Siemens 2005 Annual Report Download - page 98
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98
Siemens Business Services (SBS)
SBS posted a loss of €690 million in fiscal 2005, due primarily to a goodwill impairment of
€262 million in its Operation-Related Services division, severance and capacity adjustment
charges totaling €228 million and a decline in profitability resulting from overcapacity and con-
tinuing pricing pressure. Group profit in the prior year included a €93 million gain from the sale
of 74.9% of Kordoba. SBS realized a gain of €26 million on the sale of its remaining interest in
Kordoba in fiscal 2005. Sales and order growth was influenced by outsourcing contracts, partly
involving acquisitions. Sales were €5.373 billion, up 14% year-over-year, with approximately half
the growth coming from internal business, partly as a result of Siemens’ announced plans to con-
centrate the operation of its IT infrastructure at SBS. Orders were €6.531 billion, an increase of 4%
compared to the prior year. As part of its strategic reorientation, SBS divested part of its Product-
Related Services activities in Germany, and announced plans to outsource ordinary PC mainte-
nance services worldwide. SBS expects charges in coming quarters for severance and capacity
adjustments.
Automation and Control
Automation and Drives (A&D)
A&D continued to perform at a high level in the growing world market for factory automation
solutions, delivering double-digit growth in earnings, sales and orders in fiscal 2005. Group
profit rose 12% to €1.210 billion, primarily due to strong profit growth at the Industrial Automa-
tion and Motion Control divisions. A&D also significantly expanded its business base, making
two of Siemens’ larger acquisitions of the fiscal year. The Group acquired Flender, a leading
Management’s discussion and analysis
Segment information analysis
Year ended September 30,
% Change
(€ in millions) 2005 2004 Actual Adjusted*
Group profit (690) 40
Group profit margin (12.8)% 0.8%
Sales 5,373 4,716 14% 5%
New orders 6,531 6,293 4% (6)%
* Excluding portfolio effects of 9% and 10% on sales and orders, respectively.
Year ended September 30,
% Change
(€ in millions) 2005 2004 Actual Adjusted*
Group profit 1,210 1,077 12%
Group profit margin 12.3% 12.2%
Sales 9,844 8,829 11% 7%
New orders 10,190 8,980 13% 10%
* Excluding currency translation effects of (1)% on orders, and portfolio effects of 4% on sales and orders.