siemens well-positioned for the futurepage 3 november 10 annual analyst conference 2006 fiscal 2006...

Siemens well-positionedfor the future

Klaus KleinfeldJoe Kaeser

Annual Analyst ConferenceNovember 10, 2006

Preliminary unaudited financial statements that represent the basis of this presentation have been changed. Please see the ad-hoc release of Dec. 11, 2006, at www.siemens.com/ir At this site, you can also download the audited financial statements.

http://www.siemens.com/ir

November 10 Annual Analyst Conference 2006

Disclaimer

This document contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect its operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens worldwide to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products or technologies by other companies, lack of acceptance of new products or services by customers targeted by Siemens worldwide, changes in business strategy and various other factors. More detailed information about certain of these factors is contained in Siemens’ 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 does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.


Fiscal 2006 - A dynamic and eventful year

Strong growthNew orders € 96.3 billion

(+ 15% YoY)

Sales € 87.3 billion(+ 16% YoY)

Solid earningsNet income € 3.1 billion

(+38% YoY)

Group Profit (total op. Groups) € 5.3 billion(+12% YoY)

Massive portfolio expansionInitiated acquisitions of some € 6.6 billion


Key Figures Q4 and FY 2006

in millions of euros Q4 Δ in % FY 2006 Δ in %

(4)

+8

+35

+29

+29

—

96,259

—

87,325

+15

+16

+12

+ 3

+ 3

—

Group Profit from operations 1,251 5,256

Income from continuing operations 640 3,160

Net Cash from operating and investingactivities (continuing operations)

(610) 739

+ 7Dividend (proposed, in euros) — 1.45

3.55

22,616

23,923

0.72

New Orders

Sales

EPS from continuing operations(in euros, not diluted)


Fit4More positive – Clear sight on 2007 goals

Execute Siemens Management System (powered by top+) with focus on:

InnovationCustomer FocusGlobal Com-petitiveness

Achieve high performance cultureEstablish Leadership Excellence ProgramIncrease global talent poolStrengthen expert careers

Solve Mobile DevicesFinalize strategic reorientation of I&C (Com, SBS) Strategic reorientation of L&AReach target margins at all GroupsBuild Portfolio for 2x GDP growth

Achieve best-in-class in:

Corporate GovernanceBusiness PracticesSustainabilityCorporate Citizenship

Fit4More: Profit & Growth Program

Performanceand Portfolio

OperationalExcellence

CorporateResponsibility

PeopleExcellence

Execution by April 2007!


Massive investments in profitable growth

Market position

CTI Molecular Imaging (3/2005) # 2Diagnostic Products (4/2006) IVD overall # 3Bayer Diagnostic (6/2006) ImmunoD # 2

Healthcare

Energy & Environmental Care

Automation & Control, Industrial & Public Infrastructures

Acquisitions

USFilter (5/2004) U.S. # 1Bonus Energy (10/2004) worldwide # 5

offshore # 1Flender (3/2005) Industry & Wind # 1Robicon (7/2005) MV converters # 1VA Tech (7/2005) VAI # 1

T&D # 4Wheelabrator (10/2005) U.S. leader in flue gas

desulphurizationElectrium (12/2005) UK # 3Sustec (5/2006) leading in gasificationKühnle, Kopp & Kausch (7/2006) leading in ST<5MW

Focus areas


Utilizing all market opportunities

2x GDP growth 2005 – 2006 + 7.8% Sales growth 2005 – 2006 + 16%

Siemens

66%

17%

11%6%

1996

50%

26%

15%

9%

2006

33%

36%

25%

7%

2006

2x GDP growth = 7.8%

Europe

Americas

Growth rates2005 – 2006

Regional distribution1996 vs. 2006

GDPSiemens

ME,A, CIS

Asia/Pacific

Europe

Americas

Asia/Pacific

MiddleEast,Africa, CIS

Siemens

2x GDP

5.8%

7.0%

10.4%

12.0%

8%

20%

28%

33%


Solid transformation from SBS to SIS*

Restructuring ProgramComplexity reductionIntroduction of Operations factory model

Verticals

Future SIS structure

Bundle Siemens IT solutions and services competenciesBuild up of sector competenciesInvest for growthCash optimized project selection

10/01/06 04/01/07Reporting as SIS*

Global Sales & Regions

Professional ServicesApplication ManagementInfrastructure OperationsTransaction Operations

