Siemens 2013 Annual Report Download - page 230

92 A. To our Shareholders
117 B. Corporate Governance 155 C. Combined Management Report
156 C. Business and economic environment
173 C. Financial performance system
179 C. Results of operations
192 C. Financial position
204 C. Net assets position
207 C. Overall assessment of the economic position
209 C. Subsequent events
210 C. Sustainability
227 C. Report on expected developments and
associated material opportunities and risks

Saudi Arabia and South Africa. Even so, we expect that market
growth will be driven by the Asia, Australia region. Overall, the
markets for products, solutions and services for transportation
and logistics are driven largely by public spending and hence
are independent of short-term economic trends. In some coun-
tries, especially within emerging markets, we see a tendency
to prefer local suppliers. In some European countries we are
observing a trend of customers trying to increase competition
by using multi-supplier strategies. We expect continued strong
demand for metro and light rail as well as for technologies to
reduce energy consumption and operating costs. The locomo-
tive market is still held back by austerity programs in a number
of countries. We expect that innovative value-added services
offerings, such as IT and remote services, will support market
growth in coming years.
Markets served by our Power Grid Solutions & Products Busi-
ness are expected to show little or no growth in fiscal .
While we anticipate a general recovery of the non-residential
construction market, particularly in the U.S., there is usually a
lag time of three to four quarters before orders for electrical
installations materialize and our Business begins to participate
in such growth. As for industrial markets, we expect that the
development will be burdened by declining investments in the
mining industry. Similarly, investments by power supply com-
panies are anticipated to be held back by regulatory restric-
tions in some countries, and by austerity programs in others,
particularly in Europe. As at Transportation & Logistics we see
a tendency in some countries, especially within emerging
countries, to prefer local suppliers.
The markets for our Building Technologies Division are ex-
pected to grow moderately in fiscal . While we expect solid
growth in non-residential construction, there is – similar to
Power Grid Solutions & Products – usually a lag time of three to
four quarters before the Division begins to participate in such
growth. On a regional basis, growth is expected to be driven
by the Asia, Australia and the Americas regions. Within Europe,
C.I.S., Africa, Middle East we anticipate growth in the Middle
East, while the development in Europe is expected to be chal-
lenging due to the economic situation in some southern and
western European countries and weak public investment due
to austerity programs.
SFS’ business is geared to the Siemens Sectors and their mar-
kets and therefore provides support to the operating business
of Siemens. As such SFS is, among other factors, influenced
by the overall business development of the markets served by
the four Sectors.
C... SIEMENS GROUP
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 for
the next fiscal year.
We are exposed to currency translation effects, involving the
US$, British £ and currencies of emerging markets such as
China, India and Brazil. We expect volatility in global currency
markets to continue in fiscal . Given that Siemens is a net
exporter from the Eurozone to the rest of the world, a weak
Euro is principally favorable for our business and a strong
Euro is principally unfavorable. During fiscal , the average
exchange rate conversion for our large volume of US$-denom-
inated revenue was US$. per Euro. In the latter part of the
fiscal year, the Euro increased in strength. As of the end of the
fiscal year, the US$ exchange rate was US$. per Euro.
Through adaptation of our production facilities during the
past, we have improved our natural hedge on a global basis.
In addition, we have already systematically addressed the
remaining currency risk in our export business activities for
fiscal , see NOTE  in D. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS. We expect these steps to help to limit
effects on income related to currency in fiscal .
We expect “Siemens ,” our company-wide program for im-
proving profitability in our Sectors through cost reduction,
strengthening core activities, improving our go-to-market set-
up, optimizing our corporate infrastructure, and simplifying
our governance will contribute positively to growth in Net
income and corresponding basic earnings per share (EPS).
This outlook excludes impacts related to legal and regulatory
matters.
Revenue growth
We expect that in fiscal  revenue on an organic basis, ex-
cluding currency translation and portfolio effects, will remain
near the prior-year level, as markets for Siemens overall are ex-
pected to remain challenging in the next fiscal year. These
challenges are expected to be particularly evident in short-cy-
cle businesses, where we do not anticipate a recovery until late
in fiscal . On the other hand, we expect a stabilizing effect
on revenue from conversion of our order backlog (defined as
the sum of order backlogs of our Sectors) which totaled €
billion as of September , . From this backlog we expect
to convert approximately € billion of past orders into current
revenue in the next fiscal year. Within this amount for fiscal
, we expect approximately € billion in revenue conver-
sion from the € billion backlog of the Energy Sector, approx-