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Siemens – Vision 2020

07 May 2014

  • Focus on growth fields along the electrification, automation and digitalization

  • Acquisition of Rolls-Royce gas turbine and compressor business and public listing of audiology set the course

  • New organization with flatter structures – Sector level eliminated

  • Greater employee participation in company success – Siemens to make up to €400 million available annually depending on company performance

  • Launch of share buyback of up to €4 billion upcoming
     

In the future, Siemens AG will position itself along the electrification, automation and digitalization. Along these value chains Siemens has identified several growth fields in which it sees its greatest long-term potential. The company is orienting its resource allocation toward these growth fields and has announced concrete measures in this direction. The measures include the purchase of the major part of Rolls-Royce’s energy business. A public listing of the audiology business will also be prepared. In addition, Siemens is making its organization flatter and more customer-oriented. This is Siemens – Vision 2020.

“Our Vision 2020 addresses our company’s long-term perspectives along the modern electrification and automation value chains. By expanding share-based employee participation in our company’s success, we’re creating a sustainable ownership culture at Siemens,” said Siemens President and CEO Joe Kaeser.

The company wants to expand its share plans for employees below the senior management level and increase the number of employee shareholders by at least 50 percent to well over 200,000. For this purpose, Siemens will make up to €400 million available annually depending on company performance. In addition, the launch of the previously announced share buyback program of up to €4 billion is upcoming.

The future focus on electrification, automation and digitalization is the result of the in-depth and extensive analysis begun in August 2013. Siemens has identified the fields where it will be able to achieve long-term growth and high profitability with its products and its unique technological knowhow.

In electrification and automation, Siemens already holds a clear No. 1 position in many markets. The growth fields in these two areas include the markets for small gas turbines and offshore wind turbines, which are profiting from a growing demand for secure and sustainable power supplies. The process industry, for example, offers attractive opportunities that Siemens can leverage even more intensively with its automation and drives solutions. The market for the production of unconventional oil and gas also offers attractive growth potential for Siemens.

Siemens intends to fully exploit the potential of increasing digitalization not just in manufacturing. Utilizing software and simulations, the Digital Factory makes product development considerably faster and more efficient. Data-driven services, software and IT solutions are of decisive importance as they have a substantial influence on all of Siemens’ future growth fields.

In order to take full advantage of the market potential in these fields, Siemens is realigning its organizational structures. As of October 1, 2014, the organization will be streamlined by eliminating the Sector level and bundling business into nine Divisions instead of the current 16. In addition, Healthcare will be separately managed in the future. This means that regional organization structures can be tailored to the requirements of the healthcare market and do not have to conform to the company’s organizational matrix. This will give Healthcare greater flexibility on the medical technologies market, which is characterized by fundamental changes and paradigm shifts. As part of its realignment, Siemens is also preparing the going public of its audiology business.

Bundling the Divisions and eliminating the Sectors will reduce bureaucracy, cut costs and accelerate decision-making within the company. In addition, the company’s support functions – for example, human resources and communications – are to be streamlined and centrally managed in the future. These measures, which are expected to increase productivity by some €1 billion a year, are to be fully effective by the end of fiscal 2016. To optimize cost development sustainably, the company has set a new target for total cost productivity. Starting in fiscal 2015, it is to total three to five percent a year.

As of fiscal 2015, the Divisions will be assigned target profit margin ranges excluding ppa – that is, excluding the acquisition-related amortization of intangibles. These target ranges are oriented on the profit margins of each Division’s main competitors.

Power and Gas

11 - 15%

Wind Power & Renewables

5 - 8%

Energy Management

7 - 10%

Building Technologies

8 - 11%

Mobility

6 - 9%

Digital Factory

14 - 20%

Process Industries and Drives

8 - 12%

Healthcare

15 - 19%

Financial Services

15 - 20% (Return on equity)

Find all information regarding Siemens‘ strategic realignment and the combined press and analyst conference on May 7, 2014 at 8:45 AM CEST at www.siemens.com/pressconference

Siemens AG (Berlin and Munich) is a global powerhouse in electronics and electrical engineering, operating in the fields of industry, energy and healthcare as well as providing infrastructure solutions, primarily for cities and metropolitan areas. For over 165 years, Siemens has stood for technological excellence, innovation, quality, reliability and internationality. The company is one of the world’s largest providers of environmental technologies. Around 43 percent of its total revenue stems from green products and solutions. In fiscal 2013, which ended on September 30, 2013, revenue from continuing operations totaled €75.9 billion and income from continuing operations €4.2 billion. At the end of September 2013, Siemens had around 362,000 employees worldwide on the basis of continuing operations. Further information is available on the Internet at: www.siemens.com.

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, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect Siemens’ operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or anticipated on the basis of historical trends. These factors include in particular, but are not limited to, the matters described in Item 3: Key information—Risk factors of our most recent annual report on Form 20-F filed with the SEC, in the chapter C.9.3 Risks of our most recent annual report prepared in accordance with the German Commercial Code, and in the chapter C.7 Risks and opportunities of our most recent interim report. Further information about risks and uncertainties affecting Siemens is included throughout our most recent annual and interim reports, as well as our most recent earnings release, which are available on the Siemens website, www.siemens.com, and throughout our most recent annual report on Form 20-F and in our other 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, performance or achievements of Siemens may vary materially from those described in the relevant forward-looking statement as being expected, anticipated, intended, planned, believed, sought, estimated or projected. Siemens neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated. 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.