Chris Rossi, CEO Dresser-Rand
Capital Market Day - Energy and Oil & Gas | Houston, June 29, 2016
Unrestricted © Siemens AG 2016
siemens.com/investor
Notes and forward-looking statementsThis document contains statements related to our future business and financial performance and future events or developments involving Siemens that may constitute forward-looking statements. These statements may be identified by words such as "expect," "look forward to," "anticipate" "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. We may also make forward-looking statements in other reports, in presentations, in material delivered to shareholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current expectations and certain assumptions of Siemens' management, of which many are beyond Siemens' control. These are subject to a number of risks, uncertainties and factors, including, but not limited to those described in disclosures, in particular in the chapter Risks in the Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, performance or achievements of Siemens may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Siemens neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated.
This document includes - in IFRS not clearly defined - supplemental financial measures that are or may be non-GAAP financial measures. These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens' net assets and financial positions or results of operations as presented in accordance with IFRS in its Consolidated Financial Statements. Other companies that report or describe similarly titled financial measures may calculate them differently.
Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
Dresser-Rand, a Siemens Business - Well positioned to compete and preparing for profitable growthWell positioned
to compete in the current challenging market conditions
Expanded technology and product portfolio
Dresser-Rand
Former
Rolls-Royce Energy
Solutions based on full complement of Siemens portfolio
Extensive service network/largest installed base Enhanced client relationships/agreements
Revenue 3.4-3.7
billion €
80
Locations worldwide
Taking advantage of low market activity to prepare
for profitable growth
Synergies from acquisition
Operational excellence
Employees
11,000
Technology/innovation
Dresser-Rand is the Siemens channel into the Oil & Gas market, leveraging the combined compression and power generation portfolioCompression Power Generation & Mechanical Drives E-Houses
Single-shaft
Gear-type
Reciprocating
Gas Turbine packages
Steam turbines
Engines Power and process modules
Siemens
Dresser-Rand Dresser-Rand
Former
Rolls-Royce Energy
Dresser-Rand Dresser-Rand Dresser-Rand
Former
Rolls-Royce Energy
Services
Parts, repairs, field service
Long-term service plans
Installation and commissioning
Revamps/upgrades
Digital Oil & Gas solutions
Go-to-market for broa-
der Siemens portfolio
Motors and drives, gearboxes
Automation systems
Switchgear, transformers
Water treatment/sulfate removal
Examples
FPSO
Service incl. Digital solutions
Compression
Siemens scope: US$300 - 400m1)
Thruster motors and drives
LNG
Siemens scope: US$400 - 500m2)
Power generation
(gas turbine, generator)
Automation, safety, control and telecom
Pipeline
Siemens scope:
US$100 - 120m3)
Water treatment
Sulfate removal
Power distribution
(E-house)
Client value proposition: Work with a single equipment and service supplier to lower CAPEX/OPEX
Based on FPSO with 200,000 boe/d capacity, fully modularized 2) Based on greenfield LNG plant with 5.5 MTPA 3) Based on 200 mile pipeline w/ 60 MW compression station, 600 MMSCFD
Dependable high-margin service business annuity tied to the industry's largest installed baseLeveraging the combined PS and D-R Service capability
turbines
Sales
Service Execution
Industrial steam
Mechanical drives
Compressors
Combined structure organized by regions
One face to the customer approach
Complementary global coverage of service centers, product centers, and field service personnel
Rationalization plan in process
Managed regionally as shared resources between PS and D-R
Strong services network and capabilities
Largest installed fleet
Industry's largest installed base secures
further profitable service growth opportunities
Global presence
Client intimacy and faster response times through local presence and most extensive service network with over 80 facilities around the globe
Recurring revenue stream
Resilient service market business keeping
mission-critical equipment running
Service represents ~50% of revenue
Validates the value of bringing Dresser-Rand, Siemens and Rolls-Royce together
