Major Orders Fuel Fast Growth Profit Rises in All Sectors 2nd Tranche of Share Buyback Completed Peter Löscher, President and Chief Executive Officer of Siemens AG Financial highlights: “We shifted Siemens Orders rose 21%, to €23.677 billion, and revenue in- into a higher gear in creased 10%, to €19.182 billion. On an organic basis, the third quarter, excluding the net effect of portfolio transactions and reaching important currency translation, orders climbed 26% year-over-year, milestones on our and revenue rose 13%. reorganization path. We are becoming Total Sectors profit –a measure combining profit from faster, more efficient the Industry, Energy and Healthcare Sectors– climbed and more focused as 33%, to €2.084 billion. a company, with the timely entrepre- neurial approach that is required to stay Income from continuing operations rose strongly to on this course,” commented Siemens €1.475 billion from €608 million in the prior-year quar- CEO Peter Löscher. “Regarding fiscal ter. Basic earnings per share (EPS) from continuing op- 2008, we affirm our full-year outlook. erations were €1.61, up from €0.64 a year earlier. While we expect a less favorable ma- croeconomic situation in fiscal 2009, we Net income was €1.419 billion. A year earlier, net in- still plan to grow at twice the rate of come of €2.065 billion benefited from a substantial global GDP. We are also committed to gain in discontinued operations related to the transfer achieving a combined Sector operating of the carrier business into Nokia Siemens Networks. result of 8 to 8.5 billion euros for the Basic EPS declined to €1.55 compared to €2.25 in the year. Our new management incentive prior-year period. system should play an important role in our progress ahead, along with world- Siemens completed the second tranche of its share wide employee participation in Siemens’ buyback program in July, raising total purchases to €4.0 success through equity ownership.” billion in the fiscal year. Approximately €1.3 billion of the total occurred in the third quarter. Table of contents Siemens 2-4 Sectors, SEI and Cross-Sector Businesses 5-11 Other operating and corporate activities 12 Media Relations: Wolfram Trost Subsequent Events Phone: +49 89 636-34794 and Outlook 13 E-mail: [email protected] Note and Disclaimer 14 Siemens AG, 80200 Munich, Germany Earnings Release Q3 2008 Munich, July 30, 2008 Siemens 2 Orders and Revenue Robust growth and Good Sector balance In the Americas, orders and revenue strong book-to-bill rose 10% and 5%, respectively, despite Order growth was well-balanced, with strong negative currency translation Orders were €23.677 billion in the double-digit expansion in all Sectors. effects. These results include negative third quarter, up 21% from the prior- currency translation effects of 15 per- Siemens year period, while revenue rose 10% Revenue growth included double-digit centage points on orders and 14 per- year-over-year, to €19.182 billion. increases in Energy and Healthcare centage points on revenue. Excluding and 8% growth in Siemens’s largest these effects and portfolio transac- These results include negative curren- Sector, Industry. tions, orders rose 21% and revenue cy translation effects of 7 percentage increased 15%. points on orders and 6 percentage points on revenue. Excluding these Major orders in Europe fuel high The region consisting of Asia, Australia effects and portfolio transactions, order growth and the Middle East saw 9% revenue orders rose 26% and revenue in- growth, including double-digit in- creased 13%. The region comprising Europe, the creases in China and India. Third- Commonwealth of Independent States quarter orders were nearly the same The book-to-bill ratio for the quarter (CIS) and Africa contributed 40% order year-over-year, despite a higher level was 1.23, driven by exceptionally large growth and 12% revenue growth in of large orders in the prior-year period. orders in Industry and Energy. the third quarter, due in part to the large orders in Industry and Energy. Book-to-bill New Orders & Revenue 1.32 1.29 1.23 Q3 Q3 % Change 1.11 1.06 2007 2008 Act. Adj. New Orders 19,494 23,677 21% 26% 19,494 17,517 21,328 20,201 24,242 18,400 23,371 18,094 23,677 19,182 Revenue 17,517 19,182 10% 13% Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Figures in millions of € Figures in millions of € New Orders Revenue Book-to-bill ratio Act.: Actual; Adj.: Adjusted change New Orders & Revenue by Region New Orders & Revenue by Sectors 31 % 33 % 5% 42 % 19 % 21 % 24 % 2 % 3 % 11 % 26 % 23 % 11 % 40 % 20 % 10 % 9 % 0 % 2 % 7 % New Orders New New Orders New 1,420 1,455 9,188 12,827 2,780 3,328 5,578 6,136 4,188 4,576 4,728 4,714 601 643 9,149 11,508 6,556 8,077 2,517 2,801 Asia, Europe, therein: therein: Australia, therein: therein: Industry Energy Healthcare C.I.S.