Embed Size (px)
Citation preview
Go for profit and growth
Heinz-Joachim Neubürger, CFO
Deutsche Bank � German Corporate ConferenceMarch 31, 2004
2MAR-04
Key figures � Fiscal Year
Group profit from Operations
New orders
Sales
Net income
EPS (in euros)
in billions of euros
FY 03
Net cashfrom operating and investing activities
75.1
74.2
4.295
2.445
2.75
1.773
FY 02
86.2
84.0
3.756
1.661*
1.87**
4.754
* excl. EUR 936 millon gain on sales of Infineon shares
** excl. EUR 1,05 gain on sales of Infineon shares
3MAR-04
Successful Operation 2003
Asset management
Restore profitability in I&C
Integrate Atecs
Reduce central costs
U.S. Business Initiative
Reached Margin Targets
4MAR-04
Key figures � First quarter
Group profit from Operations
New orders
Sales
Net income
EPS (in euros)
in billions of euros
Q1-03
Net cashfrom operating and investing activities
20.1
18.8
1.097
0.521
0.59
(1.137)
Q1-04
20.5
18.3
1.361
0.726
0.82
(1.191)
5MAR-04
Major efforts in the I&C segment in Q1-04
ICN � Information and Communication Networks
! Profit improvement as a result of restructuring in FY 03
! Carrier and Enterprise business in the black
! Demand situation �flat� - tish
ICM � Information and Communication Mobile
! More than doubled Q1-04 Group profit y-o-y
! Gaining market share � new record with 15.2 million sold handsets
! Well positioned with 29 contracts for 3G-Networks �more than 30.000 node B-stations installed
6MAR-04
Sustainable success
PG � Power Generation! Performing within margin range; benefit from service
Med � Medical Solutions! World class innovation supports growth push
Osram! Leading position in lighting technologies
A&D � Automation and Drives! Market share gain in all businesses
7MAR-04
Challenges
TS � Transportation Systems
! Technical issues in Light Rail business require additional provisions
SD � Siemens Dematic
! Project revisions will be essentially completed in Q2
8MAR-04
Pension management
! Partly compensated by higher expected return resulting out of additional funding
Cash contribution of service costs going forward
! Changing to Defined Contribution pension plan in Germany as of Oct. 1, 2004; impact on funding status is being analyzed
! Comprehensive review of liability structure may influencefuture asset allocation
! Due to adjusted discount rate from 6.0% to 5.4%
Net periodic pension costs will increase slightly in FY 04
Pension accounting rules are being revised by FASB and IASB � impact currently not quantifiable
9MAR-04
Index (1995=100)
Development of prices and salary
1995 1996 1997 1998 1999 2000 2001 2002 200390
95
100
105
110
115
120
125
CPI
PPI electrical industry
Wages and salary development within the electrical industry
10MAR-04
Outlook for FY 04
Ongoing strength of Euro relative to US $
Overcapacities and pricing pressure
Profit and growth
Cost reduction and productivity programs
Our objectives
Environment
Double digit percentage growth in earnings
Weak global economy
MAR-04
Appendix
12MAR-04
Target margins remain unchanged
Q1-04
ICN
ICM
SBS
A&D
I&S
SD
SBT
PG
PTD
TS
SV
Med
Osram
Information and Communication Networks
Information and Communication Mobile
Siemens Business Services
Automation and Drives
Industrial Solutions and Services
Siemens Dematic
Siemens Building Technologies
Power Generation
Power Transmission and Distribution
Transportation Systems
Siemens VDO Automotive
Medical Solutions
3.8
(6.8)
1.5
10.8
3.6
4.2
3.0
3.1
4.9
19.8
6.2
12.9
10.2
SFS 22.5 1)
7 - 9
7 - 9
11 - 13
5 - 6
8 - 11
8 - 11
5 - 6
5 - 7
11 - 13
5 - 7
10 - 13
10 - 11
4 - 6
18 - 221)Siemens Financial Services
1) Return on Equity before taxes
in percent target margin
13MAR-04
11.3
FY 2000 2001
(6.7%)
2002
9.6
(7.2%)
target2003
7.1
(5.1%)
Successful implementation of programContinuation with focus on process optimization
" Size the business- Monitor capacities, considering market conditions
" Manage assets- Maintain world-class turnover ratio- Reduced working capital by 2.1 bn by end of FY03
