Presentation: "Execution of Vision 2020 fully on track" (Exane European CEO Conference)

70417d7f-5de1-4d99-b7cd-3e0accee839c.pdf Execution of Vision 2020 fully on track

Ralf P. Thomas, CFO

Exane European CEO Conference | Paris, June 14, 2016

Unrestricted © Siemens AG 2016

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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.

Value

Strengthen core

• Stringent capital allocation

  Scale up

• Innovation initiative

• Customer and market focus

• Digitalization at work

  Drive performance

  • Cost reduction support functions (€1bn)

  • Global footprint optimization

  • Fix underperforming businesses

Ownership culture drives high performance team

2015 2016 2017 2018 2019 2020

Strategic direction

Operational consolidation

Optimization Accelerated growth

and outperformance

Executing Vision 2020 Capital allocation along strategic imperatives

April 16

1| Areas of growth?

January 16

Closing of acquisition of CD-adapco for

$970m to pursue industrial software strategy

2| Potential profit pool? 3| Why Siemens?

4| Synergetic value? 5| Paradigm shifts?

Closing of divestment to AtoS

January 16

Closing divestment of remaining assets to EQT for €300m

Strategic asset combination

Unrestricted © Siemens AG 2016

50/50 joint venture for powertrain in E-cars announced

Note: Figures based on Industrial Business (Growth FY 2015 vs. FY 2014 rebased)

Digital Enterprise - Key innovations

1

2

3

4

Enhance Industrial software and automation portfolio

• Integration of CD-adapco flow simulation

• Significant expansion of TIA-Portal and COMOS Software suite

  Expand Industrial communication portfolio

  Provide holistic industrial security concept Drive Industrial services

• Launch of Mindsphere platform - the Siemens

  cloud for Industry

  Productivity Energy efficiency

  Sinalytics

  Common technology platforms

  EM WP

  PG

  DF PS

  Sinalytics

  Customer value through

  Data analytics

  Sinalytics

  Data visualization

  Modeling/Analysis

  Data management

  Data integration

  PD applications MO

  HC BT

  Cloud/Connectivity Cyber Security

  Availability Security

  Unrestricted © Siemens AG 2016

  MindSphere - Siemens Cloud for Industry

  Data analytics Data visualization

  MindApps

  by Siemens by OEMs by end-customers

  Optimize the performance of assets, energy and resource consumption, maintenance, services …

  MindSphere - Siemens Cloud for Industry

  Data management

  Data storage Connectivity

  10	01	10	01
  11	00	11	00

  01 00

  01 11

  01 00

  01 11

  10	01	10	01
  11	00	11	00

  01 00

  01 11

  01 00

  01 11

  1

  Execution of Vision 2020 is well on track

  2

  Accelerated execution of €1bn cost reduction measures

  3

  Underperforming businesses show clear improvement

  4

  Stringent capital allocation along strategic imperatives

  5

  Focus on digital opportunities

  We confirm our financial guidance for fiscal 2016, although the market environment for our high margin short cycle business may not pick up materially in the second half.

  We still anticipate further softening in the macroeconomic environment and continuing complexity in the geopolitical environment in fiscal 2016.

  Nevertheless, we expect moderate revenue growth, net of effects from currency translation. We anticipate that orders will materially exceed revenue for a book-to-bill ratio clearly above 1.

  For our Industrial Business, we expect a profit margin of

  10% to 11%.

  We expect basic EPS from net income in the range of €6.00 to €6.40.

  Additionally, it excludes charges related to legal and regulatory matters.

  One Siemens Financial Framework Clear targets to measure success and accountability

  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%

• 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

  Underperforming businesses show improvement

  Underperforming businesses

  Unconsolidated Revenue FY 2015 in €bn

  2016e

  ~15

  Underperforming businesses as of Q2 FY 2015

  ~1.2

  Siemens Compressors

  Reverse integration into

  ~14

  Remaining underperforming businesses

  ~3%

  Fiscal Year	2013	2014	2015	2017e	2020e
  Margin	-4%	-3%	+1%	~6%	>8%

  • Tight monitoring of business plans

  • Footprint optimization

  • Sharpening business scope

  • Partnering and divestitures an option

• Supply chain management - BOLD moves program 2020

  'Traditional' procurement levers

  • Contract management & pooling

  • Negotiations excellence

  • Digitalization - analytics & process optimization

  • Global value sourcing (GVS)

