Presentation: "Another strong quarter – profitable growth continuing" (Q2 Analyst Call)

Ralf P. Thomas, CFO

Q2 FY 2017 Analyst Call | Munich, May 4, 2017

Unrestricted © Siemens AG 2017

siemens.com

This document contains statements related to our future business and financial performance and future events or developments involving Siemens that may 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. Should one or more of these risks or uncertainties materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, 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. Other companies that report or describe similarly titled financial measures may calculate them differently.

Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

• Successful closing of Siemens Gamesa merger and Mentor acquisition

• Orders +1% at €22.6bn despite tough comps - excluding €3.1bn Egypt orders up +17% Substantial volume from large orders and base orders clearly up

• Accelerated revenue growth to +5% supported by all Divisions; book-to-bill at 1.12x

• Strong quarter with 8 out of 9 Divisions in or above target range

• Industrial Business margin expansion to 12.1% (+120bps) driven by strong operational execution

• Net income stable at €1.5bn impacted by higher tax rate - EPS at 1.79€

• Strong Industrial Business free cash flow of €2.0bn, up 32% y-o-y

  Major orders around the world secure further growth

  Energy Management (EM) Wind Power and Renewables (WP)

  HVDC link India

  • India's first HVDC link in VSC1) technology to support govern- ment's vision of 24x7 power for all

  • Combined order volume ~$520m for Siemens and Sumitomo Electric

    HVDC solution example 1) VSC: Voltage Sourced Converter

    7 MW Turbine (SWT-7.0-154)

    EnBW Hohe See, Germany

• 497 MW complete offshore wind

  power plant solution

• Delivery out of new Hull and Cuxhaven factories

• Grid connection in 2019

• Order volume ~€1.4bn

  Power & Gas (PG) Mobility (MO)

  12 industrial gas turbines for

  Argentina

  • Four turnkey industrial power plants

  • Combined capacity of ~690 MW

  • Order volume ~$570m incl. long- term service contract

Rhine Valley network, Germany

• First order for 24 trains based on the new Mireo platform

• 15 double-decker trainsets from

  the proven Desiro family

• Customer Deutsche Bahn

SGT-A65 TR gas turbine

Mireo mass transit platform

Power and Gas (PG)

+4%1)

6.2

3.1

3.9

3.9

4.1

+48%1)

+4%1)

2.1

3.1

1.5

1.5

Wind Power and Renewables (WP)

Orders

Revenue

Orders

Revenue

€bn

€bn

Egypt

project

-38%1)

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Profit

Q2/16 - Iran effect: Revenue: €174m Profit: €130m Margin: ~280bps

Profit margin

Profit

Profit margin

€m

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

• Orders down due to tough comparables

• Revenue growth driven by rapid backlog conversion

• Strong execution & high service contribution

• Sharply higher volume from large orders

• Revenue growth in onshore and service

• Higher productivity & capacity utilization, strong execution

-14%

-240bps

11-15%

535 461

14.9%

13.6%

11.5%

11.2%

€m

+13%

137

155

9.6%

9.4%

+90bps

10.4%

5-8%

10.3%

1) Comparable, i.e. adjusted for currency translation and portfolio effects

x.x% Margin as reported

x.x% Margin excl. severance (and excl. integration cost D-R for PG only)

Energy Management (EM)

+31%

172

225

6.8%

+120bps

7.7%

7-10%

6.3%

7.5%

€m

+112%

+700bps

8-11%

235

111

7.9%

7.7%

14.8%

14.7%

Building Technologies (BT)

Orders

Revenue

Orders

Revenue

€bn

€bn

+17%1)

+9%1)

+10%1)

+10%1)

3.0

3.6

2.7

3.0

1.5

1.6

1.4

1.6

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Profit

Profit margin

Profit

Pension effect

€94m (590bps)

Profit margin

€m

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

• High volume of large orders

• Global revenue growth, led by transmission

• Profitability up broad based, led by High Voltage Products

• Excellent top-line growth across all regions drove

profitability

Digital Factory (DF)

Process Industries and Drives (PD)

Orders

Revenue

Orders

Revenue

€bn

€bn

+9%1)

+11%1)

-1%1)

+1%1)

