Innovation, profit and growth: We deliver what we promise. Wolfgang Dehen, Group President Johann Löttner, CFO

Transcription

1 Innovation, profit and growth: We deliver what we promise. Wolfgang Dehen, Group President Johann Löttner, CFO Days, May 12, 2003

2 : Our organizational structure Powertrain Dr. Egger Gasoline Systems Diesel Systems Air Fuel Modules Engine Actuators & Emission Management Fuel Supply Systems Sensors Electronics & Drivetrain Customers Siemens VDO Automotive in 2002: Sales: EUR 8.5 billion, Employees: 43,000 Chassis & Carbody Dehen Body & Chassis Electronics Restraint Systems, Safety Electronics Electric Motor Drives Electronics Manufacturing Services Interior & Infotainment Hauptmann Information Systems Passenger Cars Infotainment Solutions Commercial Vehicles Cockpit Modules & Systems Trading & Aftermarket Löttner Trading & Aftermarket Segment Units: Independent Aftermarket, Special Original Equipment Manufacturers, Fleet, Original Equipment Services May

3 The world s leading OEM are our top ten customers Sales 2002 Top 3: 45% Top 5: 62% Top 10: 80% VW GM DC PSA Ford BMW Renault Intern.* Hyundai Fiat May * International (Motor and Comm. Vehicle Manufacturer)

4 One face to the customer Our Key Account Management with close contact to our global customers is a crucial success factor KAM ensures effective local customer support Sales and marketing staff are SV s corporate ambassadors to the customer One member of staff coordinates all of a customer s inquiries Quick reactions and handling processes are ensured Our innovative solutions help our customers to differentiate themselves from their competitors May

5 Our performance and service are highly appreciated by our customers SV compared to benchmark Relative Competitive Position 1 Logistics Sales R & D ion 0.5 Quality Better than Equal to 0 Worse than the best In the survey, the informant was asked to evaluate the divisions on a scale of -5 competitor to +5. The above results show the aggregated data for the Units and -0.5 per criteria. May

6 Worldwide presence for our customers North and Central America Canada Mexico USA South America Argentina Brazil Europe Austria Belgium Czech Republic Denmark France Germany Italy Netherlands Poland Romania Russian Federation Slovakia Spain Sweden Switzerland Turkey UK Asia / RoW China India Indonesia Japan Korea Malaysia Singapore Australia Sales proportion FY % 70% 8% May

7 Siemens VDO derives its strength from being a perfect fit s Regions Ex-VDO Powertrain Information Carbody ex-siemens AT ex-vdo 2% 8% 10% 43% 37% ex-siemens AT 2% 4% 30% 35% 29% Safety & Chassis Asia Germany RoW other Europe NAFTA only 10% overlap May

8 Joined forces to become number 1 in automotive electronics From 6th to 3rd position in automotive electronics Sales of competitors compared to Siemens VDO (in billions of euros) Robert Bosch GmbH Delphi Automotive Systems Siemens VDO Visteon Corp. Denso Corp. TRW Int. Siemens AT VDO 1) w/o pure tire and captive suppliers; only automotive sales May 2003 Source: Deutsche Bank (Figures as of CY 2000) 8

9 The market offers attractive opportunities for us Siemens VDO will profit from increase in electronic content 22% Electronics / Electricals content 35% 4% Software content 13% Software Hardware Software Hardware Value OE ~ 125bn Value OE ~ 270bn May 2003 Source: Mercer 9

10 Siemens VDO is well-positioned in the most promising business fields of electronics The main growth drivers in automotive electronics are: Infotainment & communication for improved mobility (in billions of euros) 92 34% Increased safety for road users and environment Comfort & convenience Improved performance in driving and braking % Infotainment & Communication Safety Comfort & Convenience Driving & Braking May 2003 Source: Mercer 10

11 The increasing demand for automotive electronics compensates low market growth % % 55.0 ~ % +13.4% Total (in millions of vehicles) SV Sales (in billions of euros) May 2003 Source: Siemens 11

12 Suppliers have good opportunities to gain new market shares Suppliers value added per vehicle is rising R&D Share Total Share OEM 70% 50% 35% 25% Suppliers 30% 50% 65% 75% May Source: VDA (Association of German Automotive Industry)

