FEB-04

Profitable Growth in Challenging Times

Klaus Voges, Group President

Power GenerationFinancial Market Day, February 17, 2004

2FEB-04

My topics today:

We are achieving strong results in challenging times

Continuous execution of our strategies leads to profitable growth

We will deliver continuous strong performance

Siemens Management System at PG �Structured programs and initiatives

3FEB-04

PG business results

in millions of euros

Orders

Sales

Group profitas % of sales

Q1 FY03Q1 FY04 FY03

Net cash

2,270

1,785

40922.9%

2,676

1,902

24512.9%

7,302

6,967

1,17116.8%

(448)40 (46)

30,300Employees

4FEB-04

Continuous execution of our strategies...

... leads to profitable growth for our businesses

Optimization of business mix

Portfolio optimization

Service growth

Innovation leadership

Global market and customer diversity

5FEB-04

Continuous optimization of PG business portfolio

F = Fossil Power GenerationI = Industrial ApplicationsL = Instrumentation & Control

1) Industrial Control and Information Systems2) Framatome Advanced Nuclear Power

Divestiture

Ceramics (CE)Redwitz

Acquisitions

Parsons

Westinghouse

Demag Delaval

AlstomInd. Turbines

ICIS 1)

New EnergyAssociates

1998

2003

2002

2002

Joint ventures

FramatomeANP 2)

34% (formerly KWU'sNuclear Div.)

Voith Siemens Hydro (VSH)

35% (formerly KWU Hydro)

Turbo Service Network

(TSN)(joint venture with

Chromalloymanaged by PG)

2003

2001

1997

PG F PG I PG L

6FEB-04

Business model of PG Industrial Applications

�PG I as One-Stop Shop and System Integrator for Rotating Equipment�

CUSTOMER

Growth Machine(and future profit)

Profit Machine(and growth)

Competence Machine (fuel)

Low �Total Cost of Ownership�

Speed/Customer Intimacy Integrated Systems/Risk Mgmt.Quality Costs/Reliability

Service Systems/ SolutionProducts

Subdiv.:Oil & Gas

Subdiv.:Power Plants

Subdiv.: Service

Subdiv.:Ind.

Steam Turbines

Subdiv.:Ind. Gas

Turbines

Subdiv.:Com-

pressors

7FEB-04

Alstom Industrial Turbines integration is progressing as planned

Supply Management

Manufacturing

Sales Network

Service Network

Newly integrated PG I already in operation 2 months after closing (since October 2003)

Introduction of central supply management organization and launch of major savings initiatives

Design of integrated manufacturing network, including best practice sharing

Optimized customer approach through global PG I sales management and key account management to fully exploit all market opportunities

Organization of service activities in regional hubs to support service growth strategy

Measures and Status:

Organization

8FEB-04

Siemens Management System at PG

Innovation Customer focus

Winning new customers

Global competitiveness

Project-management@Siemens

Service initiative

company programs

Clear responsibilities, goals and incentives on project level

New large GT family

Platform strategies

Harmonize GT productline

Optimized steam turbine family

Partnering + AEs1)

as customers Oil & Gas

Cross selling initiativePilot customerengagement

Complementor strategy

Software initiative

Shared services

worldwidemanufacturing concept

Low cost manufacturing

Asset management

Steam turbine mods and upgrades;Total plant maintenance and diagnostics; GT-LTP�s with risk / gain sharing

Quality and process initiativeCustomer site back quality program

1) Architect Engineers

9FEB-04

Winning new customers:PG enters attractive Oil & Gas business

Down-stream

Mid-stream

Up-stream

Rotating equipment market within

Oil & GasEUR 15 bn p.a. Our offerings to the Oil &

Gas industry increase significantly due to the completion of our product portfolio with small / medium gas turbines and compressors

Full portfolio of rotating equipment:- compressor stations- gas and steam turbine packages- power plants, and- related services

Opportunities within growth areas, e.g. LNG (Liquified Natural Gas) plants, subsea applications

NewEquipment

Service

Strong position within rotating equipment

10FEB-04

Cross selling initiative:Sell �All electric LNG� plants in cooperation with other groups

GT = Gas Turbine, ST = Steam Turbine, G = Generator, M = Synchronous Motor, C = Compressor

EUR 3.0 bn�All electric LNG� (incl.

