1. No category

Joe Kaeser | President and CEO
Disciplined execution of Vision 2020
Commerzbank German Investment Seminar
New York
York, January 12
12, 2015
© Siemens AG 2015
Notes and forward-looking statements
This document contains statements related to our future business and financial p
performance and future events or developments
p
involving
g Siemens that may
y
constitute forward-looking statements. These statements may be identified by words such as “expect,” “look forward to,” “anticipate” “intend,” “plan,” “believe,”
“seek,” “estimate,” “will,” “project” or words of similar meaning. We may also make forward-looking statements in other reports, in presentations, in material
delivered to shareholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements
are based on the current expectations and certain assumptions of Siemens’ management, of which many are beyond Siemens’ control. These are subject to a
number of risks, uncertainties and factors, including, but not limited to those described in disclosures, in particular in the chapter Risks in the Annual Report.
y g expectations
p
not occur or assumptions
p
p
prove incorrect,, actual results,,
Should one or more of these risks or uncertainties materialize,, or should underlying
performance or achievements of Siemens may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking
statement. Siemens neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from
those anticipated.
This document includes – in IFRS not clearly defined – supplemental financial measures that are or may be non-GAAP 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
Statements. Other companies that report or describe similarly titled financial measures may
calculate them differently.
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 year-over-year 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,
g, numbers presented
p
throughout
g
this and other documents may
y not add up
pp
precisely
y to the totals p
provided and p
percentages
g may
y not p
precisely
y
reflect the absolute figures.
© Siemens AG 2015
Page 2
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Siemens at a glance
Divisional structure (as of Oct 1st, 2014) and Revenue / Profit FY 2014
Power and
G
Gas
Wind
P
Power
and
d
Renewabl.
Power
G
Generation
i
Services
€12.7bn
€5.6bn
€2.2bn
17.4%
€0.0bn
0.1%
Part of
PG and W
WP
Industrial Business
Energy
M
Management
Building
T h l
Technologies
Mobility
Digital
F
Factory
Process
I d
Industries
i
and Drives
Healthcare
(
(separately
l
managed)
Financial
S i
Services
€10.7bn
€5.6bn
€7.2bn
€9.2bn
€9.6bn
€11.7bn
Assets
€22.0bn
€22
0bn
-€0.1bn
-0.8%
€0.5bn
9.2%
€0.5bn
7.3%
€1.7bn
18.3%
€0.8bn
8.0%
€2.1bn
17.7%
IBIT
€0.5bn
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
Revenue1)
65.1
69.6
74.7
73.4
71.9
N t iincome
Net
39
3.9
59
5.9
43
4.3
44
4.4
55
5.5
EPS (basic) in €
4.28
6.55
4.74
5.08
6.37
Free Cash Flow
7.1
5.3
4.7
5.3
5.2
Key Figures in €bn
1) Continuing operations
© Siemens AG 2015
Page 3
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Siemens – Vision 2020
Value creation & Cultural change
Value
Scale up
Strengthen core
Drive performance
Foster ownership culture and leadership based on common values
2015
Strategic
direction
✓
2016
Operational
consolidation
2017
Optimization
2018
2019
2020
Accelerated growth
and outperformance
© Siemens AG 2015
Page 4
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
On track to deliver mid-term
cost savings of €1bn through simplification
Target
Drive performance
Key actions
Functional cost
reduction
~€1bn
FY 2014
R
additional
dditi
l llayers (Cl
(Clusters,
t
Sectors)
S t
)
• Remove
• Combine certain Divisions and Businesses
✓
✓
• Stringent management governance through
all levels of the organization (Corporate Core)
FY 2015
• Optimization and bundling of
Corporate Services
FY 2015
• Final agreements with key stakeholders
Mid 2015
Target
Positively impacting FY 2016,
y effective in FY 2017
fully
© Siemens AG 2015
Page 5
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Clear progress in fixing
underperforming businesses
Portfolio analysis
Drive performance
Execution
Feb 2015
Strategic
review
Mar 2015
Decide on
resource
allocation
Sep 2017
Businesses
fixed
Fix ourselves
Cluster "underperforming
businesses"1)
Revenue
Profit
18%
none
• Low Voltage and Products
Joint Venture or partner with others
• Metals Technologies
Divest to better owners
• Healthcare IT
• Water Technologies
1) Internal analysis, May 2014
© Siemens AG 2015
Page 6
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Executing Vision 2020
Capital allocation along strategic imperatives
✓
Strengthen core
Healthcare IT
Divestment to Cerner for US$1.3bn announced
Aero-derivative
gas turbines and
compressors
£785m purchase price
and £200m for exclusive
access to
t long-term
l
t
aero-technology
developments
Microbiology
'Siemens – Vision 2020'
Divestment to Beckman Coulter for
US$ ~450m announced
Audiology
Divestment to EQT for €2.15bn announced
W t Technologies
Water
T h l i
Divestment to AEA Partners
1| Areas of growth?