" Reduce costs - Achieved target of 1.7 bn cost reduction
in FY03 and 1.8 bn in FY02- Reduced workforce to 33,000 by the end of FY03- Launch initiative for productivity enhancement
through process optimization in FY04
" Maximize synergies of carrier and enterprise - Offer enterprise services to carrier customers
" Leverage expertise through enhanced services
" Optimize customer orientation and enter into growth phase- Win new customers, generate new business,
and increase market share- Focus on profitable business and growth fields
" Lead in innovation- 90% of R&D in Next Generation Networks
! Leading market positions in 2003- No.1 in Enterprise Switching- No.1 in Carrier Switching - No.2 in Broadband Access- Leading in Real Time Communications- Leading in Next Generation Networks (Carrier
Convergence, Metro and Long Haul Transport)! Goals for 2005
- Maintain and expand leading positions- Drive growth in application and service business
End-to-end solution provider for NextGeneration Networks (NGN)
Information and Communication Networks (ICN)
Partner for profitable networksSalesin billions of euros
6.1%
8-11%
Group profitmargin Performance drivers
12.9
14MAR-04
8.9
FY 2000 2001
(2.7%)2002
11.0
target2003
Information and Communication Mobile (ICM)
Innovating the mobile worldSalesin billions of euros
8.1%
8-11%
Group profitmargin Performance drivers
11.3Targets
" Increase market share
" Become the leading provider ininnovative solutions likeend-to-end, EDGE, 3G, M2M, WLAN
" Further adjustment to market conditions
Strategic orientation
1. Drive innovation in processes, technology and business models
2. Expand into high-margin servicesand products
3. Benchmark in quality excellence for our customers
4. Continue to develop the Siemens mobile brand
0.9%
10.0
1.8%
! Highest volume increase in Q4 FY03 among top vendors
! Market share > 9 %
! Full year growth again above market
! 26 new products announced in FY 03
Mobile Infrastructure Mobile Phones
! Significant profit increase despite volume decrease
! GSM: growth in emerging markets
! EDGE: market leadership
! UMTS: technology leadership; 7 of 12 commercial networks
15MAR-04
Siemens Business Services (SBS)
FY 2000 2001 2002 target2003
Moving Siemens Business Services forward
Performance drivers
6.0 5.8
(4.3%)
1.7%
5.9
1.2%
5.2
0.2%
Salesin billions of euros
5-6%
Group profitmargin
Sales breakdownFY 2003
... by region
Solutionservices
Operation-related services Europe
Germany
Product-related services
... by services
Asia-Pacific,Africa & M.E. 4%
Americas8%
39%
49%28%
47%
25%
" Growth- International expansion of the portfolio
- Europe: Improve market presence - USA: Strong growth focused on IT
outsourcing- Expand BPO (Business Process Out-
sourcing) business
" Productivity improvement- Cost optimization- Capacity adjustments (reduction in
working hours, insourcing)
" Customer focus- Intensify account management- Existing customers: increase share of
wallet- Industries: manufacturing, financial
services, government
16MAR-04
World leader in automation
Performance drivers
7.9
10.9%
8.9
11.0%
8.6
8.4%
8.4
9.6%
Salesin billions of euros
Group profitmargin
FY 2000 2001 2002 target2003
" Build on clear global No. 1 position
" Technology trendsetter in innovation
" Leading company active in manufacturing and process automation; expand Simaticinto process automation
" Increase market shares with new Simotion systems, Sinamics drive platform and MES (Manufacturing Execution Systems) business
" Gain market share and new customers (key account management, increase effectiveness and efficiency in sales)
" Extend regional coverage: Asia, USA
" Optimize headquarters, processes and asset management
" Strong earnings and cash generator
Automation & Drives (A&D)
11-13%
Manufacturing Automation
Process AutomationMotion Control
Low Voltage Control and Installation Technologies
FY 2003
FY 2002
FY 2001
Gaining market share
FY 2003
FY 2002
FY 2001
FY 2003
FY 2002
FY 2001
FY 2003
