Siemens 2008 Annual Report Download - page 144

48 Management’s discussion and analysis
Management’s discussion and analysis
Business overview and economic environment
Fiscal 2008 – Summary
In scal 2008 we achieved many operating goals while rapidly transforming Siemens as a Company and as
a competitor. We exceeded our revenue target, completely realigned our operations, streamlined our manage-
ment, identied substantial cuts to our cost structure, restructured business activities, divested or closed
numerous non-strategic businesses, and integrated a major acquisition. In addition, we closed a successful
divestment of Siemens VDO Automotive (SV), resulting in a substantial gain and cash inows. We further
strengthened our cash position, in part through long-term debt transactions in capital markets, under favorable
conditions ahead of the global nancial crisis. We also reduced the number of outstanding shares by approxi-
mately 53 million shares through our share buyback plan.
A number of the steps mentioned above took place under our previously announced transformation programs,
principally involving our program for reducing selling and general administrative expenses (SG&A), restructur-
ing programs in our Healthcare Sector and Mobility Division and streamlining our portfolio within Other Opera-
tions. These programs were the major factors resulting in €1.741 billion in transformation charges to earnings
in scal 2008. These include charges for severance, impairments, and other measures. In addition, we booked
a provision of approximately €1 billion in connection with ongoing settlement negotiations with authorities in
Germany and the U.S. These factors reduced income from continuing operations and net income for the scal
year, among other measures, and will negatively affect cash ow in scal 2009.
As a result of our progress in scal 2008, we believe that Siemens is now a faster, more efcient and more
focused company with greater potential for protable growth.
Orders rose 11%, to €93.495 billion, and revenue increased 7%, to €77.327 billion. Orders rose 13% and reve-
nue increased 9% on an organic basis, excluding the net effect of currency translation and portfolio transac-
tions, compared to scal 2007. Within these effects, currency translation effects took ve percentage points from
both orders and revenue growth. Order growth included double-digit expansion in Energy and Healthcare and
9% growth in Siemens’s largest Sector, Industry. Revenue growth showed a similar pattern. Our largest region,
which comprises Europe, the Commonwealth of Independent States (C.I.S.) and Africa, contributed 15% order
growth and 7% revenue growth, including large orders in Industry and Energy. The Asia/Australia/Middle East
region contributed 10% order and revenue growth. Due in part to the large orders mentioned above, our book-
to-bill ratio for scal 2008 was 1.21.
In the wake of intensifying our focus on growth markets, we determined our portfolio of products and solutions
for environmental and climate protection. In scal 2008, revenue generated by our environmental portfolio
was approximately to €19 billion and accounted for approximately 24% of Siemens’ consolidated revenue.