a&d - trendsetter in innovation - siemens...siemens a&d siemens a&d schneider el....

A&D - Trendsetter in Innovation

Helmut Gierse, Group PresidentAutomation & Drives

Financial Market Days, May 13, 2003

May 2003Automation and Drives 2

. . . allows industrial and electro-technical solutions with high economicbenefit for our customers

! PLC! Switchboards! Circuit Protection! Process Instruments

and Analytics! HMI! Motors! MES Products! etc.

Products

! Control Systems

! PLC-, CNC-, DCS-Systems

! Drive Systems

! Bus Technologies

! Software Systems

! etc.

Systems

! Complete Factory Automation for " Automotive" Chemicals" Pharmaceuticals" Food & Beverage

! Motion Control Solutions

Solutions

The consistency of our products and systems . . .

A&D business activities


All business units in #1 or #2 position

Increase EVA (economic value added) in all business units (cost of capital: 9%)

Group profit margin target: 11% - 13%

Working capital turnover: 6.5

Long term Sales growth: two times market growth (market growth ~2.5% p.a.)

A&D strategic goals


Performance drivers

Build on clear global #1 position

Leading company active in manufacturing and process automation

Technology trendsetter in innovation

Extend regional coverage: Asia; USA

Optimize cost structure and processes

A&D continuously uses all levers to improve profitability


A&D business activitiesLow voltage control and installation technologies

Market slowdown due to weak economic environmentin building markets

! Broad market fields in all industries, private and commercial construction

! Low volatility in business cycles, mode-rate growth rates over a long time

! National standards and short time to delivery need global presence and sales by local distributors

Market Characterization

2000 2001 2002

Sales

! Solid #2 position

! Continuous innovation of products

! Extended use of software and bus technology

! Optimizing and restructuring US operations

Highlights

2.6 2.72.4

in billions of euros


A&D business activitiesMotion control

A&D is a world leader for motion control components and systems

2000 2001 2002

Sales

! #1 position in the widespread field of motion control and drive systems

! New motion control system Simotion

! New drive platform Sinamics

! Improvement of cost position for large motors

Highlights

2.83.2 3.2

! Customers in all industry segments

! Strong cyclicity due to capital spending

! Trend to substitute mechanical automation solution by mechatronics

! Highly fragmented markets in motor business field




A&D business activitiesManufacturing automation

A&D is the clear market leader in factory automation systems

! Widespread applications in all industry segments

! Continuous trend to machinery automation

! Further growth due to impact of sensor technology

! Great importance of installed base! Long term system pre-definition by

customers


2000 2001 2002

Sales

! Strong #1 position

! Simatic IT-framework for consistent MES-solutions

! Component based automation

! New system concept in fail safe technology

Highlights

2.73.0 2.9



A&D business activitiesProcess automation

A&D is aiming at a solid No. 3 position in process automation

! Cyclicity in business growth due to capital expenditure in process industries

! High importance of engineering know how

! Highly concentrated market in DCS technology

! Large variety in field of instrumentation products

! Trend to hybrid automation


2000 2001 2002

Sales

! Improved and scalable control system PCS7 for small to very large batch processes

! Completion of portfolio for field devices and analytics

! Concentration of engineering know how in a new business unit

Highlights

0.80.9 0.9



Low Voltage Control andInstallation Technologies Motion Control

Manufacturing Automation Process Automation

Siemens A&D Siemens A&D

Schneider El. Mitsubishi

ABB ABB

GE Rockwell

Eaton Fanuc/GEF

Siemens A&D Siemens A&D

Rockwell Emerson

Mitsubishi ABB

Schneider El. Honeywell

Omron Yokogawa

9% 11%

17% 6%

7% 5%

6% 5%

5% 4%

14% 6%

6% 14%

4% 13%

3% 11%

3% 6%

Figures 2002 (estimated)

Competition and market sharesin A&D‘s business activities


A&D business figures

Ordersthereof international

Group profitin % of sales

Salesthereof international

Employees (in 1,000)

Research & Developmentin % of sales

Capital Spendingin % of sales

8,7285,373

8,6355,341

7238.4%

20022001

9,0655,602

-4%

-3%

+11%

+13%8,9475,502

98111.0%

2472.9%

51.2

5115.9%

4294.8%

54.2

4985.6%

Q2_03Q2_02

2,168

2,133

1386.5%

59 2.8%

52.7

–

2,155

2,034

1849.0%

50.6

653.2%

–

-1%

-5%

Net Cash from operating and investing activities

1,019533 272 275

in millions of euros


Innovation: To raise our customer‘s benefit

Speed up machining and accuracy

Minimize downtime, service and maintenance

Reduce time and cost for engineering and start-up phase

Enhance quality of machining output

Reduce life cycle costs of machinery and plant investment

Improved competitiveness and profitability of our customers lead to increasing sales and new orders for A&D


. . . is consequently developed and extended since 1996

TIAA&D

TIPPTD SBT

>=110kV

MESManufacturing ExecutionSystem

ERPEnterprise ResourcePlanning

Auto-mation

Medium Voltage

Low Voltage

! Data Management! Engineering! Communication

! Cost Reduction! Time Advantage! Efficiency Advantage

Threefold Consistency Threefold Customer Benefit

Our philosophy Totally Integrated Automation (TIA) and Totally Integrated Power (TIP) . . .


