Following the acquisition of Varian, we expect Siemens

CORPORATES

CREDIT OPINION4 August 2021

Update

RATINGS

Siemens AktiengesellschaftDomicile Munich, Germany

Long Term Rating A1

Type LT Issuer Rating - FgnCurr

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Martin Fujerik +49.69.70730.909VP-Senior [email protected]

Frederic Massard +46.8.5179.1274Associate [email protected]

Christian Hendker,CFA

+49.69.70730.735

Associate Managing [email protected]

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

Siemens AktiengesellschaftUpdate following outlook change to stable

SummaryOn 30 July, we changed the outlook on Siemens Aktiengesellschaft (Siemens) to stable fromnegative. Siemens' A1 issuer rating is primarily supported by the company's (1) considerablescale, broad geographical footprint and diversified portfolio of businesses, most of whichhave leading market positions on a global scale and good underlying growth potential; (2)capacity to innovate, as illustrated by its sizeable R&D spending; (3) increasing share ofrecurring revenue in its business mix, enhancing the stability of the earnings; (4) ability toconsistently generate positive free cash flow (FCF); (5) conservative financial policies basedon a net industrial leverage target of up to 1.5x (including leases); and (6) excellent liquidityprofile.

Siemens' A1 issuer rating is primarily constrained by its exposure to cyclical end-marketsand the risk of debt-funded acquisitions, such as that of partly debt-funded Varian MedicalDevices (Varian) concluded in fiscal 2021. Even though Siemens has recently slightly relaxedits financial policies, we expect that it will continue to largely operate with the credit metricscommensurate with its A1 rating and that any deterioration of the metrics, for instancefollowing future acquisitions, will only be temporary. In that context we recognize Siemens'strong FCF generation capabilities, its stakes in listed assets that provide a degree of financialflexibility, as well as the underlying strengthening of its business profile, supported byan ongoing shift towards more recurring and more profitable businesses and a focus onstructural cost reduction, which enables structurally higher profitability.

Exhibit 1

Following the acquisition of Varian, we expect Siemens' leverage to reduce significantly duringfiscal 2022

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

2012 2013 2014 2015 2016 2017 2018 2019 2020 LTM March 2021 Forward view -FY 2022e

Moody’s adjusted Debt / EBITDA (LHS) Moody’s adjusted RCF / Debt (RHS)

Debt/EBITDA as defined and adjusted by us. Forward view is Moody's view and does not assume further acquisitions or disposals.Source: Moody's Financial Metrics™

http://www.surveygizmo.com/s3/1133212/Rate-this-research?pubid=PBC_1296995

https://www.moodys.com/credit-ratings/Siemens-Aktiengesellschaft-credit-rating-676500

MOODY'S INVESTORS SERVICE CORPORATES

Credit strengths

» Global scale, multiple market leadership positions, and broad customer and geographical diversification

» Strong innovation and R&D capabilities

» Excellent liquidity, underpinned by established access to capital markets

Credit challenges

» Increasing cash leakage related to Siemens Healthineers' (SHS)

» Continued strain from the coronavirus pandemic in some of Siemens' end-markets

» Temporary weaker credit metrics following the acquisition of Varian

Rating outlookThe stable outlook reflects our expectation that following the acquisition of Varian Siemens will be willing and able to restore its creditmetrics commensurate with its A1 rating by the end of fiscal 2022.

Factors that could lead to an upgrade

» Revenue growth and reduced competitive pressure throughout Siemens' broad operations while the company maintains its prudentfinancial policy

» EBITA margin above 15% on a sustained basis

» Adjusted gross debt/EBITDA below 1.5x on a sustained basis

» Adjusted retained cash flow (RCF) / debt above 25% on a sustained basis

» Strong liquidity

Factors that could lead to a downgrade

» Siemens' competitive strength, profitability and cash flow erode on a sustained basis

» The company fails to integrate and grow the acquired business

» The company fails to reduce its adjusted gross debt/EBITDA towards 2.5x during 2022

» Financial policy shifts towards a higher permanent financial leverage, either through additional debt-funded acquisitions or sharebuybacks that exceed FCF

» Adjusted retained cash flow (RCF) / debt below 20% on a sustained basis

» EBITA margin significantly decreases below 12%

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 4 August 2021 Siemens Aktiengesellschaft: Update following outlook change to stable


