Siemens Ag Spons Adr

Good morning, ladies and gentlemen, and welcome to the Siemens 2020 Fourth Quarter Conference Call. As a reminder, this 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 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 Reichel, Head of Investor Relations. Please go ahead, Madam.

Good morning, ladies and gentlemen, and welcome to our Q4 conference call. All Q4 documents were released at 7 a.m. this morning. You can find everything on our Investor Relations website. I'm here together with Joe Kesa, Roland Busch and Ralf Thomas to review the Q4 results and outlook for fiscal 21. We have a lot on the agenda and I would like to head over immediately to Joe.

Thank you Sabine. Good morning everyone and thank you for joining us to discuss our fourth quarter results in what I would call remarkable times. As you can see we have a lot on our plate today so let's start right away. And I'm sure you all agree that we are in the middle of interesting times. This is true for the political environment, the geoeconomic factors, as well as technology driving transformation. And on top of everything, the emerging second wave of COVID-19 is a factor hard to predict when it comes to its impact on the global value chain. It's easy to say that the full cocktail of all those matters needs to have the utmost focus of corporate leadership. And I believe truly that these times will determine the future of industries and companies. They will turn intact sectors into structurally challenged businesses, make new sectors emerge faster, and accelerate the digital transformation in all areas of doing business. And it will reward these companies which master the crisis well learn from what they experienced while already getting prepared for the time after the pandemic. In any case, this will drive leadership, focus and attention to its highest levels. And the ability to connect in the dots in a changing ecosystem will determine the winners and the losers in the post-COVID environment. And that's why I'm really extremely glad that we have been able to achieve the major milestones of our Vision 2020 Plus strategic concept. With the creation of three strong and powerful companies in their respective sectors, we have laid the groundwork for emerging stronger from the crisis while focused and operating in attractive areas of societal needs. Siemens Optimeers, Siemens Energy and the new Siemens AG are well suited to successfully manage and emerge from the pandemic and actively shape the future of their respective sectors. Needless to say that relentless focus, efficient innovation and reliable execution remain the decisive success factors for value creation in the future. In March 2018, we successfully went public with Siemens Healthineers. And with a listing of Siemens Energy in September, we completed Siemens' structural realignment phase to create a powerful ecosystem. And this was a major step into resolving the Siemens conglomerate structure and create ultimate shareholder value. While we are aware that a lot of work still needs to be done, we believe the direction has been clearly set. With three focused, entrepreneurially driven and increasingly independent companies, sharing a strong Siemens brand, we have initiated the right setup for the future. Another important step to clarify our portfolio intent is the pending sale of Lender, a world-leading supplier of mechanical and electrical drive systems to Carline. What we call the POC concept, Portfolio Company Concept, of fixing businesses by introducing Any means of measures, such as mid-sized company structures, has turned out to be an effective way of generating value after all. Jim Sothenius is well on track to complete its transformative acquisition of Ratio Therapy Leader variant during the first half of calendar year 2021. Jim Sothenius also successfully raised its capital and took €2.7 billion in into its pockets. With this first step, the Siemens shareholding was reduced from 85% to 79%, and obviously subsequently creating meaningful rights in free float, already which we believe is important also on where the companies are being included. Ralph and Roland will give you a further update and details on the ongoing execution of the mid-term competitiveness programs. Ladies and gentlemen, after what we believe an unprecedented and successful spit-off process in unprecedented times, we lifted Siemens Energy on September 28. This move continued the re-rating of the new Siemens AG shares, which were already started after the approval of the spin-off AGM in July. Not unexpectedly, the Siemens Energy listing posed a huge catalyst with a share price increase of more than 9% or around 7 billion euro market cap on that day. The following days, the human share price gained further ground and reached a pre-spin-off level within two weeks after listing. Since then, the re-rating has continued, including obviously favorable impact from sector rotation. This development is finally endorsing The strategic direction management took in its efforts to focus and de-risk the Siemens company, and therefore, obviously, subsequently creating value for our shareholders. These achievements, in our view, have certainly been the highlight of our fiscal Q4, as well as the whole fiscal year 2020, where we outperformed both Stack 30, as well as the MSCI World Industrial Index. Nevertheless, both our operating financial performance in the fourth quarter was quite satisfactory given the circumstances we had to deal with. Our global team has done an outstanding job in handling the pandemic and delivered a strong finish to fiscal 2020. We have recognized this dedication through a special bonus payment to our employees below senior management level. On the numbers, Orders were up by 2%, to $50.6 billion, with a what we believe solid book-to-bill ratio of 1.02. Main driver in this aspect, as well as, by the way, in revenues, was China, with a comparable 22% growth year-over-year and a nominal 7% growth sequentially quarter-over-quarter. As expected, revenues have come down moderately by about 3% to $15.3 billion. over most regions, except China, which has been advancing 12% year over year. It performed also well on the operating industrial profitability, with an adjusted EBITDA from industrial businesses up 10% to 2.6 billion euros, obviously including a material valuation gain from up-end shareholdings and a divestment gain in smart infrastructure. This led to an excellent market performance of 18.7% as reported and 13.8% excluding the Bentley effect and the smaller SI divestiture gain. In our view, it has proven to be a smart idea to have invested into a software company early on and now harvesting the gains from a rich valuation, especially this is a tangible gain where we can have a on the stock exchange for the shares going forward. We are very satisfied with our free cash flow development, which has been pouring 3.8 billion euros cash into the company's accounts and further building on the strong third quarter performance. So that totals a 6.4 billion free cash flow for the whole fiscal year, an amount we haven't seen in a long time. Our strong finish in the quarter helped us also to achieve our guidance, although after six years in a row, it's been the first time that we need to make a revision during the year due to the obvious COVID-19 pandemic reasons. So all in all, we delivered a really good, this is now a really good and especially reliable streak over the years. The team is focused on keeping it that way. No doubt about this one. although the ongoing uncertainties due to the second wave of COVID-19 has not made it any easier to make a meaningful prediction for fiscal 21. So the question is, what does this period mean for our shareholders above and beyond becoming a predictable company? So what's been in for them? Well, if you look at the total shareholder return in this period of time, it reached close to 100%, clearly outperforming the German DAX. The question is, could it have been better? Well, absolutely. Could it have turned out to be much worse? Well, certainly, as you know and as other examples show. The shifts from a hard-to-predict conglomerate into a focused and more transparent company with a clear structure of responsibility and accountability was a relevant need long overdue. Ready to see the three Siemens companies, Siemens Huffineers, Siemens Energy and the new industrial focused Siemens AG has set the stage for mastering the biggest disruptive transformation of our time. While Huffineers is ahead, The two other companies have a clear path of priorities in both strategy and performance. As I said, I'm building out the next level of creating value so focus and transformation can begin. Seeking the ultimate value creation is still the midterm goal. I'm very grateful for the support of many constituencies, people, and particularly close allies, such as my fellow company, Ralph Thomas, Roland Busch and others to have been able to take it that far. It should have been more. It should have been more. But balancing the desirable with the doable requires patience and often compromising in order to get anything done. So I chose to get at least something done. And given the circumstances, I'm especially proud of what the entire Siemens team has accomplished over the years. And with that, ladies and gentlemen, I give it over to Ralph to give you more insights on the fourth quarter.