The Analyst Conference will take place in London, on November 13, at 4.30 p.m. CET, and will be webcast on

Transcription

1 Siemens Q4 FY08 IR FLASHLIGHT The Analyst Conference will take place in London, on November 13, at 4.30 p.m. CET, and will be webcast on The Annual Press Conference will take place in Munich, on November 13, at app a.m. CET, and will be webcast on

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 behavior of financial markets, including fluctuations in interest and exchange rates, commodity and equity prices, debt prices (credit spreads) and financial assets generally; continued volatility and further deterioration of the capital markets; the commercial credit environment and, in particular, additional uncertainties arising out of the subprime, financial market and liquidity crises; future financial performance of major industries that we serve, including, without limitation, the Sectors Industry, Energy and Healthcare; the challenges of integrating major acquisitions and implementing joint ventures and other significant portfolio measures; 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 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. Earnings before interest and taxes, or EBIT (adjusted); Earnings before interest, taxes, depreciation and amortization, or EBITDA (adjusted); Return on capital employed (ROCE); Return on equity (ROE); Free cash flow; and Cash conversion rate are non-gaap financial measures. These non-gaap financial measures should not be viewed in isolation as alternatives to measures of our financial condition, results of operations or cash flows as presented in accordance with IFRS in our Consolidated Financial Statements. Information for a reconciliation of these amounts to the most directly comparable IFRS financial measures is available on our Investor Relations website under Financial Publications. Profit Total Sectors is reconciled to Income from continuing operations before income taxes in the table Segment Information. Page 2 November 2008 Flashlight Q4 08

3 Highlights of Q Solid top line growth 1) : order growth +6%, revenue growth +9%, book-to-bill 1.03x Order growth driven by Energy (+24%): Fossil (+48%), Power Transmission (+62%), Power Distribution (+18%) High single digit order growth at cyclical businesses such as Industry Automation (+8%), Drive Technologies (+9%) and Building Technologies (+9%) Revenue growth driven by Energy (+19%) and Industry (+8%) Outstanding cash conversion of 2.22x at Total Sectors Excellent Free Cash Flow from continuing operations of 2.8bn up 32% y-o-y Total Sector Profit of 1.485bn include transformation costs of 325m Excellent earnings conversion 2) especially at Industry Automation (26%), Power Distribution (33%) and Diagnostics (24%) Stable underlying margin at Healthcare 16.0% despite challenging US environment Income from Cont. Ops. of bn impacted by transformation costs of 1.539bn and a provision of approx. 1bn in connection with the settlement of investigations by legal and regulatory authorities FY08 Guidance achieved 1) Year-on-year (y-o-y) on a comparable basis excluding currency translation and portfolio effects 2) Excluding PPA & OTC Page 3 November 2008 Flashlight Q4 08

4 What we expect in 2009 Growth target remains unchanged despite macroeconomic adversity: 2x global GDP growth Income targets become more ambitious due to market conditions Total Sectors unchanged: bn Growth in income from continuing operations expected to exceed growth in Total Sectors profit Dynamic economy guidance assessed quarterly Every crisis creates opportunities This outlook excludes earnings impacts that may arise from restructuring and legal and regulatory matters. Page 4 November 2008 Flashlight Q4 08

5 Key Items relating to Q4 08 (I) Industry Industry Automation Margin: 15.4%, PPA 1) (35)m and OTC (6)m associated to UGS acquisition Underlying margin: 17.2% (excl. PPA, OTC) Q4 07: PPA (56)m, OTC (5)m, underlying margin 16.8% Drive Technologies Margin: 12.5%, PPA (10)m related to Flender acquisition Underlying margin: 12.9% excl. PPA Q4 07: PPA (7)m, OTC (7)m, underlying margin 12.8% Building Technologies Margin: 10.1% Osram Margin: 3.7% Charges related to structural initiatives were offset by a 130m net gain related to disposal of Global Tungsten & Powders unit Approx. one third of charges are expected to affect cash flows in coming quarters Underlying margin: 3.7%. IS Margin 6.2% Mobility Margin: -12.0%, underlying margin: -2.8% (excl. Mobility in Motion) (151)m costs related to "Mobility in Motion", of which approx. two thirds will affect cash flows in coming quarters Also provisions related primarily to software challenges in the rail automation business Energy Fossil Power Generation Margin: 0.1% (110)m Olkiluoto project charges Underlying margin 4.6% (excl. Olkiluoto conventional island) (52)m negative equity investment income associated with Areva N. P. Continued volatility in equity investment income expected in coming quarters Renewable Energy Margin: 13.2% Oil & Gas Margin: 9.3% Power Transmission Margin: 9.3% Power Distribution Margin: 12.5% 1) PPA = purchase price allocation; OTC = one-time costs Page 5 November 2008 Flashlight Q4 08