Key indicators

Exhibit 2

Key indicators for Siemens

9/30/2017 9/30/2018 9/30/2019 9/30/2020 3/31/2021(L) FY2022e

Revenue (USD Billion) $90.7 $97.9 $65.1 $63.2 $67.4 $68-$74

EBITA Margin 11.6% 10.5% 14.3% 10.8% 12.4% 15-16%

EBITA / Interest Expense 11.7x 12.2x 14.4x 11.2x 17.2x 18-21x

Debt / EBITDA 2.0x 1.9x 2.4x 3.2x 3.3x 2.2-2.4x

Retained Cash Flow / Net Debt 46.6% 63.6% 59.5% 33.5% 91.3% 35-45%

Free Cash Flow / Debt 2.3% 10.5% 6.2% 4.4% 11.7% 8-12%

As of end march 2021, cash and cash equivalents still included the acquisition price for Varian (around €14 billion) which was paid at the beginning of the second half of fiscal 2021.Metrics for fiscal 2019 were restated based on fiscal 2020 annual report.All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.Forward view is Moody's view and does not assume further acquisitions or disposals.Source: Moody's Financial Metrics™

ProfileSiemens Aktiengesellschaft (Siemens) is one of the world's largest manufacturing and technology companies, with revenue fromcontinuing operations of around €57 billion in fiscal 2020. The company has a workforce of more than 290,000 and a broad globalfootprint. Siemens is publicly listed, with a market capitalisation of around €113 billion as of 27 July 2021.

Following the spinoff and the public listing of Siemens Energy in September 2020, in which Siemens held a 35% stake as of the end ofJune 2021, Siemens fully consolidates its four main businesses (together “Industrial Businesses”):

» Smart Infrastructure (SI; 27% of external revenue from continuing operations and 17% of profit of Industrial Businesses in fiscal2020), which focuses on intelligent infrastructure for buildings and decentralised energy systems;

» Digital Industries (DI; 28% and 43%), with an offering focused on automation and digitalisation in the process and manufacturingindustries;

» Mobility (MO; 17% and 11%), offering mobility solutions for rail and road transport; and

» Siemens Healthineers (SHS; 27% and 29%), with a portfolio of products and services in the core areas of diagnostic andtherapeutic imaging, and in laboratory diagnostics and molecular medicine; SHS is a publicly listed company, in which Siemens helda 75% stake as of the end of June 2021.

Besides Industrial Businesses, which accounted for around 90% of Siemens' external revenue from continuing operations in fiscal 2020,the company also owns several smaller enterprises, which it manages separately to improve their performance, bundled under theumbrella of “Portfolio Companies,” with a combined external revenue of almost €5 billion in fiscal 2020. Siemens also has a sizeablecaptive finance company, Siemens Financial Services (SFS), to support the activities of Industrial Businesses.



Exhibit 3

External revenue per segmentFiscal 2020, continuing operations

Exhibit 4

Revenue split by geography Fiscal 2020, continuing operations

Digital Industries 28%

Smart Infrastructure27%

Mobility17%

Siemens Healthineers27%

Share of external revenue of Industrial Businesses only, that is, excluding external revenueof SFS, Portfolio Companies and reconciliation to consolidated financial statements.Source: Company

Europe, CIS, Africa, Middle East (excluding Germany)32%

Germany17%

Americas27%

Asia, Australia24%

CIS = Commonwealth of Independent States.Source: Company

Detailed credit considerationsLarge and diversified portfolio, with multiple global leadership positions in markets with good underlying growth prospects,supported by sizeable R&D investmentsOne of the key supporting factors for Siemens' A1 issuer rating is its considerable scale that stems from a large and diversified portfolioof Industrial Businesses, most of which have leading market positions on a global scale. SHS is the world's leading company in imagingand advanced therapies, with a roughly one-third market share based on sales in a fairly consolidated market, and the second-largestcompany active in diagnostics. In DI, Siemens has a market-leading position in industrial software, factory automation and motioncontrol, and in most of the businesses within SI, it has the first or second market position. In MO, Siemens is the world's third-largestmanufacturer of rail transport equipment globally, positioned just behind China-focused CRRC Corporation Limited (A1 stable) andAlstom (Baa2 negative), which completed the acquisition of Bombardier in January 2021 after an earlier failed merger attempt withSiemens.

