Siemens : Presentation: "Strong start into the fiscal year – earnings outlook raised" (Q1 Analyst Call)

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Strong start into the fiscal year - earnings outlook raised

Analyst Call | Munich, January 26, 2016

Joe Kaeser, President and CEO Ralf P. Thomas, CFO

© Siemens AG 2016

Notes and forward-looking statements

" " " "

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.

3D Design

Year of acquisition

2007

CAD Software NX Design, Nastran and PLM Software Teamcenter

• Streamlines and accelerates the product development process in a

  collaborative environment

• Includes a modern, multi-discipline CAE environment

• Teamcenter as collaboration platform enables consistent data management throughout the whole value chain

osed loop Perfor- mance analysis

2012

Simulation & Testing: LMS Virtual.Lab, Imagine.Lab, Test.Lab

• Behavioral simulation: 1D cross-discipline simulation, like mechanical and electrics, e.g. fuel economy & range simulation for hybrid vehicles

• 3D mechanical simulation: e.g. stiffness, noise, vibration

  Cl

• Testing: Solutions for prototype testing (stationary & mobile)

  
  

  
  

  Leading Portfolio

  2016

  Multidisciplinary Design Exploration: STAR-CCM+ and others

  
  

  Coachella

  Multidisciplinary Engineering Simulation: primarily computational fluid dynamics (CFD) for analysis of fluid flow, heat transfer, and fluid-structure interaction

  Design Exploration: Engineering simulation workflows and design optimization algorithms to automatically drive product design, e.g. for reduction of weight & cost

  
  

  © Siemens AG 2016

  Page 3

  Munich, January 26, 2016

  Q1 FY 2016, Analyst Call

  
  

  
  

  Company description and strategic rationale

  Key customer industries (% of billings FY 2015)

  • CD-adapco is a leading provider of Computational Fluid Dynamics (CFD) simulation software, a sub- market of CAE, reducing time-to-market by up to 35%

  • Fast growing market; CD-adapco grew revenues by

    >12% CAGR (constant currency) over last three years

  • Profitability is SW-typical double digit

  • Modern SW-architecture and strong customer base

  • Founder-led and privately held, established 1980, headquarters in Melville, NY, US

Key figures Enterprise Value $970m

Revenues ~$200m

(thereof >80% recurring)

Synergies Mid-double digit €m in year 5

Employees ~900 (therein ~280 in R&D)

Customers ~3,200

Users ~19,000

Expected closing H2 FY 2016

Ground Transportation (52%)

14 of top 15 1)

Energy (9%)

9 of top 10 1)

Aerospace & Defence (9%)

All top 10 1)

Marine (7%)

9 of top 10 1)

1. Number of industry leaders using CD-adapco software

   
   

   Q1 - Strong start into the fiscal year

   
   

   • Stringent execution of Vision 2020 and further portfolio optimization

     
     

     • Acquisition of CD-adapco announced

       
       

     • Closing of Unify and disposal of Sivantos assets in January

       
       

   • Strong order increase of 27% to €22.8bn (excluding FX up by 22%)

     
     

   • Backlog at €114bn; book to bill at healthy 1.21x

     
     

   • Revenue up 8% at €18.9bn (excluding FX 4% higher)

     
     

   • Solid Industrial Business margin of 10.4% (up 20bps)

     
     

   • Net Income of €1.6bn (+42%)

     
     

     Power and Gas (PG) Wind Power and Renewables (WP)

     
     

     
     

     €bn

     Orders Revenue

     +28%1)

     
     

     €bn

     Orders Revenue

     
     

     5.5

     3.8

     
     

     2.9

     -3%1)

     
     

     3.7

     
     

     1.3

     +36%1)

     
     

     1.9

     
     

     1.5

     
     

     -20%1)

     
     

     1.2

     
     

     Q1 FY 15

     Q1 FY 16

     Q1 FY 15

     Q1 FY 16

     Q1 FY 15

     Q1 FY 16

     Q1 FY 15

     Q1 FY 16

     
     

     Profit & Margin

     €m

     
     

     Target €m

     Profit & Margin

     
     

     Target

     331349

     margin

     80 margin

     51

     11.5	10.4 11-15%	5.4	4.3
     11.3%	9.5%	5.4%	4.2%

     5-8%

     
     

     Q1 FY 15

     Q1 FY 16

     Q1 FY 15

     Q1 FY 16

     
     

     20 Large Gas Turbines booked;

     €1.6bn Egypt order incl. service

     • Margin decline on weaker solution and distributed generation business, strong service contribution

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

Major offshore order incl. service in UK

• Revenue down due to timing effects related to project execution

We 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%. After a strong start into the fiscal year, we raise our previous expectation for basic EPS from net income in the range of

€5.90 to €6.20 to the range of €6.00 to €6.40.

This outlook assumes that momentum in the market environment for our high-margin short- cycle businesses will pick up in the second half of fiscal 2016.

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

One Siemens Financial Framework - Clear targets to measure success & accountability

Siemens

Growth:

One Siemens Financial Framework

Capital efficiency

(ROCE2))

Capital structure

(Industrial net debt/EBITDA)

Siemens > most 15-20% up to 1.0x relevant competitors1)

(Comparable revenue growth)

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

Financial Cockpit

Orders

Revenue

Profit Industrial Business (IB)

Net Income

in €bn

+19%

(+27%)

Comp.

(nom.)

+1%

(+8%)

in €bn

+10%

in €bn

22.8

18.0

17.4

18.9

1.8

10.4%

2.0

10.7%

1.1

+42%

1.6