Siemens 2017 - employer of choice and reliable partner · PDF filethe chapter Risks in the...

The CompanyApril 2018

siemens.com© Siemens AG 2018. All rights reserved.

© Siemens AG 2018April 2018 siemens.com

Disclaimer

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 expectationsand 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 the applicable financial reporting framework not clearly defined – supplemental financial measures that are or may be alternative performance measures (non-GAAP-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 the applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe similarly titled alternative performance 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.

All information is preliminary.

Restricted © Siemens AG 2017

170 years of Siemens


Milestones of a 170-year history

1866The dynamo makes electricity part of everyday life

1816 – 1892Company founder, visionary and inventor

1847 Pointer telegraph lays the foundation of Siemens as a global company

1925Siemens electrifies the Irish Free State with a hydroelectric power plant

1975Breakthrough of high-voltage direct current (HVDC) transmission

2010TIA Portal takes automation a stage further

2017MindSphere, the cloud-based operating system for the Internet of Things

2012Test operation of the world’s largest rotor for offshore wind turbines

1983First magnetic resonance imaging scanner goes into operation

1959SIMATIC makes Siemens a leader in automation technology

Werner von Siemens Siemens innovations over the past 170 years


Industrial Business

(in millions of €)

Power and Gas

Energy Management

Building Technologies

Mobility DigitalFactory

Process Industries and Drives

SiemensHealthineers6

Siemens GamesaRenewable Energy6

FinancialServices

Orders 3,064 2,805 1,688 3,219 3,526 2,262 3,356 2,913Revenue 3,152 2,816 1,555 2,180 3,013 2,025 3,196 2,127Profit 238 187 151 226 606 148 541 110 1734

Profit margin 7.6% 6.7% 9.7% 10.4% 20.1% 7.3% 16.9% 5.2% 21.8%5

First quarter of fiscal 2018

Key figures

Results of operations

Q1 2018 Q1 2017

LiquidityFree cash flow2 872 714

Employees (in thousands) Dec. 31, 2017Total3 376

Germany 118Outside Germany 258

(Continuing operations; in millions of €except where otherwise stated) Q1 2018 Q1 2017 Change in %

VolumeOrders 22,477 19,706 7%1

Revenue 19,823 19,213 1%1

Profitability and capital efficiencyNet income2 2,211 1,980 12%Return on capital employed (ROCE)2 17.9% 19.2%

4 Income before income taxes; 5 Return on equity (RoE; after taxes); 6 Strategic Unit

Note: With beginning of fiscal 2018 Siemens adopted the accounting standard IFRS 15 (Revenue from Contracts with Customers). Prior-year information is presented on a comparable basis1 Excluding currency translation and portfolio effects; 2 Continuing and discontinued operations; 3 With beginning of fiscal 2018 part time employees are included to the full extent rather than proportionally


Fiscal 2017

Key figures(Continuing operations; in millions of €except where otherwise stated) Fiscal 2017 Fiscal 2016 Change in %

VolumeOrders 85,669 86,480 (2)%1

Revenue 83,049 79,644 3%1

Profitability and capital efficiencyNet income2 6,179 5,584 11%Return on capital employed (ROCE)2 13.5% 14.3%

LiquidityFree cash flow2 4,769 5,476

Employees (in thousands) Sept. 30, 2017 Sept. 30, 2016

Total3 377 356Germany 118 117Outside Germany 259 239

Asia, Australia 19%

Americas 28%

Europe, CIS4, Africa,Middle East

(without Germany) 39%

Germany 13%

Power and Gas 18%Siemens Healthineers 16%2

Process Industries and Drives 11%

Digital Factory 13%

Mobility 10%

Energy Management 15%

Building Technologies 8%

Siemens GamesaRenewable Energy 9%2

Revenue by Region

Revenue by Industrial Business

1 Excluding currency translation and portfolio effects; 2 Strategic Unit; 3 With beginning of fiscal 2018 part time employees are included to the full extent rather than proportionally. Prior-year information is presented on a comparable basis; 4 Commonwealth of Independent States


Global presence

Europe (excluding Germany), CIS3, Africa, Middle East Share of total

worldwide

Revenue1 €32.2 billion 39%Employees2 113,000 30%

Germany Share of total worldwide


Americas Share of total worldwide


Asia, Australia Share of total worldwide


1 In FY 2017; by customer location2 As of September 30, 2017. With beginning of FY 2018 part time employees are included to the full extent. Prior-year information is presented on a comparable basis 3 Commonwealth of Independent States

All figures refer to continuing operations.

