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Siemens Power Generation in China
Lothar Herrmann, Siemens PG China
Siemens Days in ChinaMarch 16th , 2005
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sSafe Harbor Statement
This presentation contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified either orally or in writing by words as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will” or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect its operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens worldwide to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products or technologies by other companies, lack of acceptance of new products or services by customers targeted by Siemens worldwide, changes in business strategy and various other factors. More detailed information about certain of these factors is contained in Siemens’ 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 anticipated, believed, estimated, expected,intended, planned or projected. Siemens does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.
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sSiemens PG in China
Siemens installed first generator for illuminating the Shanghai harbor in 1879
Constructed China’s first tram line and related power plant in Beijing in 1899
Today Siemens PG China:
We are the leading partner for the Chinese power industry
SiemensPG in China
Market Environment
Facts & Figures
Business Opportunities
Designs and delivers components for fossil power plant (incl. CCPP)
Supplies parts, provides service, offers modernization and upgrades for power plants
Supplies instrumentation and control equipment for power plants
Supplies turbines and compressors for industrial applications
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sCountry setup
• Number of locations 15(incl. JVs)thereof sales & services 9thereof manufacuring 6
• Number of employees 6,650(incl. JVs)
• Power Plants Sites* 16with power generationcapacity of ~14 GW
(* Yuhuan 4x1000 MW still under construction)
SiemensPG in China
Market Environment
Facts & Figures
Business Opportunities
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sJoint ventures unitsLocal partners in China
Siemens Ltd., China
Joint VenturesJoint Ventures
100 %Figures for FY 04
32 %
68 %
40 %
60 %
30 %
70 %
35 %
65 %
51 %
49 %
50 %
50 %
60 %
40 %
Shanghai Electrical Co. (SEC)
Shanghai Turbine Generator Co.
Shanghai Power Equipment Co. Power Projects Co.
Shanghai AdvancedShanghai Turbine Co.
Design, manufacturing / sales of el. generators
(50 to 1,000MW)
Design, manufacturing / sales of power plant auxiliary equipment
Project management for power
project implementation
Design, manufacturing / sales of steam turbines
(50 to 1,300MW)
Shanghai Electric Machinery
Manufacturing Works
Shanghai Turbine Works
Shanghai Power Station Auxiliary Equipment
Works
Shanghai Electrical Corp.
Siemens Gas Turbine Parts Ltd
Long Wei Shanghai Power Plant Automation Ltd
Sales and Service for I&C, electr .-/ IT-equipment
and solutions
Mods, repair & maintenance / field
service for power plants
Manufacturing & Sales for hot gas path parts
Nanjing Automation Equipment Factory
State Power Technical Environment Group Co.
Shanghai Electrical Corp.
SIEM
ENS
AG
SiemensPG in China
Market Environment
Facts & Figures
Business Opportunities
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sInstalled capacity in China
45 5
67
11
53
120108958683795136
204
534346
283317
248234170
106
2611
11
107
6
0,4 0,4 0,47 0,57 0,60,7
4
//
Wind Power (in GW)
Thermal, Hydro and Nuclear (in GW)
223 GW
142 GW
488 GW
806 GWSiemens
PG in China
MarketEnvironment
Facts & Figures
Business Opportunities
800 Hydro Coal Fired4
GT/CC Nuclear + others700Wind
6003
440 GW500 391 GW
357 GW338 GW319 GW400 5 222
300
200 1
100
0 0
20042003
20022001
20001995
19902005
e e2010
We participate through joint ventures
Source: China Electricity Council
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sChina power market
Continuously high market demand
