Siemens 2008 Annual Report Download - page 173

Management’s discussion and analysis 77
Our primary measure for the conversion of revenue growth to income growth is prot margin, applied and
reported at the Sector, Division and Cross-Sector Business level. For our Sectors, Divisions and for Siemens IT
Solutions and Services, prot margin is calculated as the ratio of prot and revenue, while prot for these busi-
nesses is dened as earnings before nancing interest, certain pension costs, and income taxes, and also may
exclude various categories of items, which are not allocated to these businesses since Management does not
regard such items as indicative of their performance.
In contrast, and in line with common practice in the nancial services industry, the protability measure for SFS
is return on equity, dened as Income before income taxes divided by the average allocated equity for SFS. Our
2010 target ranges and the scal 2008 performances of our Sectors, Divisions and Cross-Sector Businesses, are
shown below.
Profit Margin
Formula:
Prot
= × 100%
Revenue
* Return on Equity
9 – 13%
12 – 17%
11 – 16%
7 – 10%
10 – 12%
5 – 7%
5 – 7%
11 – 15%
11 – 15%
12 – 16%
10 – 14%
10 – 14%
11 – 15%
14 – 17%
14 – 17%
11 – 14%
16 – 19%
5 – 7%
20 – 23%
10.1%
18.5%
13.5%
7.8%
8.7%
6.2%
– 3.9%
6.4%
– 1.1%
11.6%
8.7%
10.3%
11.5%
11.0%
13.2%
4.4%
7.8%
2.7%
31.4%
Industry
Industry Automation
Drive Technologies
Building Technologies
OSRAM
Industry Solutions
Mobility
Energy
Fossil Power Generation
Renewable Energy
Oil & Gas
Power Transmission
Power Distribution
Healthcare
Imaging & IT
Workow & Solutions
Diagnostics
Siemens IT Solutions and Services
Siemens Financial Services*
Margin
Margin ranges
Fiscal year 2008
Target range