Siemens Energy: Oil & Gas Division

Transcription

1 Siemens Energy: Oil & Gas Division Frank Stieler, CEO Oil & Gas Division Capital Market Days Energy Munich, July 1, 2008

2 Safe Harbour Statement This document contains forward-looking statements and information that is, statements related to future, not past, events. These statements may be identified by words such as expects, looks forward to, anticipates, intends, plans, believes, seeks, estimates, will, project 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 our 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 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; changes in business strategy; the outcome of pending investigations and legal proceedings, especially the corruption investigations we are currently subject to in Germany, the United States and elsewhere; the potential impact of such investigations and proceedings on our ongoing business including our relationships with governments and other customers; the potential impact of such matters on our financial statements; as well as various other factors. More detailed information about certain of these factors is contained throughout this report and in our other 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 forwardlooking 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. This document presents other financial measures, Profit Total Sectors, Return on capital employed (ROCE), Free cash flow and Cash conversion rate. These measures are or may be non-gaap financial measures as defined in relevant rules of the U.S. Securities and Exchange Commission. Our management takes these measures, among others, into account in its management of our business, and for this reason we believe that investors may find it useful to consider these measures in their evaluation of our performance. Neither Profit Total Sectors nor ROCE should be viewed in isolation as an alternative to IFRS net income for purposes of evaluating our results of operations; and CCR and Free cash flow should not be viewed in isolation as alternatives to measures reported in our IFRS cash flow statement for purposes of evaluating our cash flows. For definitions of Profit Total Sectors, ROCE, CCR and Free cash flow, please refer to Reconciliation and Definitions for Non-GAAP Financial Measures on our Investor Relations website, Page 2 July 2008 Capital Market Days Energy

3 We serve the hydrocarbon and industrial energy markets Markets Products Upstream Midstream Downstream Other Industries Onshore Offshore Transportation Liquefaction Storage Refining Petrochemicals Process industries Industrial power Turbo compressors Electrical drives Gas turbines Steam turbines Automation & control Life-cycle services Page 3 July 2008 Capital Market Days Energy

4 Current trends change the industry Size of relevant markets, in bn Major trends % CAGR 43.9 Strong growth in energy demand, driven by emerging countries Easy oil is out resulting in more technology per barrel Increasing power of National Oil Companies (NOCs) Siemens O&G 2007 Siemens O&G 2010 Energy efficiency Environmental awareness Page 4 July 2008 Capital Market Days Energy

5 Siemens answers industry trends by creating unique competencies for Oil & Gas Industry Energy Oil & Gas set-up Market position 2007 Large motors and automation equipment Integration of electrical and automation equipment into systems Rotating equipment Transmission and distribution equipment Globally Europe Americas Asia / Pacific # 2 # 1 # 2 # 1 Africa, NME, CIS # 2 One face to the customer power to compression from one provider Higher added value combined competencies and portfolio Product cost reduction improved integration of our product range Strong market position #1 or #2 player in all relevant markets Page 5 July 2008 Capital Market Days Energy

6 Oil & Gas drives us and we respond with proven technologies New compressor technology for mature fields Depletion Compression Example Groningen NAM 75% of NL's consumption - 330M m³ a day Supplying 3 x 20 units valued at 540 m Prerequisite for production beyond 2010 Highly demanding solution for export LNG terminals Recovery of cryogenic temperature gas (-163 C) Boil Off Compressor Used as high pressure fuel gas, or re-condensed Siemens is technology leader Total sales volume of 165 m over last 10 years Rapid growth potential going forward Page 6 July 2008 Capital Market Days Energy

7 Oil & Gas drives us and we shape the industry's future High reliability, lowers CO 2 emissions by up to 35% Fast track development of new LNG plants E - LNG Modular standardized designs (0,5MTPA) 1 st small E-LNG reference in Indonesia (EWC 1) ) 6 projects expected mid term (up to 350 m each) Extended field life, safer production, lower cost Sub-Sea Technology Innovation leader with 1 st zero emission compressor Successful onshore prototype since '06 Sub-sea prototype sold to Statoil (Asgard B) 1 st unit to be commercialized within next 5 years 1) Energy World Corporation Page 7 July 2008 Capital Market Days Energy

8 We make more money by taking proven technologies to new markets Steam Turbines for Solar Thermal An alternative to photovoltaics Application of mature steam turbine products Market growth 40-60% p.a. by 2010, 30% thereafter Clear market leader with a market share of > 90% Projects include Boulder City (USA, Nevada) with 74 MW and Andasol (Spain) with 2 x 50 MW Compressors for Carbon Transportation & Storage Injection of sequestered CO 2 underground Driven by CCS requirements for power plants CO 2 compression is proven competence 1 st unit sold to Snovit (Hammerfest, Norway) 40 major projects expected in the next 10 years Up to 20 m per project for rotating equipment Page 8 July 2008 Capital Market Days Energy

9 Siemens owns and expands a unique manufacturing and know-how network Global footprint Duisburg Görlitz Major elements Lead plants serve high end markets Houston Oslo Finspong Lincoln Rio de Janeiro Jundiaí Moscow Brno Abu Dhabi Vadodara Frankenthal Huludao Beijing Singapore/ Kuala Lumpur EM plants serve emerging markets and are suppliers for standardized components Engineering and R&D is being established globally Supply chain close to customers (NOCs) Lead plants EM (emerging markets) plants Engineering centers Continuous reduction of cost base Page 9 July 2008 Capital Market Days Energy

