Siemens 2012 Annual Report Download - page 148

1 A. To our Shareholders
21 B. Corporate Governance 49 C. Combined Management Report
50 C. Business and economic environment
64 C. Financial performance measures
69 C. Results of operations
82 C. Financial position
93 C. Net assets position
95 C. Overall assessment of the economic position
96 C. Subsequent events
97 C. Sustainability
111 C. Report on expected developments and
associated material opportunities and risks

The Sector’s principal competitors are multinational companies
such as ABB, Alstom, Ansaldo, Bombardier, General Electric,
Honeywell, Johnson Controls, Schneider Electric and Tyco. The
Sector’s competitors vary by Division. The main competitors of
the Rail Systems Division and the Mobility and Logistics Divi-
sion are Alstom, Ansaldo, Bombardier and General Electric. The
primary competitors of the Low and Medium Voltage Division
are ABB, General Electric, Honeywell and Schneider Electric.
The principal competitors of the Smart Grid Division are ABB,
Alstom, General Electric, and Schneider Electric. The main com-
petitors of the Building Technologies Division are Honeywell,
Johnson Controls, Schneider Electric and Tyco. Infrastruc-
ture & Cities also faces competition from niche competitors and
from new entrants, such as utility companies and consulting
firms, exploiting the fragmented energy efficiency market. The
Sector’s solution businesses also compete with engineering,
procurement and construction (ECP) providers while competi-
tors in the service field often include small local players.
Equity Investments
In general, the segment Equity Investments comprises equity
stakes held by Siemens that are accounted for by the equity
method, at cost or as current available-for-sale financial assets
and are not allocated to a Sector, SFS, Centrally managed port-
folio activities, Siemens Real Estate (SRE), Corporate items or
Corporate Treasury for strategic reasons. Our main investments
within Equity Investments are our stake of approximately
.% in Nokia Siemens Networks B.V. (NSN), our .% stake
in BSH Bosch und Siemens Hausgeräte GmbH (BSH) as well as
our .% stake in Enterprise Networks Holdings B.V. (EN).
Financial Services
Financial Services (SFS) provides a variety of financial servic-
es and products both to third parties and to other Siemens en-
tities and their customers. SFS has three strategic pillars: sup-
porting Siemens Sectors with financing solutions for their cus-
tomers, manage financial risks of Siemens and offering third-
party financing services and products. To better achieve this
goal, Financial Services intends to grow its business in a profit-
able, controlled manner.
SFS’ business can be divided into capital business and fee busi-
ness. The capital businesses support activities for Siemens’
sales as well as third party vendors and customers and consist
of leasing, loans, asset-based lending and equity investments
(both in infrastructure projects and corporate venture capital).
The fee businesses comprise support and advisory activities
concerning financial risk and investment management, proj-
ect & export financing, and arranging of project financing for
Siemens’ projects, treasury & financing services, pension asset /
investment management, insurance brokerage as well as re-in-
surance of Siemens risks.
SFS conducts its business through seven Business Units: Com-
mercial Finance; Project and Structured Finance Energy; Proj-
ect-, Structured and Leveraged Finance Healthcare; Project- and
Structured Finance Infrastructure and Cities & Industry; Trea-
sury; Financing Services & Investment Management and Insur-
ance. In addition, one Business Segment (Venture Capital) is di-
rectly assigned to SFS’ CEO. The SFS functions Trade Finance
Advisory and Corporate Pensions provide advisory and assis-
tance services to the entire Siemens Company. In addition, SFS
host a number of functions to support its own business.
In its transactions with Siemens and third parties, SFS acts
consistently with banking industry standards in the interna-
tional
financial markets that are both applicable and mandato-
ry for these transactions. In December , the Siemens Bank
GmbH was granted a license by the German Federal Financial
Supervisory Authority (Bundesanstalt für Finanzdienstleis-
tungsaufsicht – BaFin) to engage in banking business. In par-
ticular, the license covers engaging in loan, guarantee busi-
ness and deposit taking. Siemens Bank GmbH was established
to support the operational businesses of Siemens’ Sectors by
providing financing solutions and the license enables the bank
to gain access to the deposit and refinancing facilities of the
European Central Bank.
SFS’ competition mainly includes commercial finance opera-
tions of banks, independent commercial finance companies,
captive finance companies and asset management companies.
International competitors include BNP Paribas Equipment
Finance, De Lage Landen, General Electric Commercial Finance,
Macquarie and Société Générale Equipment Finance. Particu-
larly in the commercial finance business, SFS’ competitors are
often local financial institutions and competition therefore
varies from country to country.
.. Economic environment
...   
Growth in the global economy continues to slow down in ,
with real global gross domestic product (GDP) expected to rise
by only .% compared to .% in . Above all, the unstable
economic situation in Europe burdens economic activity
worldwide. Concerns about the stability of the banking sector,
the sovereign debt crisis and the fragile economy continue to
hamper private-sector investment and consumer spending.
Moreover, austerity policies to cut government deficits and
bring down debt levels in Europe have led to a significant re-
duction of government spending. In addition, the U.S. economy
remains sluggish and growth in emerging markets has cooled
down due to spillover effects from advanced economies and
various country-specific factors.