Power Plant)

GT Driven LNG

2003

Trends within Oil & Gas:� Increasing need for gas

transportation� Increasing relevance of availability

Core competencies within Siemens:� Power plant (PG)� Electric grid / system control (PTD)� Compressor trains (PG, A&D)

LNG market

+25% p.a.G

Power Plant (Island operation)(250 MW)

Process Plant Electrical Grid

CompressorTrains(190 MW)

GT G ST G GT

�All electric LNG� plant

EUR 5.0 bn

M C C CM M

Double digit growth opportunity: �All electric LNG�

1.0

3.0

2008

2.0 2.0

11FEB-04

Service initiative:Installed fleet provides strong basis for future profitable growth

Americas484

336

6922

Europe

Africa / Middle East

Asia / Pacific110 109 88

60

261

189

5012

Gas TurbinesSteam TurbinesNuclear Steam Turbines

GE Siemens AP MHI

55 53 5223

AP GE Siemens MHI

Siemens PG is strong in all regions

World total: 2900 GW

696 665

445

166

928

GE Siemens AP MHI Others

AP Siemens GE MHI

in GW, status of 2002

12FEB-04

Service initiative:PG Service � a profitable, growing business

Three key levers:

� Improved base

� Organic growth

� Accelerated growth

Service Mixin billions of euros

FY02 FY05e

Fossil Service

Ind. ApplicationsService

I&C Service

3.3

2.3

~ 13% p.a.

Follow through:

� Full integration of AP Industrial Turbines

� Implementation of teaming agreements between divisions

� Regional service optimization

� Balance of plant initiative

� Total plant solutions

� Diagnostics implementation

13FEB-04

Quality and process initiative:Focus of top+ Quality @ PG is shifting from internal focus to suppliers and customers

FY01 FY02 FY03 FY04e

Cumulative business benefits

~16 ~14~45

~142

~75

294

400

Investment Business benefitCumulative numbers:

Training is the foundation

0

1000

2000

3000

4000

5000

6000

7000

FY00 FY01 FY02 FY03

Staff

Management

Green & Black Belts

> 6,000Participants

Goal FY04Current Status� Cumulative savings

EUR 294 millions� More than 6,000 people

trained worldwide

Outlook� Customer Site-Back Quality:

Make the customer feel the impact of our quality efforts

� top+ with Six Sigma @ PG Supply Base:We require the same efforts from our suppliers as we demand internally

� Shift of Six Sigma ProjectFocus ... ... from reactive to

preventive measures to ensure quality

~110

in millions of euros

14FEB-04

Market development in the power plant market by types and regions

Small Generators1

Nuclear

Fossil Market

Industrial Market

Wind, Solar

Hydro

1) Recip. engine, fuel cell, micro gas turbines

Americas

Western Europe

Eastern Europe/CIS

Asia & Australia

Africa & Middle East

thereof:USA 66

thereof:USA 16

thereof:China 28

thereof:China 21

Power Plant Types[GW p.a.]

Regions[GW p.a.]

158

138 138

158

Ø 98-02 Ø 98-02Ø 03-08 Ø 03-08

125

104

167

14

114

75

17

10

21

11

45

22

3

77

18

59

8

22

31

Long term development is positive

15FEB-04

Continuous execution of our strategies leads to profit performance in the 10-13 % range

FY02 FY05e

Components

Others

EPC

Service

Segment profit target

6-10%

18-22%

4-6%

6-8%

Segmentprofit target

4%

5%

24%

14%

Strategies for growth and profitability

� Portfolio optimization

� Service growth

� Global market and customer diversity

� Innovation leadership� Optimization of

business mix

Increasing importance of Service and Industrial Application in PG�s business mix

(incl. Ind. Applications, I&C)

16FEB-04

Siemens Investor Relations Team

Webpage: http://www.siemens.com Investor Relations

e-mail: Investorrelations@siemens.com

Fax: +49-89-636-32830

Marcus Desimoni +49-89-636-32445

Constantin Birnstiel +49-89-636-36165

Christina Schmöe +49-89-636-32677

Claudia Wagner +49-89-636-33693

Disclaimer:This presentation contains forward-looking statements based on beliefs of Siemens' management. Suchstatements reflect the company's current views with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results to be materially different, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products, lack of acceptance of new products or services and changes in business strategy. Actual results may vary materially from those projected here. Siemens does not intend or assume any obligation to update these forward-looking statements.