2.6

2.9

2.4

2.7

2,3

2,3

2.1

2.2

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Profit

Profit margin

Profit

Profit margin

€m

+33%

+270bps

14-20%

€m

+50%

8-12%

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

Q2 FY 16

Q2 FY 17

• Strong top-line growth and margin expansion driven by

  short cycle demand from automotive & machine building

• Top-line growth particularly in China and Europe

• Growth in Process Automation offset by decline in

  commodity related businesses

• Higher margin Process Automation drives profitability

363

482

15.5%

15.1%

18.2%

17.8%

134

89

4.5%

+200bps

6.5%

4.1% 6.1%

1. Comparable, i.e. adjusted for currency translation and portfolio effects

   x.x% Margin as reported

   x.x% Margin excl. severance

   MO: Stringent execution and resumption of top line growth HC: Solid performance with strength in Asia

   Mobility (MO)

   +7%1)

   1.8 2.2

   1.9

   2.0

   153

   213

   8.2%

   +250bps

   10.8%

   6-9%

   8.0%

   10.5%

   3.2

   3.4

   3.3

   3.4

   +40bps

   15-19%

   555

   588

   17.2%

   16.7%

   17.5%

   17.1%

   Healthineers (HC)

   Orders

   Revenue

   Orders

   Revenue

   €bn

   €bn

   +19%1)

   +2%1)

   +2%1)

   Q2 FY 16

   Q2 FY 17

   Q2 FY 16

   Q2 FY 17

   Q2 FY 16

   Q2 FY 17

   Q2 FY 16

   Q2 FY 17

   Profit

   Profit margin

   Profit

   Profit margin

   €m

   +39%

   Pension effect

   €28m (140bps)

   €m

   +6%

   Q2 FY 16

   Q2 FY 17

   Q2 FY 16

   Q2 FY 17

   Q2 FY 16

   Q2 FY 17

   Q2 FY 16

   Q2 FY 17

   • Broad based order growth with strong U.S. contribution

   • Profit up on increased revenue and larger share from high margin rail infrastructure business

   • Double digit order growth in China

   • Revenue growth driven by Diagnostic Imaging

   • Final U.S. FDA clearance for AtellicaTM Solution

   Volatility at CMPA remains Mentor & Gamesa with additional PPA-effects in H2 FY 17

   Below Industrial Business - Q2 FY 2017

   Expectations for H2 FY 2017

   in €m

   2,492

   3

   207

   18

   -281

   -168

   Therein:

   • -€100m Pensions

   • -€181m Corp. Items

   • SFS: H2 in line with prior year

   • CMPA: includes other portfolio elements; volatility remains; H2 broadly in line with prior year

   • SRE: H2 in line with prior year, dependent on disposal gains

   • Corporate Items: H2 in line with prior year

   • Pension: ~€125m per quarter

   • PPA: in line with H1 FY 2017 plus additional effects of ~€0.3bn from Mentor and Gamesa

   • Elimination, Corporate Treasury, Other: H2 in line with prior year, including higher interest expenses

   • Tax: expect 26 - 30% for FY 2017

   -75

   Including effects related to:

   • Asset retirement obligation of ~€314m

   • Impairment of Primetals of

   -€230m

   -738

   1,458

   25 1,483

   Tax rate

   @34%

   IB SFS

   CMPA

   SRE

   Corp. Items

   & Pen.

   PPA

   Elim. Corp. Treas., Other

   Tax

   Inc. Cont. Ops

   Disc. Ops.

   Net Income

   Significant operational free cash flow improvement - Overall more balanced development

   738

   1,452

   Q1 FY 17 Q2 FY 17 H1 FY 17

   +32%

   1,951

   Free cash flow Industrial Business free cash flow

   €m

   +1.4bn

   €m

   714

   1,477

   812

   84

   Q2 FY 16

   Q2 FY 17

   -728

   Q1 FY 16 Q2 FY 16 H1 FY 16

   • Strong free cash flow improvement driven by PG, BT, DF

   • Net operating working capital increase mainly due to Mentor integration

   Siemens Vision 2020 A strong foundation to drive profitable growth

   Value

   Strengthen core

   • Stringent capital allocation

     Scale up

   • Innovation initiative

   • Customer and market focus

   • Digitalization at work

     Drive performance

     • Continuous productivity improvement

     • Stringent project execution

     • Fix underperforming businesses

Ownership culture drives high performance team

2015 2016 2017 2018 2019 2020

Strategic

direction

Operational

consolidation

Optimization Accelerated growth

and outperformance

Gross margin improvement on track

+120bps y-o-y

Ongoing rigorous total cost productivity

in % of total cost base1)

28.6%

28.9%

29.9%

31.8%

~€3bn

~€4bn

At least 4% of

total cost base

~4%~5%

FY 2014

FY 2015

FY 2016

H1 FY 17

FY 2015

FY 2016

FY 2017e

Divisional productivity programs Functional productivity initiatives

Siemens Operating Model drives change towards a fast learning, innovative and agile company

