00:00The numbers just hitting the wires. So just taking a look at the fourth quarter net income number looks really strong against estimates, but maybe there are some one offs in there.
00:08Could you just give us an explanation for that and the key message behind the earnings this morning?
00:14Well, thanks for that. The key message for our fiscal year 2025 are our revenue grew by five or the impact by six percent.
00:22And we have a record free cash flow of 10.8 billion up 14 percent and a record net net income of 10.4 billion up 16 percent.
00:37So all in all, very strong, very strong fiscal year. And it was carried actually by all our businesses which performed.
00:44So there's not one off particular in there, as you argued. So we are we have the right strategy, the right portfolio and the right team.
00:53And we are continuing investing. We are investing in AI strongly, in industrial AI, which helps us also to grow faster in the future.
01:02So this is a reason why we outlined our growth for the next year to be something between six to eight percent in a difficult environment.
01:10But we are very confident that we can make it.
01:12Yeah. So you're increasing your medium term growth targets, Roland. What's the explanation?
01:18What's the key driver behind that higher expectation for the period ahead?
01:24Well, the midterm target we increased even to six to nine percent.
01:28This, by the way, excludes Siemens Healthineers.
01:31And as I said, the reason is that we have highly competitive offerings due to our long term investment, for example, in our software suite.
01:39We invested 28 billion in our software suite, which is today industrial and industrial software, maybe the most competitive one.
01:48If you want to build a digital twin of anything, we can build it for you, the most comprehensive physics based digital twin.
01:57And we invest in AI. We talk about investing in AI technology in the next three years, a billion.
02:04And it's not new to us. We do that for many, many years.
02:06We have a lot of offerings already, but we are doubling down on AI.
02:08And we talk industrial AI. We bring AI now to the industrial world.
02:13So when we are serving very strong markets, we are serving the digital markets.
02:17They grow faster. These markets grow by 11 percent.
02:21We are investing and growing in the regions, the key regions, United States, China, India.
02:27And we are also doubling down on what we do in Germany, by the way.
02:33And we are investing and growing in verticals.
02:36We have growth verticals, which are super interesting, like semiconductors, big growth verticals, pharmaceuticals.
02:43This is a business, a market which is in its transformation.
02:47Data centers and just to name a few.
02:49Yes, you've named a few there.
02:52And tell me about which of the client segments that have the most appetite and the most to gain from investing in your AI solutions.
03:04To be very honest, these are cuts across all industries.
03:08The point is, if you really want to increase your innovation speed, like we do, but also for our customers, if they want to lower their cost,
03:16if they want to drive their productivity, if they want to shorten their innovation cycles.
03:22And the only way is digitalization.
03:24And what we talk about, we are talking about our strategy, which is combining the real and the digital worlds.
03:29What does that mean?
03:31You start when you plan a new factory, for example.
03:35You build it twice.
03:36First in the digital world, in all details.
03:39The building, the plant, the machines on the site, even the people.
03:45And once you have it, then you build it in the real world.
03:53Healthineers is a business that you're going to take part of and do a direct spin-off around.
03:5830% of it going to be handed back to shareholders.
04:02Can you tell me about the rationale and the reason for doing it in this way,
04:07the reason for choosing this solution for your Healthineers stake?
04:10Yeah.
04:11So, first, we are doing that out of a position of strength.
04:15Strength for Siemens, but also for Siemens Healthineers, a business which is doing very well.
04:20But you recognized that the market, but also the businesses, they are drifting apart.
04:28For example, Siemens Healthineers is going more and more into clinical part, into therapies.
04:33Because digitalization does not scale in the healthcare space for regulatory reasons.
04:38It's very much regional, as it does for our Siemens business.
04:43We're also talking about the growth.
04:44We want to unleash our growth, go for the next growth level.
04:47And we believe we can do that if we separate more.
04:51And every company can allocate capital according to their needs even better.
