TIDMSIE
Facts and figures for shareholders
Fiscal 2011
October 1, 2010 - September 30, 2011
Dr. Gerhard CrommeChairman of the Supervisory Board of Siemens
AGOverall, fiscal 2011 was a very successful year for Siemens AG.
In the first half-year, the Company profited from an economic
recovery that was stronger than expected. In the summer, however,
economic uncertainties began to increase due to the debt and
financial crisis.
In fiscal 2011, the Supervisory Board performed the duties
assigned to it by law, the Siemens Articles of Association and the
Bylaws for the Supervisory Board. We regularly advised the Managing
Board on the management of the Company and monitored the Managing
Board's activities. We were directly involved in all major
decisions regarding the Company. In written and oral reports, the
Managing Board regularly provided us with timely and comprehensive
information on Company planning and business operations as well as
on the strategic development and current state of the Company.
Deviations from business plans were explained to us in detail.
The Supervisory Board would like to thank the members of the
Managing Board as well as the employees and employee
representatives of all Siemens companies for their work. Together,
they helped make fiscal 2011 another very successful year for
Siemens.
Peter LöscherPresident and Chief Executive Officer of Siemens
AG"Business is based on trust," said Carl Friedrich von Siemens,
the son of our founder. It's especially in difficult times that
trusted, reliable partners prove their value. And we've been that
kind of partner for over 160 years now - for our shareholders,
customers, suppliers and employees as well as for the business
community, the public sector and society as a whole. And this trust
pays off - as fiscal 2011 has shown.
Despite the economic uncertainties, we made excellent progress
in our drive to generate sustainable, profitable growth in fiscal
2011. At roughly EUR74 billion, revenue for the year was 7% above
the level achieved in fiscal 2010. New orders rose 16% to about
EUR86 billion. Our order backlog was slightly more than EUR96
billion, a new record. At EUR9.1 billion, Total Sectors profit was
36% above the prior-year level. And income from continuing
operations was EUR7.0 billion, a 65% increase year-over-year. We
want our shareholders to benefit from our success - in the form of
another substantially increased dividend. That's why the
Supervisory Board and Managing Board will propose to the Annual
Shareholders' Meeting in January 2012 a dividend of EUR3.00 for
every share entitled to a dividend. With this proposal, we're
continuing our tradition of attractive dividend payments.
Fiscal 2011 - Financial summaryIn fiscal 2011 we maintained our
profitable growth momentum and further focused our business
portfolio in alignment with our long-term strategy. Both orders and
revenue grew in all Sectors and all reporting regions, and by the
year's end many of our businesses saw volumes returning to or
exceeding their peak levels before the downturn. Strong execution
in the Sectors throughout the year took Total Sectors profit up
substantially compared to fiscal 2010. In combination with net
gains related to portfolio transactions, this lifted income from
continuing operations well above the prior-year level. During
fiscal 2011, we exited the nuclear power joint venture Areva NP
S.A.S. (Areva), disposed of our IT services business and announced
our plans to publicly list our lighting business. In addition, we
prepared a realignment of selected business activities in order to
further sharpen the focus in our Industry and Energy Sectors while
creating a new Sector to focus on growth opportunities associated
with urbanization and demand for infrastructure solutions. This
strategic change took effect with the beginning of fiscal 2012.
We restored growth in revenue, which rose toEUR73.515 billion,
compared to EUR68.978 billion a year earlier. Revenue for Siemens
overall as well as for Total Sectors increased 7% year-over-year,
driven by the Industry and Energy Sectors. Growth in Industry
primarily included strong recovery in the Sector's short-cycle
businesses, while revenue in Energy grew at all Divisions. Both
Sectors raised their revenue in each of the four quarters of fiscal
2011 compared to the respective prior-year quarter. Revenue at
Healthcare was flat year-over-year. On a geographic basis, revenue
grew in all the reporting regions, including double-digit growth
rates in the Asia, Australia and the Americas regions.