Sales

Excellence

PLM and

Innovation

Production

and Logistics

Project

Business

Service

Business

1. Total cost base: Sum of cost of sales, R&D and SG&A expenses

   Productivity deep dive: Supply chain management drives competitiveness

   SCM performance indicators Ramp up of Cost & Value Engineering on track

   Cost & Value Engineering (CVE)

   in €bn

   • Cross functional and divisional approach

   • More than 200 CVE-experts operational; >600 planned until 2020

   • Teamcenter Product Cost Management software as backbone

     2.3

     FY 2015

     3.4

     FY 2016

     5.6

     FY 2017e

     >12

     FY 2020

     Target

     Example Power Generation

     Example Energy Management

     Global Value Sourcing

     In % of procurement volume (~€40bn)

     35%
     	26%	27%	29%

     FY 2015

     FY 2016

     FY 2017e

     FY 2020

     Target

     • Project in Bolivia: 22 Heat Recovery Steam Generators for SGT800 turbine

     • Deep analysis of material & manufacturing process with suppliers and e-bidding

     • 26% cost savings versus initial offer

• Benchmark of internal factory with external supplier

• Value flow optimization along lean principles

• ~30% savings potential of manufacturing cost identified

Mobility - Acquisition of HaCon Energy Management - Partnership with SAP

• Implementation of Mobility digitalization strategy to expand intermodal digital offering

• Leading software provider for public transportation,

  mobility and logistics

• Trip planning software used by more than 100 customers in ~25 countries

• ~300 employees

• Closing in first half of CY 2017 expected

• Global reseller agreement between SAP & Siemens

• Siemens Meter Data Management solution EnergyIP combined with SAP for utilities solution

• Address digital end-to-end scenarios for utility customers in an increasingly distributed energy landscape

• Real-time processing of data will change business models

Digital twin across the entire value chain -

for products, for production and complete plants

R&D collaboration to digitalize the adidas

SPEEDFACTORY

Key highlights

Rapid expansion of MindSphere ecosystem

Around 70 million assets and connected sensors

Siemens part manufacturing platform for additive manufacturing announced

(Copyright: adidas AG)

EPS ("all-in")

in €

7.20 - 7.70

6.80 - 7.20

6.74

FY 2016

FY 2017e FY 2017e

as of as of

Q4 FY 16 Q1 FY 17

Note: FY 2016 weighted average number of shares of 809m

Guidance Update

We confirm our expectations for fiscal 2017 presented with our results for Q1 FY 2017.

We continue to expect modest growth in revenue, net of effects from currency translation and portfolio transactions, and anticipate that orders will exceed revenue for a book-to-bill ratio above 1.

We expect the profit margin of our Industrial Business in the range of 11.0% to 12.0%, and basic EPS from net income in the range of €7.20 to

€7.70.

This outlook now includes portfolio changes already closed by the middle of fiscal 2017, particularly the acquisition of Mentor Graphics and the Gamesa merger, which are expected to burden Industrial Business profit margin and basic EPS from net income fiscal 2017.

The outlook continues to exclude charges related to legal and regulatory

matters as well as potential burdens associated with pending portfolio matters.

Siemens

One Siemens

Financial Framework

Growth:

Siemens > most

relevant competitors1)

(Comparable revenue growth)

Capital efficiency

(ROCE2))

15 - 20%

Total cost productivity3) 3 - 5% p.a.

Capital structure

(Industrial net debt/EBITDA)

up to 1.0x

Dividend payout ratio 40 - 60%4)

Profit Margin ranges of businesses (excl. PPA)5)

PG

11 - 15%

EM

7 - 10%

MO 6 - 9%

PD

8 - 12%

SFS6) 15 - 20%

WP 5 - 8%

BT

8 - 11%

DF

14 - 20%

HC

15 - 19%

1. ABB, GE, Rockwell, Schneider, Toshiba, weighted; 2) Based on continuing and discontinued operations; 3) Productivity measures divided by functional costs (cost of sales, R&D, SG&A expenses) of the group; 4) Of net income excluding exceptional non-cash items; 5) Excl. acquisition related amortization on intangibles; 6) SFS based on return on equity after tax

