Siemens Ag Spons Adr

Please stand by, we are about to begin. Good morning, ladies and gentlemen, and welcome to Siemens 2021 Second Quarter Conference Call. As a reminder, this call is being recorded. Before we begin, I would like to draw your attention to the Safe Harbor 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. Iva Riesenhuber, Head of Investor Relations. Please go ahead, madam.

Good morning, ladies and gentlemen, and welcome to our Q2 conference call. All Q2 documents were released this morning and can be found also on our investor relations website. I'm here today with our president and CEO, Roland Busch, and our CFO, Ralph Thomas, who will review the Q2 results and fiscal year 21 outlook. After the presentation, we will then have time for Q&A. This call is scheduled for 60 minutes. In addition, Roland and Ralph will be hosting a virtual sell-side meeting and investor roadshow next week. Since there's a lot on the agenda with that, I hand over to Roland.

Thank you, Eva. And good morning to everyone. Thank you for joining us to discuss our second quarter results. I'm very proud that we delivered another outstanding performance. My thanks goes to all the people at Siemens Worldwide for their dedication and for always embracing a growth mindset. From a macro perspective, industrial recovery continued. This was clearly visible in key verticals such as automotive, machine building, electronics, chemicals, or pharma. Part of the strong manufacturing rebound is due to catch-up effects and strengthening resilience in increasingly strained supply chains. From a regional perspective, China stands out now clearly above pre-COVID levels for industrial output. Recovery in Europe and the United States gains traction, with vaccination now progressing at fast pace. Broad-based fiscal stimulus will support over the midterm to modernize infrastructure and lower greenhouse gas emissions. All in all, the economic environment is improving, albeit with large regional differences depending on the pandemic impact. Our top priority is on execution, strategically and operationally, and we made substantial progress here. Our portfolio, more focused and strengthened. Our competitiveness programs, fully on track. Our offering, best suited to create sustainable customer impact and support their digital transformation. All this led to strong operational momentum, driving profitable growth and excellent free cash flow. We expect to continue the second half in fiscal 2021. At the same time, we will continue to manage risks and opportunities in a prudent way. We expect an uptick in discretionary spending in line with opening of economies. In addition, we plan to selectively invest in further digital applications and vertical offerings guided by demand from the market and our customers. Also, we will improve our sales processes and performance across all sales channels to grasp growth opportunities. Besides the pandemic-related risks, we keep a close eye on stretched supply chains. Our teams have done a great job so far. They are working hard to further mitigate risks from electronic shortages and price increases in certain categories. Currently, there is also a strained supply for steel, plastics and freight, amongst others. In selected cases, we may face production constraints and prolonged delivery lead times to customers over the next month. Based on our strong first half-year performance and significant portfolio gains, we raise our outlook for fiscal year 2021 again. We expect our book-to-bill ratio to be above 1%. We now expect revenue growth for the Siemens Group of 9 to 11% on a comparable basis. And net income is now seen in the range of 5.7 to 6.2 billion euros. These numbers do not include any effects from Siemens Healthineers acquisition of Varian, which closed after the second quarter. And Ralph will walk you through the details. Now, let me give you some more color on the topics I touched in my introduction. As I said, we made good progress to shape and strengthen our portfolio. Siemens Healthineers closed three weeks ago the transformational Varian acquisition and started its integration. We are very pleased with Varian's strong strategic fit, sound financing structure, and synergy potential. I'm sure our 75% stake in Siemens Healthineers continues. will become even more valuable. Smart infrastructure finally closed the CNS electric acquisition. This is fully in line with our strategy to grow in Asia. We get access to a fast-growing low-voltage power distribution market in India, and at the same time, CNS will serve as export hub for further markets in the region. In some regions, and especially in India, the pandemic is raging particularly violently these days. My thoughts go out to all our colleagues and to all people who are affected by the serious consequences. Our management teams, especially in India, are doing everything possible to protect our employees. We support from here as best as we can, and I hope that international aid will take effect soon and that vaccinations will increase rapidly in the country. We haven't talked a lot about our global venture firm NEXT 47. Five years after redefining the strategy of our venture capital activities, I can say that we are very pleased with the progress. NEXT 47 combines capital investments with hands-on business development capabilities for startups and supports our management with great insights into the venture market. Today, Next 47 is invested in more than 30 promising ventures. Siemens benefits by collaborating with these startups in attractive technology fields of relevance to us. And the concept pays off. In the second quarter, two companies were listed in the United States, ChargePoint and Aeva. The ChargePoint