Sustainable Value Generation Based on Solid Financials Siemens Capital Market Day | Berlin, December 9, 2014

Ralf P. Thomas | Member of the Managing Board and CFO Sustainable value generation based on solid financials Siemens Capital Market Day | Berlin, December 9, 2014

This document contains statements related to our future business and financial performance and future events or developments involving Siemens that may constitute forward-looking statements. These statements may be identified by words such as “expect,” “look forward to,” “anticipate” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project” or words of similar meaning. We may also make forward-looking statements in other reports, in presentations, in material delivered to shareholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current expectations and certain assumptions of Siemens’ management, of which many are beyond Siemens’ control. These are subject to a number of risks, uncertainties and factors, including, but not limited to those described in disclosures, in particular in the chapter Risks in the Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, performance or achievements of Siemens may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Siemens neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated. This document includes – in IFRS not clearly defined – supplemental financial measures that are or may be non-GAAP financial measures. These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens’ net assets and financial positions or results of operations 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. All underlying margins are calculated by adjusting margins for the effects reported for the respective businesses in the relevant period. These effects are provided to assist in the analysis of the businesses' results year-over-year and may vary from period to period. Underlying margins are not necessarily indicative of future performance. Other companies may calculate similar measures differently. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

Successful completion Our path to sustainable of FY 2014 value generation

Risk Efficient We delivered the results we ✓ Manage- Cost promised in our guidance ment Structure ✓ We made substantial Value progress strengthening Generation our portfolio

We are delivering attractive ✓ shareholder returns Resource Allocation

Orders Revenue Net Income Total cost productivity in €bn +0.8% Comp. +0.5% Profit 8.8% 10.6% (-1.8%) (nom.) (-2.1%) Margin 3-5% (Industrial 79.1 77.7 72.8 71.2 Business) +1.1 in €bn 5.5 4.4 4.0% 4.1% B-t-B 1.09 1.09

FY 13 FY 14 FY 13 FY 14 FY 2013 FY 2014 FY 2013 FY 2014

EPS (“all-in”) ROCE (“all-in”) Capital structure1) in € 15-20% ≤1 +25% 6.37 5.08 17.3% 13.5% 0.3x 0.1x

FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 FY 2014

1) Industrial Net Debt/EBITDA; EBITDA is without the elimination of income or loss from investments accounted for using the equity method © Siemens AG 2014 Page 4 Berlin, December 9, 2014 Capital Market Day Vision 2020 | Ralf P. Thomas, Siemens CFO New structure along value chain of electrification provides further room for value generation

Profit margins of businesses

Power Wind Energy Building Mobility Digital Process Healthcare SFS1) and Gas Power Manage- Tech- Factory Industries & & Renew- ment nologies Drives ables 11-15% 5-8% 7-10% 8-11% 6-9% 14-20% 8-12% 15-19% 15-20%

17% 18% 18% 18% 17% 18% 15% 15%

9% 8% 7% 7% 5% 0% 0% 2% -1% -4%

FY 2013 FY 2014 1) SFS based on Return on equity after tax © Siemens AG 2014 Page 5 Berlin, December 9, 2014 Capital Market Day Vision 2020 | Ralf P. Thomas, Siemens CFO Another year with more than five billion FCF, despite continuing trend of lower advance payments

Key drivers free cash flow FCF development (“all-in”) 5.328 Operating Working Capital turns Total Sectors FY 2013 5.201 9.0 FY 2014 7.6 7.2 in €bn

FY 2012 FY 2013 FY 2014

Advance payments Orders & BiE in €bn in €bn Total Sectors, as reported 16 83.1 100 76.8 79.6 15 80 FY 2013 4.3 14.0 3.5 14 60 FY 2014 13 12.8 1.3 1.4 1.1 1.0 40 12 11.8 20 -0.7 -1.4 0 0 FY 2012 FY 2013 FY 2014 Q1 Q2 Q3 Q4

Risk Efficient Manage- Cost legacy projects phasing out ment Structure Value Risk Generation

Resource Management Allocation

Order backlog portfolio (Sep 30, 2014) Order backlog revenue recognition in €bn 100 Order backlog Industrial Business: €100bn 36

Product Business 18 Project Business ~17%

46 ~48%

~35% As of Sep Revenue Revenue Revenue Service 30, 2014 recognition recognition recognition Business in FY 2015 in FY 2016 in FY 2017 & beyond

Risk Efficient Manage- Cost majority will be completed 2017 ment Structure Value Risk Generation

Resource Management Allocation

Estimated project completion Offshore grid connections – North Sea PoC ca. 75%-90% 2015

HVDC links – Canada and UK ~2016/17 PoC ca. 40%-50%

Rail projects – Germany and UK ~2017 Velaro D PoC ca. 80%, Velaro Eurostar PoC ca. 55%

beyond 2017 Olkiluoto 3 – Finland

Risk Efficient Manage- Cost risk mitigation and reducing project charges ment Structure Value Risk Generation

Resource Management Allocation

Lessons learned Intensification "Corporate & Implementation of … Memory"

Typical risk … identification Extended risk and pitfalls of risks and root Refined project opportunity causes categorization workshops in early bid phase First-of- High Speed its-kind Trains … early warning technical mechanisms Independent challenges Intensified technical internal view risk assessments from experienced project leaders … project approval Specific process regional Offshore conditions/ Grid Portfolio risk Risk-adjusted partnering Connections … mitigation management business models measures for contingent events Company-wide Low Siemens Improved … business transfer of people, value add terms and proximity of knowledge and conditions HVDC Links management expertise