Close to customers all over the world


Megatrends that are changing our world

DigitalizationBy 2020, the global volume of data will soar to 44 zettabytes, and 50 billion devices will be connected.

Source: IDC, The Digital Universe of Opportunities: Rich Data and the Increasing Value of the Internet of Things, April 2014; Dave Evans (Cisco): The Internet of Things, How the Next Evolution of the Internet Is Changing Everything, April 2011



GlobalizationIn the time span of 20 years, global export volume has more than quadrupled. In 2016, goods worth US$16 trillion were exported.

Source: Statista, 2017



UrbanizationBy 2050, nearly 70 percent of the world population will live in cities; today it‘s 54 percent.

The population of cities worldwide is growing at a rate of about 50 million people per year. Accordingly, investments in urban infrastructure are booming.

Source: United Nations, World Urbanization Prospects. The 2014 Revision, New York, published 2015



Demographic changeBy 2050, the world population will grow from 7.3 billion today to 9.7 billion.

The average life expectancy will be 83 years in 2050; today it’s 73 years.

Source: United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision, Key Findings and Advance Tables. Working Paper No. ESA/P/WP.241; Statista: Weltbevölkerung, 2016



Climate changeAt the UN Climate Conference in Paris in 2015, almost all nations of the world agreed to limit anthropogenic global warming to well under 2º centigrade.

In the summer of 2017, Earth‘s atmosphere had the highest concentration of carbon dioxide in 800,000 years.

Source: Earth System Research Laboratory, NOAA, 5. Oktober, 2017


Our claim “Ingenuity for life”

“Ingenuity” stands for innovation, engineering and genius. For us, it also includes unity: We are united in our efforts, and we are committed to partnering with our customers.

“For life” relates to our role in society: to make real what matters.

“Ingenuity for life” is therefore our unrelenting drive and promise to create value for customers, employees and society.


What we stand for – our mission


Vision 2020 – our company’s strategy program

Foster ownership culture and leadership based on common values

2015 2016 2017 2018 2019 2020

Value

Scale up

Drive performance

Strengthen core

Strategicdirection

Accelerated growthand outperformance

Operationalconsolidation Optimization


Vision 2020 – seven goals

Implement stringent company gover-nance with effective support functions

FosterOwnership Culture

Be an employer of choice

Expand global management

Strengthen portfolio

Be a partner of choicefor our customers

Execute financialtarget system

1234567

GOAL

Live lean governance and drive continuous optimization

Ignite pride and passion for Siemens, through a new mindset and equity ownership

Unleash the full potential of our people

Get closer to our customersand markets

Sharpen our business focus inelectrification, automation, and digitalization

Foster an intimate and trusting partnership with our customers

Grow our company value

INTENT

1

€1bn cost savings by FY 2016 achieved, continued productivity of 3-5%

≥ 50% increase in number of employee shareholders

> 75% approval rating in “leadership” and “diversity” in SGES

> 30% of Division and BU management outside Germany

≥ 20% improvement in Net Promoter Score

15-20% ROCE

Tap growth fields

KPI

Growth > most relevant competitors

> 8% margin in underperforming businesses


Our focus is on E-A-D –strong growth in digitalization

Note: Figures based on Industrial Business; SGRE as of April 2017 1 Growth FY 2016 to FY 2017, rebased; 9% growth for Siemens software excludes Mentor Graphics

