Siemens 2009 Annual Report Download - page 138

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 Reports Supervisory Board /
Managing Board  Corporate Governance  Management’s discussion and analysis  Consolidated Financial Statements
44 Business and operating environment 63 Fiscal 2009 – Financial summary 66 Results of operations 84 Financial position
After the first external review of data and processes of our en-
vironmental portfolio in fiscal 2007, we again commissioned
an independent accounting firm to conclude on our environ-
mental portfolio for fiscal 2008. Such review is different from
an audit as it was performed for our consolidated financial
statements. The outcome of the review was favourable and
the independent accounting firm recorded the results, in par-
ticular the details relating to total revenues generated by the
environmental portfolio and the quantity of reduced carbon
dioxide emissions attributable to it, in an Independent Assur-
ance Report. We intend to continue this practice and will sub-
ject the environmental portfolio data and processes for fiscal
2009 to a similar external review.
Global SG&A program
The global program for the reduction of marketing, selling and
general administrative (SG&A) expenses we launched in fiscal
2008 was targeted at improving the efficiency of the selling
and administration processes in our corporate functions, our
Sectors, Divisions and Cross-Sector Businesses as well as our
regional Clusters. The program played an important role in
helping us to substantially improve our competitive position
on the cost side over the course of fiscal 2009, despite the dif-
ficult environment created by the global financial and eco-
nomic crisis. As we have already achieved our SG&A cost-cut-
ting target for fiscal 2010 a year ahead of schedule, we success-
fully completed our global SG&A program at the end of fiscal
2009.
We reduced our SG&A expenses by €1.2 billion in the current
fiscal year from the level of fiscal 2007, despite major acquisi-
tions during and between the periods under review and sever-
ance charges related to SG&A reduction in fiscal 2009. SG&A
expenses in the current fiscal year amounted to 14.2% of reve-
nue, compared to 16.7% in fiscal 2007. A reduction in expendi-
tures for IT infrastructure and external consultants as well as
job reductions in administration and sales functions ac-
counted for part of this improvement. Our pooling and process
simplification initiatives across numerous administrative ac-
tivities in the Sectors and regional Clusters also made a signifi-
cant impact in 2009, as did our sales channel optimization ef-
forts. Effects due to lower demand caused by the economic
downturn also contributed to reduced SG&A expenses. Going
With our environmental portfolio we intend to help our cus-
tomers to reduce their carbon dioxide footprint, cut their en-
ergy costs and improve their profitability through an increase
in their productivity. Our new increased target by 2011 is to re-
duce our customers’ annual carbon dioxide emissions by ap-
proximately 300 million metric tons through the Siemens
products and solutions installed at our customers from the be-
ginning of fiscal 2002 and still in use. The products and solu-
tions installed until fiscal 2009 are already reducing carbon
dioxide emissions by approximately 210 million metric tons
a year.
Equally important is the fact that the environmental portfolio
also enables us to claim a share of attractive markets with bet-
ter than average growth potential. We have set ourselves am-
bitious revenue targets for the environmental portfolio. De-
spite the continuous challenges from macroeconomic and fi-
nancing conditions, our goal is to generate €25 billion in
revenue from products and solutions for environmental and
climate protection by fiscal 2011. Including newly incorporated
products and solutions and a strong performance of our envi-
ronmental portfolio in fiscal 2009, revenues from this portfolio
in the current year amounted to €23.0 billion and were above
the comparable revenues of €20.7 billion in fiscal 2008. This
means that our environmental portfolio already accounts for
about 30% of our total sales.
There is no standard system that applies across companies for
compiling and calculating revenues generated from products
and solutions for environmental and climate protection and
the quantity of reduced carbon dioxide emissions attributable
to such products and solutions. Accordingly, revenues from
our environmental portfolio and the reduction of our custom-
ers’ annual carbon dioxide emissions may not be comparable
with similar information reported by other companies. We sub-
ject revenues from our environmental portfolio and the reduc-
tion of our customers’ annual carbon dioxide emissions to in-
ternal documentation and review requirements which are,
however, different from those underlying our financial infor-
mation. We may change our policies for recognizing revenues
from our environmental portfolio and the reduction of our cus-
tomers’ annual carbon dioxide emissions in the future without
previous notice.