   Siemens Vision 2020 Clear intents for our seven overarching goals

   GOAL

   INTENT

   KPI

   1

   Implement stringent company gover-

   nance with effective support functions

   Live lean governance and

   drive continuous optimization

   €1bn cost savings by FY 2016 achieved

   Continued productivity of 3-5%

   2

   Strengthen portfolio

   3

   Execute financial

   target system

   4

   Expand global management

   Sharpen our business focus in electrification, automation, and digitalization

   Grow our company value

   Get closer to our customers and markets

   Tap growth fields

   > 8% margin in underperforming businesses

   15-20% ROCE

   Growth > most relevant competitors

   > 30% of Division and BU management outside Germany

   5

   Be a partner of choice

   for our customers

   Foster an intimate and trusting partnership

   w

   1

   ≥ 20% improvement in Net Promoter Score

   ith our customers

   6

   Be an employer of choice

   Unleash the full potential of our people

   > 75% approval rating in leadership and diversity in SGES

   7

   Foster

   Ownership Culture

   Ignite pride and passion for Siemens,

   through a new mindset and equity ownership

   ≥ 50% increase in number

   of employee shareholders

   Financial cockpit - Q2 FY 2017

   Orders

   in €bn

   Revenue

   Net Income

   in €bn

   Profit Industrial Business (IB)

   +1%

   (+2%)

   Comp.

   (nom.)

   +5%

   (+6%)

   in €bn

   22.3

   22.6

   19.0

   20.2

   B-t-B

   1.17

   1.12

   Margin

   Q2 FY 16

   +18%

   0%

   1.5

   1.5

   2.1			.4% 12.1%
   11	.4% 10.9%	12

   2.5

   Q2 FY 16

   Q2 FY 17

   Q2 FY 17

   Q2 FY 16 Q2 FY 17 Q2 FY 16 Q2 FY 17

   EPS ("all-in")

   in €

   14.9%
   	13.3%

   ROCE ("all-in")

   0%

   1.78

   1.79

   Q2 FY 16

   Q2 FY 17

   Q2 FY 16

   Capital structure

   ≤1

   15 - 20%

   1.2x

   1.2x

   Q2 FY 16

   Q2 FY 17

   Q2 FY 17

   x.x% Margin as reported

   x.x% Margin excl. severance

   Net debt bridge - Q2 FY 2017

   • SFS Debt

   • Post emp. Benefits

   • Credit guarantees

   • Fair value adj. (hedge accounting)

   Q2

   +23.2

   -10.5

   -0.7

   +0.5

   ΔQ1

   +0.0

   +0.7

   +0.0

   -0.1

   Adj. ind. Net Debt/ EBITDA (c/o)

   1.2x

   (Q1 FY17: 0.7x)

   therein a.o.:

   • Mentor Graphic acquisition -3.5

   • CAPEX -0.5

   -19.8

   Operating Activities

   -26.0

   -13.5

   therein:

   • Δ Inventories -1.0

   • Δ Trade and other receivables +0.1

   • Δ Trade payables +0.5

   -2.9

   -0.2

   Net Debt Q1 2017

   Cash & cash equiv.

   €10.81)

   1.7

   Cash flows from op.

   activities

   (w/o ∆ working capital)

   therein:

   • Dividend paid

   • Interest paid

   -0.4

   ∆ Working

   Capital

   -4.0

   Cash flows from

   investing activities

   -3.5

   Financing and

   other topics

   Net Debt Q2 2017

   Cash & cash equiv.

   €11.21)

   12.5

   Net Debt adjustments Adj. ind. Net Debt

   Q2 2017

2. Including current available-for-sale financial assets

3. SFS Key figures - Q2 FY 2017

   Key financials SFS

   • Assets

   • Income before income taxes

   • Return on Equity after tax

   • Operating and Investing Cash Flow

   Assets

   €27.2bn

   €207m 26.3%

   €171m

   Liabilities and Equity

   €bn €bn

   24.0 1.3

   1.6

   0.2

   27.2

   27.2

   2.7

   23.2

   1.3

   Leases & Loans1)

   Equity Investments

   Other Assets

   & Inventory2)

   Cash

   Total Assets

   Total Liabilities

   & Equity

   Allocated Equity

   Total Debt Accruals

   & Other Liabilities

4. Operating and finance leases, loans, asset-based lending loans, factoring and forfaiting receivables

5. Intercompany receivables, securities, (positive) fair values of derivatives, tax receivables, fixed assets, intangible assets, land and building, prepaid expenses and inventories

   Provisions decreased in Q2, mainly due to slightly increased discount rate assumptions and strong equity performance