Digitalization Leader

Automation Global No. 1

Electrification Leader

Market CAGR FY 2018 – 2022

~+8%

~+3%

+1-3%

Digital services

~1.2 billion €

Siemens software

~4.0 billion €

Revenue FY 2017

Enhanced automation

~19 billion €

Enhanced electrification

~43 billion €

Classic services

~17 billion €

MindSphere+20 %1

Strategic direction

Expand No. 1 position and utilize it for digitalization

Differentiate through expanded offerings with automation and digitalization

Strengthen leadership with a combination of software, platforms, and services


Successful execution of digitalization strategy

5.2 billion €Revenue FY 2017

+20%FY 2017 growth rate

MindSphere

Siemens software and digital services


Digital twin (products and infrastructure)

Our digital portfolio

Siemens software Siemens digital services

Digitally optimized automation

MindSphere – the IoT operating system

Digitally optimized electrification

Dataanalysis

Cloud andplatforms

Cybersecurity

Securenetworking

Simulationtools

Artificialintelligence

ServiceOperateDesign

© Siemens AG 2018January 2018 siemens.com

Research and development –we‘re investing more and sharpening our focus

Additive manufacturing

Connected (e)mobility

Autonomous robotics

Energy storage

Distributed energy systems

Cybersecurity

Data analytics, artificial intelligence

Blockchain applications

Connectivity and edge devices

Future of automation

Materials

Power electronics

Simulation and digital twin

Software systems and processes

4.05.2 ~5.6

FY 2014 FY 2017 FY 2018e

R&D spendingin billions of €

~+40%


Innovation – that‘s how we shape the future

1 In FY 2017 2 Centers of Knowledge Interchange

5.2 billion € 38,000

7,400 3,600

€€

8 17

Cooperation with universitiesInventions and patents

R&D expenditures1 R&D employees1

Inventions1 Patentapplications1

CKIuniversities2

Principal partneruniversities


The next generation of innovation –an independent unit for startups

Capital volume

1 billion €for five years

Key technologies

Innovationareas

ArtificialIntelligence

Virtualreality

Robotics and drones

Additive manufacturing

Energy IndustryInfrastructure

Siemens target markets

Capital

Create

Catalyst…combines the speed and agility of an independent investor with the breadth of Siemens’ businesses and technologies. The unit doesn’t just fund startups; it also connects entrepreneurs with industry experts and a global ecosystem.


Business to Society –we make real what matters

We serve society by applying our ingenuity for the benefit of people and in the interest of the common good.* That has been the purpose of our company for 170 years.

With the Business to Society method, we evaluate what impact our activities have on society and how we contribute to the achievement of the UN Sustainable Development Goals.

* Based on a Werner von Siemens quote


How our activities benefit society

InvestmentsContribution to global GDP of about 250 billion €

Contribution to infrastructure financing of about 26 billion €

JobsSupport of 4.3 million jobs worldwide

2.2 million of them in developing countries

EnvironmentThe technologies of our Environmental Portfolio reduce emissions at customers worldwide by 570 million tons per year

HealthMore than 90 million patients worldwide receive medical treatment with the help of our medical technologies and laboratory tests

InnovationInvestment of 5.2 billion € in research and development

ComplianceWe work together with about 90,000 suppliers who comply with our code of conduct


Vision 2020 – the five elements of our ownership culture

Ownershipculture

Leadership• Be bold, decisive and courageous• Exemplify “Siemens matters”• Motivate and engage

Values – Our foundation• Responsible• Excellent• Innovative

People orientation• Empowerment and trust• Honesty, openness and

collaboration

EquitySupport long-term, output and profit orientation

Behaviors• Respect• Focus• Initiative and execution


Siemens as an employer • Worldwide, around 386,000 people

work for Siemens1

• New hirings totaled 39,000worldwide2

• Siemens work-study programs provide training for 11,400 trainees and university students worldwide2

1 Including trainees; as of September 30, 2017; continuing operations 2 As of September 30, 2017


Being an employer of choice

Siemens invests about €510 million each year in the training and education of employees.

Siemens supports employee engagement with employee share programs; 186,000 Siemens employees are already shareholders of the company.