Global Operations

GZ GZ GZ GZ GZ

Global Service Portfolio

SBS transition phase

PRS ORS SOL

Region D

Region A

Region

…

Former SBS situation

Global Service Portfolio

SalesDelivery

SalesDelivery

SalesDelivery

SalesDelivery

SalesDelivery

SalesDelivery

SalesDelivery

SalesDelivery

SalesDelivery

SalesDelivery

SalesDelivery

SalesDelivery

Software R&DProfessional Services

Application ManagementInfrastructure OperationsTransaction Operations

PSE SISL DIP BIC

aligned withother Siemens

Groups

* Siemens IT Solutions & Services


New business model for SIS – 3 key levers for success

Volume Focus on Siemens industries e.g.:Automotive, healthcare, utilities, airportsJoint go-to-market strategy

CostsAdditional units with strong presence in low cost countries, e.g.:Eastern Europe, India, ChinaFocus project:

- Reduced capital lockup- Risks

PriceDifferentiation through unique set of competencies:

- Total IT integration- Solution competencies- Industry know how


A&D - Sustained value enhancement

% of Sales

708 740865

1,253

1,077

806723

981

profit A&DBusinessCyclicality

1, 572

1998 1999 2000 2001 2002 2003 2004 2005 comp.

10.1% 10.5% 10.9% 11.0% 8.4% 9.6% 12.2% 12.1%

2006

12.2%

in € mn


A&D invests in process automation and regional setup

2002 2006

ElectricalInstallation

for Buildings

ProcessAutomation

FactoryAutomation

+115%

Sales in € bn

8.6

12.8

+49%

Asia/Pacific

Americas

Europe

Others

+214%

2002 2006

Sales in € bn

8.6

12.8

+49%


14%

9%

8%

4%

3%

7%

2%2%

1%

22.8%

25.2%

Source: ARC Advisory Group

Leading PLC suppliers in Asia (Including hardware, software & services)

ABB

BR Industrial

GE Fanuc

Koyo-PLC Direct

SchneiderElectric

RockwellAutomation

Omron

Mitsubishi

Siemens

Others

A&D very well positioned in the Asian market

#1 in Chinawith 25% market share

#1 in Indiawith 33% market share

LSIS


A&D – World market leadership expanded with complemented portfolio

Robicon

Flender

Robicon Perfect Harmony: most-sold MV converter worldwideImproved access to key growth sectors in North America(Oil & gas, water/wastewater, energy)

Leading drives supplier in wind power and raw materials processingDrives technologies accelerate growth in process automation

Starters / Converters

Motors Drives

Sales +89% YOY

Expanded

Strengthened

20%

#2

#3#4

2005 2006

Sales

+50%

Others

Siemens +Robicon


16

22

PG - Power market offers ongoing opportunities

30

109

155

2005

39

118

179

2010

Wind

Oil & Gas andIndustrial

Applications

Fossil Power 2% p.a

6% p.a

7% p.a

Replacements of power plants in Europe and US

Strong economic growth and increase of population leads to an increase of power demand in Asia and NME

Water demand drives desalination market in NME

Market in € bnnew equipment & service

High Oil&Gas prices drive investments

Growth in GTL and LNG

Wind boom especially in US and Asia

+3% p.a


Sales in € bn

21%

33%

46%

7.8

2000

30%

48%

22%

10.1

2006

Service

Components

Turnkey (EPC)

Focus on components- GT/ST- Compressors- Oil&Gas solutions- Wind - Air Pollution Control

PG - Driving profitable growth through optimized business mix

World class EPC

Service segment growth

Profit margin 0.9% 7.8%

+4% p.a


Clean energy offers multiple growth opportunitiesWind

2.3 MW onshore turbine3.6 MW offshore turbine+ 195% orders+ 350% profitEurope's largest wind park€ 350 mn order value

GasificationSustec IGCCCO2-free power plant (option)Fuel flexibilityLower emissionsReduction of investment costIncrease of efficiency

CleanEnergy

Efficiency increase targets43% >50% (lignite)47% >53% (hard coal)58% >60% (CCPP)

SGT5-8000H

Air Pollution ControlWheelabratorAdvanced Burner TechnologyOrders +56%Book to Bill >2

Geothermal Power StationsConversion of heat from low-temperature springsinto electrical energyCO2-emission free base load supplyAdditional Service business opportunities


Healthcare - We target #1 or #2 positions also in newly addressed high growth market segments

Newly addressed:In-vitro diagnostics*

Already addressed:Imaging systemsProduct relatedservicesHealthcare ITOthers

~ 51

+ 5% p.a

+ 6% p.a

~ 15

~ 36

~ 20

~ 47

20102005

~ 67 Immuno+ 7%

Molecular+ 14%

Healthcare IT+ 8%

* excluding anatomical pathology, blood banks and self testing systems

Market in € bncurrency adjusted


Med - M&A is an integral part of our Healthcare strategy

2006: DPC2005: CTI2004: CADVision2003: OMT2000: Shared Medical2000: Acuson

2004: Mochida (35%)

