007 Deutsche Bank 10th German Corporate Conference

3 Continued focus on value creation Performance ( ) 10 Points program Portfolio adjustment EVA Driver Transparency ( ) Operation 2003 Target Margins Integration Atecs Asset Management US Business Initiative Cost reduction in Central Functions Fit4More Portfolio & Performance Operational Excellence People Excellence Corporate Responsibility Performance Portfolio Operational Excellence People Excellence Corporate Responsibility 2010 Time Page 3 June 2007 Deutsche Bank 10th German Corporate Conference

4 Fit4More execution has been key April 2005 Start Fit4More Program Fit4More delivered Performance and Portfolio Solve Mobile Devices Finalize strategic reorientation of I&C i.e. Com and SBS Fit4More: Profit & Growth Program Operational Excellence Siemens Management System (powered by top + ) with focus on Innovation People Excellence Achieve high performance culture Establish Leadership Excellence Program Corporate Responsibility Achieve Best in Class in Corporate Governance Transformational program initiated top-down Structural changes in portfolio: Reorientation Strategic reorientation of L&A Reach target margins at all groups Build portfolio for 2x GDP growth Customer Focus Global Competitiveness Increase global talent pool Strengthen expert careers Execution by April 2007! Execution by April 2007! Business Practices Sustainability Corporate Citizenship Focus Benchmark oriented margin targets reached Leadership excellence strengthened Page 4 June 2007 Deutsche Bank 10th German Corporate Conference

5 - comprehensive and broadly established Fit is a comprehensive program People Excellence Develop talent globally Strengthen leadership development Attain high performance culture Strengthen expert careers Operational Excellence Execute Siemens Management System (powered by top + ) with focus on Innovation Customer Focus Global Competitiveness People Excellence Operational Excellence Portfolio Performance Optimize capital efficiency with ROCE of >14 16% Attain cash conversion rate of "1 growth rate" Sustain 2x GDP growth Achieve new margin ranges Corporate Responsibility Portfolio Build on our strengths in Energy & Environmental Care Automation & Control, Industrial & Public Infrastructures Healthcare IPO of Siemens VDO Corporate Responsibility Achieve best-in-class in Corporate Governance Compliance Climate protection Corporate Citizenship Company program developed by complete management team New set of corporate targets focusing on cash and value generation New ambitious divisional targets Strong compliance focus Page 5 June 2007 Deutsche Bank 10th German Corporate Conference

6 New developments Governance structure CEO change Compliance challenges Page 6 June 2007 Deutsche Bank 10th German Corporate Conference

7 Comprehensive compliance program has been set up Major sources New Compliance Program Goal External advisors (Fairfax, Davis Polk, PWC) Prevent Detect Respond "Tone from the top" Benchmark in Compliance and Transparency by 2010 Investigators (Debevoise, Deloitte, national prosecutors) Benchmarks (Daimler, GE, ABB, Ethics Council) Compliance organization Training Policies & Procedures Program communication Centralization Integration with personnel processes Continuous improvement Forensic & part of standard audits Compliance reviews Compliance controls Compliance helpdesk (incl. Global Ombudsman function) Consequences for misconduct Global case tracking Monitoring effectiveness People Excellence Operational Excellence Performance Optimize capital efficiency with ROCE of 14 16% Attain cash conversion rate of "1 growth rate" Sustain 2x GDP growth Achieve new margin ranges Portfolio Corporate Responsibility Company (Interviews, GCO/RCO conference, country visits, ) Concrete actions and accountability identified for all program elements Corporate Functions have specific responsibilities Regular progress reports scheduled in CEC meetings Includes all topics from Fairfax/DPW memorandum Investigation and remediation outside the program scope Page 7 June 2007 Deutsche Bank 10th German Corporate Conference

8 We focus our financial resources on value creation* high Profiteers Top Groups ROCE** low Substance Keepers >14 16% ROCE High Growth Groups * Size of bubble = Value contribution of Groups (EVA) ** ROCE = Group EBIT / avg. business assets 1x GDP world Growth Organic Growth 2x GDP world Growth Page 8 June 2007 Deutsche Bank 10th German Corporate Conference

9 What's on the CFO's mind? 4 Cs: Continuity Culture Confidence Commitment Role of CFO Strict adherence to Fit program and targets as a baseline Advisor of new CEO Looking ahead Focus on organic growth Wise consideration of the M&A sellers market Cash conversion through Moderate Capex spend Streamline NWC turns Move down break-even point of business segments Prioritize resources on most promising projects for sustainable capital efficiency Optimized capital structure Page 9 June 2007 Deutsche Bank 10th German Corporate Conference

10 We are committed to providing shareholder return Net Dividend Payments in EUR % CAGR * Special dividend of 0.67 in 2000 related to the Infineon IPO 10% CAGR * We see a very good potential to grow EPS and dividends at or above historical rates Balance Sheet Considerations 1. Share buyback: Don t expect a share buyback in the short-term 2. Convertible: Multiple options 3. Gearing: Debt capacity will increase with higher Free Cash Flow Higher debt capacity provides opportunity to grow EPS at a faster rate than profit from operations Page 10 June 2007 Deutsche Bank 10th German Corporate Conference

11 Next focus area: capital structure Net debt / EBITDA* Net Debt** (bn. ) EBITDA (bn. ) *** * 2001 to 2004 US GAAP, from 2005 IFRS (EBITDA based on continuing Operations) ** Net Debt = Short-term debt and current maturities of long term debt + Long- term debt + Funding Status Pension Cash and cash equivalents Available for sale financial assets *** YTD based on linear assumptions (Q2 YTD * 2) Page 11 June 2007 Deutsche Bank 10th German Corporate Conference

