Presentation: "Q2 – Continuing growth in orders, revenue and profitability" (Q2 Analyst Conference)

15891281-a519-49e6-8b86-f7e5eed25b63.pdf Q2 - Continuing growth in orders, revenue and profitability

Joe Kaeser, President and CEO | Ralf P. Thomas, CFO Q2 FY 2016 Analyst Conference | London, May 4, 2016

Unrestricted © Siemens AG 2016

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.

• Execution of Vision 2020 fully on track
• Further portfolio optimization and cost savings acceleration
• Clear order increase of 7% to €22.3bn (excl. FX +10%)
• Record backlog of €115bn, book-to-bill at excellent 1.17x
• Accelerated revenue growth of 5% (excluding FX +7%)
• Industrial Business margin expansion to 10.9% (up 190bps), supported by a positive effect of 60 bps related to Iran business
• Net Income of €1.5bn; Earnings per share of €1.78
• Strong Free Fash Flow of €0.8bn

  U

  nrestricted © Siemens AG 2016

  Page 3

  London, May 4, 2016

  Q2 FY 2016 Analyst Conference

  Q2 FY 2016 y-o-y Orders

  Revenue

  Europe/C.I.S./Africa/ME

  (therein Germany) -43%

  20%

  7%

  -7%

  Americas

  (therein U.S.)

  Asia/Australia

  (therein China)

  -16%

  -5%

  7%

  13%

  -8%

  3%

  10%

  1%

• Change is adjusted for currency translation and portfolio effects

  Orders Revenue

  • UK & Africa benefitting from large Energy orders

  • Short cycle in Germany slow

  • UK, Netherlands, Turkey with substantial growth

  • Energy related projects drive growth in Middle East

  Europe, MEA, CIS

  Americas • Lower large project volume

  • Brazil with continued weakness

    • Broad based growth in the U.S. despite weak Oil & Gas demand

    • China orders up mainly on EM

    • Industrial demand in China still sluggish

    • India with substantial growth driven by PG

    Asia, Australia

    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

  n

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

  U restricted © Siemens AG 2016

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

• Larger share of high margin product and service business

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

  Page 7

  London, May 4, 2016

  Q2 FY 2016 Analyst Conference

  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

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

  Unrestricted © Siemens AG 2016

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

  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

1

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

Unrestricted © Siemens AG 2016

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

   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

   -99 22

   2,115

   226

   -141

   -167 -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. Net

   Ops. Income

   all in

   Unrestricted © Siemens AG 2016

   Expectations for H2 FY 2016

   • 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

Broad based improvements of free cash flow

84

69

32

9

Free cash flow ("all-in") Divisional free cash flow in Q2 FY 16

€m

+1,053

€m

+165

812

+193

402

332 326

260

237

168 168

+262

178 184

+469

67

97

-72

-241

Q2 FY 15 Q2 FY 16

-385

H1 FY 15

H1 FY 16

PG

-230

WP

EM

BT

MO

DF

PD

HC

Q2 FY 2015

Q2 FY 2016

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

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

   April 16

   1| Areas of growth?

   January 16

   2| Potential profit pool?

   Closing of divestment to AtoS

   Closing of acquisition of CD-adapco for

   $970m to pursue industrial software strategy

   3| Why Siemens?

   4| Synergetic value? 5| Paradigm shifts?

   January 16

   Closing divestment of remaining assets to EQT for €300m

   Strategic asset combination

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

   Unrestricted © Siemens AG 2016

   Unrestricted © Siemens AG 2016

   Cooperation in field of Hybrid Electric Propulsion Systems

• Launch of joint long-term project to electrify aviation

• Demonstrate technical feasibility by 2020

• Develop prototypes for various propulsion systems & power classes

• Significant joint mid three digit €million R&D investment

• Joint development team of ~200 employees

• Drastic reduction of CO2-emissions

• Establish hybrid electric propulsion systems as future business

  Page 15

  London, May 4, 2016

  Q2 FY 2016 Analyst Conference

  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

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.