*, Americas Germany U.S. Middle China India Sector Sector Sector Africa East 12 % 26 % 3 % 12 % 13 % 15 % 7 % 12 % 26 % 37 % 8 % 19 % 10 % 12 % 14 % 5 % (4) % 9 % 24 % 33 % Revenue Revenue 9,200 10,303 2,871 3,260 4,706 4,935 3,764 3,617 3,611 3,944 976 1,213 370 491 8,751 9,423 4,880 5,829 2,431 2,677 Figures in millions of € Figures in millions of € Q3 2007 Q3 2008 Actual change * Commonwealth of Independent States Q3 2007 Q3 2008 Actual change Adjusted change (Always: Excluding the net effect of currency translation and portfolio effects) Adjusted change Siemens 3 Income and Profit Higher profit margin drives Income and EPS from continuing Net income comparison increase in Total Sectors profit operations rise sharply influenced by prior-year gain Siemens’ three Sectors delivered Income from continuing operations Net income in the third quarter was €2.084 billion in Total Sectors profit, was €1.475 billion in the third quarter, €1.419 billion, with corresponding Siemens up 33% from €1.571 billion in the well above €608 million a year earlier. basic EPS of €1.55. third quarter a year earlier, with Basic EPS on a continuing basis particular strength in the Industry and climbed to €1.61 from €0.64 in the A year earlier, third-quarter net in- Energy Sectors. prior-year period. come was €2.065 billion. Correspond- ing EPS were €2.25. Within Industry, the leading profit The main factor in these increases was performers were the two Divisions the growth in Total Sectors profit year- The comparison year-over-year is created out of the former A&D Group: over-year. strongly influenced by discontinued Industry Automation and Drive operations, which posted a loss of €56 Technologies. Sector profit also In addition, Strategic Equity million in the current period in con- included a gain of €113 million on the Investments (SEI) posted profit of €1 trast to income of €1.457 billion in the sale of the wireless modules business million compared to a loss of €301 prior-year period. The major factors in in the Industry Automation Division. million in the third quarter a year the latter result were a preliminary earlier. The main factor in this change pre-tax non-cash gain of €1.7 billion Profit growth within Energy featured was significant progress at Nokia resulting from the transfer of Siemens’ strong contributions from the two new Siemens Networks B.V. (NSN), which telecommunications carrier business Divisions created out of the former improved its operating result and into NSN and positive operating results PTD Group: Power Transmission and sharply reduced restructuring and at Siemens VDO Automotive (SV), only Power Distribution. integration costs compared to the partly offset by an impairment of the prior-year quarter. enterprise networks business in the Siemens’ Healthcare Sector pre-tax amount of €355 million. contributed 6% profit growth and Siemens’ two Cross-Sector Businesses, sustained its profitability despite Siemens Financial Services (SFS) and challenging market conditions. Siemens IT Solutions and Services, contributed €123 million in profit, nearly unchanged year-over-year. In addition, expenses for legal and regulatory matters were lower in the current quarter. Total Sectors Profit Earnings per Share (EPS)* 33% 2,084 2.25 1.61 1,571 326 1.55 307 615 0.64 442 1,143 822 Income from Net Income continuing Q3 2007 Q3 2008 operations Figures in millions of € Figures in € Sectors: Industry Energy Healthcare Q3 2007 Q3 2008 Change in % * Basic Income 143 % n.a. +5 % +15(31) % % +11 % +8 % +19 % +10 % 608 1,475 1,457 (56) 2,065 1,419 Revenue Income from continuing Income from discontinued8,751 9,423 4,880Net5,829 income2,431 2,677 operations operations Figures in millions of € Q3 2007 Q3 2008 Change in % Q3 2007 Q3 2008 Actual change Adjusted change Siemens 4 Cash, Return on Capital Employed (ROCE), Pension Funding Status and Investigation Expenses Cash conversion rate This effect more than offset higher Siemens completes the second above target income from continuing operations in tranche of its share buyback pro- the current period, and will continue gram Free cash flow from continuing opera- through the current fiscal year. tions in the current quarter was The second share buyback tranche Siemens €1.547 billion. For comparison, free totaled €2.0 billion in purchases for cash flow of €1.943 billion in the Continued expenses for compliance 27,916,664 shares, and was com- prior-year quarter benefited from a investigations pleted after the close of the quarter on positive effect of approximately €1.1 July 22, 2008.