SiemensPG in China
MarketEnvironment
Facts & Figures
Business Opportunities
Per Capita Consumption
1,582 kWh in 2004 which is still about only half of world average (USA above 10.000 kWh)
Power generation in 2004
2187 TWh with annual growth of 14.5%Increased utilization and efficiency of existing plants
Macro Control Policies
The tide of project approval for power generation project has been curbed by the
policy measurement as following :
1. Taken back the approval right from local level
2. Stringent bank loan
3. Strictly carried out the environment assessment procedure
Still domination by coal power
Shortage of Power Supply
China's installed capacity of power still failed to meet its demand
Power supply demand is expected to be basically balanced by the end of 2007
Wind power and other renewable energy technologies will gradually play significant role in the future
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sWind power in China
China’s first MW Wind farm construction started late 1980s
600 MW of total installed capacity completed by the end of 2004
Ambitious national plan till 2020 has been drafted:
4,000 MW by 2010
10,000 MW by 2015
20,000 MW by 2020
Accelerating wind power commercialization process through NDRC’s franchised projects
As many as 40 wind farms being under planning and construction
Policy in favor of China wind power industry through request for increased local content
Others4%
GE3%
Siemens (Bonus)
5%
Nordex12%
Gold Wind16%
Gamesa20%
Vestas40%
Main Players in the Marketas % of installed fleet
Total Fleet per 2004: 600MW
Wind power growth driven by ambitious national plan
SiemensPG in China
MarketEnvironment
Facts & Figures
Business Opportunities
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sSiemens PG at a glance
140144Employees(excl. minority JV‘s)
13.20.6Capex & Investment (in mn RMB)
1,0371,655Sales (in mn RMB)(excl. minority JV‘s)
FY2003FY2004
SiemensPG in China
Market Environment
Facts & Figures
Business Opportunities
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sFossil power plants in operation
Guangdong
Shanghai
Shandong
FuJiang
Hubei
Shaanxi
Macau
Henan
JiangxiHunan
Guangxii
Anhui
Heilongjiang
Liaoning
Jilin
Shanxi
Yunnan
Sichuan
Gui Zhou
Chongqing
Jiangsu
Hanfeng 2x660 MW
Yuzhou 2x350 MW
Yangcheng 6x350 MW
Dalian 2x350 MW
Mingzhu 2x48 MW GTPP
Zhuhai 2x828 MVA Geno
Yangpu 2x137 MW GTPP
Coloane.B 2x48 MW GTPP
Hubei
Taiwan
Inner Mongolia
Qinhai
Gan
Su
Ningxia
Tibat
Xin jiang
Zhejiang
Beijing
Tianjin
Hongkong
Ligang II 2x350 MW
Rizhao 2x350 MW
Dandong 2x350 MW
Yangzhou 2x600 MW
Waigaoqiao 2x900 MW
SiemensPG in China
Market Environment
Facts & Figures
Business Opportunities
Yangshupu 2x125 MW
Fuzhou 2x350 MW
Fuhuade 1x157 MWGTPPHainan
We installed 16 power plants during the last decade with ~14GW generating capacity
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sPG Industrial Applications projects
Longmen ISCO - MAC
Hancheng Power Plant- BFPT
Tianji Revamp-Compressor Train
Jinchuan - MAC
Yangtze River Acetyles - Compressor trains
CSPC (Shell Nanhai) - STG (4x60MW)
package - Compressor trains
APP Jiangling - STG (2x120MW) Package
Jianlong ISCO - MAC
SECCO Co-made
- STG
WISCO - MAC
Nanjing BASF-YPC - Compressor trains. 3 orders
NanjingISCO - MAC
Meishan ISCO - Blower Drive ST
Tongshi(APCI)- Compressor
SiemensPG in China
Market Environment
Facts & Figures
Business Opportunities Over 400 Siemens industrial turbines and compressors
have been installed in China
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sPG Instrumentation & Control projects
Daqing 3x200 MW
Shuangliao 1x300 MW
Gaobeidian Huaneng 2x830 t/h
Dalian Chemical 1x220 t/h
Longkou 2x200 MW
Hangzhou DistrictHeating 1x220 t/h
Shanghai
Beijing
Yangquan1#+2# 2x300 MW3#+4# 2x300 MW *
Yangcheng 6x350 MW *
Yangzhou 2x600 MW *
Mingzhu C 50 MW CCPP
Hanfeng 2x660 MW *
Zhunge’er Guohua 2x330 MW
Laichang 2x300 MW
Dezhou Huaneng 2x660 MW
Dingzhou Guohua 2x600 MW
Taishan Guohua 2x600 MW
Zhaoguang 2x300 MW
Daihai 2x600 MW
Diandong 4x600 MW
SiemensPG in China