Orders grew even faster than revenue, to EUR85.582 billion, up
16% from EUR74.055 billion in the prior year. Order development
largely followed the pattern described above for revenue
development, with growth driven primarily by the Industry and
Energy Sectors. While Industry's short-cycle businesses contributed
strongly to order growth for the Sector, the increase
year-over-year also included Siemens' largest-ever train order,
worth EUR3.7 billion. Order growth in Energy was broad-based across
the Sector's Divisions. Healthcare delivered slightly higher orders
year-over-year. On a geographic basis, orders grew in all the
reporting regions, including double-digit growth rates in the Asia,
Australia and Europe, C.I.S., Africa, Middle East regions.
We increased Total Sectors profit to EUR9.093 billion. Total
Sectors profit climbed 36% compared to the prior fiscal year. The
increase year-over-year included a strong operating performance in
Industry's short-cycle businesses and Energy's Fossil Power
Generation Division. Profit in the Industry Sector rose 36%, to
EUR3.618 billion, while Energy generated profit of EUR4.141
billion, up 23% from the prior year. This increase in Energy
included a substantial net gain related to the Areva joint venture
mentioned above, as a EUR1.520 billion gain on the sale of the
Sector's stake in Areva was partly offset by a profit impact of
EUR682 million related to a payment to Areva S.A., the joint
venture partner, following an adverse arbitration decision. A
strong profit increase in Healthcare year-over-year was due
primarily to prior-year impairment charges of EUR1.204 billion at
its Diagnostics Division. Charges at Healthcare in the current
period were significantly lower.
Income from continuing operations reached EUR7.011 billion.
Corresponding basic earnings per share (EPS) rose to EUR7.82. A
year earlier, income from continuing operations was EUR4.262
billion and corresponding basic EPS was EUR4.72. The strong
increase in income from continuing operations was driven primarily
by the high level of Total Sectors profit, and secondarily by
improved results outside the Sectors. Expenses for Corporate items
and pensions came in lower year-over-year, in part because these
expenses in the prior fiscal year included EUR267 million (pretax)
related to special remuneration for non-management employees.
Income from continuing operations increased also on lower losses at
Equity Investments and Centrally managed portfolio activities
compared to the prior fiscal year.
Net income rose to EUR6.321 billion from EUR4.068 billion in
fiscal 2010. Corresponding basic EPS rose to EUR7.04 compared to
EUR4.49 a year earlier. The primary driver of net income growth was
higher income from continuing operations. In contrast, discontinued
operations had a negative influence on net income. This was due
primarily to Siemens IT Solutions and Services, which was
reclassified as discontinued operations during the year and posted
a loss of EUR826 million compared to a loss of EUR468 million a
year earlier. The sale of the business resulted in a negative
earnings impact of EUR903 million (pretax) in fiscal 2011. OSRAM
was also reclassified as discontinued operations in fiscal 2011. It
made a positive contribution to net income in both periods under
review, including EUR309 million in the current period and EUR318
million in fiscal 2010. Overall, discontinued operations resulted
in a loss of EUR690 million in fiscal 2011, compared to a loss of
EUR194 million a year earlier.
Free cash flow from continuing operations was EUR5.885 billion,
compared toEUR7.043 billion a year earlier. The decline year-
over-year was mainly due to the Energy Sector which significantly
built up its net working capital, particularly its inventories.
Lower Free cash flow at Healthcare was more than offset by an
increase at Industry as well as lower cash outflows outside the
Sectors year-over-year.
We improved our capital efficiency. On a continuing basis,
return on capital employed (ROCE) (adjusted) increased to 24.0%, up
from 13.4% in fiscal 2010. The difference was due primarily to
higher income from continuing operations and, to a lesser extent,
to a decline in average capital employed year-over-year.
To our shareholders. The Siemens Managing Board, in agreement
with the Supervisory Board, proposes a dividend of EUR3.00 per
share. The prior-year dividend was EUR2.70 per share. Based on
shares outstanding as of September 30, 2011, this proposal
corresponds to a dividend payout of 41% of Siemens' net income for
fiscal 2011.