Most of Siemens' businesses have high barriers to entry, and the company's technological know-how, with an ability to innovate,is among its key success factors. Siemens has a strong commitment to R&D, as illustrated by the sizeable annual R&D spending ofaround €4.6 billion in fiscal 2020, accounting for more than 8% of sales — one of the largest R&D budgets among the manufacturingcompanies we rate. Siemens is also one of the largest patent application and grant filers in Europe and globally, and has more than40,000 R&D employees globally.

Siemens' Industrial Businesses have good underlying growth prospects, some with growth rates even higher than that of GDP,supported by megatrends that are not hurt by the pandemic, such as an ageing population and increase in chronic diseases (SHS),energy efficiency and decentralisation of energy (SI), urbanisation (MO), and focus on productivity and digital transformation ofindustries (DI). In addition, in most of its businesses Siemens aims to grow faster than its relevant market and at group level it targetscomparable revenue growth rate, which it in June 2021 revised upwards to 5%-7% over the cycle from 4%-5% previously. Siemens'established position in the faster-growing Asian markets, where the company already generates almost a quarter of its revenue, andfocus on markets with a comparatively faster growth, such as industrial software, should help it reach that goal.

Continuous reshaping of portfolio through acquisitions and divestments, including value realisation through listing ofassetsOver the past decade, Siemens has continuously reshaped its portfolio through acquisitions and divestments, which accelerated itstransition from a traditional manufacturing company to a broader technology group with an emphasis on automation and digitalisation— a trend we expect to continue. We estimate that between fiscal 2010 and fiscal 2021, Siemens has spent more than €35 billion(net of cash acquired) on acquisitions. Most recent additions to the portfolio include Mentor Graphics in 2017 (purchase price of $4.4billion) and mendix in 2018 (purchase price €0.6 billion), both of which strengthened Siemens' industrial software offering in DI. In


https://www.moodys.com/credit-ratings/CRRC-Corporation-Limited-credit-rating-824719992/summary

https://www.moodys.com/credit-ratings/Alstom-credit-rating-600051540/summary

https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1249243





fiscal 2020, SHS finalised the acquisition of Corindus Vascular Robotics Inc. (purchase price $1.1 billion), which is active in robotic-assisted precision vascular systems, cassettes and services, and in fiscal 2021, the acquisition of Varian (purchase price around €14billion), which competes in the field of oncology diagnostics and treatment.

An important source of funding for the acquisitions has been the disposal of weaker-performing or non-core assets. We estimate thatSiemens has realised total proceeds of more than €18 billion since fiscal 20101, which included transactions such as the sale of thewhite goods joint venture BSH in 2015; the sale of the hearing aid business Sivantos in 2015; the divestment of the loss-making ITservices company Unify; and most recently in fiscal 2021 the divestment of the drive system business (Flender), for an enterprise valueof around €2 billion.

To unlock the value of its assets, Siemens has listed some of them in the recent past, and has used equity as acquisition currencyfor acquisitions. In 2018, Siemens finalised the IPO of SHS and realised €4.2 billion in net proceeds from the share float of a 15%stake. Siemens also financed around one-third of Varian's purchase price from a capital increase at SHS, in which it did not participateand which reduced its stake by additional 10%. Despite the decreased ownership, SHS remains a core business for Siemens. Eventhough further monetisations cannot be excluded, we understand that the company would like to retain a controlling stake in it.Notwithstanding the sizeable value of the stake - the market capitalisation of SHS was around €62 billion as of 27 July 2021 - thereduced ownership increases cash leakage given the full consolidation of the asset in Siemens' books, which we view qualitatively ascredit negative.

In September 2020, Siemens finalised the spinoff and listing of its energy business, which consists of the former Gas and Powerbusiness of Siemens as well as Siemens' 67% stake in Siemens Gamesa Renewable Energy S.A. Siemens currently owns a 35% stake inSiemens Energy, which had a market capitalisation of around €16 billion as of 27 July 2021. We expect Siemens to sell the remainingstake over time, which would provide sizeable funds for future growth.

Wide range of end-markets and geographies and a rising share of recurring revenue supported earnings stability during thepandemicSiemens' business model has been able to deliver relatively stable operational performance through the cycle despite the company'sexposure to cyclical end-markets, such as automotive, construction or chemicals. The company has a broad range of customers, regionsand end-markets, which have different demand drivers and cycles. In addition, Siemens' sizeable backlog, valued at €72 billion as of theend of March 2021, provides a good degree of revenue visibility for some of the businesses.