Market Environment
Facts & Figures
Business Opportunities
Zhangjiakou 2x300 MW
Yangliuqing 2x300 MW
Shengli 2x200 MW
Rizhao 2x350 MW *
Wuxi 1x63 MW CCPP
Shunlong Fengshan 51 MW CCPP
Suzhou Huaneng 2x300 MW
Suzhou Coastal 51 MW CCPP
Jinshan 4x100 MW
Yangshupu 2x125 MW
Jiaxing 2x300 MW
Taizhou 2x330 MW
Ninghai 4x600 MW
Jinhua 2x55 MW CCPP
Fuzhou 2x350 MW
Taishan Extension 3x600 MW* = Supply with TELEPERM XP
So far more than 80 power plants in China have adoptedour I&C System or Equipment
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sFuture strategy
Improve local presence through SEC and other local partnership
Participate through Joint Ventures in all power plant type projects
Introduce new technology to China
Participate in:
GT/CCPP Projects
Ultra supercritical STPP
NPP program
Industrial application projects
SiemensPG in China
Market Environment
Facts & Figures
Business Opportunities
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sSummary
Siemens PG is a leading partner for the Chinese power industry
Siemens PG participates through joint ventures in projects for all power plant types
Siemens PG installed 16 power plants during the last decade withmore than 14GW generating capacity
Over 400 Siemens industrial turbines and compressors have been installed in China
So far more than 80 power plants in China have adopted Siemens I&C System or Equipment
PG is going to further improve its local presence through SEC and other local partnerships and will introduce new technologies to China
SiemensPG in China
Market Environment
Facts & Figures
Business Opportunities
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sReconciliations and definitions
”Group profit from Operations” is reconciled to ”Income before income taxes” of Operations under ”Reconciliation to financial statements” on the table ”Segment information.” See ”Financial Reports/Fiscal 2004, Quarter 4 / Financial Statements” at our Investor Relations website under www.siemens.com
”ROE” (Return on equity) margin for SFS was calculated as SFS’ income before income taxes divided by the allocated equity for SFS. Allocated equity for SFS as of September 30, 2004 was €1.015 billion. See also Siemens’ Form 20-F at our Investor Relations website under www.siemens.com
The allocated equity for SFS is determined and influenced by the respective credit ratings of the rating agencies and by the expected size and quality of its portfolio of leasing and factoring assets and equity investments and is determined annually. This allocation is designed to cover the risks of the underlying business and is in line with common credit risk management standards in banking. The actual risk profile of the SFS portfolio is monitored and controlled monthly and is evaluated against the allocated equity.
Siemens ties a portion of its executive incentive compensation to achieving economic value added (EVA) targets. EVA measures the profitability of a business (using Group profit for the Operating Groups and income before income taxes for the Financing and Real estate businesses as a base) against the additional cost of capital used to run a business, (using Net capital employed for the Operating Groups and risk-adjusted equity for the Financing and Real estate businesses as a base). A positive EVA means that a business has earned more than its cost of capital, and is therefore defined as value-creating. A negative EVA means that a business is earning less than its cost of capital and is therefore defined as value-destroying. Other organizations that use EVA may define and calculate EVA differently.
A reconciliation of EVA may be found on our Investor Relations website under www.siemens.com
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sSiemens Investor Relations Team
Marcus Desimoni +49-89-636-32445
Dr. Constantin Birnstiel +49-89-636-36165
Irina Pchelova +49-89-636-33693
Christina Schmöe +49-89-636-32677
Webpage: http://www.siemens.com Investor Relations
e-mail: [email protected]
Fax: +49-89-636-32830