Siegfried Gerlach, CEO Siemens Switzerland Ltd. Structure follows Strategy Effective implementation of the new Siemens strategy ZFU, November 15, 2013 Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Telecommunication and high voltage engineering: the historical roots of Siemens 1847 . Invention of the pointer telegraph . Founding of Siemens & Halske 1848 . Construction of Europe's first long- distance telegraph: Berlin-Frankfurt 1866 . Discovery of the dynamo-electric principle 1874 . Cable steamship "Faraday" lays transatlantic telegraph cable 1879 . First electric train shown at the Berlin trade fair 1881 . First electronic elevator in Mannheim 1896 . First subway in Budapest . First automatic telephone exchange 1909 for large city opened in Munich Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 2 November 15, 2013 Siegfried Gerlach / CEO Siemens Ltd. was active in six sectors up to 2005 Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 3 November 15, 2013 Siegfried Gerlach / CEO After our successful transformation, One Siemens is our framework for sustainable value creation Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 4 November 15, 2013 Siegfried Gerlach / CEO Strategic visioning process – Pictures of the Future Today‘s business 'Picture of the Future’ Influence factors and trends Society Politics Extra- Retro- polation polation Economy (Road- (Szenarios) Environment maps) Technology Customers Competitors Today Suppliers Today Short-term Medium-term Long-term Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 5 November 15, 2013 Siegfried Gerlach / CEO Climate change . 2012: highest CO2 concentration in the atmosphere in 350,000 years . 2001 to 2010: warmest decade on record . Max Planck Institute for Meteorology: Only immediate, drastic reduction of CO2 emissions will keep global warming below 2°C until 2100. Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 6 November 15, 2013 Siegfried Gerlach / CEO Urbanization Growth of cities . 2009: For the first time in history, more than 50% of mankind lives in cities . 2050: 70% of mankind will live in cities Megacities worldwide . 1975: 3 megacities with more than 10 million inhabitants . 2025: 27 megacities with more than 10 million inhabitants; about one person out of ten lives in a megacity. Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 7 November 15, 2013 Siegfried Gerlach / CEO Demographic change World population . 2011: 7 billion people . 2050: 9.3 billion people Worldwide life expectancy . 2011: 69 years . 2050: 76 years; share of people over age 65 more than twice what it is today Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 8 November 15, 2013 Siegfried Gerlach / CEO Our strategy is the base for our success Siemens strategy at a glance Competition from the West IT players Capital goods Markets & customers Global Megatrends Vision Framework for Demographic Strategic Directions sustainable value creation Siemens – Change the pioneer Focus on innovation- 1 One Siemens Urbanization driven growth markets Financial target system Get closer to our Revenue Capital Capital Climate Change 2 Siemens customers Growth Efficiency Structure Sectors EBITDA Globalization Use the power 3 responsible of Siemens Continuous improvement + excellent Competitors from innovative Economic environment emerging countries Values Restricted © Siemens Switzerland Ltd.Competition 2013 from the East siemens.ch/answers Page 9 November 15, 2013 Siegfried Gerlach / CEO We provide answers to the most urgent questions of our time Vision Organization IndustryEnergyHealthcareInfrastructure & Cities Intelligent infrastructure Infrastructure .. FossilImagingRail Systems Power & Therapy & Cities Sector . Industry Automation solutions GenerationSystems .. DriveMobility Technology and Logistics . OilClinical & Gas Products .. CustomerSmart Grid Services .. RenewableDiagnosticsLow and Medium Energy Industrial Industry Sector productivity . EnergyCustomerVoltage Service Solutions .. PowerBuilding Transmission Technologies The Pioneer in Energy efficiency Energy Sector Affordable and personalized Healthcare healthcare Sector Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 10 November 15, 2013 Siegfried Gerlach / CEO Portfolio adjustment - Divestments Divestments in Com area (new orders 2006: 13 billion euro) Joint-venture Nokia Siemens Networks Sale of majority share in Siemens Enterprise Communications Sale of Siemens Home and Office Communication Devices Sale of share in Fujitsu Siemens Computers Sale of Siemens VDO to Continental (new orders 2006: 10 billion euro) Sale of SIS to Atos Origin (3.7 billion euros / 28,500 employees) Spin-off