12 Siemens creating value Great company with huge potential Clear goals Work to do Expecting future enhancements Execution is key Page 12 June 2007 Deutsche Bank 10th German Corporate Conference

13 Appendix June 2007 Deutsche Bank 10th German Corporate Conference

14 Key figures In millions of euros Q2 FY07 (IFRS) Δ yoy (in %, except for EPS) FY06 (IFRS) New orders 23, ,702 Sales 20, ,253 Group profit (from Operations) 1, ,499 Net income 1, ,335 Earnings per share (in, not diluted; change in ) Net cash (continuing operations) (901) 1) 973 1) incl. cash payment of EUR 3.8 billion for the diagnostics division of Bayer Page 14 June 2007 Deutsche Bank 10th German Corporate Conference

15 Margin ranges increased for nine out of eleven Groups Margin ranges Fit4More Q2 FY07 SIS 5-6% 5.2% A&D 11-13% 14.2% I&S 4-6% 4.6% SBT 7-9% 7.5% PG 10-13% 10.7% PTD 5-7% 8.1% TS 5-7% 5.0% SV 5-6% 6.3% Med 11-13% 13.4% Osram 10-11% 10.5% SFS* 18-22% 52.6% New margin ranges Fit % 12-15% 5-7% 7-9% 10-14% 7-10% 5-7% 7-9% 13-15% 10-12% 20-23% * Return on equity Page 15 June 2007 Deutsche Bank 10th German Corporate Conference

16 ROCE Definition Post-tax ROCE from Continuing Operations = Income from Continuing Operations (post tax), before net interest expense Capital Employed (for Siemens, including SFS, SRE and Treasury) Source Income (loss) from continuing operations (i.e. post tax) (Profit and Loss Statement) +/ Other interest income, net (Notes to Consolidated Financial Statements, e.g. Note 8, p.35 of IFRS FY06 Statements) +/ Tax effect on other interest income, net (Effective tax rate derived from Profit and Loss Statement) = Income (loss) from continuing operations (post tax), before net interest expense Total equity (incl. minorities) (Balance Sheet) + Long-term debt (Balance Sheet) + Short-term debt and current maturities of long-term debt (Balance Sheet) - Cash and cash equivalents (Balance Sheet) - Assets classified as held for disposal (Balance Sheet) + Liabilities associated with assets classified as held for disposal (Balance Sheet) = Capital Employed* * Capital Employed for a fiscal year is determined as the average of five datapoints: the capital employed at the beginning of the fiscal year and the capital employed at the end of each of the four quarters of the fiscal year. Page 16 June 2007 Deutsche Bank 10th German Corporate Conference

17 Cash Conversion Rate Definition Cash Conversion Rate (Continuing Operations) = Free Cash Flow Income from Continuing Operations Source Cash Flow from Operations (Continuing Operations) (Cash Flow Statement) + Additions to intangible assets and property, plant and equipment (Continuing Operations) (from Q3: Segment Reporting) = Free Cash Flow Income from Continuing Operations (Profit and Loss Statement) Page 17 June 2007 Deutsche Bank 10th German Corporate Conference

18 Financial calendar FY07* June June Capital Market Days 2007, Berlin July July 26 Third quarter financial results FY07 conference call November January November 8 Preliminary figures for FY07 November 9 Annual analyst conference, Munich January 24 Annual General Meeting * Preliminary, updates will be posted at: Page 18 June 2007 Deutsche Bank 10th German Corporate Conference

19 Reconciliations and definitions 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 Publications/Quarterly Reports, FY07 Q2, Financial Statements at our Investor Relations website under ROE (Return on equity) margin for SFS was calculated as SFS' income before income taxes divided by the allocated equity for SFS. Allocated equity for SFS for the financial year 2007 is billion. The allocated equity for SFS is determined and influenced by the respective credit ratings of the rating agencies and by the expected size and quality of its portfolio of leasing and factoring assets and equity investments and is determined annually. This allocation is designed to cover the risks of the underlying business and is in line with common credit risk management standards in banking. The actual risk profile of the SFS portfolio is monitored and controlled monthly and is evaluated against the allocated equity. Siemens ties a portion of its executive incentive compensation to achieving economic value added (EVA) targets. EVA measures the profitability of a business (using Group profit for the Operating Groups and income before income taxes for the Financing and Real estate businesses as a base) against the additional cost of capital used to run a business, (using Net capital employed for the Operating Groups and risk-adjusted equity for the Financing and Real estate businesses as a base). A positive EVA means that a business has earned more than its cost of capital, and is therefore defined as valuecreating. A negative EVA means that a business is earning less than its cost of capital and is therefore defined as valuedestroying. Other organizations that use EVA may define and calculate EVA differently. To measure Siemens' achievement of the goal to grow twice the rate of global GDP we use GDP on real basis (i.e. excluding inflation and currency translation effects) with data provided by Global Insight Inc. and compare those growth rates with growth rates of our revenue (under IFRS). In accordance with IFRS, our revenue numbers are not adjusted by inflation and currency translation effects. Page 19 June 2007 Deutsche Bank 10th German Corporate Conference

20 Siemens Investor Relations Team Marcus Desimoni Roland Bischofberger Florian Flossmann Irina Pchelova Christof Schwab Susanne Wölfinger Webpage: Investor Relations Telephone: Fax: Page 20 June 2007 Deutsche Bank 10th German Corporate Conference