Fit4 2010 – Unleashing the potential of an integrated technology company

The Siemens-wide Fit4 2010 program is helping us leverage the capabilities of our integrated technology company to create lasting value for our shareholders and customers. Building on our values – responsible, excellent and innovative – we’re also striving to become a world leader in performance, transparency and compliance.

To succeed over the long term, companies must set and achieve demanding goals. That’s why – following in the footsteps of Fit4More – our Fit₄2010 program defines ambitious targets for growth, profitability, capital efficiency and cash flow:

We want to grow Company-wide at least twice as fast as world GDP. This normally means growth of about seven to eight percent, depending on global economic conditions.
To close the profitability gap to our best competitors, we introduced a new management and organizational structure on January 1, 2008 and set tough new target margin ranges for our Industry, Energy and Healthcare Sectors, their Divisions, and our Cross-Sector Businesses.
To measure capital efficiency, we’re applying the performance yardstick return on capital employed (ROCE). This metric is calculated by dividing income before interest by capital employed. We’re aiming for an ROCE of 14-16 percent for the entire Company by 2010 – an ambitious goal in light of our past performance.
In the area of cash flow, we’ve set a cash conversion target of “one minus the Company’s growth rate.” Positive cash flow is vital if we are to make the investments necessary to generate future growth.
To optimize our capital structure, we’re aiming to achieve a ratio of adjusted industrial net debt to EBITDA of 0.8-1.0, depending on our level of profitability.
Finally, we intend to further optimize our market position by achieving a €1.2 billion reduction in our sales, general and administrative (SG&A) costs by 2010, compared with the figure for 2007.

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To reach these targets, we can’t just rely on the strengths of our individual businesses. We have to unleash the full potential of our integrated technology company. And that’s where our four proven drivers – Portfolio, People Excellence, Operational Excellence and Corporate Responsibility – come in:

Portfolio: As in the past, the goal of our portfolio strategy is to capture leading positions with our products and solutions in high-growth markets worldwide. Experience has shown that businesses must be No. 1 or No. 2 in their markets if they are to achieve high operating margins and profitable long-term growth. Having made major acquisitions in the past five years, we’re now focusing primarily on generating organic growth in our three Sectors Industry, Energy und Healthcare (see chapter Portfolio).
People Excellence: By attracting the best people worldwide, evaluating and developing our employees on the basis of binding standards, identifying and fostering tomorrow’s top managerial talents and key technology experts early on, and grooming our managers for leadership, we’re creating a high-performance culture that will ensure our Company’s future success (see chapter People Excellence).
Operational Excellence: We aim to remain a leading global player, offering innovative products and solutions while expanding our market presence and increasing our market penetration, particularly in fast-growing regions like Asia. With our SMART initiative, for example, we also want to better serve our customers in a variety of market segments around the world (see chapter Operational Excellence).
Corporate Responsibility: We do more than deliver innovative, cutting-edge products and services worldwide; we also make major contributions to environmental protection, economic development and public welfare in the communities where we do business. Under the Fit4 2010 program, we’re focusing on four areas: corporate governance, compliance, climate protection and corporate citizenship. Compliance-related activities, in particular, are a vital element of corporate responsibility at Siemens (see chapter Corporate Responsibility).