Presentation: "Strong execution drives growth and profitability – earnings outlook raised" (Q3 Analyst Call)

Joe Kaeser, President and CEO | Ralf P. Thomas, CFO Q3 FY 2016 Analyst Call | Munich, August 4, 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.

• Further portfolio optimization and cost savings acceleration
• Clear order increase excl. FX of 10% to €21.1bn
• All-time high backlog of €116bn, book-to-bill at 1.06x
• Clear revenue growth excl. FX of +9% to €19.8bn
• Industrial Business margin expansion to 10.8% (up 130bps)
• 8 out of 9 Divisions in the target margin range
• Net income of €1.4bn; earnings per share of €1.64

  U

• Strong free cash flow of €1.8bn

  Power and Gas (PG)

  Orders

  Revenue

  €bn

  +23%1)

  +22%1)

  3.6

  4.5

  3.3

  4.3

  Q3 FY 15

  Q3 FY 16

  Q3 FY 15

  Q3 FY 16

  €m

  Target

  margin

  11-15%

  Profit & Margin

  480

  285

  9.9%

  8.7%

  Q3 FY 15

  11.2%

  11.1%

  Q3 FY 16

  • Large orders from U. S. and Bolivia drive order growth

  • 16 Large Gas Turbines delivered

  • Strong profit contribution from service including positive inventory measurement effect

    Wind Power and Renewables (WP)

    Orders

    Revenue

    €bn

    +342%1)

    +30%1)

    0.7

    2.7

    1.4

    1.7

    Q3 FY 15

    Q3 FY 16

    Q3 FY 15

    Q3 FY 16

    €m

    Target

    margin

    5-8%

    Profit & Margin

    143

    51

    3.8%

    3.6%

    Q3 FY 15

    8.3%

    8.3%

    Q3 FY 16

  • Major offshore orders in UK (€1.4bn) & Germany (€0.5bn)

  • Strong backlog conversion drives revenue and profit

    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)

    Orders Revenue

    €bn

    Building Technologies (BT)

    Orders Revenue

    €bn

    -6%1)

    3.5

    3.1

    3.0

    +2%1)

    2.9

    1.5

    +10%1)

    1.7

    1.5

    +5%1)

    1.5

    Q3 FY 15

    Q3 FY 16

    Q3 FY 15

    Q3 FY 16

    Q3 FY 15

    Q3 FY 16

    Q3 FY 15

    Q3 FY 16

    Profit & Margin

    €m

    110

    240

    Target €m

    margin

    Profit & Margin

    140

    119

    Target margin

    4.7%

    3.7%

    Q3 FY 15

    8.5%

    8.3%

    Q3 FY 16

    7-10%

    8.7%

    8.0%

    Q3 FY 15

    9.3%

    9.1%

    Q3 FY 16

    8-11%

  • Lower orders in Middle East on tough comps; large UHVDC-Transformer order in China

  • Continued profitability improvements in particular in the Solutions and High Voltage Products business

    n

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

    U restricted © Siemens AG 2016

• Order growth across all regions

• Strong profit conversion and higher margins in product business

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

  Page 5

  Munich, August 4, 2016

  Q3 FY 2016 Analyst Call

  Digital Factory (DF)

  Process Industries and Drives (PD)

  Orders €bn	Revenue	€bn	Orders	Revenue
  +1%1)	+2%1)	-3%1)	-3%1)
  2.6	2.6	2.5 2.5	2.2	2.1	2.42.2
  Q3 FY 15	Q3 FY 16	Q3 FY 15 Q3 FY 16	Q3 FY 15	Q3 FY 16	Q3 FY 15 Q3 FY 16

  Profit & Margin

  €m

  Target €m

  Profit & Margin

  178

  Target

  423

  17.2%

  16.9%

  Q3 FY 15

  395

  16.2%

  15.7%

  Q3 FY 16

  margin

  14-20%

  8.7%

  7.4%

  Q3 FY 15

  101

  6.2%

  4.5%

  Q3 FY 16

  margin

  8-12%

  • Short cycle volume near prior year level with China and

    U. S. still weak

  • CD-adapco integration well underway, causing special effects

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

  Unrestricted © Siemens AG 2016

• Ongoing weak demand in commodity related industries

• Structural challenges take down profit

1

n

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

U restricted © Siemens AG 2016

Ownership culture drives high performance team

2015 2016 2017 2018 2019 2020

Strategic direction

Operational consolidation

Optimization

Accelerated growth and outperformance

April 16

1| Areas of growth?

