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Press Release28 June 2011Siemens AGMunich, Germany / Shanghai, China
Siemens to expand market share in emerging markets
Siemens plans to drive growth primarily not only in Brazil, Russia, India and China (BRIC) and the Middle East, but also in countries like Chile, Indonesia, Mexico, Colombia, Poland, South Africa, Thailand, Turkey and Vietnam. "We've been active in many emerging countries for over 100 years and are highly respected there as a local business partner. This is a competitive advantage we're going to exploit," said Busch.
As a green infrastructure supplier, Siemens – with its Industry, Infrastructure & Cities (from October 1, 2011), Energy and Healthcare Sectors – offers the right portfolio to address demand in the emerging markets. For example, the Chinese government's twelfth five-year plan calls, among other things, for massive investments in renewable energies, smart grids, electric mobility and improvements in the healthcare system. By 2020, India wants to be feeding an additional 200 gigawatts into its power grid in order to meet its enormous energy needs. To expand its rail network alone, Russia has announced investments of nearly €300 billion by 2030.
Over the last few years, Siemens has already achieved above-average growth in the emerging markets. Revenue from continuing operations more than doubled between fiscal 2005 and fiscal 2010 to some €22 billion – an average annual growth rate of 17 percent. By way of comparison, GDP in the emerging markets grew by an average of 6.1 percent during the same period. The share of Siemens' total revenue generated in the emerging markets rose from about 20 percent in fiscal 2005 to more than 30 percent in fiscal 2010.
Local value creation – encompassing not only sales and production but also research and development (R&D) activities and engineering – is a key success factor for business in emerging markets. In 2005, Siemens had about 46,000 employees in the emerging markets. By 2010, the figure had risen to 85,000. During the same period, the number of Siemens main production facilities increased from 64 to 117. To tailor products to the particular requirements of individual markets, R&D must be local. From 2005 to 2010, the number of Siemens' personnel employed in R&D and engineering in the emerging markets grew, accordingly, from 8,600 to around 15,500. A clear orientation toward customers in the emerging markets, where Siemens already has 27 percent of its sales employees, is a further lever. In this connection, the company has rigorously expanded its key account management organization in the emerging markets.
The market for products in the entry-level segment is an additional growth lever for Siemens in the emerging markets. Also called SMART products, these offerings are simple, maintenance-friendly, affordable, reliable and timely-to-market. They offer major growth potential in the entry-level segments that Siemens does not address with its high-end products. The market for entry-level products is growing worldwide at an annual rate of seven percent. In China and India, the rate is ten percent. By way of comparison, the volume that Siemens generates in the entry-level segment has increased by around 20 percent year-over-year to a current annual volume of some €10 billion. Today, Siemens is already marketing over 160 products in the entry-level segment. Another 90 products are currently being developed or are close to market launch.
Products already launched include, for example, the SST-600 steam turbine, which is produced in India. Increasing the turbine's local value-added from 30 percent to 100 percent within three years cut costs by around 40 percent. The CerberusECO fire alarm system – developed and produced entirely in China – is particularly easy for users to install. Since its market launch in 2009, more than 500,000 units have been sold.
Siemens developed the Essenza magnetic resonance imaging (MRI) scanner in China, Germany and the UK and produces it in China. The system is not only affordable; it is also extremely fast and precise – thereby making it possible to examine considerably more patients. These features of the Essenza have enabled Siemens to tap the new market segment for small and municipal hospitals: more than 550 of the MRI systems have now been sold worldwide.
For this press release
Siemens AG (Berlin and Munich) is a global powerhouse in electronics and electrical engineering, operating in the industry, energy and healthcare sectors. For over 160 years, Siemens has stood for technological excellence, innovation, quality, reliability and internationality. The company is the world's largest provider of environmental technologies. More than one-third of its total revenue stems from green products and solutions. In fiscal 2010, which ended on September 30, 2010, revenue from continuing operations (excluding Osram and Siemens IT Solutions and Services) totaled €69 billion and net income from continuing operations €4.3 billion. At the end of September 2010, Siemens had around 336,000 employees worldwide on the basis of continuing operations. Further information is available on the Internet at: http://www.siemens.com.