FY 2002
FY 200110%
11%
5%
6%
9%
9%13%
14%
17MAR-04
Performance drivers
4.24.6
2.1%2.6%
4.5
(4.4%)
4.0
(1.0%)
Improving customer productivitySalesin billions of euros
4-6%
Group profitmargin
FY 2000 2001 2002 target2003
Restructuring achievements
!Workforce reduced by 2,200 employees worldwide in FY03
!Transfer of 2,600 employees into three new service units of Siemens AG
!Productivity improvement and cost reduction through � target� and regional performance dialogues
" Impacts in FY2003 - restructuring charges for portfolio
adjustments and reorganization- difficult market conditions- profit oriented order selection
" Reorganization to strengthen competitiveness as a supplier of industrial systems, maintenance services and sector-specific IT solutions with a joint marketing and sales force
" Development of standardized solutions and service packages for global customers
Industrial Solutions and Services (I&S)
18MAR-04
Restructuring measures
We supply the perfect material flow
Three major one-time-effects:
" High risk provisions for two big projects (Airport Logistics, Postal/Parcel Logistics) stemming out of the pre-merger phase
" Weak markets primarily in Material Handling Automation
" Restructuring costs
The operational business was positive.
Performance impacts in FY03
FY 2000 2002 2003
2.5
(2.3%)
11.0%
1.8
2001
1.5%3.0 2.6
(8.4%)
7-9%
Group profitmargin
Salesin billions of euros
" Convert regionally structured Material Handling Automation business into three global divisions: Distribution & Industry Logistics, Airport Logistics and Customer Service
" Shift of �Courier, Express and Parcel�-business to Postal Automation division to ensure one-face-to-the-customers
" Set up a global manufacturing network to leverage synergy potential
" Setup global R&D structures to synchronize innovation efforts
" Refocus of program with special emphasis on quality, project management & execution and asset management
" Enhance targets for Power STEP to 252 million euros in fiscal 2003
" Integrate Siemens Dematic subsidiaries into Siemens regional units
Siemens Dematic (SD)
target
19MAR-04
Salesin billions of euros
7-9%
Group profitmargin Performance drivers
Turning market position into profitability
Germany
Europe
Americas
Asia-Pacific
Sales by regionFY 2003
28%
37%
31%
FY 2001 2002 2003
5.0
2.4% 3.5%2.0%
5.65.5
" Exploit market leadership in fire safety and building automation
" Build position in security systems and fire & security products businesses to become market leader
" Increase sales to third parties and OEMs in heating, ventilation & air conditioning products business
" Profitably grow the installed base in all solutions businesses
" Grow service business with innovative service offerings
" Continue to optimize portfolio
" Rigorously apply -program in all business areas
" Exploit market opportunities through leveraging of synergies with other Siemens Groups and Regional Companies
Siemens Building Technologies (SBT)
4%
4.9
6.0 %
2000 target
20MAR-04
8.6
7.4%0.9%
7.8
16.7%
9.4
7.0
16.8%
!Completion of PG�s product portfolio with small and medium gas turbines
! Installed fleet of 3,500 gas and 4,100 steam turbines creates additional service opportunities
! PG enters Oil & Gas market with full portfolio of rotating equipment
! Excellent track record for smooth and successful integrations as evidenced by both the Westinghouse and Demag Delaval acquisitions
Salesin billions of euros
10-13%
Group profitmargin Performance drivers
Meeting the market challenges
Strategic benefits of Alstom Industrial Turbine acquisition
FY 2000 2001 2002 target2003
" Portfolio optimization- Realize strategic benefits of Alstom
Industrial Turbine acquisition- Strong No. 2 in all served segments
" Service growth - Our strategy is based on three primary thrusts: - Improving the base- Organic growth- Accelerated growth
" Global market & customer diversity
" Innovation leadership to increase customer value
