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Siemens' (SIEGY) CEO Joe Kaeser on Q3 2015 Results - Earnings Call Transcript

Siemens AG (OTCPK:SIEGY) Q3 2015 Earnings Conference Call July 30, 2015 3:00 AM ET

Mariel von Schumann - Head-Governance and Markets

Thank you very much. Good morning, ladies and gentlemen, and thank you for joining us for the combined press and analyst conference call on the third quarter results of fiscal year 2015. I would like to welcome you also on behalf of Stephan, or as I just said, Stephan Heimbach, Head of Communication and Government Affairs.

The earnings release was published this morning at 7 am. You can download this file from the Press and the IR website. This morning’s presentation is now online and this call is also being webcast via our website. Allow me a short overview of today’s proceedings. Our President and CEO, Joe Kaeser, will briefly review the Q3 results, before he, together with our Chief Financial Officer, Ralf Thomas, will answer your questions.

We will start with the Analyst Q&A in English, followed by a Press Q&A in German language. A corresponding simultaneous translation is provided throughout the call. I would like to draw your attention to the Safe Harbor statement on page number 2 of the Siemens presentation. This conference call may include forward-looking statements. These statements are based on the Company’s current expectation and certain assumptions and are therefore subject to certain risks and uncertainties.

And with that I would like to hand over to you, Joe.

Joe Kaeser - President and Chief Executive Officer

Thank you, Mariel. Welcome and good morning, everyone, and thank you for joining us to discuss the third-quarter results of fiscal 2015. We delivered a solid quarter with quite some underlying strengths in many areas, despite a softening environment. Compared to our last quarter almost all businesses improved their profit at least on operational level, in part also helped by FX and currency.

However, we know there is still a lot to do and the short-term market conditions are not helpful. During this quarter we continued to execute on Siemens Vision 2020 as planned, and I just what to highlight a few important milestones. First, we made a recent agreement with the workers’ representatives for comprehensive measures to improve productivity and simplify structures in support function areas.

Implementation of these measures across the organization is now in full swing to drive performance towards 2016 and onwards. In total, we recorded €274 million severance charges; €173 of which is in the industrial businesses. Negotiations with the workers’ representatives for the recently announced actions on footprint optimization as well as fixing the underperforming businesses are in well-advanced stages.

Second, we strengthened our core and closed the Dresser-Rand acquisition, giving us a significantly strengthened offer and footprint, in particular for distributed power generation, including the oil and gas industry. Integration has started, and initial customer feedback is very encouraging, although the depressed oil price remains a concern in the short-term.

And third, Mobility has signed a major €1.6 billion long-term service contract for regional trains in Russia. We will further scale up data-driven services business as one of the key levers for structurally improved profitability. Overall, the business environment started to soften further in the third quarter, while the geopolitical environment saw encouraging moves in some areas.

However, the continued risk from various geopolitical conflicts economic issues like Greece, volatile currencies and raw material prices create uncertainties in the business, going forward. On the other hand, political reforms, such as in India or the recent agreement relating to Iranian nuclear program holds further opportunities, if executed in a stringent way.