Outlook for fiscal 2012. For fiscal 2012, we expect moderate
organic revenue growth compared to fiscal 2011, and orders again
exceeding revenues for a book-to-bill ratio well above 1. We
anticipate continued strong earnings performances in our
businesses, despite ongoing pricing pressure and higher operating
expenses. We set our goal for fiscal 2012 income from continuing
operations based on the high level we achieved in the prior year,
excluding the net positive effect of EUR1.0 billion (after tax)
related to Areva that lifted income to EUR7.0 billion in fiscal
2011. Our expectation for income includes anticipated profit
impacts related to our equity stake in Nokia Siemens Networks B.V.,
charges associated with repositioning activities in the Healthcare
Sector, and higher pension expenses. Based on our expectation for
capital-efficient growth in our businesses and continuous
improvement relative to markets and competitors, we expect ROCE
(adjusted) to reach our target range of 15% to 20% in fiscal 2012.
This outlook excludes significant portfolio effects and impacts
related to legal and regulatory matters. It is also conditional on
continued revenue growth, particularly for businesses that are
sensitive to short-term changes in the economic environment.
The Siemens share/Investor relationsStock performance. During
fiscal 2011, the Siemens share price developed largely in line with
the German stock market. Siemens stock performed relatively well in
this market environment, closing at EUR68.12 per share on September
30, 2011. For shareholders who reinvested their dividends, this
amounted to a loss of 9.5% (fiscal 2010: a gain of 25.4%) compared
to the closing price a year earlier. The Siemens share performed
somewhat better than the leading index of the German stock market,
the DAX 30 (which depreciated 11.7%) but remained behind the
leading international index, MSCI World (which declined 4.4%). At
the Annual Shareholders' Meeting, the Managing Board and the
Supervisory Board will propose a dividend payment of EUR3.00, an
increase of EUR0.30 per share. After the very large dividend
increase in fiscal 2010, this proposal reflects our earnings
position in fiscal 2011 and is in strict accordance with our payout
policy, representing a payout ratio of 41%.
Siemens on the capital market. We take our responsibility to
maintain an intensive dialogue with the capital market very
seriously. Cultivating close contacts with our shareholders, we
keep them informed of all major developments throughout Siemens. As
part of our investor relations work, we provide information on the
Company's development in quarterly, semiannual and annual reports.
Our CEO and CFO also maintain close contact with investors through
roadshows and conferences. In addition, Siemens holds Sector
Capital Market Days, at which the management of our Sectors informs
investors and analysts about the Sectors' business strategies and
market environments. In recognition of the growing importance of
the emerging markets, we held the first Capital Market Day Emerging
Markets in Shanghai in fiscal 2011. We also provide extensive
information online. Quarterly, semiannual and annual reports,
analyst presentations, press releases and our financial calendar
for the current year, which includes all major publication dates as
well as the date of the Annual Shareholders' Meeting, are available
at www.siemens.com/investors
Further information can be found in the Siemens Annual Report
for 2011.Available in English, German, French and Spanish, the
report can be downloadedat www.siemens.com/annual-report (English
version) or www.siemens.com/geschaeftsbericht (German version).