of Osram (4.7 billion euros / 39,000 employees) Planned divestments: . Solar energy business (700 employees) . Water Technologies (4,500 employees) . Logistics and Airport Solutions (3,600 employees) Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 11 November 15, 2013 Siegfried Gerlach / CEO Portfolio adjustment - Acquisitions Purchase of VA Tech (3 billion euros, 13,000 employees) Purchase of diagnostics sector from Bayer (1.4 billion euros, 5000 employees) Purchase of Diagnostic Products Corporation California (481 million dollars, 2,500 employees) Purchase of Dade Behring (1.7 billion dollars, 6,400 employees) Purchase of UGS (1.22 billion dollars, 7,300 employees) Purchase of Invensys Rail (3,200 employees) Purchase of LMS International (1,200 employees) Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 12 November 15, 2013 Siegfried Gerlach / CEO The Siemens Environmental Portfolio – our contribution to sustainability Environmental Portfolio revenue 1 EnergyEnergy efficiency efficiency (in billions of €) 1) 28 30 33 2 Renewable energies 2010 2011 2012 Customers’ CO2 abatement (in millions of metric tons) 1) 332 257 213 …roughly equal to 3 Environmental technologies 1% of global CO2- emissions in 2011 2010 2011 2012 1) Continuing operations only (without OSRAM and Solar business) Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 13 November 15, 2013 Siegfried Gerlach / CEO Siemens AG – Facts and Figures Sales of more than 78 billion euros and profit of 4.6 billion euros (after taxes) R&D expenditure of 4.2 billion euros in FY 2011/12 Siemens achieves 75% of its business with products and solutions that have been developed within the last five years. 370,000 employees in 190 countries across the globe Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 14 November 15, 2013 Siegfried Gerlach / CEO Comparison of new orders for Siemens Switzerland Ltd. Values in millions of Fiscal year 2000 Fiscal year 2012 CHF 94.6 95.8 37.8 50.8 80.2 113.3 169.7 401.8 232.1 75.5 Total: 172.1 1973.8 396.8 Energy Energy 267.9 Healthcare Medicine 897.2 Infrastructure & Cities Industry (Building Technologies) Infrastructure & Cities Industry (Transportation) (Mobility and Logistics/Rail Systems) Information & Communication Infrastructure & Cities (Smart Grid/Low and Medium Voltage) Components Industry Household Appliances Other Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 15 November 15, 2013 Siegfried Gerlach / CEO CD ST defines the corporate strategy Level in Type of Strategy Typical activities Scope Siemens Where to . Identifies and defines the businesses the company . Broad environment compete is in and sets priorities for capital allocation . Long term / indefinite Corporate . Sets targets & measures/controls performance scope Strategy . Defines horizontal strategies and the level of . Top level . Siemens interaction/corporate involvement management . Sectors . Identifies risk and opportunities in the market . Specific . Divisions Business . Defines sales and customer strategies market/business . Examines the behavior of competitors . Medium-to-long term Strategy . Defines its competitive advantages regarding . Business leader . Business strengths and competences Units . Translates business strategy into functional . Specific function . Functions strategy . Short-to medium Functional Strategies . Defines the core competences within functions term . Implements and executes the strategy R&D Marketing HR . Functional leader Sourcing Production … How to compete To be successful each strategy level needs to be properly aligned and closely linked to each other Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 16 November 15, 2013 Siegfried Gerlach / CEO Siemens Switzerland Regional Strategy Implementation Process Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 17 November 15, 2013 Siegfried Gerlach / CEO Siemens Switzerland Implementation Process (SIP) Overview of Phases 1. Corporate & Business strategy (Global) Global Siemens ST Strategy Review (SSP) Department 2. Regional (Market) Strategy (Countries) Analyze Define Analyze Internal Develop Implement Control External Strengths and Action Fields Strategy Strategy Strategy Environment Weaknesses Strategy Targets/ Review Budgets Meetings BRM 3. Regional Functional Strategies (e.g. IT, HR, SCM) Functional Strategies (SCM, HR, IT, AC,..) Nov Dec Jan Feb Mar Apr-Oct Restricted © Siemens Switzerland Ltd. 2013 siemens.ch/answers Page 18 November 15, 2013 Siegfried Gerlach / CEO Siemens Switzerland Strategy Implementation Process (SIP) Siemens Toolbox Analyze Define Analyze Internal Develop Implement Control External Strengths and Action Fields