A&D: Technology trendsetter in innovation

1995 2002

Sirius

Sinumerik840

Simodrive 611

Mobic

Windows-Based HMI

Component based Automation

Simotion

Simatic.Net

Sinamics

PC based HMIPro Tool

Simatic S7

PCS7

1FK7

Nearly every year one major innovation besides numerous improvements and redesigns/updates for more competitive and cost reduced

products and systems


Continuation of setting trends in technology:A&D-MES products in a framework strategy

We shape the industrial standard with our products in the quickly growing MES-market

MES-World (today) Implementation within A&D

IT Components

HistoricalData

Management

ProductionExecution

ProductionDispatching

DetailedProductionScheduling

ProcessAnalysis

ProductionAnalysis

(QA) ProductAnalysis

ProcessMonitoring

ManualOperations

ResourceManagement

ProductionTracking

ProductDefinition

Management

AutomatedControl

ERP (SAP etc.)

ERP-Interface

SIMATIC IT Components

Res

ou

rce

Man

agem

ent

SIMATIC IT Framework

ERP (SAP etc.)

Pro

du

ctio

n D

isp

atch

ing

Pro

du

ctio

n T

rack

ing

Pro

du

ctio

n D

isp

atch

ing

Pro

du

ctio

n A

nal

ysis

Pro

cess

An

alys

is

Au

tom

ated

Co

ntr

ol


Automation platform solutions vs. best of breed product solutions

Within the TIA concept different kinds of processes can be handled with one automation philosophy

Enterprise Resource Planning (ERP)

MES-System (SIMATIC IT Framework)

Control Systems (SIMATIC S7, PCS 7)

PLC based

Inbound Logistics

DCS based Motion Control based PLC based

Primary Process Secondary Process Outbound Logistics

Industrial Networks (PROFIBUS, Ethernet)

Actuators (Motors, Drives) and Sensors (Simotion/Sinumerik)

Auxiliary Processes: Electrical Power Distribution, HVAC, Building Automation ...


Bathtub

High quality and cost effectiveness in large parts production

! Stability and maximized weight reduction due tothin-walled structures

! Improved surface quality

! Time optimized machining

! Eco friendly production processes

Out of a 3,200 kg aluminum slab a 50 kg bathtub for the new Airbus A380 will be milled in 31.2 hours

Close collaboration between end-user, machine tool builder and automation technology provider reduces machining time and costs

Innovative parallel-cinematic machine concept withCNC-functionality of Sinumerik 840D

Integrated engineering chain from Catia CAD/CAMsystem to CNC-Control by NURBS interface

High speed cutting maximizes material removal rate

Dry run saves about 80,000 l cooling lubricants


Oct.01

Jan.02

Apr.02

Jul.02

Oct.02

Jan.03

Apr.03

Jul.03

Oct.03

Cont

rolle

rs

Simotion successfully replaces competitor solutions in the field ofmechatronic production machinery

Project MixSimotion Start-up: faster than expected

Customer Benefit Through Cost Reduction

40%

10%

20%

15%

15%

17%

38%

18%

15%

12%

-15%

Logistics

Assembly

R&D

Mechanics

Electronics

10%new machinedesign

10%improved Siemenssolutions

Simotion: Starting a new story of success

80%replacementof competitor

solutions

Oct.01

Jan.02

Apr.02

Jul.02

Oct.02

Jan.03

Apr.03

Con

trolle

rs

plannedrealized


Sinamics drive platform: Economic values

Reduction of complexity

achievedold target

Reduction of R&D expenses

achievedold target

Market entry Reduction on product costs

achievedold target

parts-30%

-40%

-33%-30%

-15%-30%

2003 2004

Sinamics G110compact standard drives

Sinamics S120modular drives

Sinamics S150large drive cabinets

Sinamics G150large drive cabinets

The platform concept leads to reduction of product costs and advantages in asset management


China: Attractive market for A&D

The development in the Chinese industry – especially in production –requires A&D’s global presence with an increasing local value added

80 85 90 95 96 97 98 99 00

80 85 90 95 96 97 98 99 00

80 85 90 95 96 97 98 99 000

100

200

300

400

500

Bn. U

SD

! Production 16% p.a. 4%

! Imports 12% p.a. 6%

! Exports 14% p.a. 6%

Industrial Growth Rates 1980-2000

! Sales 2002 approx. 300 millions of EUR

! Growth 1998-2002: 34% p.a.