2003: Dräger Med (35%)

2002: Mindit (75%)

1997: Trixell (24.5%)

2005: Sensant

2003: MRC

2001: Pointshare

In the last 7 years (2000 - 2006) we executed more than 40 deals with a total transaction volume of ~ € 5.9 bn

Other selected M&AMajor JV / InvestmentsMajor Acquisitions


Medical hits profit target for six years in a row and outpaces market growth

Neworders*

Sales*

15.1% 14.8% 12.8%Group profitmargin Continuing

introduction of trendsetting “firsts”, e. g. SOMATOMDefinition CT

Further market share gains in 2006, notablyin CT and MI

Enhanced position in In-vitro diagnostics through DPC

*Including effects from portfolio transactions: 2001 Acuson, Shared Medical Systems; 2003 Draeger joint venture; 2004 Divestment of Life Support Systems; 2005 CTI Molecular Imaging, 2006 DPC

in € bn

12.9%Highlights

EnterpriseValueDevelopment(post Q3 vs. post Q3)

€ 10.9 bn€ 16.3 bn

+50%

9.37.8 8.1 8.67.4 7.1 7.6 8.3

2003 2004 2005 2006


Pflege

Med - World’s first integrated diagnostics company

1) excluding “Personal Monitoring” (Blood Glucose) and Blood ScreeningAlready covered by Siemens Medical Solutions

Leading position in attractive In-vitro diagnostics market (IVD)Rapid growthAttractive marginsStrong Cash flow

Number 3 position1) in IVD, almost level with number 2Strong position in immunodiagnostics and gene based analysis

CareTherapyPrevention,early detection

In-vivo diagnostics (Imaging)

Diagnosis

Workflow-oriented IT

In-vitro diagnostics

(IVD)DPC & Bayer DiagnosticsSales 2005: ~ € 1.8 bn


Outlook for fiscal 2007 – We’ll reach our Fit4More goals

Growth of 2x global GDP (w/o effects from deconsolidation)

All Groups expected to reach target margins

2007 will be a good year for Siemens


Shaping the company drove financing requirement

(0,6)

Severancepayout

Com and SBS

+3,738

Provided by operatingactivities

Other

(3,115)

Used in investing activities

+116

Net cashSFS, SRE,Corporate Treasury

(372)

5,256

Group profitfrom

Operations

+0,1

(1,4)

Net working capital from

volume

+0,4

Reversal of net effect

Juniper gain,severance charges

Net cashDiscontinuedOperations

367

Net Cash

Reversal ofJuniper gain € +356 mnCom severance charges € (393) mnSBS severance charges € (393) mn

Net cashOperations

Strategic reorientationAcquisitions

Growth

Strategicreorientation

Strategicreorientation

Significant sales growth

Juniper proceeds (net) € +0.5 bnInfineon proceeds (net) € +1.1 bnAcquisitions € (2.4) bnthereof: DPC (net of cash) € (1.3) bn

CAPEX € (3.2) bn(tangible & intangible assets)

in € millions


Siemens raised € 9bn debt financing during last quarter

Financing StrategyDiversification of investors and product baseCurrency congruent financing Balanced maturity profileRating support

August 2006: US$ 5 bn rule 144A bond

August 2006: US$ 4 bn syndicated credit facility

September 2006: € 2 bn hybrid bond(Financial News: „DCM Deal of the quarter“)

GoalsMaximize demand, minimize costsReduce currency volatility riskMatch funding requirements Maintain strong investment grade

Financing strategy Goals


Cash flow generation has widely followed volume growth

New Orders

Sales

Volume in € Cash Flow in €

1.2 1.3 0.80.5

1.2 Cash Conversion:

Aspiration

60 bn

70 bn

80 bn

90 bn

100 bn

2002 2003 2004 2005 2006 20070 bn

2 bn

4 bn

6 bn

8 bn

10 bn

12 bn

0.1

Net Cash excluding Acquisitions / Divestments

Income from Cont. Ops before Tax excl. Juniper


Most Groups improved NWC turns

7.4

6.9

Group specific programs in place for FY 2007

2005

2006

NWC turns*

* Total Operations Groups excluding Com and Other Ops.

