Siemens 2009 Annual Report Download - page 204

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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
the end of fiscal 2010. The market environment for renewable
energy solutions is expected to remain competitive in fiscal
2010. Market development in the established markets of
Europe and the U.S. benefits from state subsidies. Within Asia,
particularly in China and India, growth in renewable energy is
expected in the next years. After the significant marked de-
cline in volume in the oil and gas markets in 2009, there is a
chance of growth for the next year. This expectation is based
on the continuing increase in global demand for energy and
the return of rising oil prices, which favor the opening up and
exploitation of hard-to-reach sources of oil. Market growth is
expected to remain moderate, with overall volume, at least in
fiscal 2010, remaining well below the level it reached before
recession. As far as the power transmission market is con-
cerned, a slight growth overall over the next few years is ex-
pected, driven in particular by infrastructure development in
emerging economies, investment in replacement technolo-
gies in industrialized countries and the integration of renew-
able energies. As for the power transmission and distribution
market, we anticipate that following its decline in fiscal 2009 it
will stagnate in fiscal 2010.
Market climate for the healthcare industry, within which our
Healthcare Sector operates, is expected to remain difficult in
fiscal 2010. In particular, there is still uncertainty regarding
both the implementation and potential impact of health re-
form in the US. It is expected that the markets served by Imag-
ing & IT will not develop uniformly, but will tend to shrink
slightly. The potential reduction in public spending related to
budget deficits may affect the healthcare industry in particu-
lar, and therefore have a negative influence on growth pros-
pects.
National stimulus programs are expected to have different re-
sults on our Sectors. In particular, we expect these programs to
support order growth in Divisions within the Industry and En-
ergy Sectors that serve infrastructure equipment markets. In
contrast, investments in economic and financial stabilization
programs combined with lower tax revenues due to the reces-
sion may reduce public sector spending in coming years and
therefore adversely affect the growth prospects outside of the
infrastructure equipment markets.
SIEMENS GROUP
Results of operations
We are basing our outlook for the Siemens Group and its Seg-
ments on the above mentioned expectations of the cyclical
economic situation, and in particular of moderate growth in
global GDP over the next two fiscal years. We further assume
economic growth without significant setbacks and relatively
stable foreign currency exchange rates for the U.S. dollar. To
the extent that we report revenue on an organic basis, how-
ever, currency translation effects are not relevant. Our outlook
does not include potential impacts of major portfolio trans-
actions. Our investments within Equity Investments may re-
sult in impairments due to further deterioration in their busi-
ness prospects or aggressive competitor movements. We hold
considerable amounts of long-term tangible and intangible
assets including goodwill, in our clinical diagnostics business
among others, and continually test its recoverable value. Here
again, adverse developments in the markets or competition
could result in impairments. Such potential effects are not in-
cluded in our outlook because at this time we are unable to re-
liably estimate whether or in what amount they might occur.
To a certain extent, the challenging conditions in our markets
may make restructuring measures necessary. Financial im-
pacts from such measures are not included in the following
outlook. Furthermore, our outlook is conditional on no signifi-
cant increase in price pressure in markets for our products and
services in the coming two years, and also on a general market
upturn in the second half of fiscal 2010, particularly for our
short-cycle businesses.
Following a double-digit decline in orders in fiscal 2009, we
expect only a mid-single-digit percentage decline in organic
revenue in fiscal 2010 due to the stabilizing effect of our strong
order backlog. Our Fit42010 goal of growing organic revenue
twice as fast as global GDP growth will presumably not be
reached. This goal is based on normal business cycles unlike
the current conditions characterized by the recession and
effects of the financial crisis on the global economic environ-
ment. Assuming a positive effect from government stimulus
programs and continued growth in our environmental port-