  +

  Cross-functional levers

  • Demand/spend management

  • Core/non-core and footprint

  • Supplier innovation & optimization

  • Cost & value engineering1) (CVE) incl. design-to-cost

  GVS share of total purchasing volume (~€39bn)

  CVE coverage of total cost base

  Target: GVS share >1/3

  Target: Significant increase of CVE-Coverage

  €bn

  26%

  27%

  35%

  ~12

  FY 2015

  FY 2016e

  FY 2020 Target

  2.3

  FY 2015

  3.2

  FY 2016e

  FY 2020 Target

  Unrestricted © Siemens AG 2016

  1) Cost and Value Engineering: Cost optimized design solutions in early phase including cost transparency along entire value chain

  Cumulated effects of savings

  €800m -

  €900m

  €850m -

  €950m

  €1bn

  €1bn

  €400m

  €150m -

  €200m

  FY 2015

  FY 2016e

  FY 2017e

  View on distribution of savings as of Q4 FY 2015

  View on distribution of savings as of Q2 FY 2016

  Orders

  in €bn

  Revenue

  Q2 15

  Q2 16

  Q2 15

  Q2 16

  Q2 FY 15

  Q2 FY 16

  Q2 FY 15

  Q2 FY 16

  +7%

  (+7%)

  Comp.

  (nom.)

  +5%

  (+5%)

  20.8

  22.3

  18.0

  19.0

  B-t-B

  1.15

  1.17

  Profit Industrial Business (IB)

  in €bn

  +28%

  2.1

  Margin

  1.7

  9.6%

  9.0%

  11.4%

  10.9%

  EPS ("all-in")

  in €

  ROCE ("all-in")

  BSH and Audiology

  €3bn

  Net Income

  in €bn

  3.9

  +~60%

  1.5

  Capital structure

  ≤1

  BSH and Audiology1)

  €3.61

  BSH and

  4.70

  15 - 20%
  14.9%

  Audiology 35%-points

  1.1x
  	0.3x

  45.5%

  +~60%

  1.78

  Q2 FY 15

  Q2 FY 16

  1) BSH and Audiology EPS-disposal-effects for FY 2015: €3.66

  x.x% Margin as reported x.x% Margin excl. severance

  Q2 FY 15

  Q2 FY 16

  Q2 FY 15

  Q2 FY 16

  Megadeals in Egypt - execution on track

• €3.1bn orders for Burullus and New Capital power plants incl. long-term service contract

  • Fast track projects for 9.6 GW (16 H-class turbines)

  • Financial close in March 2016

• Project execution of Beni Suef - 4 out of 8 H-class turbines

  shipped

• Comprehensive transmission network study ongoing

• Contract for six substations signed

• Training of 600 engineers and technicians has started

  Major offshore order in Wind Power

  7 MW Turbine (SWT-7.0-154)

  East Anglia ONE project

• Customer: ScottishPower Renewables

• 714MW total capacity

• Largest order to date for 7MW

  direct drive turbine

• Five years service contract

• Order volume ~€1.2bn

• Start of commercial operation in 2020

• Delivery out of new Hull and

  Cuxhaven factories in 2019

  +15%1)

  6.2

  Power and Gas (PG)

  €bn

  Orders

  +86%1)

  Revenue

  3.1

  3.1

  3.9

  Q2 FY 15

  Q2 FY 16

  Q2 FY 15

  Q2 FY 16

  Profit & Margin

  €m

  Target

  margin

  11-15%

  535

  382

  14.1%

  12.3%

  Q2 FY 15

  14.9%

  13.6%

  Q2 FY 16

  Incl. Iran effect:

  Revenue: €174m Profit: €130m Margin: ~280bps

  • Ramp up of Egypt orders drive revenue; 16 LGTs shipped

  • Positive revenue and profit effects driven by ending or

    easing of Iran sanctions

    Wind Power and Renewables (WP)

    Orders

    Revenue

    €bn

    +60%1)

    +18%1)

    1.4

    2.1

    1.3

    1.5

    Q2 FY 15

    Q2 FY 16

    Q2 FY 15

    Q2 FY 16

    €m

    Profit & Margin

    137

    -3.4% 9.6%

    -3.5% 9.4%

    Target

    margin

    5-8%

    -44

    Q2 FY 15

    Q2 FY 16

  • Major offshore order in UK incl. service of ~€1.2bn

  • Significant revenue increase on high backlog conversion

  • Improved operations drive margin

  • 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)

    Orders Revenue

    €bn

    Building Technologies (BT)

    Orders Revenue

    €bn

    -0%1)

