Siemens AG Company Analysis Report
Siemens Aktiengesellschaft (Siemens) is a German engineering conglomerate, focused on electronics and electrical engineering businesses. The group is engaged in diversified businesses, including information and communications, automation and control, power, transportation, medical and lighting. Siemens operates in about 190 countries spread over the Americas, Europe, Africa, Middle East, CIS and Asia Pacific.The group has undergone a significant restructuring in recent years, involving divestments, reorganizations and acquisitions. Now Siemens operates in six major businesses: automation and control, power, transportation, medical, information and communications and lighting.
The automation and drives business of Siemens comprises three sub groups: automation and drives (A&D); industrial solutions and services; and Siemens Building Technologies (SBT).
The A&D business offers products, solutions and services to three main endcustomer segments: manufacturing automation, process automation and electrical instrumentation for buildings. The manufacturing automation segment serves customers in the factory automation industry. It primarily serves the automotive and machinery industries. The process automation segment serves customers in the process automation industry such as the chemical, pharmaceutical, food and beverage industries. The electrical instrumentation for buildings segment serves customers in the industrial and private building engineering industry. The products, solutions and services of this group fall into four major categories: low voltage control and installation technology products; manufacturing automation products; Motion control and drive systems products; and process automation products and services.
The A&D business also includes electronic assembly systems and wireless modules. The industrial solutions and services is the second sub group of the A&D business. It develops solutions and services for industrial and infrastructure facilities from planning and installation through to operation and the whole equipment lifecycle. Its systems and processes are applied for iron and steel production, treatment of potable water and wastewater, as well as for traffic systems, airport logistics and postal automation. It is also engaged in the pulp and paper sector, oil and gas, shipbuilding and mining.
The SBT provides products, systems, solutions and services for monitoring and regulating the temperature, fire safety, ventilation, electricity, lighting and security of commercial and industrial property, tunnels, ships and aircraft. The power business comprises two sub segments: power generation; and power transmission and distribution. The power generation sub segment provides a full range of equipment for the conversion of energy into electricity and heat. It also customizes gas and steam turbines in the smaller output range, which can be used as drives for compressors or large pumps, to meet specific project needs. It also offers a broad range of power plant technology, with activities that include: development and manufacture of key components, equipment, and systems; planning, engineering and construction of new power plants; and comprehensive servicing, retrofitting and modernizing of existing facilities. The power generation sub
segment comprises four businesses: fossil power generation; industrial applications; instrumentation and control; and wind power.
The power transmission and distribution sub segment supplies energy utilities and large industrial power users with equipment, systems and services used to process and transmit electrical power from the source, typically a power plant, to various points along the power transmission network and to distribute power via a distribution network to the end-user. Its product range includes power systems control equipment and information technology systems; transformers; high voltage products and readyto- use systems; protection and substation control systems; and medium voltage equipment.
The transportation business of Siemens includes transportation systems and Siemens VDO Automotive. The transportation systems sub segment offers a full range of products and services for railway transportation. It includes three product focused divisions: mass transit; locomotive and trains. The Siemens VDO sub segment designs, manufactures and sells integrated electrical, electronic and electromechanical systems and modules and individual components used in automotive applications. Its product range includes components and systems used in automobile powertrains, body electronic systems, safety and chassis systems, electric motor drives, information and cockpit systems, and driver information, communication and multimedia systems. In early 2007, Siemens announced plans to take Siemens VDO Automotive public. Siemens intends to hold a majority stake in Siemens VDO Automotive after initial public offering.
The medical solutions segment (Med) offers diagnostic and therapeutic systems and equipment as well as information technology systems for clinical and hospital administrative. The segment's diagnostic products offering includes a full range of medical imaging systems like x-ray, computed tomography, magnetic resonance, molecular imaging and ultrasound, as well as related computer-based workstations for health care professional. The segment also provides oncology care systems such as linear accelerators; hearing aids and related products and supplies as well as electro-medical systems for patient transport, monitoring vital functions via body sensors, supporting breathing and administering anesthetic agents. Its product portfolio also includes respiratory machines designed for systems for intensive neonatal care and home care. This segment provides electro-medical systems through a joint venture Drager Medical of Lubeck, Germany. This segment also includes Diagnostic Products Corporation, a global leader in immunodiagnostics. It includes the diagnostics division of Bayer, acquired in 2006.
The Med has research and development, and OEM cooperation agreements with various companies, including with Bruker, in the field of magnetic resonance imaging; Toshiba, in the field of ultrasound and magnetic resonance imaging; and Matsushita, for low and mid range ultrasound systems. It also has joint ventures with Philips and Thales, for the manufacturing of flat panel detectors for medical imaging; and with
Mochida Pharmaceutical in the field of ultrasound in Japan. The segment includes CTI, which develops and manufactures positron emission tomography systems; and Diagnostic Products Corporation, a leading immunodiagnostics.
The information and communications segment primarily includes IT solutions and services. In fiscal 2006, Siemens announced several major changes, which resulted in the dissolution of communications as a reportable segment. Siemens merged its carrier-related operations with the networks business group of Nokia to form a new 50-50 joint venture: Nokia Siemens Networks. This joint venture is now included in
the strategic equity investments segment. In the third quarter of fiscal 2006, the Siemens Home and Office Communications Devices division was carved out of Com as a separate business and has been reported retroactively within 'Other Operations'. The communication division's wireless modules has been included in A&D at beginning of fiscal 2007.The Siemens IT Solutions and Services include the former Siemens Business Services of the group. This sub segment comprises four software development entities program and system engineering and Siemens Information Systems, development innovation and projects and the business innovation center. The lighting segment of Siemens includes Osram, its subsidiary offering lighting products. Osram designs, manufactures and markets lighting products and related materials, components and equipment. Osram's product offering ranges from general lighting to special purpose halogen and high-intensity discharge lamps; from LED systems to electronic ballasts and luminaries as well as includes lighting related precision materials and components. This segment also has joint ventures with Mitsubishi and Toshiba.
The strategic equity investments segment (SEI), created by the group in fiscal 2007, comprise certain equity Computers (FSC) and BSH Bosch und Siemens Hausgerate (BSH). These investments were formerly included in other operations. This segment also includes new company, Nokia Siemens Networks (NSN), a joint venture company of Siemens and Nokia Corporation.
The Siemens financial services segment offers a variety of customized financial solutions both to third parties and to other Siemens business Groups and their customers. The Siemens real estate segment owns and manages Siemens' real estate portfolio. SRE offers a range services including real estate development
projects, real estate disposals and asset management; and lease and service management. The other operations of Siemens' consist of centrally held operating businesses not related to a Group, including Siemens Home and Office Communication Devices division.
The group recorded revenues of E87,325 million during the fiscal year ended September 2006, an increase of 15.7% over 2005. The operating profit of the group was E3,224 million during fiscal year 2006, an increase of 4.2% over 2005. The net profit was E3,033 million in fiscal year 2006, an increase of 34.9% over 2005.