Compressors, turbines
and
d engines
i
for
f
Oil & Gas
US$83 per share,
total consideration
of US$7.6bn
2| Potential profit pool?
3| Why Siemens?
© Siemens AG 2015
Page 7
New York, January 12, 2015
Joint Venture Primetals Technologies with MHI
B/S/H/
4| Synergetic value?
5| Paradigm shifts?
Metals Technologies
g
Divestment of 50% share to Bosch
Equity value €3.25bn – thereof €3.0bn cash
purchase price and €250m dividend & special
dividend
Underperforming businesses
✓
✓
✓
Decision along imperatives
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Scale up
Acquisitions on track –
Synergies exceed initial targets
Targets are a perfect fit
• Complementary ADGT and compressor portfolio and geographic footprint
g customer p
pull and references
• Oil & Gas brand strength,
• Large installed fleet with secured service revenues
 Step up in Oil & Gas business
 Drive decentralized energy focus
Synergies
y
g
to exceed initial estimates
• Synergy drivers include sales, manufacturing, supply chain and technology
• Cross synergies: Global manufacturing and packaging optimization
• Additional
Additi
l pull-through
ll th
h off respective
ti sales
l channels
h
l push
h customer
t
penetration
t ti
Rolls-Royce: Synergies on plan and schedule
Dresser-Rand: Targeting synergies 30% greater than announced
© Siemens AG 2015
Page 8
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Scale up
Oil & Gas – Recent acquisitions leverage
attractive offerings and market access
Onshore
Drilling
O&G Production
Pipeline
LNG
Siemens
Rolls-Royce
Dresser-Rand
Drilling
Subsea
FPSO
Offshore
FPSO = Floating, Production, Storage and Offloading; LNG = Liquefied Natural Gas
© Siemens AG 2015
Page 9
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Scale up
New installed base secures recurring service
revenues with robust after sales margin
Combined serviceable fleet (small turbines and compressors)
Small/medium
gas turbines
Aero derivative
Aero-derivative
gas turbines
Steam
turbines
Compressors
1,600
2,500
1,500
62,000
32,500
2,250
10,000
10,000
Six-fold increase of combined Siemens fleet
from ~22
22,250
250 to >120
>120,000
000
© Siemens AG 2015
Page 10
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Next Generation Healthcare
Independent setup addresses paradigm shifts
Strengthen core
Siemens Healthcare is a great business:
✓✓
Market attractiveness
Growth
✓
Profit
✓✓
Cash
✓✓
Healthcare of Tomorrow
can be even GREATER
Optimized organization
1| Go-to-market
2| Research and innovation
3| Management
M
t model
d l
"Company within the company" model
drives growth and performance
© Siemens AG 2015
Page 11
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Scale up
Digitalization – From data to business
Major
M
j digitalization
di it li ti
technologies …
… leveraged
l
d along
l
our entire portfolio …
Digitalization
Vertical
software
Digital
services
€2.4bn
Mobile and
collaboration
Connectivity and
Internet of Things
… to
t create
t attractive
tt
ti
business opportunities
Automation
Revenue
e e ue FY 2014
0
Revenue
e e ue FY 2014
0
Profitability
Profitability
++
+9%
Market growth
Enhanced
automation
Cloud
technologies
Big data and
analytics
+++
+15%
Market growth
Classic
services
€19bn
Electrification
€0.5bn
€14bn
Revenue FY 2014
Revenue FY 2014
Profitability
Profitability
+6%
++
Market growth
+++
+3%
Market growth
Enhanced electrification (~€37bn)
Note: Figures Industrial Business
© Siemens AG 2015
Page 12
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Ownership culture drives change
Leadership
Behaviors
Ownership
culture
Values
Ownership culture
"Always act as if it were
your own company““
•
Entrepreneurship
•
Discipline
•
Risk awareness
•
Accountability
•
Shareholding
Equity
People
p
orientation
© Siemens AG 2015
Page 13
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Appendix
© Siemens AG 2015
Page 14
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Profit Margin and ROCE increase
in low growth environment
Orders
in €bn
Revenue
+0.8%
Comp.
+0.5%
(-1.8%)
(nom.)
