Siemens 2007 Annual Report Download - page 195

Management’s discussion and analysis 195
Management’s discussion and analysis
enhancing the security of buildings, cities and transportation systems; develop-
ing alternative sources of energy; and shifting the emphasis in healthcare from
treatment to early diagnosis and disease prevention. With its global reach and
broad business portfolio, Siemens is well positioned to take advantage of market
development in both the mature and emerging economies around the world.
Growth and Financial Performance
In fi scal 2007, we expanded our external communication regarding our fi nancial
performance, goals and expectations. Our most important targets and perfor-
mance expectations are summarized in the following paragraphs.
Growth. In the next two fi scal years we intend to increase our revenue by at
least twice the rate of global GDP growth. We believe we are well positioned to
reach these near-term growth targets, in part due to new orders of approximately
€84 billion in fi scal 2007 and a corresponding book-to-bill ratio of 1.16.
Group Profi t from Operations. We aim to increase Group profi t from Opera-
tions at a rate at least twice as fast as our rate of revenue growth in the next two
years. Effects on Group profi t from Operations related to the SG&A reduction pro-
gram mentioned below are not yet quantifi ed for fi scal 2008 or 2009. We aim for
growth in Group profi t from Operations in fi scal 2009 as we approach fulfi llment
of Fit42010, which includes higher margin ranges for our operating Groups
(shown in the table below). In particular, we increased our 2010 margin expecta-
tions for Med, which completed or announced major acquisitions in fi scal 2007.
We expect Group profi t from Operations to benefi t from these and other substan-
tial portfolio changes that we have completed at other Groups in recent years.
Margin ranges
new
Margin ranges
old(1)
Automation and Drives 12 – 15% 11 – 13%
Industrial Solutions and Services 5 – 7% 4 – 6%
Siemens Building Technologies 7 – 9% 7 – 9%
Osram 10 – 12% 10 – 11%
Transportation Systems 5 – 7% 5 – 7%
Power Generation 10 – 14% 10 – 13%
Power Transmission and Distribution 7 – 10% 5 – 7%
Medical Solutions 14 – 17% 11 – 13%
Siemens IT Solutions and Services(2) 5 – 7% 5 – 6%
Siemens Financial Services(3) 20 – 23% 18 – 22%
(1) The old margin ranges refer to our Fit4More program.
(2) The old margin range was for the former Siemens Business Services Group.
(3) Return on equity, which is defi ned as SFS‘ income before income taxes divided by the allocated equity for SFS.