6 Key Items relating to Q4 08 (II) Healthcare Sector Healthcare Margin: 7.2% incl. (174)m transformation costs incl. (46)m PPA and (52)m OTC effects in Diagnostics Underlying margin 16.0% (excl. transform. costs, PPA, OTC) Q4 07: PPA (21m), OTC 55m); underlying margin 16.0% (excl. PPA, OTC) Imaging & IT - Margin: 11.8%, incl. (90)m transformation costs including severance charges, impairments and costs related to reviews of business activities - Underlying margin: 16.4% Workflow and Solutions - Margin: -16.0%, incl. (81)m transformation costs primarily related to a strategic business review of certain business activities - Underlying margin: 3.9% Diagnostics Margin: 6.0%, PPA (46)m and OTC (52)m Underlying margin 17.8% (excl. PPA, OTC) Q4 07: PPA (21)m, OTC (55)m Underlying margin 14.7% (excl. PPA, OTC) Equity Investment and Cross-Sector Businesses Equity Investments As of Q4 08, the former "Strategic Equity Investments" has been expanded and renamed "Equity Investments". Major components are NSN and BSH Equity investments profit: 6m Improved operating results at NSN: lower restructuring and integration costs (59)m, down from (86)m in Q4 07 Siemens equity investment loss related to NSN decreased to (16)m from (58)m in Q4 07 Q4 07: equity investment income (7)m Cross-Sector Businesses Siemens IT Solutions and Services Margin: 3.1% SFS ROE: 21.6% Significant total asset growth from 8.9bn to 11.3bn (+27%) primarily due to growth in the commercial finance business including asset purchases in the secondary market Page 6 November 2008 Flashlight Q4 08

7 Key Items relating to Q4 08 (III) Other Operations, Corporate Activities and Eliminations Other Operations By the end of 2009 all businesses activities are expected to be integrated into an existing Siemens sector or Cross-sector Business (Transformation Program) (133)m transformation costs which were related mainly to Siemens Home Communications (SHC) Therein (124)m negative earnings impact associated with the divestment of SHC In addition SHC (21)m carve-out costs SRE: Q4 benefited from real estate disposals Corporate Items & Pensions Corporate items (2,821)m include: SG&A charge (1,081)m Provision of approx. (1,000)m in connection with ongoing settlement negotiations One-time endowment of (390)m with establishment of the Siemens Foundation Outside advisory costs: (83)m in Q4 08, down from (85) in Q4 07 Corporate Treasury: - Approx. (50)m charges related to counter-party risk, which was partly offset by reduced interest expense Discontinued Operations Discontinued Operations (1,000)m associated with sale of 51% of Siemens Enterprise Communications (SEN) (120)m provision related to expected settlement by a claim of the insolvency administrator of BenQ Q4 07: Incl. approx. (1,000)m in tax expense associated with the carve-out of VDO Automotive pending the close of its sale Penalty of (201)m imposed by German authorities related to misconduct at Com Page 7 November 2008 Flashlight Q4 08

8 Year of Transition 2008 incurred significant charges Project charges Q1 & Q2 08 Charges Q4 08 m m ~1,100 Total Cash Outflow from FY08 charges 1,081 ~1,000 ~1, m ~1,780 m ~2,430 m ~ PG, TS, SIS Mobility in Motion SG&A Siemens Healthcare Osram Other Fossil, Operations 1) Areva Foundation Legal and regulatory matters SEN P&L impact Cash out flow ) Net effect of cash outflow FY08 FY10 shown Page 8 November 2008 Flashlight Q4 08