13 A strong product portfolio incites further growth 85% of our product portfolio will be in #1 or #2 positions by 2007 position no. 4 or below no. 4 or below no. 3 ~ 10% no. 1 no. 1 no. 2 ~ 50% ~ 30% no. 3 ~ 10% no. 2 ~ 60% in #1 or #2 positions > 85% in #1 or #2 positions May

14 Taking the lead with first-to-market innovations Growth with innovation Earlier first to markets : Speedometer Metal substrate catalyst Immobilizer In-car navigation (Philips) IAFM Module Intelligent switching unit 1st Europe gasoline DI Mechatronic module for AT Cockpit Module Integrated Multi Media System P-sensor for side airbag Diesel CR with Piezo Valvetronic Keyless Go Integrated Driver Information System IDIS Modular, scalable upgradable SW platform (TLA) Finger print sensor Content on Demand Electrical Parking Brake Tire Guard HUD 3D-Camera (CMOS) for Occupant Gasoline Detection DI with Piezo Advanced Weight Sensing Digital Tachograph Active Noise Tailoring May

15 Innovation and systems integration are drivers for profitable growth Innovation We are highly innovative Diesel Piezo Integration We have the capability of integrating advanced systems 2 8 Radio Java-based TLA Navi Audio/TV Phone Entertain Complete Projects We have excellent capacity to manage complex projects May

16 Powertrain: Intelligence for improved performance Gasoline Systems Diesel Systems Air Fuel Modules Engine Actuators & Emission Management Fuel Supply Systems Sensors Electronics & Drivetrain We integrate electronics, electrical equipment and mechatronics to create intelligent systems We reduce fuel consumption and minimize emissions We enhance engine performance and motoring comfort We are a partner for innovation in the field of fuel injection systems for gasoline and diesel engines Key competence areas Examples of our innovations NOx Sensor Diesel Piezo Common Rail (PCR) Actuator for E-Gas 5 Actuator for VVT May

17 With innovative technology Siemens VDO is profiting from the worldwide diesel boom Diesel share in Europe grows to 50 % quantity [Mio.] 8 80% direct diesel injection replaces indirect injection 7 Common Rail systems occupy 60 % 70% 6 Diesel share in Europe 60% 5 50% 4 40% year 30% 20% 10% 0% May

18 Interior & Infotainment: Perfect information Information Systems Passenger Cars Infotainment Solutions Commercial Vehicles Cockpit Modules & Systems We are the leading partner in innovation for automobile information and communication We develop leading-edge technology for an optimum presentation of information We are a full-service partner for the integration of complete cockpits We support the driver by setting new standards in ergonomics and operation We integrate complex individual functions in easy-to-operate overall systems We network multimedia systems with telematics and Internet functions We leverage Siemens unique position in telematics Key competence areas Examples of our innovations Head-up display Graphics-capable instrument cluster BMW idrive Virtual Reality May

19 Top Level Architecture (TLA) The modular approach to more functionality Stand-alone solutions Integrated solutions Top Level Architecture (TLA) Human Machine Interface Java-based TLA Navi Audio/TV Phone Entertain Hardware Separated devices Optimized Human Machine Interface (HMI) Best functionality Software but no hardware updates Infinite hardware and software updates Integration of 3rd parties applications Yesterday Today Tomorrow May

20 Chassis & Carbody: Where safety and comfort meet Body & Chassis Electronics Restraint Systems, Safety Electronics Electric Motor Drives Electronics Manufacturing Services We are developing an intelligent safety network for people, vehicles and the environment We improve active and passive driving safety We optimize energy management and vehicle architecture We reduce space requirements, weight and system complexity We improve personalized comfort Key competence areas Examples of our innovations Camera-based occupant detection Tire Guard Pressure monitoring system Passive Start and Entry System (PASE) Yaw rate sensor May