Around 6,700 Siemens employees are enrolled in work-study programs that combine academic learning with practical experience.

The „International Tech Apprenticeship@Siemens program enables more than 120 young people from EU countries as well as Turkey, Egypt, Algeria, Morocco, South Africa, Mozambique, Iran and Saudi Arabia to participate in work-study programs in Germany in the fields of electronics and mechatronics.


Management | Managing Board of Siemens AG

Joe KaeserPresident and ChiefExecutive Officer

Governance and MarketsCommunicationsLegal and Compliance

Lisa Davis

AmericasPower and GasPower Generation Services

Roland BuschChief Technology Officer

CIS1

Middle EastBuilding TechnologiesMobilitynext47Corporate DevelopmentCorporate Technology

Janina KugelChief HR Officer

Human Resources

Klaus Helmrich

AfricaEuropeDigital FactoryProcess Industries and Drives

Cedrik Neike

Asia, AustraliaEnergy Management

Michael Sen

Global ServicesSiemensHealthineers2

Siemens GamesaRenewable Energy2

1 Commonwealth of Independent States; 2 Strategic Unit

Ralf P. ThomasChief Financial Officer

Controlling and Finance Financial Services


Management | Divisions

1 Strategic Unit

Willi MeixnerCEOPower and Gas

Markus TackeCEOSiemens GamesaRenewable Energy1

Ralf ChristianCEOEnergy Management

Matthias RebelliusCEOBuilding Technologies

Jan MrosikCEODigital Factory

Jürgen BrandesCEOProcess Industriesand Drives

Roland Chalons-BrowneCEOFinancial Services

Bernd MontagCEOSiemensHealthineers1

Tim HoltCEOPower Generation Services

Michael PeterCEOMobility

Sabrina SoussanCEOMobility


Company structure

Power and Gas (PG)

Power Generation Services (PS)

Energy Management(EM)

Building Technologies(BT)

Mobility(MO)

Digital Factory(DF)

Process Industries and Drives(PD)

Financial Services(SFS)

Siemens Healthineers

Siemens GamesaRenewable Energy

Strategic UnitsDivisions


Power and Gas

Leading in power generation

The Power and Gas Division offers utilities, independent power producers, engineering, procurement and construction companies (EPCs), and oil and gas customers a broad spectrum of products and solutions for the environmentally compatible and resource-saving generation of power from fossil fuels and renewable sources of energy and for the reliable transportation of oil and gas.

www.siemens.com/about/power-gas

FY 2017 FY 2016Orders in millions of € 13,422 19,454Revenue in millions of € 15,467 16,471Employees1 46,800 48,700

1 Full Time Equivalent (FTE); as of September 30

http://www.siemens.com/ueber-uns/power-gas


Energy Management

Partner for efficient energy infrastructure

The Energy Management Division is one of the leading global suppliers of products, systems, solutions and services for the economical, reliable and intelligent transmission and distribution of electrical power.

The Division’s portfolio ranges from systems for the low-voltage and distribution power grid level to smart grids and energy automation solutions to power supplies for industrial plants and high-voltage transmission systems.

www.siemens.com/about/energy-management



http://www.siemens.com/about/energy-management


Building Technologies

World leader inbuilding technologies

The Building Technologies Division is a leading global provider of safe, energy-efficient and environmentally friendly building and infrastructure technologies.

As a technology partner, consultant, service provider, systems integrator and supplier, the Division offers solutions for fire safety, security, building automation, heating, ventilation and air conditioning (HVAC) as well as energy management.

www.siemens.com/buildingtechnologieswww.siemens.com/perfect-places



http://www.siemens.com/buildingtechnologies

http://www.siemens.com/


Mobility

Shaping the future of mobility

The efficient, safe and environmentally friendly transportation of people and goods by rail and road – the Mobility Division bundles all of Siemens’ transportation-related products, solutions and services.

Advanced networked and IT-based mobility solutions and comprehensive know-how are increasing infrastructure availability, optimizing route use and raising travel quality to new levels – by rail, on the road, or across multiple modes of transportation.

