Interim Report
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Interim Report Third Quarter and First Nine Months of Fiscal !"## www.siemens.com Table of contents Key fi gures $ Revenue growth – continuing operations % Q3 2011 17,844 8% Q3 2010 17,425 Table of contents New orders – continuing operations % Q3 2011 22,937 02 Key fi gures 25% Q3 2010 19,179 0 4 Interim group management report 38 Condensed Interim Consolidated Financial Statements Income from continuing operations 44 Notes to Condensed Interim Consolidated Financial Statements "# Supervisory Board and Managing Board Q3 2011 763 (47)% 75 Review report Q3 2010 1,428 76 Quarterly summary 79 Financial calendar Basic earnings per share (in €) – continuing operations # Q3 2011 0.83 (49)% Q3 2010 1.62 ROCE (adjusted) – continuing operations Q3 2011 11.3% Q3 2010 17.0% Target corridor: 15-20% Introduction Free cash flow – continuing operations Q3 2011 992 Siemens AG’s Interim Report for the Siemens Group complies (52)% with the applicable legal requirements of the German Securi- Q3 2010 2,088 ties Trading Act (Wertpapierhandelsgesetz – WpHG) regarding quarterly fi nancial reports, and comprises Condensed Interim Consolidated Financial Statements and an Interim group man- agement report in accordance with § !"x (!) WpHG. The Con- densed Interim Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Adjusted industrial net debt / " Standards (IFRS) and its interpretations issued by the Interna- Adjusted EBITDA – continuing operations tional Accounting Standards Board (IASB), as adopted by the European Union (EU). The Condensed Interim Consolidated Q3 2011 0.03 Financial Statements also comply with IFRS as issued by the Q3 2010 0.28 IASB. This Interim Report should be read in conjunction with Target corridor: 0.5-1.0 our Annual Report for fi scal #$%$, which includes a detailed analysis of our operations and activities. 1 New orders and order backlog; adjusted or organic growth rates of Revenue and new orders; book-to-bill ratio; Total Sectors Profit; ROE (after tax); ROCE (adjusted); Free cash flow; cash conversion rate; adjusted EBITDA; adjusted EBIT; adjusted EBITDA margins, earnings effect from purchase price allocation, Due to rounding, numbers presented throughout this and or PPA effects; net debt and adjusted industrial net debt are or may be non- GAAP financial measures. Definitions of these supplemental financial measures, other documents may not add up precisely to the totals pro- a discussion of the most directly comparable IFRS financial measures, infor- vided and percentages may not precisely refl ect the absolute mation regarding the usefulness of Siemens’ supplemental financial measures, the limitations associated with these measures and reconciliations to the most fi gures. comparable IFRS financial measures are available on our Investor Relations website under www.siemens.com/nonGAAP . 2 April 1, 2011 – June 30, 2011 and October 1, 2010 – June 30, 2011. 3 Adjusted for portfolio and currency translation effects. 4 Earnings per share – attributable to shareholders of Siemens AG. For fiscal !"## and !"#" weighted average shares outstanding (basic) (in thousands) for the third quarter amounted to $%&,*## and $+$,$+& respectively and for the first nine months to $%!,%44 and $+%,$*" shares respectively. 5 Discontinued operations primarily consist of OSRAM, Siemens IT Solutions and Services and Siemens’ former Com activities, comprising carrier networks, enterprise networks and mobile devices activities. 6 Continuing and discontinued operations. 7 Calculated by dividing adjusted industrial net debt as of June 30, 2011 and 2010 by annualized adjusted EBITDA. 8 Beginning with fiscal 2011, central infrastructure costs which were formerly reported in Corporate items are allocated primarily to the Sectors. The total amount to be allocated is determined at the beginning of the fiscal year and is charged in set portions in all four quarters. Presentation of prior-year information has been adjusted to conform to the current-year presentation. Q& and fi rst nine months of fi scal !"## Volume (unaudited, in millions of €, except where otherwise stated) Q% ($$ Q& !"#" % Change #st nine months % Change Continuing operations Actual Adjusted % ($$ !"#" Actual Adjusted % New orders 22,937 19,179 20% 25% 64,425 52,466 23% 22% Revenue 17,844 17,425 2% 8% 53,164 49,575 7% 7% Earnings Q% ($$ Q& !"#" % Change #st nine months % Change Total Sectors ($$ !"#" Adjusted EBITDA 2,276 2,541 (10)% 7,432 7,192 3% Total Sectors Profi t + 1,144 2,067 (45)% 6,927 5,882 18% in % of revenue (Total Sectors) 6.5% 12.0% 13.1% 12.0% Continuing operations Adjusted EBITDA 2,319 2,667 (13)% 8,018 7,756 3% Income from continuing operations 763 1,428 (47)% 5,783 4,304 34% Basic earnings per share (in €) # 0.83 1.62 (49)% 6.48 4.86 33% Continuing and discontinued operations ) Net income 501 1,435 (65)% 5,090 4,464 14% Basic earnings per share (in €) # 0.53 1.62 (67)% 5.70 5.03 13% Capital efficiency Q% ($$ Q& !"#" $st nine months #st nine months ($$ !"