listing created a gain of more than 200 million euros in connection with the transfer to our stake to the Siemens Pension Trust. Finally, we closed the Flender divestment to Carlyle, an important step to focus Siemens. The sales generated a higher than expected gain of almost 900 million euros. I talked about digital transformation opportunities at the beginning, and a good example is the Hannover Fair, which had its second virtual edition just a few weeks ago. Many of you experienced our unmatched digital enterprise offering at a virtual 3D tour. We had intense discussions and interactions with thousands of customers. Focus was on how to use digital twins, AI, edge computing and data to act quickly and flexibly in fast changing environments and how to adapt products and manufacturing processes in a resource efficient way. PLM software is a key driver for digitalization, so we are proud that our Teamcenter portfolio was recognized by the well-known Forrester Research firm as the leader in this space. When we started the new chapter of Siemens, I told you that we will strengthen and amplify our ESG program. Sustainability is the core of our business. It is part of our offering when talking to customers, governments, and investors. We stepped up our focus and commitment to four ambitious sustainability initiatives at once. The goal is to contribute to limit global warming to 1.5 degrees. By 2030, we have set ourselves clear goals to drive decarbonization such as to aim for 100% electric vehicles in our fleet, to use 100% renewable electricity, to own or lease only buildings that have net zero carbon emission, and we intend to achieve a 20% reduction in our supply chain's emission. We will give you more insights on our ESG measures at our Capital Market Day on June 24th. A literal lighthouse for sustainability is our electronic works factory in Amberg. Amberg joined our Chengdu factory in the global lighthouse network of the World Economic Forum for its systemic digital transformation program. The team applies seamless data integration from suppliers to customers and a lean digital factory concept. The outcome? additional 140% factory output at double product complexity without increase in electricity or resources. We have an even greater impact through our customers' operations. A good example is our strategic partnership with Mercedes-Benz, where we are expanding our decade-long cooperation. We will jointly redesign Mercedes-Benz Berlin Marienfelde factory site. How? By developing innovative solutions for digitalization and increasing energy efficiency in production. A key component will also be the qualification of employees. It is planned to roll out this blueprint for sustainable and digital production globally in their production network. Our technologies have the purpose to deliver sustainable customer value. Let me highlight a few more recent examples. Considering the pandemic, time to market has never been more important. We helped BioNTech companies, BioNTech, to convert its existing Marpoxide to produce the COVID-19 vaccine in record time of five months. We collaborated closely to rapidly implement our technologies, such as for process control and manufacturing execution. Production is end-to-end digitalized to enable paperless documentation right from the start. In smart infrastructure, we have worked hard on continuously expanding our portfolio for EV charging, infrastructure, and services. The secular growth trend towards electric vehicles to supply emission-free mobility is accelerating. So we see good opportunities and sustainably grow this business. Customers are, for example, oil majors upgrading filling stations with charging infrastructure. Other customers include local utilities, municipalities, fleet operators, and residential enterprises. Another highlight? Our mobility business received a $190 million Australian dollar order to upgrade and modernize the New South Wales rail network. Our traffic management and signaling solutions will increase capacity, reliability, and availability. So how does all this translate into our financials? Let me give you a brief overview for the Siemens Group in the second quarter. Orders were up 11%. at 15.9 billion euros with a strong book-to-bill ratio of 1.08. Key drivers were Siemens Healthineers and smart infrastructure, both up double-digit. Revenue was up across all businesses and regions by 9% to now 14.7 billion euros. Topline growth was stronger than expected. This comes to a significant extent from our business in China, We were sharply up 44% year-over-year on easy comparables. But growth was broad-based. Top-line growth in Germany, for example, increased by 7%. Adjusted EBITDA for our four industrial businesses rose sustainably to 2.1 billion euros, benefiting from strong top-line-driven profit momentum. In addition, structural improvements are paying off. Our discretionary spending continued to be on very low levels, but this effect will decline. With ongoing progress to bring the pandemic under control, countries will reopen and travel and sales efforts will pick up. Altogether, this led to an excellent margin performance of 15.1%, including one percentage point of severance. It translates into a strong earnings per share of 2.82 euros, also benefiting from the Flander gain. Ralph and I are extremely satisfied with our progress to achieve a more consistent free cash flow development throughout the year. 1.2 billion euros of free cash flow all in in the second quarter is a very strong performance driven by exceptional 2.1 billion euros from industrial business. And I promise we will continue this path. With that, over to you, Rolf. Let's take a closer look at operational performance and financials.