   Q2 FY 2017 Key financials - Pension and similar obligations

   in €bn1)	FY 2014	FY 2015	FY 2016	Q1 FY 2017	Q2 FY 2017
   Defined benefit obligation (DBO)2)	(35.6)	(36.8)	(42.2)	(39.0)	(38.4)
   Fair value of plan assets2)	26.3	27.1	28.7	28.1	28.1
   Provisions for pensions and similar obligations	(9.3)	(9.8)	(13.7)	(11.1)	(10.5)
   Discount rate	3.0%	3.0%	1.7%	2.3%	2.3%
   Interest Income	0.8	0.8	0.8	0.1	0.1
   Actual return on plan assets	2.9	0.5	3.3	-0.5	0.3

6. All figures are reported on a continuing basis.

7. Fair value of plan assets including effects from asset ceiling (Q2 2017: €-0.1bn); difference between DBO and fair value of plan assets additionally resulted in net defined benefit assets (Q2 FY 2017: €+0.2bn); Defined Benefit Obligation (DBO), including other post-employment benefit plans (OPEB)

   Note: Beginning with fiscal 2017, we report 'provisions for pensions and similar obligations' as presented in the Consolidated Statements of Financial Position, which also include Siemens` underfunding of other post-employment benefit plans.

   Prior years are presented on a comparable basis.

   Executing Vision 2020 Underperforming businesses on track to meet FY 17 expectations

   Profit

   Margin

   -4%

   -3%

   +1%

   +3%

   ~6%

   >8%

   Footprint adjustments ongoing

   Sharpened scope

   In 6% range

   ~15%

   Under special

   management attention

   FY 2017 Priorities:

   • Clear accountability and tight monitoring

   • Rigorous execution of business plans with focus on sustainable competitiveness; e. g. set up of Mechanical Drives business as standalone company within Siemens

   • Partnering and divestitures remain an option

   Underperforming businesses (~€14.5bn revenue in FY 2016)

   Fiscal

   Year

   2013

   2014

   2015

   2016

   2017e

   2020e

   Fiscal 2017 expectations:

   ~85%

   Executing Vision 2020 - Portfolio strengthening continues along our strategic imperatives

   Integration ahead of plan

   April 16

   March 17

   1| Areas of growth?

   2| Potential profit pool?

   3| Why Siemens?

   Siemens Turbomachinery Equipment GmbH

   Divestment to Colfax announced Cash consideration of €195m

   Closing of acquisition | EV of US$4.5bn

   April 17

   Closing of merger Siemens share 59%

   4| Synergetic value? 5| Paradigm shifts?

   December 16

   Closing date

   Listing preparation announced

   50/50 joint venture closed

   Merger of Siemens Wind Power and Gamesa closed as planned

   Transaction description & rationale Key figures (pro forma, LTM Dec 2016; source prospectus)

   • Merger of the entire Siemens Wind Power business incl. Service with Gamesa closed on April 3, 2017

   • Creation of a global leader in the wind power industry with a

     well balanced geographic footprint and a large installed base

   • New management team appointed with Ignacio Martín as CEO for the transition phase and Andrew Hall as CFO

   • Announcement of Rosa García as non-executive

     Chairwoman of the combined company's Board of Directors

   • New company brand reflects strenghts of united company

   • Ownership: Siemens 59%, Iberdrola ~8%, free float ~33%

   • Global HQ and listing in Spain

   • Siemens to fully consolidate the combined and listed entity

   as of Q3 FY17

   Combined business1)

   Installed Base 75 GW

   Backlog €21bn

   Revenue €11bn

   LTM recurrent EBIT €1.1bn

   LTM recurrent EBIT Margin 9.7%

   Synergies €230m EBIT full impact in year 4 post closing

8. Excluding transaction adjustments (e.g. effects from purchase accounting), incl. Adwen; EBIT adjusted

9. for normalization items (-€6m) and stand-alone effects (+€121m), excluding synergies

   Financial calendar

   May

   May 4-5, 2017

   Roadshow UK (London)

   May 8, 2017

   Roadshow Germany (Frankfurt)

   May 15, 2017

   Healthineers Teach-In call (Webcast)

   May 31, 2017

   Roadshow Canada (Toronto) and U. S. (New York)

   June

   June 16, 2017

   JP Morgan European Capital Goods CEO Conference (London)

   August

   August 3, 2017

   Q3 Earnings Release

   Investor Relations contacts Investor Relations

   Internet:	www.siemens.com/investorrelations
   Email:	investorrelations@siemens.com
   IR-Hotline:	+49 89 636-32474
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