This document contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words such as "expects," "looks forward to," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," "project" or words of similar meaning. Such statements are based on the current expectations and certain assumptions of Siemens' management, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens' control, affect Siemens' operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. In particular, Siemens is strongly affected by changes in general economic and business conditions as these directly impact its processes, customers and suppliers. This may negatively impact our revenue development and the realization of greater capacity utilization as a result of growth. Yet due to their diversity, not all of Siemens' businesses are equally affected by changes in economic conditions; considerable differences exist in the timing and magnitude of the effects of such changes. This effect is amplified by the fact that, as a global company, Siemens is active in countries with economies that vary widely in terms of growth rate. Uncertainties arise from, among other things, the risk of customers delaying the conversion of recognized orders into revenue or cancelling recognized orders, of prices declining as a result of adverse market conditions by more than is currently anticipated by Siemens' management or of functional costs increasing in anticipation of growth that is not realized as expected. Other factors that may cause Siemens' results to deviate from expectations include developments in the financial markets, including fluctuations in interest and exchange rates (in particular in relation to the U.S. dollar and the currencies of emerging markets such as China, India and Brazil), in commodity and equity prices, in debt prices (credit spreads) and in the value of financial assets generally. Any changes in interest rates or other assumptions used in calculating obligations for pension plans and similar commitments may impact Siemens' defined benefit obligations and the anticipated performance of pension plan assets resulting in unexpected changes in the funded status of Siemens' pension and other post-employment benefit plans. Any increase in market volatility, deterioration in the capital markets, decline in the conditions for the credit business, uncertainty related to the subprime, financial market and liquidity crises, or fluctuations in the future financial performance of the major industries served by Siemens may have unexpected effects on Siemens' results. Furthermore, Siemens faces risks and uncertainties in connection with: disposing of business activities, certain strategic reorientation measures; the performance of its equity interests and strategic alliances; the challenge of integrating major acquisitions, implementing joint ventures and other significant portfolio measures; the introduction of competing products or technologies by other companies or market entries by new competitors; changing competitive dynamics (particularly in developing markets); the risk that new products or services will not be accepted by customers targeted by Siemens; changes in business strategy; the interruption of our supply chain, including the inability of third parties to deliver parts, components and services on time resulting for example from natural disasters; the outcome of pending investigations, legal proceedings and actions resulting from the findings of, or related to the subject matter of, such investigations; the potential impact of such investigations and proceedings on Siemens' business, including its relationships with governments and other customers; the potential impact of such matters on Siemens' financial statements, and various other factors. More detailed information about certain of the risk factors affecting Siemens is contained throughout this report and in Siemens' other filings with the SEC, which are available on the Siemens website, www.siemens.com, and on the SEC's website, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. Siemens neither intends to, nor assumes any obligation to, update or revise these forward-looking statements in light of developments which differ from those anticipated.
This document contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words such as "expects," "looks forward to," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," "project" or words of similar meaning. Such statements are based on the current expectations and certain assumptions of Siemens' management, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens' control, affect Siemens' operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. In particular, Siemens is strongly affected by changes in general economic and business conditions as these directly impact its processes, customers and suppliers. This may negatively impact our revenue development and the realization of greater capacity utilization as a result of growth. Yet due to their diversity, not all of Siemens' businesses are equally affected by changes in economic conditions; considerable differences exist in the timing and magnitude of the effects of such changes. This effect is amplified by the fact that, as a global company, Siemens is active in countries with economies that vary widely in terms of growth rate. Uncertainties arise from, among other things, the risk of customers delaying the conversion of recognized orders into revenue or cancelling recognized orders, of prices declining as a result of adverse market conditions by more than is currently anticipated by Siemens' management or of functional costs increasing in anticipation of growth that is not realized as expected. Other factors that may cause Siemens' results to deviate from expectations include developments in the financial markets, including fluctuations in interest and exchange rates (in particular in relation to the U.S. dollar and the currencies of emerging markets such as China, India and Brazil), in commodity and equity prices, in debt prices (credit spreads) and in the value of financial assets generally. Any changes in interest rates or other assumptions used in calculating obligations for pension plans and similar commitments may impact Siemens' defined benefit obligations and the anticipated performance of pension plan assets resulting in unexpected changes in the funded status of Siemens' pension and other post-employment benefit plans. Any increase in market volatility, deterioration in the capital markets, decline in the conditions for the credit business, uncertainty related to the subprime, financial market and liquidity crises, or fluctuations in the future financial performance of the major industries served by Siemens may have unexpected effects on Siemens' results. Furthermore, Siemens faces risks and uncertainties in connection with: disposing of business activities, certain strategic reorientation measures; the performance of its equity interests and strategic alliances; the challenge of integrating major acquisitions, implementing joint ventures and other significant portfolio measures; the introduction of competing products or technologies by other companies or market entries by new competitors; changing competitive dynamics (particularly in developing markets); the risk that new products or services will not be accepted by customers targeted by Siemens; changes in business strategy; the interruption of our supply chain, including the inability of third parties to deliver parts, components and services on time resulting for example from natural disasters; the outcome of pending investigations, legal proceedings and actions resulting from the findings of, or related to the subject matter of, such investigations; the potential impact of such investigations and proceedings on Siemens' business, including its relationships with governments and other customers; the potential impact of such matters on Siemens' financial statements, and various other factors. More detailed information about certain of the risk factors affecting Siemens is contained throughout this report and in Siemens' other filings with the SEC, which are available on the Siemens website, www.siemens.com, and on the SEC's website, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. Siemens neither intends to, nor assumes any obligation to, update or revise these forward-looking statements in light of developments which differ from those anticipated.
Contact
Alexander Becker
Siemens AG
Wittelsbacherplatz 2
80333 Munich
Germany
80333 Munich
Germany
+49 (89) 636-36558