#" Continuing operations Return on capital employed (ROCE) (adjusted) 11.3% 17.0% 26.0% 17.6% Continuing and discontinued operations ) Return on capital employed (ROCE) (adjusted) 7.2% 17.1% 22.2% 18.3% Cash performance Q% ($$ Q& !"#" $st nine months #st nine months ($$ !"#" Continuing operations Free cash fl ow 992 2,088 2,405 4,112 Cash conversion rate 1.30 1.46 0.42 0.96 Continuing and discontinued operations ) Free cash fl ow 861 2,129 1,727 4,058 Cash conversion rate 1.72 1.48 0.34 0.91 Liquidity and capital structure June %(, ($$ September &", !"#" Cash and cash equivalents 13,006 14,108 Total equity (shareholders of Siemens AG) 30,992 28,346 Net debt 5,731 5,560 Adjusted industrial net debt 243 2,189 Employees – in thousands June %(, ($$ September &", !"#" Continuing Continuing operations Total * operations Total * Employees 353 421 336 405 Germany 114 131 110 128 Outside Germany 239 290 225 277 % Interim group management report Overview of fi nancial results for the third quarter of fi scal !"## (Three months ended June &", !"##) >Orders climbed #$%, to €##.3!" billion, and the order back- including double-digit increases in China and India. On a log reached a new high of €3: billion. Orders were up #;% global basis, orders in emerging markets grew ;% compared to on an organic basis, excluding currency translation and the prior-year period and accounted for €:.!"* billion or #*% of portfolio effects. total orders for the quarter. On an organic basis, third-quarter >Revenue rose #%, to €%".*// billion, with increases in all re- emerging market orders were up %#% year-over-year. gions driven by emerging market growth. Organic revenue grew *% compared to the prior-year period. New orders (in millions of €) > Total Sectors profi t was €%.%// billion, including strong Siemens Industry Energy Healthcare profi t growth in Industry and burdens on profi t of €:*# mil- Sector $ Sector $ Sector $ lion related to an arbitration decision and €!*% million re- 20% lated to particle therapy projects. > Income from continuing operations was €":! million and 54% corresponding basic EPS was €$.*!. 0% > Free cash fl ow from continuing operations was €33# million, (7)% down from €#.$** billion in the prior-year period due in part to a build-up of net working capital associated with growth. 22,937 19,179 11,806 7,657 8,027 8,061 3,016 3,260 Management’s perspective on third-quarter results. We Q& !"## Q& !"#" 1 Includes intersegment orders. continued to grow in the third quarter and believe that we are on track to reach our targets for fi scal #$%%. New orders again rose sharply, driven by a large order at Mobility. We are vigor- Revenue rises in all regions, led by emerging markets. Third- ously tackling operating challenges. Our markets are still ro- quarter revenue rose in Industry, including double-digit in- bust, although risks are tending to increase in the global eco- creases at Drive Technologies and Industry Automation, and in nomic environment. Energy, including double-digit increases at Fossil Power Gen- eration and Oil & Gas. Reported revenue in Healthcare came in Strong order intake lifts backlog to new high. Orders climbed lower compared to the prior-year period due primarily to strong #$% compared to the third quarter a year ago, led by a €!." negative currency translation effects and a signifi cant revenue billion contract for trains in Germany. This helped lift the order reduction effect related to particle therapy projects. On a geo- backlog (defi ned as the sum of order backlogs of our Sectors) graphic basis, demand in emerging markets took revenue to a new high of €3: billion at the end of the quarter. Third- higher in all regions. Revenue in emerging markets globally quarter revenue rose #% year-over-year. Currency translation grew faster than revenue overall, at *% for the quarter, and effects took ; percentage points from reported growth in both accounted for €;.*3" billion, or !!%, of total revenue for the orders and revenue for the quarter. Currency translation ef- quarter. On an organic basis, third-quarter emerging market fects had a particularly strong infl uence on reported results revenue was up %/% year-over-year. including for the U.S., India and China. On an organic basis, excluding portfolio effects along with currency translation ef- Revenue (in millions of €) fects, orders increased #;% and revenue rose *% year-over- Siemens Industry Energy Healthcare year. The book-to-bill ratio for Siemens overall was %.#3. Sector $ Sector $ Sector $ Rolling stock contract drives order growth. The large order 2% for trains noted above helped lift Industry orders by more than ;$% compared to the same period a year ago. Energy orders 7% 5% were nearly level year-over-year. Healthcare orders for the third (9)% quarter declined in a challenging environment. On a geo- graphic basis, substantial order growth came from the region 17,844 17,425 8,082 7,570 6,776 6,462 2,858 3,152 comprising Europe, the Commonwealth of Independent States (C.I.S.), Africa and the Middle East, due to the trains order Q& !"## Q& !"#" 1 Includes intersegment revenue.