Siemens 2011 Annual Report Download - page 220

6 A. To our shareholders
23 B. Corporate Governance 51 C. Combined management’s discussion and analysis
52 C. Business and operating environment
80 C. Fiscal  – Financial summary
83 C. Results of operations
101 C. Financial position
114 C. Net assets position
117 C. Overall assessment of the economic position
118 C. Report on post-balance sheet date events
119 C. Report on expected developments and
associated material opportunities and risks
135 C. Information required pursuant to Section  ()
and Section  () of the German Commercial
Code (HGB) and explanatory report

tinue while governments address their high sovereign debt
levels particularly in the U.S. and the Eurozone. We expect a
positive development in the U.S. healthcare IT market, sup-
ported by the rules for formation and operation of Account-
able Care Organizations (ACOs) beginning in  and the fi-
nancial stimulus included in the HITECH Act of  for adop-
tion of Electronic Medical Record (EMR) systems. In Europe
we expect overall a flat to moderately growing market envi-
ronment, with positive exceptions in some countries where
specific healthcare funding programs are in place. Emerging
markets will continue to be a growth driver, particularly in-
cluding China and India with double-digit growth rates.
Some customers served by our Industry Sector tend to have
short horizons for their spending decisions and greater sensi-
tivity to current economic conditions. These include the mar-
kets served by our Industry Automation Division and certain
businesses within our Drive Technologies Division. Following
the strong recovery in fiscal , especially in the short-cycle
businesses, we anticipate that the markets served by our In-
dustry Sector will return to more moderate long-term growth
rates in the next two fiscal years. We expect that our custom-
ers in emerging markets will further expand their production
capabilities and that customers in developed economies will
continue to modernize their production facilities.
The worldwide markets for the solutions provided by our In-
frastructure & Cities Sector benefit from the long-term global
trend toward urbanization. We expect the markets to grow
modestly in fiscal , and then return to the stronger
growth rates we saw in fiscal . We anticipate that this will
include a clear increase in demand in the Americas and the
Asia, Australia regions, and well-balanced market growth
across the products and solutions offered by the Sector. The
development of the markets for products, solutions and ser-
vices for rail transportation is largely driven by public spend-
ing. As customers in these markets usually have multi-year
planning and implementation horizons these markets tend to
be independent of short-term economic trends. As far as the
building and construction markets are concerned, we expect
them to benefit from increasing demand for energy efficiency
solutions in the next two fiscal years.
Following its reorganization as of fiscal October , , SFS’
business is geared even more to the Siemens Sectors and
their markets and provides even stronger support to the oper-
ating business of Siemens. As such SFS is, among other fac-
tors, dependent on the overall business development of the
markets served by the four Sectors.
C... 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 overall
economic situation as well as the specific market conditions
over the next two fiscal years. Our outlook is based also on an
exchange rate of US$. per €.
We are striving to achieve revenue of more than € billion
in the medium term. We expect our Energy Sector to contrib-
ute the largest share of the growth towards the targeted level,
followed in order by the Industry, Infrastructure & Cities and
Healthcare Sectors. We expect that our new Sector structure,
effective with the beginning of fiscal , will be a signifi-
cant factor in helping us achieve our revenue goal, because it
better aligns our businesses with customers and market op-
portunities. Other significant factors include our expanding
presence in emerging markets with regard to facilities and
employees, and our development of products and solutions
specifically for emerging market countries.
We expect that revenue in fiscal  will increase moderate-
ly on an organic basis, benefiting from conversion of our strong
order backlog (defined as the sum of order backlogs of our
Sectors). From the backlog as of September ,  we ex-
pect to convert approximately € billion of past orders into
current revenue in fiscal  and approximately € billion
into revenue in fiscal . Within these numbers for fiscal
, we expect approximately € billion in revenue conver-
sion from the € billion backlog of the Energy Sector, approx-
imately € billion in revenue conversion from the € billion
backlog of Infrastructure & Cities, approximately € billion in
revenue conversion from the € billion backlog of Industry
and approximately € billion in revenue conversion from the
€ billion backlog of Healthcare. Based on an expected overall
positive development in the markets served by our Sectors,
we expect continued revenue growth in fiscal . Revenue
in fiscal  is anticipated to benefit from an expected book-
to-bill ratio above one in fiscal .
Several additional factors support our expectations of revenue
growth in the next two fiscal years. We expect that the reve-
nue growth rate for our Environmental Portfolio will be higher
than for Siemens overall, enabling the Portfolio to grow from
€. billion in fiscal  to more than € billion in fiscal
. Similarly, revenue from emerging markets grew faster
than overall revenue in fiscal , accounting for approxi-
mately one third of total revenue. We intend to increase this
share over time. Finally, while we are focusing principally on