" Business excellence programs to drive substantial cost optimization are in place
Power Generation (PG)
21MAR-04
FY 2000 2001 2002 target
5-7%
Salesin billions of euros
Group profitmargin
3.24.1
1.4%2.4%
4.2
2.6%
6.1%
2003
Sustainable improvement
Germany
Europe
Americas
Asia-Pacific
Sales by regionFY 2003
Others
15%
27%
18%
27%
13%
" Clear No. 2 in T&D with well-balanced global set-up, as reliable partner for our utility and industry customers
" Consistent improvement of Group profitmargin and customer satisfaction through - portfolio optimization - PM@PTD (professional projectmanagement)
- Logistics.excellence@PTD(top logistics performance)
- increased value-added service offerings- early adjustment of resources tochanging market demands
" Technological top-performer through focused R&D on platform concepts and IT-based solutions
" Solid asset management to support strategy implementation by acquisitions and investment in production technology
Performance drivers
3.4
Power Transmission and Distribution (PTD)
22MAR-04
Profitable growth with efficient rail solutions
Significant new orders in 2003in millions of euros
Performance drivers
3.7 4.0
4.6%2.0%
FY 2000 2001 2002
4.4
5.7%
4.7
6.0%
2003
5-7%
Group profitmargin
Salesin billions of euros
" Technological trendsetter in innovation" New TSwins productivity program
to generate additional profit and expand market position
" Clear focus on quality - rigorous quality management and test centers for rolling stock and rail automation
" Focus on standardization with modular systems and platform technologies
" Strong project and risk management - 80 project reviews scheduled for 2003
" Rigorous asset and cash management" Focus on profitable growth in a favorable
markets
" Our goals" Maintain No. 1 position in the rail
automation and turnkey markets" Become No. 2 in the rolling stock market,
based on technological leadership
Transportations System (TS)
Trans-Pennine Network (GBR) 500Desiro trains and service
Swiss Railways (SWZ) 320Double-deck trains
AS Oslo Sporveier (NOR) 183Metro trains
Total new orders 4.7Order backlog (Sept. 30, 2003) 11.2in billions of euros
23MAR-04
Performance drivers
Cost structure for passenger carsSource: McKinsey/VDA
2002 2015Today 50% of Siemens VDO�s sales are generated from automotive electronics business. The group aims at a 65% share by 2006
�11,000 �12,000
20%
CAGR
40%
0.7 %
6.2 %
Leverage growth potential
3.85.7
2.3%
8.5
0.8%
8.4
5.0%
5-6%
Group profitmargin
Salesin billions of euros
FY 2000 2002 target2001
(4.6%)
2003
" Rigorous implementation of WIP results into cost saving of over 2 bn EUR for 2002-2004
" Streamline product portfolio:
- Develop products with high end-customer benefit and fast pay-back
- Offer regionally adapted product portfolio for growth areas (Asia and Americas/NAFTA)
- Secure number 1 and 2 position in all business segments
- Prune product portfolio and exit non-core businesses
" Discipline in processes, software, quality and design-to-cost
" Global Key Account Management -�total customer satisfaction� approach
First-tier supplier of applied automotive electronics & mechatronics
Siemens VDO Automotive (SV)
Share ofelectrics /electronics
24MAR-04
Performance drivers
4.9
9.4%7.2
11.2%
FY1999
FY2002
7.6
13.4%
7.4
15.1%11-13%
Group profitmargin
Salesin billions of euros
Profitable growth path
targetFY 2000 2001 2002 2003
Share of sales in No. 1 and No. 2 market positions(incl. JV Dräger Medical)
82%
100%
" One partner
Most complete portfolio from IT to diagnostic equipment
" One company
Integration of Acuson and Shared Medical Systems completed
" One platform
Syngo/Soarian
" One focus
Increasing efficiency in healthcare
" One message
Proven outcomes to the market
" One world
Ideal regional business mix
Medical Solutions (Med)
25MAR-04
AutomotiveLighting
OptoSemiconductors
Precision Materials
4.3
9.0%
4.5
10.2%
Ballasts and Luminaires
4.4
8.4%
4.2
9.8% 10-11%
Group profitmargin
Salesin billions of euros
