04 - I CMD OS final - Siemens · Next major growth opportunity in LED: Illumination LED lamps as...

Copyright © Siemens AG 2008. All rights reserved.

Siemens Industry:

Martin Goetzeler, CEO OSRAM

Capital Market Days 'Industry'Munich, December 18, 2008

Copyright © Siemens AG 2008. All rights reservedPage 2 December 2008 Capital Market Days 'Industry'

Safe Harbour Statement

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 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 our 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. For us, particular uncertainties arise, among others, from changes in general economic and business conditions (including margin developments in major business areas); the behavior of financial markets, including fluctuations in interest and exchange rates, commodity and equity prices, debt prices (credit spreads) and financial assets generally; continued volatility and further deterioration of the capital markets; the commercial credit environment and, in particular, additional uncertainties arising out of the subprime, financial market and liquidity crises; future financial performance of major industries that we serve, including, without limitation, the Sectors Industry, Energy and Healthcare; the challenges of integrating major acquisitions and implementing joint ventures and other significant portfolio measures; introduction of competing products or technologies by other companies; lack of acceptance of new products or services by customers targeted by Siemens; changes in business strategy; the outcome of pending investigations and legal proceedings, especially the corruption investigations we are currently subject to in Germany, the United States and elsewhere and actions resulting from the findings of these investigations; the potential impact of such investigations and proceedings on our ongoing business including our relationships with governments and other customers; the potential impact of such matters on our financial statements; as well as various other factors. More detailed information about certain of these factors is contained throughout this report and in our 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 does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

Earnings before interest and taxes, or EBIT (adjusted); Earnings before interest, taxes, depreciation and amortization, or EBITDA (adjusted); Return on capital employed (ROCE); Return on equity (ROE); Free cash flow; and Cash conversion rate are non-GAAP financial measures. These non-GAAP financial measures should not be viewed in isolation as alternatives to measures of our financial condition, results of operations or cash flows as presented in accordance with IFRS in our Consolidated Financial Statements. Information for a reconciliation of these amounts to the most directly comparable IFRS financial measures is available on our Investor Relations website under www.siemens.com/ir → Financial Publications. “Profit Total Sectors” is reconciled to “Income from continuing operations before income taxes” in the table “Segment Information.”


Margin development

2003-2008

2008

2003 2004 2006 20082005 2007

10.6%

Q1

10.2%

Q2

10.0%

Q3

10%

12%

Margin development

10.6%

Q1

10.2%

Q2

10.0%

Q3

3.7%

Q4

2003-2008

2008

10%

12%

2003 2004 2006 20082005 2007

Q4 FY 08: Hit by sharp deterioration in selected markets

Downturn in key markets

Volume plan for Q4 too optimistic:

Automotive market froze up

General US downturn

Decline in Europe

Immediate Counter Actions

Major extension of plant shutdowns

Major restructuring, use of €130 million

Moving from 9 to 4 Business Units

Consolidation of Corporate Functions

Streamlining of overhead headcount by 450 employees


Returning OSRAM to solid performance

Lighting market 2008 1) Accelerate global plant restructuring and productivity

Lower break even point

Faster shift to LCC production/ development

Tighter connection between supply chain and sales

Execute on SG&A program, incl. reorganization to get leaner

Project: OSRAM 2010

LED

Green

Basic2)

1

2

3

4

1) 2008 w/o luminaires and other special items, incl. replacement business2) Inefficient

22

ManufacturingIndustries

Automotive

CommercialBuilding

ResidentialBuilding

Consumer/Communication

22€bn


Accelerate global plant restructuring programs

OSRAM 2010

Phase out 'Basic' plants,focus on 'Green' plants, e.g. CFLi plant in Russia

Adjustments of incandescent capacities (Focus Europe and NAFTA)

Actively drive phase out of 'Basic';supported by legislation in all regions

Restructuring of manufacturing

Adjustment of capacities

74%45%

100%

2005 Today 2010

Incandescent capacity

Restructured plants11

60%

40%

52

2000 Closed

5

New

75%

25%

46

Today

6

In dis-cussion

1

New

90%

10%

41

2012

Green /LED

Basic


Speed the shift to LCC manufacturing, purchasing and R&D

Global footprint at OSRAM Manufacturing: LCC ratio

R&D: LCC ratio

Manufacturing:60% of manufacturing headcountlocated in LCC today

R&D:20% of R&D heads are located inLCC today, 30% in 2010Foshan (China) as center ofcompetence for low cost products

Purchasing:Sourcing of 70% of merchandisedproducts from LCC todayIncrease of external purchasingvolume from LCC up to 40% in 2010

15%2005

20%

Today

30%

2010

50%

2005

60%

Today

70%

2010HC manufacturing

HC R&D


Significant LED efficiency increase opens door for LED as new lighting dimension in 'illumination' OSRAM's LED growth 2008: 15% over all applicationsLED 14% of OSRAM's overall salesGreen lamps with high potential in terms of efficiency improvements and sustainability: Remain best in class technology for many applications

We are prepared to lead the technology transition

Development of illumination market Technology transition

OSRAM is leading the change 2005 Today 2015

LED

Green

Basic2)

+4%1)

+8%1)

1) CAGR2) inefficient


Technology transition -Taipei 101, Taiwan

Energy efficiency as basis fortriple win

€0.25 million p.a.

Energy savings

1,500 tons p.a.