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

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%

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

-62%

3.9

1.5

Capital structure

≤1

BSH and Audiology1)

€3.61

BSH and

-62%

4.70

15 - 20%
14.9%

Audiology 35%-points

1.1x
	0.3x

45.5%

1.78

Q2 FY 15

Q2 FY 16

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

€bn

Operating Activities

Q2 ΔQ1

• SFS Debt +21.4 -0.1

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

1.1x

(Q1 FY16: 0.8x)

• Post emp. Benefits -11.7 -1.6

• Credit guarantees -0.8 +0.1

• Hybrid bond +0.9 -0.0

• Fair value adj. +0.8 -0.1 (hedge accounting)

  therein:

  • Δ Inventories -0.7

  • Δ Trade payables +0.1

  • Δ Billings in excess +0.1

  • Δ Trade and other receivables -0.1

    therein a.o.:

    • CAPEX -0.4

    • Change in receivables from financing activities (SFS) -0.6

    • Purchase of current available-

      for-sale financial assets -0.3

      -20.1

      therein a.o.:

      • Net Income +1.5

      • D&A & Impairments +0.7

      • Income taxes paid -0.5

    1.7

    -0.5

    -0.7

    therein a.o.:

    • Dividend paid to SAG Shareholders -2.8

    • Share Buyback -0.1

    • Interest paid -0.2

    -2.3

    -21.8

    10.6

    -11.2

    Net Debt Q1 2016

    Cash & cash equiv.

    €11.71)

    Cash flows from op. activities

    (w/o ∆ working capital)

    ∆ Working Capital

    Cash flows from investing activities

    Financing topics

    Net Debt Q2 2016

    Cash & cash equiv.

    €7.51)

    Net Debt adjustments

    Adj. ind. Net Debt Q2 2016

    1) Including current available-for-sale financial assets

    Unrestricted © Siemens AG 2016

    Key Financial Data SFS

• Assets

• Income before income taxes

• Return on Equity after tax

• Operating and Investing Cash Flow

€25.3bn

€226m 31,8%

- €678m

Assets

Liabilities and Equity

€bn €bn

22.4 1.3

1.5

0.2

25.3

25.3

2.5

21.4

1.4

Leases & Loans1)

Equity Investments

Other Assets

& Inventory2)

Cash

Total Assets

Total Liabilities

& Equity

Allocated Equity

Total Debt Accruals & Other Liabilities

1. Operating and finance leases, loans, asset-based lending loans, factoring and forfeiting receivables

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

Funded status for Siemens' pension plans increased in Q2, mainly due to decreased discount rate assumption

in €bn1)	FY 2013	FY 2014	FY 2015	Q1 FY 2016	Q2 FY 2016
Defined benefit obligation (DBO) on pension benefit plans	(32.6)	(35.0)	(36.3)	(36.7)	(38.4)
Fair value of plan assets	24.1	26.5	27.3	27.4	27.5
Funded status of pension plans	(8.5)	(8.5)	(9.0)	(9.3)	(10.9)
DBO on other post-employment benefit plans (mainly unfunded)	0.6	0.5	0.5	0.5	0.5
Discount rate2)	3.4%	3.0%	3.0%	3.0%	2.4%
Interest Income2)	0.8	0.8	0.8	0.2	0.2
Actual return on plan assets2)	1.3	2.9	0.5	0.2	0.9

1. All figures are reported on a continuing basis and according to IAS 19 (revised 2011).

2. All figures are based on the post-employment benefits in total.

May

May 4, 2016

Q2-Earnings Release and Roadshow UK (London)

May 9, 2016

June

Roadshow Germany (Frankfurt)

June 1, 2016

Bernstein Conference (New York)

June 9, 2016

JP Morgan Conference (London)

June 14, 2016

Exane Conference (Paris)

June 28 - 29, 2016

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

Investor Relations

Internet:	www.siemens.com/investorrelations
Email:	investorrelations@siemens.com
IR-Hotline:	+49 89 636-32474
Fax:	+49 89 636-32830