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Power Transmission and Distribution - Siemens ... Source: European Technology Platform SmartGrids, Vision and Strategy for Europe’s Electricity Networks of the Future, V4.0, 24.2.2006

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  • Power Transmission and Distribution - Dr. Udo Niehage, Group President

    Capital Market Days 2007 June 21-22, Berlin

  • Page 1 June 2007 Capital Market Days

    Disclaimer

    This presentation contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words 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.

  • Page 2 June 2007 Capital Market Days

    Electrical energy is the backbone of our society

  • Page 3 June 2007 Capital Market Days

    PTD delivered what was promised Key Financials: Improvement 2006 vs. 2005

    0 20062005 H1 2007

    +84% Δ 2006 vs. 2005

    trailing 4 quarters

    PTD Profit

    5.0%1)

    6.0%1)

    7.8%2)

    1) Group profit margin USGAAP

    2,000

    3,000

    4,000

    5,000

    6,000

    7,000

    8,000

    9,000

    10,000

    2005 2007

    PTD Sales PTD New Orders

    +52% Δ 2006 vs. 2005

    in € m

    100

    200

    300

    400

    500

    600

    in € m

    2006

    +53% Δ 2006 vs. 2005

    2) Group profit margin IFRS

  • Page 4 June 2007 Capital Market Days

    PTD group profit 2006 vs. 2005: +84% New target margin until 2010: 7% - 10%

    12 months trailing business volume

    Strong volume growth continues in first half of FY 2007; all divisions exceeded previous year bookings

    Significant ROCE improvement

    Group profit margin improvement to 7.8% of sales in HY 2007

    CCR affected by growth effects, finalization of negative VA Tech projects and restructuring

    Sales New Orders

    SalesSales New Orders New Orders

    Sales New Orders

    SalesSales New Orders New Orders

    FY2004 FY2005 FY2006 FY2007 3

    4

    5

    6

    7

    8

    9

    10

    FY2004 FY2005 FY2006 FY2007

    Key Financials

    FY06 H1 07Δ06 vs. 05 Δ07 vs. 061)

    1) comparable period 2) values in € m

    € bn

    3) cash conversion rate

    (US GAAP) (IFRS)

    ---0.38---0.35CCR3)

    +18%3,484+53%6,509Sales

    +72%273+84%390Group profit2)

    +11%29+6%28Employees

    ---31%---18%ROCE ---7.8%6.0%as percentage of sales

    +32%5,622+52%8,028New Orders2)

    in thousands

  • Page 5 June 2007 Capital Market Days

    PTD – Gaining significant market share

    With double digit sales growth closing the gap to # 1

    Market Share Development 1)

    2005: Siemens data with anticipated full FY VATech T&D

    16% 17%

    20%

    2003

    2005

    2006

    2003

    2005

    2006

    10% 14%

    18%

    2003

    2005

    2006

    8% 7%

    9%

    1) Comparable portfolio

  • Page 6 June 2007 Capital Market Days

    Leading market positions in nearly all businesses

    Divisions

    New Orders 2006 vs. 2005

    Energy Automation (EA)

    Integrated control systems, protection and substation automation, telecontrol systems, power quality

    Transformers (T)

    Power transformers up to 1,300 MVA and 765kV, distribution transformers with oil or cast-resin insulation

    High voltage (H)

    Components, switchgear and turnkey projects for power transmission > 52kV (AC and DC)

    Medium voltage (M)

    Components, switchgear and turnkey projects for power transmission ≤ 52kV (AC and DC)

    Services (SE)

    Network planning & consulting, asset maintenance and maintenance management for grids & networks, metering services

    Market position #1#2#1 #2 #2

    > 50 %>100 %> 50 % > 20 % > 40 %

  • Page 7 June 2007 Capital Market Days

    T&D Market and New orders trend PTD grows faster than the market

    FY 2005 FY 2010 FY 2005

    € 5.3 bn

    20 %

    21 %

    37 %

    18 %

    4 %

    € 55 bn

    PTD Target (New orders)T&D Market1)

    FY 2010 3) Commonwealth of Independent States

    Germany

    € 39 bn

    +1 % p.a.

    +5 % p.a.

    +7 % p.a.

    +8 % p.a.

    +10 % p.a.

    Africa / NME2) / CIS3)

    Asia- Pacific

    Americas

    Rest of Europe (w/o Germany) 22 %

    21 %

    36 %

    16 %

    5 %

    1) adjusted to PTD portfolio 2) Near and Middle East

    +16% p.a.

    +7% p.a.

  • Page 8 June 2007 Capital Market Days

    Source: IEA

    Forecast transmission and distribution investment, 2003-30 (€ bn)

    Transmission Distribution

    Attractive market environment for PTD is foreseen worldwide in emerging as well as in mature markets

    (US, Canada)

    Implications Differentiated regional strategies Balanced portfolio management Forecasting/trend & market scouting Operational excellence/flexibility Global footprint/resources management

    Implications Differentiated regional strategies Balanced portfolio management Forecasting/trend & market scouting Operational excellence/flexibility Global footprint/resources management

    T&D Market: Investments in transmission networks are expected to account for more than € 1,300 bn over the next 25 years

    0

    200

    400

    600

    800

    1,000

    1,200

    1,400

    China N. America Europe S. Asia E. Asia Africa S. America Other Developed

    Other Transition

    Middle East

    Russia

  • Page 9 June 2007 Capital Market Days

    Source: UBS

    T&D investment in the US

    Example USA

    Average age of substations

    Mature markets

    Survey among 39 utilities in the US, 2006

    US $ bn

    Expected market volume 2007- 2027: US $ 200 bn / € ~160 bn

    Average age is 30 years

    Aging infrastructure drives demand for T&D investments in mature markets over the next years

    Source: UBS

    10.0

    8.0

    6.0

    4.0

    2.0

    0

  • Page 10 June 2007 Capital Market Days

    New opportunities: Siemens PTD is a driver of SmartGrid technologies

    European Technology Platform “SmartGrids” Vision and Strategy for Europe's Electricity Networks of the future

    Source: European Technology Platform SmartGrids, Vision and Strategy for Europe’s Electricity Networks of the Future, V4.0, 24.2.2006

    Virtual power plants

    Load flow control

    Demand side management

    Blackout prevention

    Reliability centered asset management

  • Page 11 June 2007 Capital Market Days

    Well-balanced portfolio in “traditional” T&D market

    New Orders/Sales

    Divest: Trench VA Tech

    PTI Marqott a.o.

    Elektrozavod

    Profit margin: 6.1 % 6.0 % 7.8 % within new margin-corridor

    Invest:

    Formation & Leadership

    Profit & Growth

    Common T&D Portfolio completed Prepared to cope with new market challenges

    Cable Metering

    Operation 2003

    FY 2003

    3.6 3.5

    FY 2006

    8.0 6.5

    H1 2007

    5.6 3.5

    FY 2010

    Growth above market

    € bn

  • Page 12 June 2007 Capital Market Days

    Continuous improvement of cost position by expansion of value add in low-cost-countries

    Employees (thousands)

    Sales ( in € m)

    Manufacturing facilities €

    As of