9 Q4 FY08 Key Figures New orders New orders (in million) Q Q Q *adjusted for currency translation and portfolio effects Y-o-Y Q Q4 08 Y-o-Y adj.* Q Q4 08 Q-o-Q Q Q4 08 Industry Sector 10,597 11,508 10,255-3% 0% -11% Industry Automation 2,162 2,214 2,213 2% 8% 0% Drive Technologies 2,109 2,407 2,260 7% 9% -6% Building Technologies 1,603 1,512 1,723 7% 9% 14% Osram 1,203 1,109 1,134-6% 0% 2% Industry Solutions 1,632 2,040 1,814 11% 12% -11% Mobility 2,525 2,952 1,809-28% -25% -39% Energy Sector 6,066 8,077 7,246 19% 24% -10% Fossil Power Generation 2,287 2,083 3,287 44% 48% 58% Renewable Energy 762 2, % -55% -85% Oil & Gas 1,223 1,550 1,137-7% -5% -27% Power Transmission 1,154 1,588 1,785 55% 62% 12% Power Distribution % 18% -8% Healthcare Sector 2,999 2,801 3,382 13% 5% 21% Imaging & IT 2,290 1,699 2,195-4% 0% 29% Workflow & Solutions % 58% 29% Diagnostics % 3% 0% Total Sectors 19,662 22,386 20,883 6% 8% -7% Equity Investments Cross Sector Businesses Siemens IT Solutions and Services 1,595 1,209 1,393-13% -11% 15% SFS Reconciliations Other Operations SRE Corp. Items & Pensions Elimn., CT & Other recon. -1,236-1,165-1,306 Siemens 21,328 23,677 22,205 4% 6% -6% Page 9 November 2008 Flashlight Q4 08

10 Q4 FY08 Key Figures Revenue Revenue (in million) Q Q Q *adjusted for currency translation and portfolio effects Y-o-Y Q Q4 08 Y-o-Y adj.* Q Q4 08 Q-o-Q Q Q4 08 Industry Sector 9,944 9,423 10,408 5% 8% 10% Industry Automation 2,173 2,202 2,286 5% 12% 4% Drive Technologies 2,165 2,266 2,420 12% 14% 7% Building Technologies 1,623 1,442 1,676 3% 5% 16% Osram 1,203 1,109 1,134-6% 0% 2% Industry Solutions 1,838 1,728 2,084 13% 14% 21% Mobility 1,683 1,403 1,647-2% 1% 17% Energy Sector 5,972 5,829 6,749 13% 19% 16% Fossil Power Generation 2,268 2,096 2,442 8% 12% 17% Renewable Energy % 49% -1% Oil & Gas 1,018 1,030 1,200 18% 22% 17% Power Transmission 1,429 1,401 1,596 12% 17% 14% Power Distribution ,004 15% 22% 29% Healthcare Sector 2,848 2,677 3,118 9% 2% 16% Imaging & IT 2,009 1,569 1,963-2% 2% 25% Workflow & Solutions % 0% 13% Diagnostics % 3% 1% Total Sectors 18,764 17,929 20,275 8% 10% 13% Equity Investments Cross Sector Businesses Siemens IT Solutions and Services 1,438 1,255 1,464 2% 4% 17% SFS Reconciliations Other Operations SRE Corp. Items & Pensions Elimn., CT & Other recon. -1,352-1,227-1,337 Siemens 20,201 19,182 21,651 7% 9% 13% Page 10 November 2008 Flashlight Q4 08