absolute vs. PY123456789

10

PGSVI&STSSBSOsramMedA&DPTDSBT

Ranking NWC Turns 2006


CAPEX PPE vs. depreciation – Operating Groups

2003 2006

TargetRange

PPE Capex

Depreciation

115%

95%

2004 2005

100%

2007

98%

106%

122%

x 100%144%

Clear reversal of trend in CAPEX targeted for FY2007


Tighten CAPEX discipline – prioritize by value contribution

Legend: Size of bubble = Value contribution of GroupsOrganic Growth

Siemens-Average

2x GDPworldGrowth

high

low

Cap

ital E

ffici

ency

Top GroupsCAPEX Target Range

significant above 100%

High Growth Groups

Substance Keepers

CAPEX Target Range above 100%

1x GDPworldGrowth

CAPEX Target Range significant below 100%

ProfiteersCAPEX Target Range below/

moderate above 100%


Tighter adoption of changes in capital market parametersto Weighted Average Cost of Capital (WACC)

1) Cost of Equity

S B S

A&DI&SS B T

P GP T D

T SS V

Med

O s ram

S F S 1 )

S R E 1 )

6 .5 %

7 .5 %6 .5 %

8 .5 %

7 .5 %8 %8 %

7 %

7 %7 %

7 %

7 %7 %

7 %

7 .5 %

6 .5 %

8 %

8 %8 %

8 %

7 .5 %

8 .5 %7 .5 %

WAC C n ew(s tart F Y 2 0 0 7 )

p rev io u s WAC C(F Y 2 0 0 6 )

8 %


Cash flow becomes regular part of incentives

Accountability for Cash Flow efficiency

old: Regular variableincome based onEVA only

Sporadic top downCash Flow incentive

new: Cash Flow target integrated intoregular variablecompensation

Target

Incentive System


0.0

0.4

0.8

1.2

1.6

2.0

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

* 20

06

divi

dend

/ sh

are

(€)

special dividend€ 0.67 Infineon IPO

CAGR 1977–2006: 5.9%

30 years history of continuous dividend payment

* proposed

20 years of regular dividend increases


Appendix


Robust growth in international orders

GroupsFY 2006(in millionsof euros)

Δ(in %)

13,571 +5I&C

(23)

A&D 14,108 +32

I&S 9,025 +26A&C

Power

Trans-portation

Medical

Lighting

SBT 5,235 +16

PTD 8,028 +52

TS 6,173 +34

SV 10,014 +2

Med 9,334 +8

Osram 4,563 +6

PG 12,532 +14

5,014

Com

SBS

+35

+26+16+1

+11

Δ(in %)

15,058Asia-Pacific24,651Americas

10,910

16,52329,117

FY 2006(in millions of

euros)

Germany

Middle East / C.I.S. / Africa

Europe excl. Germany

Regions

in billionsof euros

FY 2005 FY 2006

+15%96.383.8


Strong sales growth in industry and power segments

GroupsFY 2006(in millions of euros)

Δ(in %)

13,080 +7I&C

(4)

A&D 12,848 +24

I&S 8,819 +40A&C

Power

Trans-portation

Medical

Lighting

SBT 4,796 +9

PTD 6,509 +53

TS 4,502 +7

SV 10,017 +4

Med 8,227 +8

Osram 4,563 +6

PG 10,086 +25

5,157

Com

SBS

+33

+28+20+4

+11

Δ(in %)

12,871Asia-Pacific22,913Americas

8,191

16,24527,105

FY 2006(in millions of

euros)

Germany

Middle East / C.I.S. / Africa

Europe excluding Germany

Regions

in billions of euros

FY 2005 FY 2006

+16%87.375.4


Earnings from Operations substantially improved

(4)

+3

+9

+6

+78

+84

(18)

+29

+73

+25

+20

(33)

10 - 1110.5481Osram

18 - 2227.1307SFS

5 - 6(10.6)(549)SBS

8 - 112.2283Com

11 - 13

5 - 6

5 - 7

5 - 7

10 - 13

7 - 9

4 - 6

11 - 13

Target(in %)

12.9

6.7

1.8

6.0

7.8

4.9

3.3

12.2

Profit margin (in %)

1,061Med

80TS

782PG

669SV

234SBT

390

289

1,572

Group profit(in millions of euros)

(Δ in % YOY)

I&S

PTD

A&D

Groups

1) Group profit (from Operations), excl. SFS

2) Income before income tax3) ROE (= Return On Equity) 2) 3)

+12%

4,6871)

FY2005

5,2561)

FY2006

in millions of euros


Employees (thousands)

Sales (in billions of euros)

Major facilities

€

As of September 30, 2006

We continue globalizing our business

Employees by region (in thousands)