Moreover, many of Siemens' businesses have a fair share of recurring revenue, which has consistently increased over the past decade— another trend we expect to continue. For instance, around 40% of SHS' revenue in imaging and advance therapies, and most ofthe diagnostic revenue are recurring. Within DI and SI, Siemens has significantly strengthened its service and software offering, whichtends to be more profitable, less capital intensive and more recurring than the traditional product business. Specifically in DI, where thesoftware business already represented 28% of revenue in fiscal 2020, the company introduced a new key performance indicator, thatis, annual recurring revenue in DI Software, which amounted to €2.6 billion in fiscal 2020, with a target to achieve average growth ofmore than 10% by fiscal 2025.

These factors helped Siemens deliver good performance during the pandemic, ahead of our expectations. In fiscal 2020, at the grouplevel, the company reported a comparable revenue decline of only 2%, with a book-to-bill ratio of more than 1x and roughly flatadjusted EBITA margin in Industrial Businesses (as reported by Siemens). In fiscal 2021, Siemens has already upgraded its annualguidance three times, commenting that it expects most of its Industrial Businesses to achieve margins in fiscal 2021 fully in line withits medium-term margin target ranges and we expect that operational environment will support meaningful earnings expansion alsothrough fiscal 2022, which will support the deleveraging needed for the A1 rating.

Ongoing shift in business mix with focus on cost reduction help improve profitabilityIn fiscal 2019, Siemens introduced a new corporate structure, aiming to achieve a leaner company with less organisational complexity,more efficient support functions and a sustainably lower cost base. Siemens believes it is well on track to achieve or even overachievethe targeted cost savings and in June 2021 it further accelerated its costs saving ambitions until fiscal 2023, while rising mediumterm margin expectations for MO and SI. A leaner structure, complemented with an ongoing shift in the business mix towards moreprofitable businesses (for instance through a higher share of software, or exit from lower margin energy business), should support






structural improvement in Siemens' profitability. The strong performance of Siemens in 1H of fiscal 2021, with EBITA margin ofIndustrial Businesses (Siemens-defined) reaching 15.5%, significantly up from 11.9% in 1H of fiscal 2020, shows the first signs that thecompany should be able to boost its EBITA margin (as adjusted by us) towards mid-teens in percentage terms within the next 12-18months, a credit positive.

Financial policies largely commensurate with the A1 ratingSiemens' conservative financial policy is centred on its net industrial leverage target, which the company in June 2021 slightly relaxedto up to 1.5x (including leases) from up to 1.0x (excluding leases). Although the relaxation of the leverage ceiling is credit negative,we expect that Siemens will continue to largely operate with the credit metrics commensurate with its A1 rating and that anydeterioration of the metrics, for instance following future acquisitions, will only be temporary. For instance, with the acquisition ofVarian the company has already taken steps to restore its leverage back to the levels commensurate with an A1 rating by the end offiscal 2022, which supports its current rating. These steps included the sale of Flender and the transfer of its stake in Bentley Systems toa pension trust, which strongly contributed to the reduction of Siemens' pension underfunding by around €1.4 billion in the first quarterof fiscal 2021.

In June 2021, Siemens also revised its dividend policy to a progressive dividend payout from a payout ratio of 40%-60% of net incomeattributable to Siemens' shareholders. However, despite sizeable and growing dividends, the company has an established track recordof generating significant FCF, as defined and adjusted by us, throughout the past decade. We expect Siemens to continue to generatesignificant FCF in fiscal 2021 and fiscal 2022. However, we also note that the company frequently complements dividends with sharebuybacks to reduce excess cash, and between fiscal 2012 and fiscal 2020, it bought back more than €12 billion in shares in differentshare buyback programmes. The current programme, which was introduced in December 2018, targets buybacks worth €3 billionuntil November 2021, with around €2.4 billion already bought back as of the end June 2021. In June 2021, the company announceda new €3 billion buyback programme, which will run between fiscal 2022 and fiscal 2026, implying a somewhat lower annual run-rate compared to the current one. We understand that Siemens' buyback programmes are flexible and could be put on hold if thecompany's balance sheet deteriorates, for instance, following a bolt-on acquisition.