Risk Efficient Manage- Cost consequently driving down cost ment Structure Value Efficient Generation

Resource Cost Structure Allocation

Stringent execution of organizational streamlining

2013 • Reduction of Managing Board members from 10 to 7 2014 • Dissolution of Clusters • Improved go-to-market approach Ramp-up of 2015 additional • Dissolution of Sectors productivity • Healthcare separately managed of €1bn on • Optimized set-up of Divisions – bundling of Business Units/Business Segments track • More focused portfolio management • Enhanced and stringent incentive system • Strengthening of global governance enhances entrepreneurship • Optimization of Support Functions

Risk Efficient Manage- Cost countermeasure for price change and cost inflation ment Structure Value Efficient Generation

Resource Cost Structure Allocation

Levers for productivity improvement

Supply Chain

• Global value sourcing • Second sourcing/multiple sourcing • Demand bundling • eBidding/eAuctions • … Base productivity Design-to-cost 3-5% p.a. • Re-design • Standardization • Modularization Siemens value-add • Simplification • … • Process optimization • Outsourcing • Optimization of global footprint • …

© Siemens AG 2014 Page 11 Berlin, December 9, 2014 Capital Market Day Vision 2020 | Ralf P. Thomas, Siemens CFO Risk Efficient Manage- Cost Capital allocation with clear priorities ment Structure Value Resource Generation

Resource Allocation Allocation

Criteria to strengthen core … … by continuous focus on portfolio … 1| Areas of growth? Investments Divestments • B/S/H/ 2| Potential profit pool? • Dresser-Rand • Audiology • Rolls-Royce • Healthcare IT 3| Why Siemens? • … 4| Synergetic value? 5| Paradigm shifts? … and focused investments in ongoing business FY 2013 FY 2014 Focus for FY 2015 R&D 4.0 4.0 • PG - Large Gas Turbine Technology % Revenue 5.5% 5.6% • DF - Plant Data Services • HC - Next-Gen integrated platform SG&A 10.6 10.2 • PG - Growing sales force 'Siemens – Vision 2020' % Revenue 14.6% 14.3% • DF - Sales invest China

2.2 Capex 2.2 • PG - Combustion Testcenter Berlin Capex ratio 100% 116% • HC - Next-Gen integrated platform

Risk Efficient Manage- Cost attractive shareholder returns ment Structure Value Resource Generation

Resource Allocation Allocation

Attractive dividend yield Share buyback

• Dividend increase by 10% to €3.30 • Up to €4bn over 2 years • Payout ratio of 40-60% at high dividend yield • Total buyback volume €1.7bn until Dec 8, 2014

€97 €98 €96 €94 €92 57% €86 €89 46% 42% 48% 49% 34%

CAGR 389 +16% €5.401) 240 225 233 212 €3.30 199 182 €2.70 €3.00 €3.00 €3.00 €1.60

FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 May June July Aug Sep Oct Nov

Dividend per share Dividend payout ratio Share buyback volume (in €m) Share price in €

1) Effect of OSRAM stock distribution to shareholders of €2.40 per share; not reflected in CAGR or dividend payout ratio © Siemens AG 2014 Page 13 Berlin, December 9, 2014 Capital Market Day Vision 2020 | Ralf P. Thomas, Siemens CFO Assumptions FY 2015

• Complex market conditions impacted by geopolitical developments Macroeconomic environment • Modest growth for short cycle businesses expected

• Significant gains from divestments cover restructuring charges and Execution of Vision 2020 drive EPS growth

Pricing • Pricing pressure around 2.5% of revenue

Personnel cost inflation • 3-4% increase

Productivity • 3-4% of cost base

Foreign exchange • Limited foreign exchange tailwind due to hedging policy

• Continuing trend of low advance payments and billings in excess in project business Cash Flow • Cash-outs for acquisitions of Dresser-Rand and Rolls-Royce higher than proceeds from sale of BSH, Audiology and Healthcare IT • Cash-outs for ongoing share buyback and increased dividend

Profit Margins Outlook1) FY 2015

FY 2014 Target ranges • Revenue flat on an organic basis • Book-to-bill ratio above 1 PG 17% 11-15% • Increase basic earnings per share at least 15% WP 0% 5-8% • Industrial Business profit margin of 10-11% EM -1% 7-10%

BT 9% 8-11% • SFS: In line with FY 2014 MO 7% 6-9% • CMPA: Gain from divestment BSH; includes other portfolio elements, e.g. Unify, Osram, Metals, DF 18% 14-20% Postal & Baggage Handling as of FY 2015 • SRE: Lower than PY; dependant on disposal gains PD 8% 8-12% • Corporate Items: ~€150m per quarter, H2 > H1, HC 18% 15-19% volatility related to warrants, among others • Pension: ~€125m per quarter SFS2) 18% 15-20% • PPA: In line with FY 2014 ~€500m • Disc. Ops: Includes results and gains from • PG margin expected at lower end of target range Healthcare IT, Audiology, Metals • WP and EM margins expected to increase significantly

1) This outlook excludes impacts from legal and regulatory matters; 2) SFS based on Return on equity after tax © Siemens AG 2014 Page 15 Berlin, December 9, 2014 Capital Market Day Vision 2020 | Ralf P. Thomas, Siemens CFO We are fully committed to sustainable value generation

Delivering on our outlook Vision 2020

Significantly reducing Scale up project charges Strengthen core Streamlining our organization Drive performance

Efficiently allocating capital Ownership culture

Disciplined execution of Vision 2020!