04:56So, it's a more strategical freedom, freedom to allocate capital, and also giving respect that now Siemens has a very, very synergistic portfolio,
05:07which we are continually investing in, and therefore grow that faster.
05:11And, of course, grow it profitably.
05:14Yes.
05:15You've done some M&A already.
05:16This perhaps gives you more room to do more M&A, more deals.
05:20And you've expressed interest in doing further deals.
05:24You bought Altair, a software company.
05:26You bought Dotmatics, a software portfolio life sciences, an R&D company.
05:30What difference are these acquisitions making to your AI offering and to the clients that you're able to bring on board?
05:38Very good question.
05:39So, both of them are adding AI capabilities along their core portfolio for Altair.
05:44It's simulation, electromechanics simulation, electrodynamics, and they have very, very strong AI capabilities, too.
05:51What we do now is we can, as I said before, we can simulate everything.
05:56We can simulate every kind of digital twin, make it really behave like the real world, the thing in the real world.
06:03And now we are supercharging this simulation with AI, which makes it much, much faster.
06:08So, once a crash, if you crash a car and simulate it, it takes half a day if you calculate it.
06:13You can bring that down to minutes with AI.
06:15In dogmatics, same here, we are working now on simulating molecules.
06:20That's the whole idea.
06:21So that you can really simulate faster what really works and what not.
06:25So we go with less and much, much more mature molecules in your test trials, accelerating the time to market.
06:34Super relevant.
06:34And this is a reason how we are adding more and more AI capabilities to all our portfolio.
06:40On top of that, we hired now a top expert with Swazi Filomen for AI technologies.
06:46He will sit and settle.
06:47He will add our competence of AI on the West Coast.
06:53And again, we are doubling down on our already strong AI with one billion investment over the next three years.
07:00Okay, so lots of mentions of AI, mentions of data centers.
07:05If you are going to do further deals then, Roland, what are the holes that you still have to fill?
07:09What are you going to be looking for?
07:12There's not a particular hole, but we are, of course, looking how we strengthen our portfolio, not only with a strong investment in our own R&D, organic development.
07:20We are spending 8% of revenue.
07:23This is 6.5 billion, more than any other of our competitors, but also in unorganic.
07:29And here we are looking, of course, for further strengthening our software portfolio in different areas.
07:34We have, we are talking about a new addressable market of the size of 50 billion, which grows by 14% to 18%.
07:43We look in that space as well.
07:45But we also look for hardware, connected hardware, hardware which generates data, which we would love to add to our portfolio.
07:53Because this is all about connecting the real and the digital world.
07:56We play in both, and we are very good in that.
07:58And we create data.
07:59This is super relevant.
08:00We have such a rich data set, which we are curating, making it valuable for customers.
08:06Customers are sharing data with us as well.
08:08Because if you want to train new models, we want to build an industrial foundation model, get a lot of data, and we are, we have them.
08:17Clearly, Siemens is a global business, Roland, but I wonder what difference it makes to your business, to the bottom line, to the opportunities for you,
08:24that the German government is spending big on defense and, crucially, on infrastructure.
08:29Are there opportunities for your business, either directly or indirectly, in this?
08:34So, number one, yes, we are a global business, but at the same time, we are local business.
08:39So our local value added in the United States, for example, is more than 80%, same for China.
08:44So there's a reason why terrorists didn't hit us.
08:46They hit Siemens Health and it's harder, but for Siemens, it was basically we could really cover that very well.
08:52So for Germany, I mean, we see, obviously, that the investment goes into Germany in the infrastructure.
08:58Let's talk about digitalization of our rail infrastructure.
09:01And we are here.
09:02We have already the first orders.
09:03And that has to be, has to accelerate, of course, in order to increase the performance of our rail system.
09:09But there are other areas, too.
09:10We talk about data centers, for example.
09:12And here we have a strong footprint, which, of course, we want to leverage.
09:17Important is that the investment, which Germany makes, goes really into infrastructure and not into consuming or consumative part.
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