11 Q4 FY08 Key Figures Profit and margins Profit and margins (in million) Q Q Q Margin Margin Margin Target Q Q Q range Industry Sector 1,018 1, % 12.1% 7.6% 9-13% Industry Automation % 21.2% 15.4% 12-17% Drive Technologies % 15.2% 12.5% 11-16% Building Technologies % 6.6% 10.1% 7-10% Osram % 10.0% 3.7% 10-12% Industry Solutions % 5.7% 6.2% 5-7% Mobility % 2.8% -12.0% 5-7% Energy Sector % 10.6% 6.9% 11-15% Fossil Power Generation % 10.1% 0.1% 11-15% Renewable Energy % 11.4% 13.2% 12-16% Oil & Gas % 9.2% 9.3% 10-14% Power Transmission % 10.5% 9.3% 10-14% Power Distribution % 11.3% 12.5% 11-15% Healthcare Sector % 12.2% 7.2% 14-17% Imaging & IT % 12.7% 11.8% 14-17% Workflow & Solutions % 9.2% -16.0% 11-14% Diagnostics % 9.9% 6.0% 16-19% Total Sectors 1,992 2,084 1,485 Equity Investments Cross Sector Businesses Siemens IT Solutions and Services % 5.1% 3.1% 5-7% SFS Reconciliations Other Operations SRE Corporate Items and Pensions ,767 Elimn., CT & Other recon Siemens Pre-Tax Profit 1,541 2,048-1,480 Taxes Income from Cont. Operations 1,394 1,475-1,259 Income from discontinued operations -1, ,161 Net Income (All-In) -74 1,419-2,420 Minority interest Basic EPS from Cont. Operations Basic EPS from Net income (all-in) Page 11 November 2008 Flashlight Q4 08

12 Top Line FY 08 regional revenue split FY 08 revenue by region (%) FY 08 sector revenue Siemens revenue split by region Sector revenue split by region (in m) Asia, Australia, ME 21% 36% Europe, C.I.S., Africa (w/o Germany) Europe / C.I.S. / Africa therein Germany Industry Energy 9,526 HC 4,351 7,513 1, ,808 Americas 26% 17% Americas Industry Energy HC 8,817 5,643 4,861 Germany Asia, Australia, ME Industry Energy HC 1,904 7,283 7,022 Page 12 November 2008 Flashlight Q4 08

13 SFS Key Figures Q4 08 P&L Cash Flow Revenue: Interest Expense: Interest Income: Profit before Tax: 192 m (100) m 149 m 49 m Depreciation & Amortisation: Operating Cash Flow: Capex (incl. operating leases): 75 m 113 m (134) m Assets Liabilities in million 28 11,328 1,113 9,359 Leases & loan receivables Purchased Investments Other receivables assets & inventory 1) Cash Total assets / liabilities Equity Total debt Accruals & other liabilities 1) Other assets & inventory includes: Securities, fair values (positive) derivatives / FX, tax receivables, fixed assets, intangible assets, land and building, prepaid expenses, and inventories Page 13 November 2008 Flashlight Q4 08

14 Pension funding deteriorated by 1.5 to -2.5 in FY08 Plan assets decreased by -3.8, mainly based on negative equity return DBO decreased by -2.3, mainly due to the increase in discount rates Disposal of the Enterprise business effected both, plan assets and DBO According to 20F, in bn FY 06 FY 07 FY 08 Defined benefit obligation (DBO) of Principal Pension Benefits Discount rate Fair Value of plan assets % % % 20.2 Funded status (2.9) (1.0) (2.5) Additional contribution Regular funding DBO of Principal Other Post-Employment Benefits 1) Actual return on plan assets (2.2) Asset allocation of pension assets Equities Fixed income Real estate Cash 31% 57% 8% 4% 33% 54% 8% 5% 29% 61% 9% 1% 1) Mainly unfunded Page 14 November 2008 Flashlight Q4 08

15 Q4 08 Bridge from NSN Operating Profit to Siemens At Equity Income in millions Reported by Nokia Siemens share NSN Operating Profit pre Charges and PPA Charges Purchase- Price Retailed Items NSN Operating Profit Adjustments 1) NSN Net Income (Corrected) 50% Siemens Share pre PPA Siemens PPA Siemens Equity Share 1) Nokia / NSN eliminations, NSN financial income/expenses, taxes, reversal of minority shares, differences in accounting, reversal of NSN PPA to Siemens step up (cross-over accounting of PPA) Page 15 November 2008 Flashlight Q4 08

