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
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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
