Siemens 2009 Annual Report Download - page 188

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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
mand, the current tightening of credit in the financial markets
may make it more difficult for our customers to obtain financ-
ing and as a result they may modify, delay or cancel plans to
purchase our products and services or to execute transactions.
Further, prices may decline as a result of continued adverse
market conditions to a greater extent than currently antici-
pated. In addition, contracted payment terms, especially re-
garding the level of advance payments by our customers relat-
ing to long-term projects, may become less favorable under
the current conditions, which could negatively impact our
cash flows. Additionally, if customers are not successful in
generating sufficient revenue or securing access to the capital
markets they may not be able to pay, or may delay payment of,
the amounts they owe us, which may adversely affect our fi-
nancial position and results of operations.
Numerous other factors, such as fluctuations of energy and
raw material prices as well as global political conflicts, includ-
ing in the Middle East and other regions, continue to impact
macroeconomic parameters and the international capital and
credit markets. The uncertainty of economic and political con-
ditions, which is reinforced by the current developments of
the global economic situation, can have a material adverse
impact on our investments, financial condition or results of
operations and can also make our budgeting and forecasting
more difficult.
Our Sectors and Cross-Sector Businesses are affected by mar-
ket conditions. For example, our Industry Sector is vulnerable
to unfavorable market conditions in certain segments of the
automotive, manufacturing and construction industries. Our
Healthcare Sector, in turn, is dependent on developments and
regulations in the healthcare systems around the world, par-
ticularly including ongoing healthcare reform efforts in the
U.S. Finally, our Energy Sector is exposed to the development
of global energy demand and is considerably affected by regu-
lations related to energy and environmental policies.
We operate in highly competitive markets, which are sub-
ject to price pressures and rapid changes: The worldwide
markets for our products and solutions are highly competitive
in terms of pricing, product and service quality, development
and introduction time, customer service and financing terms.
In many of our businesses, we face downward price pressure
and we are or could be exposed to market downturns or slower
growth, which may increase in times of declining investment
activities and consumer demand similar to the current eco-
nomic conditions. We face strong competitors, some of which
are larger and may have greater resources in a given business
area, as well as competitors from emerging markets, which
may have a better cost structure. Some industries in which we
operate are undergoing consolidation, which may result in
stronger competitors and a change in our relative market posi-
tion. Specific competitors might be more effective and faster in
capturing available market opportunities, which in turn may
negatively impact our market share. These factors alone or in
combination may negatively impact our financial condition or
results of operations.
Our businesses must keep pace with technological changes
and develop new products and services to remain competi-
tive: The markets in which our businesses operate experience
rapid and significant changes due to the introduction of inno-
vative technologies. To meet our customers’ needs in these ar-
eas we must continuously design new, and update existing
products and services and invest in and develop new technolo-
gies. Introducing new products and technologies requires a
significant commitment to research and development, which
in return requires considerable financial resources that may
not always result in success. Our sales and profits may suffer if
we invest in technologies that do not operate as expected or
are not accepted in the marketplace as anticipated or if our
products or systems are not introduced to the market in a
timely manner or as they become obsolete. Furthermore, in
some of our markets, the need to develop and introduce new
products rapidly in order to capture available opportunities
may lead to quality problems. Our operating results depend to
a significant extent on our ability to anticipate and adapt to
changes in markets and to reduce the costs of producing high-