targetFY 2000 2001 2002 2003
Sales by DivisionFY2003
6%
9%11%
17%
4%
General Lighting
53%
Photo/Optic Lighting
Performance drivers
" Growth by innovation- Drive systems business
lamps and electronic ballasts)- Expand leading position in opto semi-
conductor business
" Growth by globalization- Extend regional sales network
(Southeast Asia, Eastern Europe) - Implement e-business worldwide
" Cost leadership by optimizing structures and processes- Expand production in low-cost countries- Ongoing productivity gains through
design-to-cost, benchmarking, supplychain management and total plant maintenance
- Quick and consistent reaction to slower markets
" Cost leadership through asset manage-ment with focus on working capital
Leading world market position through new technology
Osram
26MAR-04
FY 2001 2002 2003 target
Profitable growth through balanced portfolio of capital and fee business
Future performance driversTotal assetsin billions of euros
18-22%
ROE (before taxes)
SFS Divisions
" Focus on growth while sustaining profitability- Anticipated turnaround in asset growth- Profitability expected within target
range- Sustain and advance position as
preferred financial services provider within Siemens
- Focus on third party business in sales financing, investment management and insurance brokerage
" Sophisticated risk management- Liquid and diversified credit portfolio- Monitor portfolio credit and
concentration risk- Expected defaults part of risk and
pricing model" Continue to increase operational
efficiency- cost reduction program- Streamline processes- Expand shared services among
business units
Siemens Financial Services (SFS)
9.3
18.2%
8.7
23.2%
8.4
24.9%
= capital business = fee business
" Structured Finance- project & export finance (advisory)
" Investment Management- asset management and pension advisory
" Insurance brokerage (industrial and personal)
" Treasury & Financing Services- Siemens in-house bank
" Equipment & Sales Financing- equipment lease financing- receivables management
" Equity investments in infrastructure projects
27MAR-04
Financial Calendar 2004 / 2005
July
November
April
November 11Press conference
November 12Analyst conference
April 28Interim report for the second quarter � conference call �
July 29Interim report for the third quarter � conference call �
January January 27Annual General Meeting
MAR-04
Disclaimer
29MAR-04
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 Reports/Fiscal 2004, Quarter 1 / Financial Statements� at our Investor Relations website under www.siemens.com
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.
�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 as of September 30, 2003 was �1.080 billion. See also Siemens� Form 20-F at our Investor Relations website under www.siemens.com
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 value-creating. A negative EVA means that a business is earning less than its cost of capital and is therefore defined as value-destroying. Other organizations that use EVA may define and calculate EVA differently.
A reconciliation of EVA may be found on our Investor Relations website under www.siemens.com
30MAR-04
Siemens Investor Relations Team
Webpage: http://www.siemens.com Investor Relations
e-mail: [email protected]
Fax: +49-89-636-32830
Marcus Desimoni +49-89-636-32445
Dr. Constantin Birnstiel +49-89-636-36165
Christina Schmöe +49-89-636-32677
Claudia Wagner +49-89-636-33693
Disclaimer:This presentation contains forward-looking statements based on beliefs of Siemens' management. Suchstatements reflect the company's current views with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results to be materially different, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products, lack of acceptance of new products or services and changes in business strategy. Actual results may vary materially from those projected here. Siemens does not intend or assume any obligation to update these forward-looking statements.
