Siemens 2013 Annual Report Download - page 235

253 D. Consolidated Financial Statements
357 E. Additional Information
245 C. Compensation Report, Corporate Governance
statement pursuant to Section a of the
German Commercial Code, Takeover-relevant
information and explanatory report
246 C. Siemens AG ( Discussion on basis of
German Commercial Code)
250 C. Notes and forward-looking statements
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Drive Technologies as well as parts of the Power Grid Solu-
tions & Products Business within the Infrastructure & Cities Sec-
tor, which are highly sensitive to volatility in market demand.
If the moderate recovery of macroeconomic conditions stalls
again and if we are not successful in adapting our production
and cost structure to subsequent changes to conditions in the
markets in which we operate, there can be no assurance that
we will not experience adverse effects that may be material to
our business, financial condition and results of operations. For
example, it may become more difficult for our customers to ob-
tain financing and as a result they may modify, delay or cancel
plans to purchase our products and services or to execute
transactions. Furthermore, prices may decline as a result of ad-
verse market conditions to a greater extent than currently an-
ticipated. In addition, contracted payment terms, especially re-
garding the level of advance payments by our customers relat-
ing to long-term projects, may become less favorable, which
could negatively impact our cash flows. Additionally, if cus-
tomers are not successful in generating sufficient revenue or
securing access to the capital markets, they may not be able to
pay, or may delay payment of, the amounts they owe us, which
may adversely affect our business, financial condition and re-
sults of operations.
Numerous other factors, such as fluctuations in energy and raw
material prices, as well as global political conflicts, including
those in the Middle East, North Africa and other regions, con-
tinue to impact macroeconomic parameters and the interna-
tional capital and credit markets. The uncertainty of economic
and political conditions can have a material adverse impact on
our business, financial condition and results of operations.
Our business is affected by a variety of market conditions and
regulations. For example, our Energy Sector is exposed to the
development of global demand for energy and is considerably
affected by regulations related to energy and environmental
policies. Our Healthcare Sector, in turn, is dependent on devel-
opments and regulations in healthcare systems around the
world, particularly in the important U.S. healthcare market.
Our Industry Sector is vulnerable to unfavorable market condi-
tions in certain segments of the automotive and manufac-
turing industries. Our Infrastructure & Cities Sector focuses,
among other things, on business with public authorities
around the world and is thus vulnerable to restrictions in
public budgets.
We operate in highly competitive markets, which are sub-
ject to price pressures and rapid changes: The worldwide
markets for our products and solutions are highly competitive
in terms of pricing, product and service quality, development
and introduction time, customer service and financing terms.
In many of our businesses, we face downward price pressure
and we are or could be exposed to market downturns or slower
growth, which may increase in times of declining investment
activities and consumer demand. We face strong competitors,
some of which are larger and may have greater resources in a
given business area, as well as competitors from emerging
markets, which may have a better cost structure. Some indus-
tries in which we operate are undergoing consolidation, which
may result in stronger competition and a change in our relative
market position. Certain competitors may be more effective
and faster in capturing available market opportunities. These
factors alone or in combination may negatively impact our
business, financial condition, and results of operations.
Our business, financial condition and results of operations
may be adversely affected by continued strategic align-
ments and cost-cutting initiatives: We are in a continuous
process of strategic alignments and constantly engage in
cost-cutting initiatives, including ongoing capacity adjustment
measures and structural initiatives. Capacity adjustments
through consolidation of business activities and manufactur-
ing facilities, and the streamlining of product portfolios are al-
so part of these cost reduction efforts. These measures may
not be implemented as planned, may turn out to be less effec-
tive than anticipated, may only become effective later than
estimated or may not become effective at all. Each of these
factors alone or in combination may negatively impact our
business, financial condition, and results of operations. Any
future contribution of these measures to our profitability will
be influenced by the actual savings achieved and by our ability
to sustain these ongoing efforts.
Our business, financial condition and results of operations
may be adversely affected by portfolio measures: Our strat-
egy includes divesting activities in some business areas and
strengthening others through portfolio measures, including
mergers and acquisitions.
With respect to divestments, we may not be able to divest
some of our activities as planned, and the divestitures we
do carry out could have a negative impact on our business,
financial condition, results of operations and our reputation.
For example, we have announced the closure of our solar busi-
ness and decided to divest the business activities included in
our airport logistics and postal automation business, which as
of September ,  was part of the Infrastructure & Cities
Sector’s Mobility and Logistics Division.
Mergers and acquisitions are inherently risky because of diffi-
culties that may arise when integrating people, operations,
technologies and products. There can be no assurance that