10 We have built a strong, growing, profitable business Top line in bn Division profit 8.0% 7.2% 5.0% 10 14% Order intake FY 07 Revenue FY 07 Q1&Q2 FY 08 Q1&Q2 FY 07 Q1&Q2 FY 07 FY 08 Q1&Q2 Target 2010 Leverage pricing power Scarce capacities Material price increase passed on Pricing initiatives Bring costs down Sourcing: Global hubs China, India Manufacturing: Shift global footprint SG&A: Corporate cost initiative Strengthen competencies Recruitment and training Co-operation with universities Improved processes Continue investments Wuhan (China) Vadodara (India) Jundiaí (Brazil) Mega Test Center in Duisburg (D) Lincoln 2010 (GB) 10% - 14% division profit by 2010 Page 10 July 2008 Capital Market Days Energy

11 Clear priorities going forward We will continue to grow faster than the market Revenue Growth: > 2x market We will continuously improve our margin through productivity gains and scale Profit Margin Range: We exploit our new developments in the O&G industry We push our proven technologies into other industrial markets 7.2% 10-14% We use the unique global presence of Siemens to serve our customers FY Page 11 July 2008 Capital Market Days Energy

12 Reconciliation and Definitions for Non-GAAP Measures (I) Profit Total Sectors is defined as the sum of the profits of each of the three new Sectors that Siemens uses for purposes of reporting IFRS segment results commencing with the third quarter of fiscal For a reconciliation of Profit Total Sectors to the most directly comparable IFRS financial measure (Income from continuing operations before income taxes), see Exhibits 99 (b, c, d) to the Siemens Report on Form 6-K furnished to the U.S. Securities and Exchange Commission (SEC) on June 24, 2008, which is available on our Investor Relations website under Return on Capital Employed (ROCE) is a measure of how capital invested in the Company or the Sectors yields competitive returns. For the Company, ROCE is calculated as Net income (before interest) divided by average Capital employed (CE). Net income (before interest) is defined as Net income excluding Other interest income (expense), net and excluding taxes on Other interest income (expense), net. Taxes on Other interest income (expense), net are calculated in simplified form by applying the current tax rate which can be derived from the Consolidated Statements of Income, to Other interest income (expense), net. CE is defined as Total equity plus Long-term debt plus Short-term debt and current maturities of long-term debt minus Cash and cash equivalents. Because Siemens reports discontinued operations, Siemens also calculates ROCE on a continuing operations basis, using Income from continuing operations rather than Net income. For purposes of this calculation, CE is adjusted by the net figure for Assets classified as held for disposal included in discontinued operations less Liabilities associated with assets classified as held for disposal included in discontinued operations. For the Sectors, ROCE is calculated as Profit divided by average Net capital employed (NCE). Profit for the Sectors is principally defined as earnings before financing interest, certain pension costs and income taxes, whereas certain other items not considered performance indicative by Management may be excluded. NCE for the Sectors is defined as total assets less income tax assets, less non-interest bearing liabilities/provisions other than tax liabilities. Average (Net) Capital employed for the fiscal year is calculated as a five-point average obtained by averaging the (Net) Capital employed at the beginning of the first quarter plus the final figures for all four quarters of the fiscal year. For the calculation of the average for the quarters, see below: Page 12 July 2008 Capital Market Days Energy

13 Reconciliation and Definitions for Non-GAAP Measures (II) Average calculation for CE*: * NCE for Sectors Year-to-Date Q1 Q2 Q3 Quarter-to-Date Q1 Q2 Q3 Q4 2 Point average: (CE ending Q4 Prior year + CE ending Q1) / 2 3 Point average: (CE ending Q4 Prior year + CE ending Q1 + CE ending Q2) / 3 4 Point average: (CE ending Q4 Prior year + CE ending Q1 + CE ending Q2 + CE ending Q3) / 4 2 Point average: (CE ending Q4 Prior year + CE ending Q1) / 2 2 Point average: (CE ending Q1 + CE ending Q2) / 2 2 Point average: (CE ending Q2 + CE ending Q3) / 2 2 Point average: (CE ending Q3 + CE ending Q4) / 2 Our cash target is based on the Cash Conversion Rate (CCR), which serves as a target indicator for the Company s or the Sectors cash flow. For the Company, CCR is defined as the ratio of Free cash flow to Net income, where Free cash flow equals the Net cash provided by (used in) operating activities less Additions to intangible assets and property, plant and equipment. Because Siemens reports discontinued operations, this measure is also shown on a continuing operations basis, using Income from continuing operations, Net cash provided by (used in) operating activities continuing operations and Additions to intangible assets and property, plant and equipment for continuing operations for the calculation. For the Sectors, CCR is defined as Free cash flow divided by Profit. All values needed for the calculation of ROCE and CCR can be obtained from the Consolidated Financial Statements and Notes to Consolidated Financial Statements. Profit, Net capital employed (under the column named Assets) and Free cash flow for the Company and the Sectors can be found on the Exhibits 99 (b,c,d) to the Siemens Report furnished on Form 6-K to the SEC on June 24, 2008, which is available on our Investor Relations website under To measure Siemens achievement of the goal to grow at 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. Profit Total Sectors, ROCE, CCR and Free cash flow are or may be Non-GAAP financial measures as defined in relevant rules of the U.S. Securities and Exchange Commission. Our management takes these measures, among others, into account in its management of our business, and for this reason we believe that investors may find it useful to consider these measures in their evaluation of our performance. None of Profit Total Sectors and ROCE should be viewed in isolation as an alternative to IFRS net income for purposes of evaluating our results of operations; CCR and Free cash flow should not be viewed in isolation as an alternative to measures reported in our IFRS cash flow statement for purposes of evaluating our cash flows. Page 13 July 2008 Capital Market Days Energy

14 Siemens Investor Relations Team Michael Sen Gerald Brady Florian Flossmann Sabine Groß Dr. Martin Meyer Christof Schwab Dr. Gerd Venzl Webpage: Telephone: Fax: Page 14 July 2008 Capital Market Days Energy