Exhibit 5

Siemens is able to generate significant FCF, which is, however, frequently distributed to shareholders via buybacks

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 LTM March 2021

€ m

illio

ns

Funds from operations (LHS) Change in working capital items (LHS) Capital spending (LHS)

Dividends (LHS) Buybacks (LHS) FCF (RHS)

FCF after buybacks (RHS)

All metrics are as defined by us and based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.Data for fiscal 2020 and LTM March 2021 contains cash flow from discontinued operations.Source: Moody's Financial Metrics™

After a decade of fast growth, SFS is likely to grow in line with Industrial Businesses; low credit defaults so far during thepandemicSiemens has a captive finance business, SFS, to support the investments of its customers with leasing solutions for equipment, projectand structured financing, and corporate lending solutions. In our assessment of Siemens, we deconsolidate SFS to make Siemens'credit metrics comparable with those of pure industrial companies, taking into account the very different margin structure, interestcoverage and capital adequacy of captive finance operations, and consider SFS qualitatively. SFS' activities add risks typical of a vendorfinancing operation (that is, a prolonged contingency risk) to the risks that a pure manufacturing company is usually exposed to. This



risk is mitigated by Siemens' ability to offer its customers bespoke financing solutions, which differentiate the company from some ofits competitors.

SFS has relatively prudent financial risk management. It does not engage in asset trading, subprime mortgages or consumer lending.Within debt financing solutions, there are exposure limits in place according to rating categories, and unsecured positions are acceptedonly in exceptional cases. The portfolio is generally well diversified, and the funding, which is obtained through Siemens' treasuryoperations, is maturity and currency matched. Although SFS' profit declined significantly in fiscal 2020 because of non-cash provisions,actual credit defaults have remained relatively low, supported by a fairly high share of its project finance business, which is moreresilient to the disruption caused by the pandemic, and SFS' emphasis on markets and domains in which Siemens has expertise.

Over the past decade, SFS' asset growth has been considerably faster than that of Siemens' industrial assets. SFS' assets more thandoubled to around €29 billion in fiscal 2020, accounting for around 23% of Siemens' total assets, compared with about €13 billion infiscal 2010 (12%). The growth was particularly strong between fiscal 2012 and fiscal 2016 (a 13% compound annual growth rate), whenSFS aimed to ensure critical balance-sheet size for managing Siemens' financial risk. Since then, growth has slowed, and SFS expectsits balance-sheet growth to be in line with that of Siemens' growth in the future. While SFS will continue to support Siemens Energythrough long-term, tailored, preferred financing arrangements, the importance of Siemens Energy in the mix will progressively decline,with the focus shifting towards enhancing Siemens' Industrial Businesses, particularly SI and DI, which tend to be of a smaller value.Although the transition will somewhat reduce the risk profile of SFS, it is also likely to reduce its profitability.

Exhibit 6

SFS' assets have grown faster than those of Siemens over the past decade

0

100

200

300

400

500

600

700

800

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 LTM March 21

€ m

illio

n

€ m

illio

ns

SFS - Assets (LHS) Siemens - Assets (excl. SFS) (LHS) SFS - EBT (RHS)

12% 12% 12% 14% 16% 18% 21% 21% 21% 19% 20% 20% 23%

SFS Assets / Total Assets

22%

Source: Company

Structural considerationsMost of Siemens' debt is senior unsecured debt raised at the Siemens Aktiengesellschaft level. Even after the acquisition of Varian, SHSwill remain primarily funded by the Siemens group's internal sources. However, if a significant amount of debt from external sourceswere to be raised at the operating company level, this would represent a strategic step away from a one-tier debt structure, and wecould consider notching down Siemens' unsecured rating. However, currently we deem such a step as unlikely.

ESG considerationsThe manufacturing industry has a moderate risk score with regard to the materiality of environmental risks to credit quality, accordingto our environmental risks heat map. Siemens' carbon transition strategy is centred on its commitment to becoming CO2 neutralfrom its own operations by 2030. The company reduced its carbon footprint by half between fiscal 2014 and fiscal 2020 through anumber of initiatives, such as higher energy efficiency or sourcing of greener energy. In addition, it targets to achieve a net zero supplychain by 2050, with a 20% emissions reduction by 2030. In our assessment, we also recognise the fact that Siemens' products help itscustomers shift towards more efficient, less-resource-intensive practices.




The manufacturing industry also has moderate social risk, according to our social risks heat map. Our assessment takes intoconsideration Siemens' solid performance during the pandemic, which we classify as a social risk under our ESG framework, given thesubstantial implications for public health and safety.

In terms of governance considerations, we regard Siemens' conservative financial policy to be largely commensurate with its A1 rating.Please refer to the Detailed credit considerations section for further details on the financial policy.

