Siemens Ag Spons Adr

Good morning, ladies and gentlemen, and welcome to Siemens 2020 Third Quarter Conference Call. As a reminder, today's call is being recorded. Before we begin, I would like to draw your attention to the Safe Harbour Statement on page 2 of the Siemens presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the call over to your host today, Mrs. Sabine Riegel, Head of Investor Relations. Please go ahead, Madame.

Good morning, ladies and gentlemen, and welcome to our Q3 analyst call today. All documents were released at 7 a.m. this morning. As always, you can find everything on our IR homepage. I'm here this morning together with Joe Kayser, Roland Busch, and Ralf Thomas. And we're here together to review the Q3 results this morning. As always, we will start with the presentation, and then we will have enough time for Q&A. And we will already start right now with Joe.

Thank you, Sabine. Good morning, everyone, and thank you for joining us to discuss our third quarter results in what I will call interesting times. The COVID-19 pandemic has already now fundamentally changed our society and our daily life. It's far from over in our view. Since the start of the pandemic, our first priority has been to secure people's health and safety. It is true for our own employees, as well as for our partners, the whole value chain. Also going forward, we continue to take all necessary precautions to keep people safe and healthy while maintaining business continuity and serving our customers the best we can. And we continue to drive productivity by further digitalization also in our own processes and our own procedures. At Siemens alone, we conducted around 800,000 virtual meetings every day. For the most part, forced by the pandemic, we reduced travel and entertainment costs by more than 100 billion euros in the quarter. While the amount of savings may not fully be sustained, we expect a significant push to be saved for good also in the future. As another key learning, we decided to implement what we called a new normal working model with average two to three days per week of mobile work globally and permanently wherever possible. It should be applicable for up to around 140,000 employees globally. We expect this to also result in considerable savings related to office space and building maintenance while benefiting our employees with more flexibility, more empowerment and and less waste of time for commuting. Expanding remote services, for example, through boosting the use of artificial intelligence, helped us to serve our customers well, proving to be a reliable partner at any time. It has also become clear that the digital transformation is in full swing, also at our customers' enterprises, too. Our early investments in software, digital services, and remote maintenance are clearly paying off, and we are off to taking market shares as numbers show for the quarter. Also, we have been working hard to keep our own global operations up and running. Since we do expect COVID-19-related volatility to remain in both demand and supply states, We continue to use all instruments to flexibly adjust capacities in order to act quickly with regards to changing environments. Currently, around 8,500 employees are in short-term work in Germany, and we will be able to quickly adapt this number both ways if necessary. Despite these challenges, our strategic concept Vision 2020 Plus to transform and reshape Siemens is clearly gaining traction. With 99.36% approval rate, we receive the powerful support from our shareholders for the energy spin-off. Therefore, further streamlining and de-risking the new Siemens AG. They're fully on track. They execute the spin-off by the end of fiscal 2020. with a planned listing on September 28, 2020. You'll hear more on the energy businesses and the plans going forward at the Energy Capital Market Day on September 1, 2020. Another important example for a long-term oriented strategic development is Siemens Alpineers. It is a testimony for value creation by unleashing the potential of focusing businesses. make them more transparent and receive a sector-based re-rating when confidence and track record rise. While you realize that the timing has been courageous and some investors are worried about short-term capex in the sector as well as mid-term valuation and synergies, we do support the planned acquisition of Varian as even something is. It is a clear-cut and meaningful strategic move delivering value to all stakeholders from the mid-term onwards. As communicated, Siemens, as a major shareholder, will not participate in the capital raise, reducing its shareholdings to about 70% in the next step. We also do expect a significant rise in free-flow enabling longer-term investors to take meaningful tickets going forward. And Raoul will give you a more detailed assessment from a the majority shareholders' perspective later. Furthermore, we continue to expand our digital ecosystems by joining forces. This time, we agree to cooperate with SAP in the areas of product lifecycle management, supply chain, and asset management to accelerate the industrial transformation. As a first step, SAP will sell our team-centered software as core foundation for PLM, our digital industries will resell certain SAP products. Now, let's look at our key figures at a glance for the third quarter. As expected, COVID-19-related shutdowns and restrictions caused a deep slump in demand with very different prospects of recovery. Also, as expected, we saw very diverging regional and end-market development. China's industrial production is already back at or in parts even above 2019 levels. Important sectors such as automotive, machine building or aerospace face strong headwinds across most geographies. Some of the regions and or sectors may take quite some time to recover to pre-COVID levels. Even though extensive stimulus programs were initiated around the globe, there is still limited visibility, mostly on the back of a material probability that we see a second wave of COVID-19-related volatility going forward. This is especially the case for DI, where we do expect modest top-line growth sequentially on a comparable base, but considerably lower levels year over year. In this difficult environment, we delivered a convincing performance relative to market expectations, and in most parts, also compared to us here. Book-to-bill ratio was up at 1.07, with orders only down 7% at €14.4 billion. Revenue declined moderately by 5% to €13.5 billion, mostly on the back of lower-demand, on the product side in digital industries and smart infrastructure. Also, we saw a negative impact from limited customer side access in service and project businesses across the board. We performed well on the operating industrial profitability with an adjusted EBITDA from industrial businesses up 8% to 1.8 billion euros, also obviously benefiting from a 211 million euro increase in value from our strategic gameplay shareholdings. This led to an excellent margin performance of 14.3% as reported. Underlying key drivers were a strong software business and swift execution of contingency measures. Last, but certainly not least, we delivered an impressive and timely all-in free cash flow of more than 2.5 billion euros year over year. Needless to say that we continue to focus on cash going forward. Now, Roland will give you further insight on our operational business performance and progress in executing our competitive business programs going forward. Roland, over to you.