January 16

Closing of acquisition of CD-adapco for

$970m to pursue industrial software strategy

Merger of Siemens Wind Power with Gamesa announced to create a leading wind power player

Siemens ownership 59%

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

Siemens

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

   Orders

   in €bn

   Revenue

   19.9

   21.1

   18.8

   19.8

   B-t-B

   1.05

   1.06

   Q3 15

   Q3 16

   Q3 15

   Q3 16

   EPS ("all-in")

   in €

   0%

   1.65

   1.64

   Q3 FY 15

   Q3 FY 16

   +9%

   (+6%)

   Comp.

   (nom.)

   +7%

   (+5%)

   Profit Industrial Business (IB)

   in €bn

   +20%

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

   1.8

   Margin

   10.4%

   9.5%

   Q3 FY 15

   14.9%
   	13.7%

   ROCE ("all-in")

   Q3 FY 15

   Net Income

   in €bn

   2.2

   0%

   1.4

   1.4

   11.2%

   10.8%

   Q3 FY 16

   Q3 FY 15

   Q3 FY 16

   Capital structure

   ≤1

   15 - 20%

   1.2x

   1.2x

   Q3 FY 15

   Q3 FY 16

   Q3 FY 16

   Cumulated effects of savings

   €800m -

   €900m

   €850m -

   €950m

   €950m -

   €1,000m

   €400m

   View as of

   Q3 FY 16

   View as of

   Q2 FY 16

   View as of

   Q4 FY 15

   FY 2015

   FY 2016e

   €bn

   Operating Activities

   Q3 ΔQ2

   • SFS Debt +21.1 -0.3

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

   1.2x

   (Q2 FY16: 1.1x)

   • Post emp. Benefits -13.5 -1.9

   • Credit guarantees -0.8 -0.0

   • Hybrid bond +0.9 -0.0

   • Fair value adj. +0.7 -0.1 (hedge accounting)

     therein:

     • Δ Inventories -0.5

     • Δ Trade and other receivables -0.3

     • Δ Trade payables +0.3

     • Δ Billings in excess -0.1

       therein a.o.:

       • CAPEX -0.5

       • Acquisitions of businesses,

         net of cash acquired -0.8

       • Change in receivables from financing activities (SFS) +0.4

         therein a.o.:

         • Net Income +1.4

         • D&A & Impairments +0.7

         • Income taxes +0.5

           therein a.o.:

         • Share buyback -0.1

       -12.7

       -21.8

       3.0

       -0.6

       -0.9

       -0.6

       -21.1

       8.4

       Net Debt Q2 2016

       Cash & cash equiv.

       €7.51)

       Cash flows from op. activities

       (w/o ∆ working capital)

       ∆ Working Capital

       Cash flows from investing activities

       Financing topics

       Net Debt Q3 2016

       Cash & cash equiv.

       €7.61)

       Net Debt adjustments

       Adj. ind. Net Debt Q3 2016

     • Including current available-for-sale financial assets

   Unrestricted © Siemens AG 2016

   Key Financial Data SFS

   • Assets

   • Income before income taxes

   • Return on Equity after taxes

   • Operating and Investing Cash Flow

   €25.1bn

   €139m 17.4%

   €517m

   Assets

   Liabilities and Equity

   €bn €bn

   22.1 1.4

   1.5

   0.2

   25.1

   25.1

   2.5

   21.1

   1.5

   Leases & Loans1)

   Equity Investments

   Other Assets

   & Inventory2)

   Cash

   Total Assets

   Total Liabilities

   & Equity

   Allocated Equity

   Total Debt

   Accruals & Other Liabilities

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

3. 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 Q3, mainly due to ongoing decreased discount rate assumption

in €bn1)	FY 2013	FY 2014	FY 2015	Q1 FY 2016	Q2 FY 2016	Q3 FY 2016
Defined benefit obligation (DBO) on pension benefit plans	(32.6)	(35.0)	(36.3)	(36.7)	(38.4)	(40.8)
Fair value of plan assets	24.1	26.5	27.3	27.4	27.5	28.1
Funded status of pension plans	(8.5)	(8.5)	(9.0)	(9.3)	(10.9)	(12.7)
DBO on other post-employment benefit plans (mainly unfunded)	0.6	0.5	0.5	0.5	0.5	0.6
Discount rate2)	3.4%	3.0%	3.0%	3.0%	2.4%	1.9%
Interest Income2)	0.8	0.8	0.8	0.2	0.2	0.2
Actual return on plan assets2)	1.3	2.9	0.5	0.2	0.9	1.0

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.

August

August 4, 2016

September

Q3-Earnings Release

September 9, 2016

Morgan Stanley Conference (London)

September 19, 2016

Goldman Sachs/Berenberg Conference (Munich)

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