    3.1

    3.0

    2.8

    -1%1)

    2.7

    1.5

    +1%1)

    1.5

    1.4

    +1%1)

    1.4

    Q2 FY 15

    Q2 FY 16

    Q2 FY 15

    Q2 FY 16

    Q2 FY 15

    Q2 FY 16

    Q2 FY 15

    Q2 FY 16

    Profit & Margin

    €m

    93

    172

    Target €m

    margin

    Profit & Margin

    111

    95

    Target margin

    3.4%

    3.3%

    Q2 FY 15

    6.8%

    6.3%

    Q2 FY 16

    7-10%

    6.8%

    6.6%

    Q2 FY 15

    7.9%

    7.7%

    Q2 FY 16

    8-11%

  • Double digit order growth in Europe/CAME and Asia/ Australia offset by Americas due to tough comparables

  • Profitability improvements in solutions, transformer and high voltage products

  • Order growth in Germany and Middle East, weaker demand from China

  • Larger share of high margin product and service business

    Digital Factory (DF)

    Orders

    Revenue

    €bn

    +1%1)

    +0%1)

    2.6

    2.6

    2.4

    2.4

    Q2 FY 15

    Q2 FY 16

    Q2 FY 15

    Q2 FY 16

    Profit & Margin

    €m

    343

    363

    Q2 FY 15

    Q2 FY 16

    14.5%

    14.1%

    15.5%

    15.1%

    Target

    margin

    14-20%

  • Top line growth in the U. S. more than offset by lower volume in China and Germany

  • Profit increase mainly driven by Factory Automation

    Process Industries and Drives (PD)

    Orders

    Revenue

    €bn

    -2%1)

    -3%1)

    2.4

    2.3

    2.2

    2.1

    Q2 FY 15

    Q2 FY 16

    Q2 FY 15

    Q2 FY 16

    Profit & Margin

    €m

    103

    4.9%

    4.6%

    89

    4.5%

    4.1%

    Target

    margin

    8-12%

    Q2 FY 15

    Q2 FY 16

  • Ongoing weak demand in commodity-related industries

  • Growth in wind power component business

  • Structural challenges weigh on profit

    Mobility (MO)

    Orders Revenue

    €bn

    Healthcare (HC)

    Orders Revenue

    €bn

    -50%1)

    3.8

    1.8

    1.8

    +6%1)

    1.9

    3.2

    +2%1)

    3.2

    3.2

    +5%1)

    3.3

    Q2 FY 15

    Q2 FY 16

    Q2 FY 15

    Q2 FY 16

    Q2 FY 15

    Q2 FY 16

    Q2 FY 15

    Q2 FY 16

    Profit & Margin

    €m

    Target €m

    Profit & Margin

    157	153	margin	526	margin
    8.7%	8.2%	6-9%	16.9%	17.2%	15-19%
    8.6%	8.0%	16.4%	16.7%
    Q2 FY 15	Q2 FY 16	Q2 FY 15	Q2 FY 16

    555

    Target

  • Orders down on tough comparables

  • Profitable revenue growth driven by stringent backlog

    execution of large projects

  • Clear order and revenue growth in the U.S.

  • Revenue increase and strong earnings mainly driven by Diagnostic Imaging

Below Industrial Business: Strong results from SFS, D/O-gain from sale of remaining financial assets from hearing aid business

Below Industrial Business (Q2 FY 2016)

in €m

Expectations for H2 FY 2016

2,115

226

-99

22

-141

-167

• SFS: H2 in line with prior year

• CMPA: Negative impact H2 smaller than prior year, however, volatility remains

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

• Corporate Items: H2 in line with prior year

• Pension: ~-€125m per quarter

• PPA: H2 in line with H1

• Elimination, Corporate Treasury, Other:

  H2 in line with prior year, including higher interest expenses

• Tax: Expect 26 - 30% for FY 2016

• Discont. Operations: Limited impact in H2

-51

Therein: Negative effect from ARO Hanau

and Primetals JV

-510

1,394

86 1,480

Therein:

€92m effect from an at-equity investment

Tax rate

@27%

Therein: Sivantos

€60m

IB SFS

CMPA

SRE

Corp. Items

& Pen.

PPA Elim. Corp. Treas., Other

Tax

Inc. Cont. Ops

Disc. Ops.

Net Income

all in

June

June 14, 2016

Exane Conference (Paris)

June 28 - 29, 2016

Capital Market Day "Energy and Oil & Gas" (Houston)

July /

August

August 4, 2016

Q3-Earnings Release

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