16 Reconciliation and Definitions for Non-GAAP Measures (I) Profit Total Sectors is reconciled to "Income from continuing operations before income taxes" under Reconciliation to consolidated financial statements" in the table "Segment Information." See our Financial Publications at our Investor Relations website under Earnings before interest and taxes, or EBIT (adjusted) is Income from continuing operations before income taxes less Financial income (expense), net and Income (loss) from investments accounted for using the equity method, net. Earnings before interest, taxes, depreciation and amortization, or EBITDA (adjusted) is EBIT before Depreciation and Amortization, defined as depreciation and impairments of property, plant and equipment and amortization and impairments of intangible assets other than goodwill. Profit is reconciled to EBIT and EBITDA on the table Segment Information Analysis (II). See our Financial Publications at 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 Assets. 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. Assets for the Sectors is defined as total assets primarily less intragroup financing receivables and investments, less income tax assets, less non-interest bearing liabilities/provisions other than tax liabilities. Page 16 November 2008 Flashlight Q4 08

17 Reconciliation and Definitions for Non-GAAP Measures (II) Average Capital employed and average Assets for the fiscal year is calculated as a "five-point average" obtained by averaging Capital employed and Assets 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 during for the quarters, see below: Average calculation for CE 1) : Year-to-Date Q1 Q2 Q3 Q4 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 5 Point average: (CE ending Q4 Prior year + CE ending Q1 + CE ending Q2 + CE ending Q3 + CE ending Q4) / 5 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 Sector s cash flow. For the Company, CCR is defined as the ratio of Free cash flow to Net income, where Free cash flow (FCF) 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. Values needed for the calculation of ROCE and CCR can be obtained from the Consolidated Financial Statements and Notes to Consolidated Financial Statements. Profit, Capital employed / Assets and Free cash flow for the Company and the Sectors for previous quarters and also for fiscal 2007 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, See our Financial Publications at our Investor Relations website under 1) Assets for Sectors Page 17 November 2008 Flashlight Q4 08

18 Reconciliation and Definitions for Non-GAAP Measures (III) Our capital structure target is based on an Adjusted industrial net debt divided by EBITDA (adjusted). For the calculation of Adjusted industrial net debt, we subtract from Net debt (defined as Long-term debt plus Short-term debt and current maturities of long-term debt less Cash and cash equivalents less Available-for-sale financial assets (current)) (1) SFS debt excluding SFS internally purchased receivables and (2) 50% of the nominal amount of our hybrid bond; and add/subtract (3) Funded status of Pension benefits, (4) Funded status of Other post-employment benefits; and add (5) Credit guarantees. The components of Net debt are available on our Consolidated Balance Sheets, SFS debt less internally purchased receivables is available in our Management Discussion & Analysis under Segment information analysis Siemens Financial Services (SFS). The Funded status of our principle pension plans and Other post-employment benefits, the amount of credit guarantees and the nominal amount of our Hybrid bond is available in the Notes to our Consolidated Financial Statements. 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 (adjusted for portfolio and currency translation effects). In accordance with IFRS, revenue numbers are not adjusted by inflation and currency translation effects. Return on equity (ROE) margin for SFS was calculated as SFS' Income before income taxes of fiscal 2008 divided by average allocated equity for SFS. Average allocated equity for fiscal year 2008 is 911 million. The allocated equity for SFS is determined and influenced by the size and quality of its portfolio of commercial finance assets (primarily leases) and equity investments. 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 evaluated and controlled monthly and is reflected in the quarterly (commercial finance) and annual (equity investments) adjustment of allocated equity. Profit Total Sectors, EBIT (adjusted), EBITDA (adjusted), ROCE, ROE, CCR and Adjusted industrial net debt 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, EBIT (adjusted), EBITDA (adjusted), ROCE and ROE should be viewed in isolation as an alternative to figures reported in our IFRS statement of income for purposes of evaluating our results of operations; CCR 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; and Adjusted industrial net debt should not be viewed in isolation as an alternative to liabilities reported in our IFRS balance sheet for purposes of evaluating our financial condition. Page 18 November 2008 Flashlight Q4 08

19 Siemens investor relations contact data Michael Sen Munich Office US Office Internet: Fax: Page 19 November 2008 Flashlight Q4 08