! Increase share of local value added from 25% (1998) to 50% (2002)

Development of A&D in China

Export Volume Industry

Import Volume Industry

Industrial Production

0

100

200

300

Bn. U

SD

0

100

200

300

Bn. U

SDGermanyChina

For comparison: German Industrial Production 2000:

1,200 billions of USD


Leadership and collaboration

Quality

AssetManagement

Business driver scorecards

Best practice sharing

Salesstimulation

Costeffectiveness

Innovation

eBusiness

Benchmarking

Implementation of the tools ensures our success

Toolbox


A&DOptimization of cost structures and processes

! Benchmarks

! Productivity

! Time to market

! Logistics

! Quality management

! eBusiness

! A&D automation platform

! Asset management

! Headquarters II

! Increase of effectiveness/efficiency in sales (incl. sales stimulation program)

! Internationalization/optimiza-tion of value creation structure

! Process standards rollout

With the program we find all hideouts for unnecessary expenses and activities and fix well defined process standards

Leverage of vertical synergies Leverage of horizontal synergies

in A&D divisions cross-divisional activities


Levers in profitablity

! Reduce capital expenditure

! Enhance outsourcing

! Optimize logistics

Asset Management

! Enhance factoring

! Tough cash management

Debtor / Creditor Management

! No Maverick buying

! Pooling purchases

! Sourcing in low cost countries

! eProcurement approx. 1/3 of total

Procurement

. . . are main levers for A&D’s net cash generation of more than 1 billion EUR in 2002

Continuous improvement in structure and processes . . .


0

100

200

300

400

500

19 98 1999 2000 2 001 2002

Europa Ame ricas Asia/Pacif ic Africa, CM E, CIS

Customers: Account management

In segments served by Account Management orders grow fasterthan the market

Number of Account Teams Cross-Group Order-Growth through APP+*) in different Segments

Automotive

Chemical &Pharma

Food &Beverage

Oil & Gas

8%

4%

20%

57%

Growth of orders year to year with “AM-customers”

Segment Boards

Food & Beverage Automotive Chemical & Pharma-ceutical Industry Oil & Gas

Metal & Mining Pulp & Paper Airports*) Account Plan Process+

EuropaAmericasAsia/AustraliaAfrica, CME, CIS ~ 470

0

100

200

300

400

500

1998 1999 2000 2001 2002


Account management: Complete solutions for the automotive industry

Maintenance, auxiliary process management and auxiliary industry facility managementI&

S

Systems, complete solutions and services for power supply and energy managementPT

D

! Press shop! Body shop! Assembly shop! End of line testing! Powertrain! Conveyer solutions

! Logistics! Production management! Quality management! Maintenance management! General contracting

A&

D

Complete cross-group industry solutions through our sector development boards


Summary and outlook

! Trendsetter in Innovation

! Growth

! Increase EVA

! Optimize cost structure and processes

. . . to enhance outstanding customer value

Automation and Drives . . .

“The Power of Integrated Automation”


Glossary

A&D Automation and Drives

APP+ Account Plan Process+

CAD Computer Aided Design

CAM Computer Aided Manufacturing

CE Consumer Electronics

CIS Commonwealth of Independent States

CME Central and Middle East

CNC Computerized Numerical Control

DCS Distributed Control Systems

ECOFAST Energy and Communication FieldInstallation System

EMC Electro Magnetic Compatibility

ERP Enterprise Resource Planning

EVA Economic Value Added

HMI Human Machine Interface

HV High Voltage

HVAC Heating, Ventilating and Air Conditioning

I&S Industrial Services & Solutions

IQ-Sense Intelligent Sensors

IT Information Technology

MES Manufacturing Execution System

MV Medium Voltage

NURBS Non-Uniform Rational B-Splines

OEM Original Equipment Manufacturer

PG Power Generation

PLC Programmable Logic Controller (SPS)

PTD Power Transmission and Distribution

R&D Research and Development

SBT Siemens Building Technology

SD Siemens Dematic

TIA Totally Integrated Automation

TIP Totally Integrated Power

TS Transportation Systems


Webpage: http://www.siemens.com Investor Relations e-mail: [email protected]: +49-89-636-32830

Marcus Desimoni +49-89-636-32445

Eckhard von Münchow +49-89-636-33173

Christina Schmöe +49-89-636-32677

Andreas Schwab +49-89-636-36165

Claudia Wagner +49-89-636-33693

Disclaimer:

This presentation contains forward-looking statements based on beliefs of Siemens' management. Such statements reflect the company's current views with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results to be materially different, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products, lack of acceptance of new products or services and changes in business strategy.Actual results may vary materially from those projected here. Siemens does not intend or assume any obligation to update these forward-looking statements.

Siemens Investor Relations Team

Group profit definition:

Group profit is defined as earnings before financing interest, certain pensions costs, income taxes and certain one-time items, which do not relate to the business performance of the Groups. See "Financial Reports/Fiscal 2003, Quarter 2/Financial Statements" at our Investor Relations website under www.siemens.com

a&d - trendsetter in innovation - siemens...siemens a&d siemens a&d schneider el....

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