Siemens 2009 Annual Report Download - page 205

117
folio, we should be able to achieve organic growth in revenue
in 2011. We plan to achieve revenue of approximately €25 bil-
lion in fiscal 2011 from the sale of environmentally friendly
products and services.
Due particularly to the anticipated lower revenue, Total Sectors
profit in fiscal 2010 is expected to decline compared to fiscal
2009. We expect Total Sectors profit between €6.0 and €6.5 bil-
lion in fiscal 2010, and an increase of approximately 20% in in-
come from continuing operations compared to €2.457 billion
in the prior year. For fiscal 2011, we expect that Siemens could
benefit from tailwinds from a recovering world economy.
One of our most important goals is to increase Siemens’ capital
efficiency. We measure achievement of this goal via return on
capital employed (ROCE), which is the ratio of income from
continuing operations before interest to average capital em-
ployed, minus the balance of assets and liabilities held for dis-
posal related to discontinued operations. Our midterm goal for
ROCE is between 14% and 16%. This goal is based on normal
business cycles. We therefore do not expect to reach it in fiscal
2010. We expect that ROCE development follows the expected
income development in fiscal 2010 and 2011.
Financial position
We expect Free cash flow to decrease in fiscal 2010 compared
to fiscal 2009, which benefited strongly from reduction of in-
ventories, particularly in the fourth quarter and collection of
receivables. Thereby Free cash flow showed a clear seasonal
development through the fiscal year. Furthermore, fiscal 2010
Free cash flow could be burdened by changing customer
behavior regarding prepayments. We consider the possibility
of declining billings in excess of cost, which would continue a
trend in parts of our project business existing for several quar-
ters. Over the business cycle, we aim to ensure that the ratio of
Free cash flow to earnings (the cash conversion rate) is greater
than one minus our rate of revenue growth adjusted for port-
folio and currency effects.
Two key factors influencing Free cash flow are management of
net working capital within cash provided by or used in operating
activities, and additions to intangible assets, property, pant and
equipment within cash used in investing activities. In principle
we aim to achieve a ratio of investments in intangible assets
and fixed assets to depreciation and amortization expense in a
range from 95% to 115%. We will retain our stringent approval
process for capital expenditures, which goes up to the Manag-
ing Board level and takes into account the macroeconomic envi-
ronment and the development of new orders. In fiscal 2010, we
aim to keep our combined Sectors in the lower end of the range.
In the area of investment planning, the Industry Sector intends
to focus on investments in new products for automation and
drive solutions, building technologies and lighting solutions.
In addition, Industry will pursue selected investments in equip-
ment replacement and rationalization. The Energy Sector plans
continued investments mainly in expanding its capacity in ma-
jor sales markets and emerging economies. The Healthcare
Sector plans to continue investing in development of software
and IT solutions, primarily relating to imaging systems, and in
developing its markets for clinical diagnostics solutions.
For our medium-term capital structure, we seek a ratio of ad-
justed industrial net debt to adjusted EBITDA in the range of
0.8 to 1.0. In fiscal 2010, we expect the ratio to increase com-
pared to fiscal 2009.
 Managing Board statements, Independent auditors’ report, Additional information
95 Net assets position 97 Report on post-balance sheet date events
98 Risk report
108 Information required pursuant to
§315 (4) HGB of the German Commercial
Code and explanatory report
114 Compensation report
114 Report on expected developments