Printed copies of the Annual Report (free of charge)E-mail
siemens@bek-gmbh.deInternet www.siemens.com/order-annualreportFax +
49 7237-1736
AddressSiemens AG, Wittelsbacherplatz 280333 Munich, Germany
New orders and order backlog; adjusted or organic growth rates
of revenue and new orders; book-to-bill ratio; Total Sectors
profit; return on equity (after tax), or ROE (after tax); return on
capital employed (adjusted), or ROCE (adjusted); Free cash flow or
FCF; cash conversion rate, or CCR; adjusted EBITDA; adjusted EBIT;
adjusted EBITDA margins, earnings effects from purchase price
allocation, or PPA effects; net debt and adjusted industrial net
debt are or may be non-GAAP financial measures. These supplemental
financial measures should not be viewed in isolation as
alternatives to measures of Siemens' financial condition, results
of operations or cash flows 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. Definitions of these supplemental financial measures,
a discussion of the most directly comparable IFRS financial
measures, information regarding the usefulness of Siemens'
supplemental financial measures, the limitations associated with
these measures and reconciliations to the most comparable IFRS
financial measures are available on Siemens' Investor Relations
website at www.siemens.com/nonGAAP. For additional information, see
supplemental financial measures and the related discussion in
Siemens' annual report on Form 20-F for fiscal 2011, which can be
found on our Investor Relations website or via the EDGAR system on
the website of the United States Securities and Exchange
Commission. This document contains forward-looking statements and
information - that is, statements related to future, not past,
events. These statements may be identified by words such as
"expects," "looks forward to," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," "will," "project" or words of
similar meaning. Such statements are based on the current
expectations and certain assumptions of Siemens' management, and
are, therefore, subject to certain risks and uncertainties. A
variety of factors, many of which are beyond Siemens' control,
affect Siemens' operations, performance, business strategy and
results and could cause the actual results, performance or
achievements of Siemens to be materially different from any future
results, performance or achievements that may be expressed or
implied by such forward-looking statements. In particular, Siemens
is strongly affected by changes in general economic and business
conditions as these directly impact its processes, customers and
suppliers. This may negatively impact our revenue development and
the realization of greater capacity utilization as a result of
growth. Yet due to their diversity, not all of Siemens' businesses
are equally affected by changes in economic conditions;
considerable differences exist in the timing and magnitude of the
effects of such changes. This effect is amplified by the fact that,
as a global company, Siemens is active in countries with economies
that vary widely in terms of growth rate. Uncertainties arise from,
among other things, the risk of customers delaying the conversion
of recognized orders into revenue or cancelling recognized orders,
of prices declining as a result of adverse market conditions by
more than is currently anticipated by Siemens' management or of
functional costs increasing in anticipation of growth that is not
realized as expected. Other factors that may cause Siemens' results
to deviate from expectations include developments in the financial
markets, including fluctuations in interest and exchange rates (in
particular in relation to the US$, British GBP and the currencies
of emerging markets such as China, India and Brazil), in commodity
and equity prices, in debt prices (credit spreads) and in the value
of financial assets generally. Any changes in interest rates or
other assumptions used in calculating obligations for pension plans
and similar commitments may impact Siemens' defined benefit
obligations and the anticipated performance of pension plan assets
resulting in unexpected changes in the funded status of Siemens'
pension and other post-employment benefit plans. Any increase in
market volatility, deterioration in the capital markets, decline in
the conditions for the credit business, uncertainty related to the
subprime, financial market and liquidity crises, including the
sovereign debt crisis in the Eurozone, or fluctuations in the
future financial performance of the major industries served by
Siemens may have unexpected effects on Siemens' results.
Furthermore, Siemens faces risks and uncertainties in connection
with: disposing of business activities, certain strategic
reorientation measures, including reorganization measures relating
to its segments; the performance of its equity interests and
strategic alliances; the challenge of integrating major
acquisitions, implementing joint ventures and other significant
portfolio measures; the performance, measurement criteria and
composition of its Environmental Portfolio; the introduction of
competing products or technologies by other companies or market
entries by new competitors; changing competitive dynamics
(particularly in developing markets); the risk that new products or
services will not be accepted by customers targeted by Siemens;
changes in business strategy; the interruption of our supply chain,
including the inability of third parties to deliver parts,
components and services on time resulting for example from natural
disasters; the outcome of pending investigations, legal proceedings
and actions resulting from the findings of, or related to the
subject matter of, such investigations; the potential impact of
such investigations and proceedings on Siemens' business, including
its relationships with governments and other customers; the
potential impact of such matters on Siemens' financial statements,
and various other factors. More detailed information about certain
of the risk factors affecting Siemens is contained throughout this
report and in Siemens' other filings with the SEC, which are
available on the Siemens website, www.siemens.com, and on the SEC's
website, www.sec.gov. Should one or more of these risks or
uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those described in the relevant forward-looking statement as
expected, anticipated, intended, planned, believed, sought,
estimated or projected. Siemens neither intends to, nor assumes any
obligation to, update or revise these forward-looking statements in
light of developments which differ from those anticipated.
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