Provided regulatory authorities approve, the planned merger of the Siemens and Alstom mobility businesses will unite two successful and innovative companies with a long tradition in the rail industry. Our aim is to jointly create a European champion and so offer customers unique added value.

www.siemens.com/about/mobility



http://www.siemens.com/about/mobility


Digital Factory

Helping manufacturers make their digital transformation successful

The Digital Factory Division offers a comprehensive portfolio of seamlessly integrated hardware, software and technology-based services to support manufacturing companies worldwide in enhancing the flexibility and efficiency of their production processes and in reducing the time to market of their products.

The ultimate goal is the complete integration and digital representation of the physical value chain. The platform for this is called Digital Enterprise.

www.siemens.com/about/digital-factory



http://www.siemens.com/about/digital-factory


Process Industries and Drives

Using digital technologies to create added value throughout the entire lifecycle of systems

As a proven partner, we help customers go to market with their products much faster. We do that by providing innovative, integrated technologies for the entire lifecycle, that measurably increase productivity, shorten time-to-market, and improve the reliability, safety, and efficiency of products, processes and plants.

Customers all over the world benefit from our future-proof automation, drive technology, industrial software, and services based on best-in-class technology platforms.

We are advancing the digitalization of the process industry – from integrated engineering to integrated operation and digital services.

www.siemens.com/about/process-industries



http://www.siemens.com/about/process-industries


Siemens Healthineers

The listed Siemens Healthineers1 enables healthcare providers around the world to deliver high-quality patient care.

As a leading global healthcare company, we’re continuously developing our portfolio, expanding our medical imaging and laboratory diagnostics offerings and augmenting them with a growing range of healthcare management, consulting and IT services –such as advanced therapeutic solutions and molecular in-vitro diagnostics.

Siemens Healthineers is proactively developing its digital healthcare services. We help customers succeed in today‘s dynamic healthcare market by creating new business models that maximize opportunities and minimize risks for healthcare providers.

www.siemens.com/about/healthineersFY 2017 FY 2016

Orders in millions of € 14,218 13,830Revenue in millions of € 13,789 13,535Employees2 47,800 46,200

1 Strategic Unit 2 Full Time Equivalent (FTE); as of September 30

Next generation healthcare technologies

http://www.siemens.com/about/healthineers


Siemens Gamesa Renewable Energy

Leader in the renewable energy industry

Siemens Gamesa Renewable Energy1 is a leading supplier of reliable, environmentally friendly, and cost-efficient renewable energy solutions. The wind turbines offered by Siemens GamesaRenewable Energy are a worthwhile investment from both a financial and an environmental perspective. Our wind power solutions deliver clean, renewable energy from onshore and offshore installations all over the world.

www.siemensgamesa.com

FY 2017 FY 20163

Orders in millions of € 8,768 7,973Revenue in millions of € 7,922 5,976Employees2 25,300 14,500

1 Strategic Unit 2 Full Time Equivalent (FTE); as of September 303 Relates to the former Division Wind Power and Renewables

http://www.gamesacorp.com/gamesa/en/siemensgamesa.html


Financial Services

Financial solutions for business customers

The Financial Services Division helps enterprise customers implement investment projects by providing project-related and structured financing as well as leasing and equipment financing.

The success of Financial Services is based on a unique combination of risk management competence, technological expertise and reliable financial resources. Through our international network of SFS companies, we provide – subject to country-specific legal requirements – a broad range of financial solutions.

www.siemens.com/about/financial-services

FY 2017 FY 2016Total assets in millions of € 26,390 26,446Employees1 3,200 3,200


http://www.siemens.com/about/financial-services


With its timetable change in mid-December 2017, Deutsche Bahn AG (DB) introduced the ICE 4 from Siemens into regular service. The fleet will grow to nine trains by the summer of 2018. Siemens will deliver a total of 119 trains by 2023. Of these, 100 will be in a twelve-car configuration and 19 in a seven-car configuration.