(-2.1%)
79 1 77.7
79.1
77 7
72.8 71.2
Net Income
Profit
Margin
B-t-B
1.09
10.6%
8.8%
(
(Industrial
Business)
in €bn
Total cost productivity
3-5%
+1.1
11
4.4
5.5
FY 2013
FY 2014
4.0%
4.1%
FY 2013
FY 2014
1.09
FY 13 FY 14
FY 13 FY 14
EPS (“all-in”)
ROCE (“all-in”)
in €
15-20%
+25%
5.08
Capital structure1)
≤1
6.37
13.5%
17.3%
0.3x
FY 2013
FY 2014
FY 2013
FY 2014
FY 2013
0.1x
FY 2014
1) Industrial Net Debt/EBITDA; EBITDA is without the elimination of income or loss from investments accounted for using the equity method
© Siemens AG 2015
Page 15
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Sustainable value generation delivers
attractive shareholder returns
Attractive dividend yield
Share buyback
• Dividend increase by 10% to €3.30
• Up to €4bn over 2 years
• Payout ratio of 40-60% at high dividend yield
• Total buyback volume €1.8bn until Jan 2, 2015
€97
34%
46%
42%
48%
CAGR
+16%
€2.70
€3.00
FY 10
FY 11
€3.00
57%
€98
€94
49%
€92
€96
€86
€89
389
€5.401)
€3.00
€3 30
€3.30
199
240
225
233
212
182
120
€1.60
FY 09
Dividend per share
€
€93
FY 12
FY 13
Dividend payout ratio
FY 14
May
Jun
Jul
Aug
Sep
Share buyback volume (in €m)
Oct
Nov
Dec
Share price in €
1) Effect of OSRAM stock distribution to shareholders of €2.40 per share; not reflected in CAGR or dividend payout ratio
© Siemens AG 2015
Page 16
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
R&D focus on innovation in growth areas
and profit strongholds
Research & Development
allocation (FY 2014)
R&D growth and focus topics for
selected businesses
O
Other
€4.0bn
R&D
+8%
• Intelligent distribution grid to integrate
decentralized generation and stabilize grid
+7%
• E
Enhanced
h
d process control
t l system
t
ffor
targeted verticals
EM
~70%
PD
+11%1)
PG
DF
HC
~90%
1) Without Rolls-Royce ADGT
© Siemens AG 2015
Page 17
Strengthen core
New York, January 12, 2015
Profit Industrial
Business
• Increase efficiency of large gas turbines
• Harmonize small and medium GT portfolio
• Remote service and advanced diagnostics
+8%
• SIMATIC TIA Portal – Motion integration
• Digital Enterprise Architecture
+5%
• Next-Gen Diagnostics
• Extend entry level imaging portfolio
• Combine multi-modality applications
x%
Est. R&D growth FY 2014 – FY 2015
(subject to FX development)
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Executing Siemens – Vision 2020
Simplified and fully integrated compensation system
C
Compensation
ti system
t
f Managing
for
M
i Board
B
d as off FY 2015
1/3
/3
Fixed
Fi
d
base cash
compensation
+
1/3
1/3
Variable
compensation
(C h B
(Cash
Bonus))
Variable stock-based
compensation
(Siemens Stock
Awards)
1/3
1/3
1/3
Capital
efficiency
ffi i
Profit
Individual
+
Share price development
compared
d to competition
ii
Key imperatives for setting up the system
• Transparency through simplicity
• Performance related incentives based on internal and external benchmarks
• Emphasis on sustainability through share ownership guidelines and long-term stockbased compensation component
• System is consistent with next management levels
© Siemens AG 2015
Page 18
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Outlook Fiscal 2015
Basic earnings per share (Net income)
In €
At least 15%
growth
6 55
6.55
• We expect revenue on an organic basis to
remain
i flat
fl t year-over-year, and
d orders
d
tto exceed
d
revenue for a book-to-bill ratio above 1.
6 37
6.37
4.74
• We believe that our business environment will
be complex in fiscal 2015,
2015 among other things
due to geopolitical tensions.
5.08
• Furthermore, we expect that gains from
divestments will enable us to increase basic
earnings per share (EPS) from net income by
at least 15% from €6.37 in fiscal 2014.
• For our Industrial Business, we expect a profit
margin* of 10–11%.
• This outlook excludes impacts
p
from legal
g and
regulatory matters.
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015e
*Effective with fiscal 2015,, our enhanced profit
p
definition excludes
amortization of intangible assets acquired in business combinations.
© Siemens AG 2015
Page 19
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Financial calendar
January
January 12, 2015
Commerzbank German Investment Seminar (New York)
January 27,
27 2015
Q1 Earnings Release; Annual General Meeting
February
March
March 11, 2015
Citi West Coast Symposium (San Francisco)
March 19, 2015
Bank of America Merrill Lynch Conference (London)
© Siemens AG 2015
Page 20
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO
Siemens Investor Relations contacts
Investor Relations
Internet:
www.siemens.com/investorrelations
Email:
[email protected]
@
IRHotline:
+49 89 636-32474
Fax:
+49 89 636-32830
© Siemens AG 2015
Page 21
New York, January 12, 2015
Commerzbank German Investment Seminar | Joe Kaeser, Siemens CEO