CO2 abatement


Innovative 'Green' products will be the driving factor for many applications Additional revenue and profit by change in product mixOSRAM is innovation leader

R&D spending of ~6% of sales lead to an innovation rate of ~40%

Technology transition -Green products as profitable backbone business

Illumination market 'Green' Technology transition

HalogenEnergy Saver

HCI Powerball

Minitwistlamps

2005 Today 2015

~10%1)

~5%1)

1) CAGR

GermanSustainability

Award


Technology transition -Union Investment building in Frankfurt, Germany

USP

New applications for LED due to additional USP for our customers:Flexibility, customized solutions, color and energy efficiency


Technology transition –LED: Growth and margin driver - OSRAM No. 2

Technology transition Illumination market LED / OLED

Existing LED applications: Industry, consumer and automotiveNext major growth opportunity in LED: IlluminationLED lamps as link between traditional world and new LED world: OSRAM No.1More than 50% of OSRAM's CAPEX is invested in LEDHigh R&D spending (15% of sales) Targeted efforts for lighting next generation: OLED

GermanInnovation

Award

2005 Today 2015

~40%1)

~50%1)

1) CAGR

OLED


Integrated LED offerings from OSRAM Preferred supplier of our customers

OSRAM’s integrated LED offerings OSRAM’s strategy:Preferred supplier of our customers

OSRAM …… provides world class LED-offerings to our customers on all value chain levels

World class productsProvides full IP shield Market access to project businessApplication know howDriving standardsEconomies of scaleFlexibility and speed

Total LED

Market

No. 2

No. 2No. 2/No. 3 1)

1) in defined applications

Com-ponents Modules LED-

LUMIntegrated LED offerings


Acquisition of TRAXON: Leader in LED-LUM technology

Top position in major LED applications architainment, shop and hospitalityAccelerated LED innovations by combining both strengths in the area of luminaires, light management systems and components / modules

OSRAM benefitExtended leading edge offering across the entire LED-LUM value chainHighly creative and innovative products for customer differentiation

Customer benefit


OSRAM at IndustryStrong fit to strategy

Automationat OSRAM

Energy Efficiencyat OSRAM

Light management systems as enabler for LED-LUM

Driving force for energy efficiency

Energy saving part of our customers' strategy – fulfilled by combined Sector Industry offerings

2005 Today 2010

+13%1)

27%

73%

'Green' revenue

69%

31%

CO2 abatement

Sector Industry

OSRAM

OtherBTOSREnergy savings

Energy Audits

1) CAGR


Summary:OSRAM is leading the technology transition

Short term Mid term

Our future is 'Green' and LED !

Accelerate global plant restructuring and productivity programsExecute SG&A programFurther increase LCC ratio

'Green' products as profitable backbone business: OSRAM No. 1 or No. 2 LED – Growth and margin driver: OSRAM No. 2Integrated LED-LUM offering at OSRAM: Preferred supplier of our customers

We are prepared to lead technology transition

Strong No. 2 in all growing market segments

Returning OSRAM to solid performance

Speeding the technology transition

» »


Reconciliation and Definitions forNon-GAAP Measures (I)

Profit Total Sectors is reconciled to “Income from continuing operations before income taxes” under “Reconciliation to consolidated financial statements” in the table “Segment Information.” See our Financial Publications at our Investor Relations website under www.siemens.com/ir.

Earnings before interest and taxes, or EBIT (adjusted) is Income from continuing operations before income taxes less Financial income (expense), net and Income (loss) from investments accounted for using the equity method, net.

Earnings before interest, taxes, depreciation and amortization, or EBITDA (adjusted) is EBIT before Depreciation and Amortization, defined as depreciation and impairments of property, plant and equipment and amortization and impairments of intangible assets other than goodwill.

Profit is reconciled to EBIT and EBITDA on the table Segment Information Analysis (II). See our Financial Publications at our Investor Relations website under www.siemens.com/ir.

Return on Capital Employed (ROCE) is a measure of how capital invested in the Company or the Sectors yields competitive returns.

For the Company, ROCE is calculated as Net income (before interest) divided by average Capital employed (CE). Net income (before interest) is defined as Net income excluding Other interest income (expense), net and excluding taxes on Other interest income (expense), net. Taxes on Other interest income (expense), net are calculated in simplified form by applying the current tax rate which can be derived from the Consolidated Statements of Income, to Other interest income (expense), net. CE is defined as Total equity plus Long-term debt plus Short-term debt and current maturities of long-term debt minus Cash and cash equivalents.

Because Siemens reports discontinued operations, Siemens also calculates ROCE on a continuing operations basis, using Income from continuing operations rather than Net income. For purposes of this calculation, CE is adjusted by the net figure for Assets classified as held for disposal included in discontinued operations less Liabilities associated with assets classified as held for disposal included in discontinued operations.

For the Sectors, ROCE is calculated as Profit divided by average Assets. Profit for the Sectors is principally defined as earnings before financing interest, certain pension costs and income taxes, whereas certain other items not considered performance indicative by Management may be excluded. Assets for the Sectors is defined as total assets primarily less intragroup financing receivables and investments, less income tax assets, less non-interest bearing liabilities/provisions other than tax liabilities.


Siemens investor relations contact data

Michael Sen +49-89-636-33780

Munich Office +49-89-636-32474

US Office +1-408-464-2004

Internet: http://www.siemens.com/investorrelations

Email: [email protected]

Fax: +49-89-636-32830

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