Liquidity analysisSiemens' liquidity is excellent. As of the end of March 2021, the company reported almost €24 billion of cash and cash equivalents,including funding raised for the acquisition of Varian. Additionally, Siemens had access to undrawn facilities totalling €7 billion withoutcovenants and MAC clause. We also expect Siemens to generate positive FCF in the next 12-18 months. As of the end of March 2021,the company reported around €8.5 billion of short-term debt, including issued P-1 rated commercial papers. The debt maturity profileof Siemens is well spread.

Methodology and scorecard

The principal rating methodology used for rating Siemens is our global Manufacturing Methodology, published in March 2020. Thescorecard indicates an A1 outcome for our forward view, which is in line with the assigned rating.

Exhibit 7

Rating factorsSiemens Aktiengesellschaft

Manufacturing Industry Scorecard [1][2]

Factor 1 : Scale (20%) Measure Score Measure Score

a) Revenue (USD Billion) $67.4 Aaa $68 - $74 Aaa

Factor 2 : Business Profile (25%)

a) Business Profile A A A A

Factor 3 : Profitability and Efficiency (5%)

a) EBITA Margin 12.4% Baa 15% - 16% Baa

Factor 4 : Leverage and Coverage (35%)

a) Debt / EBITDA 3.3x Ba 2.2x - 2.4x Baa

b) Retained Cash Flow / Net Debt 91.3% Aaa 35% - 45% A

c) Free Cash Flow / Debt 11.7% Baa 8% - 12% Baa

d) EBITA / Interest Expense 17.2x Aa 18x - 21x Aa

Factor 5 : Financial Policy (15%)

a) Financial Policy A A A A

Rating:

a) Scorecard-Indicated Outcome A1 A1

b) Actual Rating Assigned (P)A1

Current

LTM 3/31/2021

Moody's Month Forward View by

FY 2022

All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.Forward view is Moody's view and does not assume further acquisitions or disposals.Source: Moody's Financial Metrics™




Ratings

Exhibit 8

Category Moody's RatingSIEMENS AKTIENGESELLSCHAFT

Outlook StableIssuer Rating A1Senior Unsecured MTN (P)A1Commercial Paper P-1Other Short Term (P)P-1

SIEMENS BANK GMBH

Outlook NegativeIssuer Rating A1ST Issuer Rating P-1

SIEMENS FINANCIERINGSMAATSCHAPPIJ N.V.

Outlook StableBkd Senior Unsecured A1Bkd Commercial Paper P-1Bkd Other Short Term (P)P-1

SIEMENS CAPITAL COMPANY, LLC

Outlook StableBkd Senior Unsecured A1Bkd Commercial Paper P-1

Source: Moody's Investors Service



AppendixPeersSiemens' main peers include General Electric Company (Baa1 negative), Eaton Corporation (Baa1 stable), ABB Ltd (A3 stable), SchneiderElectric SE (A3 stable), Emerson Electric Company (A2 stable) and Rockwell Automation, Inc. (A3 stable).

Exhibit 9

Spinoff of the energy business will support marginsMoody's-adjusted EBITA margin

0%

5%

10%

15%

20%

25%

2013 2014 2015 2016 2017 2018 2019 2020 LTM

Siemens (A1/STA) ABB (A3/STA) Eaton (Baa1/STA) Schneider (A3/STA)

GE (Baa1/NEG) Rockwell (A3/STA) Emerson (A2/STA)

Source: Moody's Financial Metrics™

Exhibit 10

Impact of the pandemic will lead to temporarily high leverageMoody's-adjusted debt/EBITDA

1.0x

2.0x

3.0x

4.0x

2013 2014 2015 2016 2017 2018 2019 2020 LTM

Siemens (A1/STA) ABB (A3/STA) Eaton (Baa1/STA) Schneider (A3/STA) Rockwell (A3/STA) Emerson (A2/STA)



https://www.moodys.com/credit-ratings/General-Electric-Company-credit-rating-313000

https://www.moodys.com/credit-ratings/Eaton-Corporation-credit-rating-255000

https://www.moodys.com/credit-ratings/ABB-Ltd-credit-rating-600051525

https://www.moodys.com/credit-ratings/Schneider-Electric-SE-credit-rating-853450

https://www.moodys.com/credit-ratings/Schneider-Electric-SE-credit-rating-853450

https://www.moodys.com/credit-ratings/Emerson-Electric-Company-credit-rating-263000

https://www.moodys.com/credit-ratings/Rockwell-Automation-Inc-credit-rating-600021824


