Siemens AG
Siemens to raise target margin ranges for Operations
Munich, 2007-Nov-08
Siemens is raising the target margin ranges for its operating units. “We’re convinced that the creation of new structures within the three planned Sectors Energy, Industry and Healthcare will make our company less complex, more transparent, more focused and, therefore, faster and more successful. As a result, it’s also clear we’ll exceed the current goals of our Fit for 2010 program,” said Peter Löscher, Siemens CEO. The new target margin ranges for the future Energy and Industry Sectors will be announced at the end of January 2008. Effective immediately, the target margin range for the Medical Solutions Group (Med) will be raised to 14-17% from the current 13-15%. In the course of the restructuring, Siemens also intends to reduce selling, general and administrative costs, as a percentage of sales, 10-20% by 2010.
If approved by the Supervisory Board on November 28, 2007, implementation of the new company structure will begin in January 2008. External financial reporting on the basis of the new structure will begin in the second half of fiscal 2008. Financial information will be reported at the Sector level and below. “We’re again making our financial reporting considerably more transparent than it is today,” said Löscher.
The Energy Sector will essentially comprise the Groups Power Generation (PG) and Power Transmission and Distribution (PTD). This Sector will target a highly attractive market, which is growing at 11% a year. Siemens expects the market’s total volume to be well above €300 billion by 2010.
The Industry Sector will comprise the business activities of Automation and Drives (A&D), Industrial Solutions and Services (I&S), Transportation Systems (TS), Siemens Building Technologies (SBT) and Osram. Siemens assumes that the Sector’s markets will grow 5% a year to reach a total volume of nearly €500 billion by 2010.
The Healthcare Sector will comprise the Medical Solutions Group (Med). Med’s latest acquisitions have more than doubled its market to €57 billion and enabled the Group to tap attractive new segments.
Siemens IT Solutions and Services and Siemens Financial Services (SFS) will continue to operate as cross-sector businesses.
The planned new structure will generate considerable synergy potentials. “We’re going to precisely define how staff functions are assigned to the various levels in the new structure,” said Peter Löscher, with reference to the selling, general and administrative costs, which totaled some 17% of sales in fiscal 2007.
Siemens AG (Berlin and Munich) is a global powerhouse in electrical engineering and electronics. The company has around 400,000 employees (continuing operations) working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of services for individual requirements. Siemens provides innovative technologies and comprehensive know-how to benefit customers in some 190 countries. Founded 160 years ago, the company focuses on the areas of Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting. In fiscal 2007 (ended September 30), Siemens had revenue from continuing operations of €72.4 billion and net income from continuing operations of €3.909 billion (IFRS) – preliminary figures, unaudited. Further information is available on the Internet at: www.siemens.com.
All figures are preliminary and unaudited. Reconciliation and definitions of our non-GAAP measures are available on our Investor Relations website at www.siemens.com/ir, Financial Publications, Quarterly Reports.
This document contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words such as “expects,” ”looks forward to,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect its operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens worldwide to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from: changes in general economic and business conditions (including margin developments in major business areas); the challenges of integrating major acquisitions and implementing joint ventures and other significant portfolio measures; changes in currency exchange rates and interest rates; introduction of competing products or technologies by other companies; lack of acceptance of new products or services by customers targeted by Siemens worldwide; changes in business strategy; the outcome of pending investigations and legal proceedings; our analysis of the potential impact of such matters on our financial statements; as well as various other factors. More detailed information about our risk factors is contained in Siemens’ filings with the SEC, which are available on the Siemens website, www.siemens.com, and on the SEC’s website, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. Siemens does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.
Reference Number: AXX200711.12 e