Siemens 2012 Annual Report Download - page 203

135 D. Consolidated Financial Statements
239 E. Additional Information
130 C. Siemens AG (Discussion on basis of
German Commercial Code)
134 C. Notes and forward-looking statements
129 C. Compensation Report, Corporate Governance
statement pursuant to Section a of the
German Commercial Code, Takeover-relevant
information and explanatory report

For the next two fiscal years, we expect the healthcare markets
in which our Healthcare Sector participates to expand moder-
ately but below the long-term growth rates anticipated for this
industry. Public healthcare systems have been under cost pres-
sure for some time, and this situation is likely to continue
while governments address their high sovereign debt levels
particularly in the U.S. and the Eurozone. In the U.S., a health
care reform was enacted in the spring of . In particular in
connection with this reform, it is currently expected that an
excise tax will be charged on certain medical devices from
 onwards. Siemens believes that this tax will impact all
businesses except of Audiology. A continuing trend towards
Accountable Care is driving provider consolidation and closer
alignment between hospitals and physicians. Emerging mar-
kets will continue to be a growth driver, particularly China with
double digit growth rates. In Europe we expect overall at best a
flat market environment.
Due to an uncertain economic outlook, the Industry Sector ex-
pects that most of its customers will continue to invest cau-
tiously in fiscal . In the years ahead we expect markets, in-
cluding those served by the Industry Automation Division and
certain businesses within the Drive Technologies Division, to
return to their long-term moderate growth rates. The excep-
tion is the still relatively small but dynamic market segment for
industrial IT, which we expect to grow significantly faster. In
emerging markets, we expect that Industry customers will
continue to expand and modernize their production capabili-
ties. In developed economies, we expect that our customers
will focus on modernizing their production facilities, though
the actual development of investments may differ by country
and industrial market segment.
Worldwide markets for solutions provided by our Infrastruc-
ture & Cities Sector benefit from the long-term global trend to-
wards urbanization. We expect the Sector’s markets to grow
moderately in fiscal , including large infrastructure proj-
ects in rail systems. We anticipate that this will include bal-
anced growth across our reporting regions in fiscal . For
fiscal  we expect a slowdown in growth. While the Ameri-
cas and Asia, Australia are expected to continue their moder-
ate growth, demand in Europe, C.I.S., Africa, Middle East is ex-
pected to decline due mainly to a declining demand in Europe.
We expect that growth in the rail transportation and logistics
markets in fiscal  will benefit from large rail projects, par-
ticularly in the Europe, C.I.S., Africa, Middle East region. We ex-
pect a lower number of large projects in fiscal  and an as-
sociated slowdown in market growth. Overall, the develop-
ment of the markets for products, solutions and services for
rail transportation and logistics is largely driven by public
spending. As customers in these markets usually have multi-
year planning and implementation horizons, they tend to be
independent of short-term economic trends. For the low and
medium voltage and smart grid markets we anticipate slight
growth in  and somewhat faster growth in fiscal . De-
spite continued demand for energy efficiency solutions, we ex-
pect growth in building and construction markets to slow
down in fiscal , with some improvement in  particu-
larly in the U.S.
Following its reorganization at the beginning of fiscal ,
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, influenced by the overall business development of the
markets served by the four Sectors.
...  
Results of operations
We are basing our outlook for the Siemens Group and its seg-
ments on the above-mentioned expectations regarding the
overall economic situation and specific market conditions over
the next two fiscal years. The outlook is based also on an ex-
change rate of US$. per €. We further expect that results for
fiscal  and particularly fiscal  will be influenced by
“Siemens ,” our company-wide program for improving
profitability in our Sectors through cost reduction, strengthen-
ing core activities, improving our go-to-market setup, optimiz-
ing our corporate infrastructure, and simplifying our gover-
nance. Specific expectations related to “Siemens ” are de-
tailed in the paragraphs below.
We expect that revenue in fiscal  will approach the level
reached in fiscal  on an organic basis. We expect revenue
development to benefit from conversion of our order backlog
(defined as the sum of order backlogs of our Sectors) of €
billion as of September , . From this backlog we expect
to convert approximately € billion of past orders into current
revenue in fiscal  and approximately € billion into reve-
nue in fiscal . Within these numbers for fiscal , we ex-
pect approximately € billion in revenue conversion from the
€ billion backlog of the Energy Sector, approximately € bil-
lion in revenue conversion from the € billion backlog of In-
frastructure & Cities, approximately € billion in revenue con-
version from the € billion backlog of Industry and approxi-
mately € billion in revenue conversion from the € billion
backlog of Healthcare. Based on an expected overall improve-
ment in the markets served by our Sectors, we expect revenue
to return to moderate growth in fiscal . We also expect rev-
enue from emerging markets, which accounted for % of total
revenue in fiscal , to grow faster than overall revenue in
the coming two fiscal years.