Exhibit 11

Moody's-adjusted EBITDA breakdown

(in EUR millions)FYE

Sep-16

FYE

Sep-17

FYE

Sep-18

FYE

Sep-19

FYE

Sep-20

LTM

March-21

Reported pre-tax income 7,403 8,189 8,050 6,933 5,672 6,877

Add back interest expense 989 1,051 1,089 965 815 692

Add back D&A 2,764 3,211 3,414 2,342 3,157 3,096

Reported EBITDA 11,156 12,451 12,553 10,240 9,644 10,665

Equity Income Adjustment (134) (43) 3 (112) 596 709

SFS Adjustment [1] (1,001) (977) (912) (959) (1,023) (920)

Operaitng Lease Adjustment 1,158 1,242 1,249 1,208

Pension Adjustment (10) (117) 153 50 (3) (3)

Unsual items (122) (327) (1,633) 63 (1,252) (1,474)

Adjusted EBITDA 11,048 12,229 11,413 10,490 7,962 8,976

[1] SFS adjustment is an estimation of its EBITDA (pretax income plus interest expense plus depreciation and amortisation).Source: Moody's Financial Metrics™

Exhibit 12

Moody's-adjusted debt breakdown

(in EUR millions)

FYE

Sep-16

FYE

Sep-17

FYE

Sep-18

FYE

Sep-19

FYE

Sep-20

LTM

March-21

Total Unadjusted Debt 32,900 33,668 33,662 38,191 44,567 52,098

Pension Adjustments [1] 13,195 9,082 7,084 9,296 5,960 2,888

Operating Lease Adjustments [2] 3,474 3,726 3,747 3,624 - -

Hybrid Securities Adjustments - - - - - -

Other Standard Adjustments [3] (20,711) (21,616) (23,267) (25,588) (24,802) (25,400)

Total Adjusted Debt 28,858 24,860 21,226 25,523 25,725 29,586

[1] Pension liability excluding other post-employment benefits (OPEB) liability.[2] Operating lease adjustment was changed with the implementation of IFRS 16. We now use a reported finance lease liability on the balance sheet.[3] Includes adjustment for SFS debt and hedge accounting adjustment.Source: Moody's Financial Metrics™



Exhibit 13

Select metrics of Siemens

EUR Millions

FYE

Sep-17

FYE

Sep-18

FYE

Sep-19

FYE

Sep-20

LTM

March-21

INCOME STATEMENT

Revenue/Sales 82,089 82,266 57,706 56,472 57,749

EBITDA 12,229 11,413 10,490 7,962 8,976

EBITA 9,517 8,602 8,274 6,110 7,170

Interest Expense 811 704 576 546 417

BALANCE SHEET

Cash & Cash Equivalents 9,617 12,337 13,722 15,297 24,895

Total Debt 24,860 21,226 25,523 25,725 29,586

CASH FLOW

Funds from Operations (FFO) 10,199 8,790 10,282 6,872 7,361

Dividends (3,101) (3,137) (3,265) (3,382) (3,080)

Retained Cash Flow (RCF) 7,098 5,653 7,017 3,490 4,281

RCF / Net Debt 46.6% 63.6% 59.5% 33.5% 91.3%

Free Cash Flow (FCF) 567 2,226 1,585 1,127 3,452

FCF / Debt 2.3% 10.5% 6.2% 4.4% 11.7%

Business acquisitions (4,385) (525) (958) (1,727) (295)

Share buybacks (931) (1,409) (1,407) (1,517) (545)

PROFITABILITY

EBITA Margin % 11.6% 10.5% 14.3% 10.8% 12.4%

EBITDA Margin % 14.9% 13.9% 18.2% 14.1% 15.5%

INTEREST COVERAGE

EBITA / Interest Expense 11.7x 12.2x 14.4x 11.2x 17.2x

EBITDA / Interest Expense 15.1x 16.2x 18.2x 14.6x 21.5x

LEVERAGE

Debt / EBITDA 2.0x 1.9x 2.4x 3.2x 3.3x

Net Debt / EBITDA 1.2x 0.8x 1.1x 1.3x 0.5x


Endnotes1 Excluding SHS and Siemens Energy shares, and excluding several assets that have been transferred to the pension trust.



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