Siemens 2006 Annual Report Download - page 10

Letter to our Shareholders
10
Our Groups are achieving profitable growth.
All our Groups – with the exception of Siemens Business Services – reported strong growth in fiscal
2006, with six operating Groups achieving a double-digit percentage increase in new orders. In
many of our businesses, we’re winning market share from our competitors. Automation and Drives
(A&D), Medical Solutions (Med), Siemens VDO Automotive (SV), Power Transmission and Distribu-
tion (PTD) and OSRAM reached their target margins every quarter, while Industrial Solutions and
Services (I&S), Siemens Building Technologies (SBT), Transportation Systems (TS) and Siemens Busi-
ness Services (SBS) are closing in on their profitability goals. We’re confident that all our Groups will
reach their target margins by the second quarter of 2007. In the months ahead, we’ll focus on con-
tinuing to improve our Groups’ profitability and maintaining these margin levels in the long term.
The second pillar of the Fit4More program – Operational Excellence – comprises the proven tools
of the Siemens Management System (SMS), including our Company-wide programs Innovation,
Customer Focus and Global Competitiveness and our top+initiative, with which we’ve been continu-
ously optimizing our business processes for ten years now.
Half of our sales growth is organic, and this achievement is a testimony to our power of innova-
tion. To further boost our technological edge, we invested €5.7 billion in research and development
in fiscal 2006 (see also pages 32 – 33 of this Report). And this investment is paying off. In fiscal
2006, our researchers submitted more than 10,000 invention reports, roughly 17 percent more than
in fiscal 2005. We filed patent applications for over 6,000 of these inventions, about eight percent
more than in the previous year. Our portfolio now comprises more than 62,000 patents.
Now I’d like to give you just a few examples of how our innovative strength is driving success
at our Groups:
■Our SOMATOM Definition computed tomography (CT) scanner is a major breakthrough in med-
ical diagnostics. Using two X-ray tubes and two detectors, this innovative system reduces radia-
tion exposure by up to 50 percent and energy consumption by roughly 30 percent. SOMATOM
Definition scans the human heart in just six seconds and the entire body in only 20 seconds.
With an imaging rate that is faster than the beating heart, it’s an ideal tool for producing cardiac
images of patients with irregular or very rapid heartbeats. And its high image resolution of up
to 0.4 millimeters helps physicians better identify early indicators of heart disease. We sold
150 SOMATOM Definition scanners and installed more than 50 of the systems in fiscal 2006.