250

300

150

200

FY 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 20042003 2005

Germany

International

2006

22%26% 27%

104 22.9 78

€

Americas27%

31%

23%

127 27.1 67

€

Europe(excl. Germany) 34%

19%

30%

161 16.2 86

€

Germany

3% 9% 1%

13 8.2 4

€

Middle East, Africa, CIS

15% 15%19%

70 12.9 54

€

Asia-Pacific


Projected benefit obligation (PBO) 2)

Accumulated benefit obligation (ABO) 2)

Discount rate 3)

Fair Value of plan assets Funded status 2)

Additional contributionRegular funding

Non allocated pension related income 4)

Expected return on plan assets (EROPA) 5)

Asset allocation of pension assets• Equities• Fixed income• Real estate• Cash

FY04 FY05According to 20F, in billions of euros

1) Principal Funded Pension Plans and Principal other Postemployment Benefit Plans)2) As of September, 303) Basis for calculation for PBO and ABO as of September, 304) Net periodic pension cost for pension plans and other postretirement benefits, excluding service cost which are predominantly allocated to the groups5) Basis for calculation of net periodic benefit costs of the corresponding year

20.820.05.5%

17.7(3.1)1.30.5

26%56%9%9%

(0.729) 6.7%

FY06

(0.519) 6.7%

25.024.04.5%

21.5(3.5)1.50.6

31%56%8%5%

(0.598) 6.7%

26.224.24.8%

23.5(2.7)0.00.8

33%48%8%11%

Key figures – Pensions 1)

Expect further update under IFRS


Planned reporting changes in FY 2007

IFRS as primary News: Dec. 2006(effective 10/01/2006) (Financial statements FY05 - 06)

SIS reporting start Q3 FY 2007

New Segment “ Strategic Equity Investments”(incl. BSH, FSC) start Q1 FY 2007

NSN moves into “Strategic Equity Investments” after closing Q2 FY2007 (expected)

Wireless Modules moves into A&D start Q1 FY 2007


June

November

January

April

November 9Press conference

November 10Analyst conference

JuneCapital Market Days 2007

January 25AGM and first quarter results FY07 conference call

April 26Semiannual results FY07 – conference call

Financial calendar FY 07

July July 26Third quarter results FY07 – conference call

December IFRS Conversion, Financials FY 2005 and 2006Conference Call


Reconciliations and definitions

”Group profit from Operations” is reconciled to ”Income before income taxes” of Operations under ”Reconciliation to financial statements” on the table ”Segment information”. See ”Financial Publications/Quarterly Reports, FY2006Q4, Financial Statements” at our Investor Relations website under www.siemens.com

ROE (Return on equity) margin for SFS was calculated as SFS' income before income taxes divided by the allocated equity for SFS.Allocated equity for SFS as of September 30, 2006 was € 1,131 million. See also Siemens' Form 20-F at our Investor Relations website under www.siemens.com

The allocated equity for SFS is determined and influenced by the respective credit ratings of the rating agencies and by the expected size and quality of its portfolio of leasing and factoring assets and equity investments and is determined annually. This allocation is designed to cover the risks of the underlying business and is in line with common credit risk management standards in banking. The actual risk profile of the SFS portfolio is monitored and controlled monthly and is evaluated against the allocated equity.

Siemens ties a portion of its executive incentive compensation to achieving economic value added (EVA) targets. EVA measures theprofitability of a business (using Group profit for the Operating Groups and income before income taxes for the Financing and Real estate businesses as a base) against the additional cost of capital used to run a business, (using Net capital employed for the Operating Groups and risk-adjusted equity for the Financing and Real estate businesses as a base). A positive EVA means that a business has earned more than its cost of capital, and is therefore defined as value-creating. A negative EVA means that a business is earning less than its cost of capital and is therefore defined as value-destroying. Other organizations that use EVA may define and calculate EVA differently.

A reconciliation of EVA may be found on our Investor Relations website under www.siemens.com

http://www.siemens.com/

http://www.siemens.com/


Siemens Investor Relations Team

Webpage: http://www.siemens.com Investor Relations

e-mail: [email protected]

Fax: +49-89-636-32830

Marcus Desimoni +49-89-636-32445

Roland Bischofberger +49-89-636-36165

Frank Heffter +49-89-636-34095

Irina Pchelova +49-89-636-33693

Christina Schmöe +49-89-636-32677

Susanne Wölfinger +49-89-636-30639

siemens well-positioned for the futurepage 3 november 10 annual analyst conference 2006 fiscal 2006...

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