Siemens 2005 Annual Report Download - page 90

Management’s discussion and analysis
Business overview
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Management’s discussion and analysis
Business overview
Financial highlights
Fiscal 2005 was a very dynamic year for Siemens. We saw healthy growth, notably double-digit
growth in orders, and many of our Groups produced strong profit performances. Siemens also
completed one of its busiest years of portfolio changes, gaining new strength in power, medical
solutions and industrial automation. Furthermore, we took important steps with respect to our
Information and Communications businesses.
Orders rose 11% to €83.791 billion and sales of €75.445 billion were up 7%. Orders were
higher at every Group in Operations, and sales also rose across the board except at Transporta-
tion Systems (TS). Sales growth was driven by international expansion, while orders climbed
both domestically and internationally. Acquisitions made a significant contribution to top-line
growth for the year. Excluding currency translation effects and the net effect of acquisitions and
dispositions, orders rose 7% and sales were up 3% year-over-year.
Income from continuing operations was €3.058 billion, level with income from con-
tinuing operations of €3.450 billion in fiscal 2004, excluding a net benefit of €403 million
related to the sale of shares in Infineon Technologies AG and a goodwill impairment.
Income from continuing operations in fiscal 2004 benefited from a pre-tax gain of €590 million
and a reversal of €246 million in deferred tax liabilities related to the sale of shares of Infineon
Technologies AG (Infineon), partially offset by a goodwill impairment of €433 million. Basic and
diluted earnings per share on a continuing basis were €3.43 and €3.29, respectively, compared to
€3.87 and €3.71 a year earlier.
Net income was €2.248 billion, including a negative €810 million related to discontinued
mobile devices operations. Net income of €3.405 billion in the prior year also included the
€403 million net benefit. Fiscal 2005 basic and diluted earnings per share were €2.52 and €2.42,
respectively, compared to €3.82 and €3.66 a year earlier.
Group profit from Operations was €4.687 billion, including significant charges in the
I&C Groups and the industry logistics businesses formerly of Logistics and Assembly Sys-
tems (L&A). Most Groups continued on track toward their fiscal 2007 earnings objectives, with
particularly strong earnings coming from Automation and Drives (A&D), Medical Solutions
(Med), Power Generation (PG), Siemens VDO Automotive (SV) and Osram. In contrast, Group
profit at Communications (Com) was significantly lower than in the prior year, Siemens Business
Services (SBS) posted a substantial loss and the Distribution and Industry Logistics and Material
Handling Products divisions incurred charges. These businesses were the primary factors in the
decline in Group profit from Operations compared to €5.136 billion in fiscal 2004.
Net cash used in operating and investing activities was €2.703 billion compared to net
cash provided of €3.262 billion in the prior year. On a continuing basis, net cash used in
operating and investing activities was €1.489 billion, including a significant increase in
cash used for acquisitions and investments to €3.102 billion and €1.496 billion in supple-
mental cash contributions to Siemens pension plans. In the prior year, net cash provided by
operating and investing activities was €3.015 billion, including lower supplemental pension plan
contributions of €1.255 billion more than offset by €1.794 billion in net proceeds from the Infi-
neon share sale.
Siemens’ Managing and Supervisory Boards propose a dividend of €1.35 per share. The
prior-year dividend per share was €1.25.