Siemens 2006 Annual Report Download - page 112

Management’s discussion and analysis
108
Siemens Business Services (SBS)
SBS narrowed its loss year-over-year to €549 million, including €393 million in severance
charges. For comparison, the prior year included a goodwill impairment of €262 million in the
Operation Related Services (ORS) business and €228 million in severance charges, only partly
offset by a €26 million gain on the sale of an investment. As part of its strategic reorientation,
SBS divested its PRS business midway through the fiscal year. For further information on the
sale of PRS see “Notes to Consolidated Financial Statements.” Fiscal 2006 sales of €5.157 billion
were consequently lower than the level a year earlier. Orders of €5.014 billion were also lower
than the prior-year level, due to the PRS divestment, as well as more selective order intake and
a reduction in major orders year-over-year.
After the close of the fourth quarter, following an intensive analysis by the Managing Board,
Siemens announced plans to bundle the activities of SBS with other corporate IT activities
worldwide into a new Group, to be called Siemens IT Solutions and Services (SIS). We expect
that integrating the activities described above will be a significant management focus in fiscal
2007. SIS will be reported as a Group beginning with the third quarter of the fiscal year 2007.
Year ended September 30,
% Change
(€ in millions) 2006 2005 Actual Adjusted*
Group profit (549) (690) 20%
Group profit margin (10.6)% (12.8)%
Sales 5,157 5,373 (4)% 2%
New orders 5,014 6,531 (23)% (16)%
* Excluding currency translation effects of 1% on sales and orders, and portfolio effects of (7)% and (8)% on sales
and orders, respectively.