21 Trading & Aftermarket: Special services and solutions Independent Aftermarket Special Original Equipment Manufacturers Fleet Original Equipment Services We have a sales-channel-structured trading organization We offer attractive audio and navigation devices for retrofitting A broad product range increases efficiency for fleet management and commercial vehicles Customer-driven development of small series, e.g. for industry, commercial vehicles and leisure marine We sell genuine replacement parts for passenger cars plus services We develop advanced e-commerce applications We open up new business fields in the service area with Intelligent Content on Demand (C-IQ) Key competence areas Examples of our innovations VDO CD tuner VDO Dayton navigation system May

22 Opening up new business fields: Intelligent content on demand Customer receives DVD or CD bundle every 6-12 months free of charge Phone FAX Web Customer names Navi ID, desired option(s) and required period SMS POS Siemens VDO Backbone delivers individual Access Key(s) against payment Customer pays for individual use only! May

23 overview Sales (in billions of euros) Group profit (in millions of euros) Group profit margin FY 01 1) FY 02 HY (261) (4.6)% 0.8% 4.4% Employees 44,000 43,000 44,000 R&D (in millions of euros) ) Including VDO May to Sept. 01 May

24 top + WIP - The key to success WIP ensures profitable growth Targets Communication Strategy Manufacturing Quality Benchmarking Material Management Structure R & D SG & A Programs Asset Management May

25 A solid basis for profitable future growth with the top + WIP program Improvement in Return on Sales Group profit margin (4.6) % % +68' +73' target Operation 2003: 5-6% 5% +119' Group profit -36' -6' -60' -158' -6' +18' -14' Year Challenges in merger year Decline in automotive market Price erosion Cost increase One time costs Successful enactment of top + WIP program Restructuring production network optimization Additional improvement by four initiatives for disinvestments May

26 With clearly defined measures and rigorous implementation, we achieved a massive cost reduction top+ WIP cost reduction measures Total cost reduction (in millions of euros) 700 (actual) ~ 700 (target) ~ 700 (target) Of which material (%) 52 % 46 % Year TCR 7.8 % 8.9 % TCR = Total Cost Reduction Rate (net) ~ 8 % May

27 Material cost reduction is the main driver of top+ WIP Total cost productivity > 2.0bn Material Major improvement levers in purchasing Bundling significant volumes e.g. electronic components Using purchasing power of Siemens AG Improved supplier management New sources in low-cost countries e.g. China E-bidding Flexible purchasing volumes May

28 Optimization business portfolio Stop unprofitable developments Concentrate R&D on projects with fast pay-back Sell non-core businesses Focus on core competencies: Electronics and mechatronics Examples: Sale of wiring harness production, Hydraulik- Ring, Air outlets, etc. Exit businesses Examples: Complete tank systems, JIT/JIS assemblies (brought into joint venture with Faurecia) May

29 Initiatives to gain new momentum for further improvement Quality Initiative Total quality approach: zero tolerance for defects (Project Management Initiative) Improvement of project management (Software Initiative) Reach CMMI* 3 level in systems integration and software development Design-to-Cost Initiative Target costing to improve margins May * CMMI (Capability Maturity Model Integration)

30 Summary Short term focus focus Customers Operational Excellence Reach the goals of operation 2003 Achieve best-in-class quality Reach profitable growth Secure Number 1 and 2 positions in all competence areas Expand business in NAFTA and Asia Become customer s first choice for automotive electronics and mechatronics by innovations with high-end customer benefit Structured, transparent and efficient innovation process Strengthen advanced and base engineering Secure improvement of efficiency and increase in Group profit margin by rigorous enactment of top + WIP program Employees Involvement of personnel is our main driver to achieve a quantum leap in innovation throughout the whole company We deliver what we promise. May

31 Siemens Investor Relations Team Marcus Desimoni Eckhard von Münchow Christina Schmöe Andreas Schwab Claudia Wagner Webpage: Investor Relations Fax: Group profit definition: Group profit is defined as earnings before financing interest, certain pensions costs, income taxes and certain onetime items, which do not relate to the business performance of the Groups. See " Reports/Fiscal 2003, Quarter 2/ Statements" at our Investor Relations website under Disclaimer: This presentation contains forward-looking statements based on beliefs of Siemens' management. Such statements reflect the company's current views with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results to be materially different, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products, lack of acceptance of new products or services and changes in business strategy.actual results may vary materially from those projected here. Siemens does not intend or assume any obligation to update these forward-looking statements. May