A strong partner around the world –Germany

• More than 500,000 jobs1

• Siemens invests ~€200 million a year in vocational training in Germany.

1 Direct, indirect and induced 2 By customer location 3 Full Time Equivalent (FTE); as of September 30; continuing operations

FY 2017 FY 2016Revenue2 in billions of € 11.1 10.7Employees3 115,000 113,400

Siemens and Braunschweig Municipal Hospital have entered into a strategic technology partnership. Under the agreement, Siemens will assume responsibility for supplying, maintaining and servicing all new and replacement systems in the areas of imaging, radiotherapy and nuclear medicine.

Siemens is building a shore power supply system for so-called ro-ro (roll-on/roll-off) ships in Cuxhaven, Germany. The system eliminates the need to combust ship fuels for generating electricity during lay time – one of the main causes of air pollution in ports.


• Around 90% of the airport logistics technology in the UAE is from Siemens.

• In South Africa, every second automobile is manufactured using technology from Siemens.

A strong partner around the world –Europe1, C.I.S.2, Africa, Middle East

3 By customer location4 Full Time Equivalent (FTE); as of September 30; continuing operations


1 Excluding Germany 2 Commonweatlh of Independent States

Siemens is supplying transformers for a HVDC link between England and France. The link will transmit power efficiently between the two countries, supplying up to three million homes with electricity. Siemens will complete the project by mid-2019.

Siemens is working with Dutch railway station operator NS Stations to equip 47 railway stations in the Netherlands with a user-friendly and secure self-service bicycle parking solution. The bike parking facilities will be available for privately owned as well as rental bikes.

Siemens has received an order from its customer Nizhnekamskneftekhim for the turnkey construction of a combined cycle power plant in Tatarstan. As general contractor, Siemens will partner with a Turkish company to build the 495-megawatt combined cycle power plant on a turnkey basis.


The first new light-rail vehicle from Siemens is now being deployed for passenger service in San Francisco. The new vehicles are being built at the Siemens plant in Sacramento, California. The company will deliver a total of 219 vehicles. This is Siemens’ largest order to date for light rail vehicles in the U.S.

A strong partner around the world –The Americas

Siemens is planning and installing twelve microgrids for the Brazilian utility Centrais Elétricas do Pará. The microgrids will be built in power generation plants in the state of Pará. The two power plants that are furthest apart are located 890 kilometers from one another.

• Siemens technology is the basis for 80 percent of the cutting-edge power grid in Argentina.

• Siemens has more than 50,000 employees in the U.S. and invests $1 billion a year in R&D.



Siemens is supplying key components for a combined cycle power plant in the U.S. The 1,000-megawatt natural-gas-fired combined cycle plant is being built in Lawrence County, Pennsylvania. The plant will feature two H-class turbines.


Example

A strong partner around the world –Asia, Australia

• Siemens employs 4,500 researchers and developers in China.

• Every third industrial plant and production facility in Singapore uses Siemens automation.



Siemens is supplying the electrical equipment for a new conveyor system in an underground copper mine in Mongolia. The system, which will expand the existing open-pit mining facility, is expected to bring 95,000 tons of copper ore to the surface per day.

Siemens has received an order from Pakistan for a complete power island for the new combined cycle Punjab Power Plant Jhang. To be operated with liquid natural gas (LNG), the plant is being constructed 250 kilometers southwest of Lahore and will have a power-generating capacity of 1.3 gigawatts.

Siemens is building a fully automated people mover for Suvarnabhumi Airport in Bangkok. The train system is to connect the existing terminal with a new satellite terminal. Siemens is to deliver a total of six two-car trains. Plans call for the project to be commissioned in 2020.


Contact

Siemens AGCC TL SP Werner-von-Siemens-Straße 180333 MunichGermany [email protected]

For further information: siemens.com/aboutsiemens.com/presssiemens.com/investorssiemens.com/innovationssiemens.com/careers

http://siemens.com/about

http://www.siemens.com/press

http://www.siemens.com/investors

http://www.siemens.com/innovations

http://www.siemens.com/careers

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