Strategic partner to our client
Offering single source solutions
Generating pull-through
Earning larger share of client
spend
Key synergy drivers
New Units
Gas turbines into Oil & Gas
Revenue
synergies
40% of
total
Product portfolio
Cross-selling
Service
Services
Expense &
product
R&D program consolidation
Cost
synergies
60% of total
SG&A rationalization
Supply chain/purchasing
Personnel
Footprint optimization
Integration is progressing well with projected synergies clearly above planRevenue and cost synergies 250 €250m in FY19 Increased guidance 200 (Dec 2014) Original guidance 150 (Sep 2014) 100 50 FY16e FY17e | 170 | 250 | New Unit growth |
15% | |||
25% | Services growth | ||
General expense | |||
30% | and product | ||
cost reduction | |||
30% | Personnel cost reduction | ||
FY18e | FY19e | ||
Higher cost synergies and services synergies driving improvement | |||
~% of cost synergies
Expense & product
Cost
R&D program consolidation
SG&A rationalization
Consolidate duplicate programs between D-R and Siemens
Completed sales integration and eliminating redundancies
10%
25%
synergies
60% of
• Eliminated D-R publicly traded company expenses
Leveraging Siemens purchasing spend of ~20 times D-R spend
total
Personnel
Supply chain/purchasing
Footprint optimization
Consolidating spend with best performing suppliers
Consolidating work into fewer facilities (closure/consolidation of 8 sites)
Leveraging low cost manufacturing capability in India and China
30%
35%
Objective
Ongoing cost out measures
Operational excellence focus
General resizing of all functions and facilities for lower volume
Implementing D-R flexible manufacturing model
Lower cost structure
Improved profitability
Technology/ innovation focus
Deploying D-R value engineering/value analysis program
Developing next generation compressor with best of best technology
Digitalizing gas turbine package design and build process
Lower product cost
Best cycle times
Increase value to earn higher price
Headcount reduced since closing >1,100 FTE (~30% from integration/70% from ongoing cost out measures)
Leveraging Siemens combined strength to win additional business and deliver on the synergiesGas turbines into O&G
Product portfolio
Cross-selling
Services
Replaced 3rd party gas turbine with Siemens technology
New facility
2 gas turbine driven
compression trains
Replaced 3rd party motor with Siemens technology
Latest motor technology bundled with DATUM compression
reciprocating compressor package
3 reciprocating fuel-gas compressors
Electric motor
Auxiliary equipment
Revamp Siemens com- pressor modules with D-R technology
Latest technology bundles
Turnkey installation and
commissioning
Control room retrofit
Midstream application Gas transmission Powergeneration
with compression
Offshore
Well positioned to compete in the current challenging market conditionsCurrent situation
Strength of the combined business
Upstream
Hardest hit due to drop in oil prices
Customer focused on taking cost out, driving standardization and modularization, highest utilization of equipment
Midstream
LNG supply capacity expected to increase by almost 50% over the next 5 years1)
Gas transmission still relatively strong activity
Downstream
Less impacted by low oil prices
High utilization of installed equipment
Growth expected in emerging markets/China
Offshore
Legacy D-R strong market position,
enhanced with full range of gas turbines and modules
Onshore
Legacy Siemens strong market position,
enhanced with high pressure compression technology
LNG
Solution offering
(modularization leveraging full complement of Siemens products)
Gas Transmission
Improved compressor offering, full range of gas turbine power blocks
Broader regional market coverage
Improved compressor offering
Expanded low cost manufacturing capability
Enhanced application coverage
Source: IHS Global Liquefaction Buildup Tool May 2016
The strategy to bring Dresser-Rand, Siemens,
and Rolls-Royce together to serve the O&G industry is working
Key takeaways
Fleet continues to grow organically
Significant installed base added from acquisitions
Leveraging the combined PS and D-R capability
Integration is progressing well with projected synergies well above plan
Aggressive focus on cost out measures
Poised for profitable growth and increasing share
Reaffirming Outlook FY16
Orders stabilizing, but book-to-bill
Margin in high single digits, excluding transformation cost
Integration and transformation cost ~€120m in FY16, PPA ~€200m in FY16
Installed fleet and resilient service business
$ Increased synergies and cost out
Performance
improving
50%
Service share of total revenue
€250m
Synergies in FY19
€3.4 - 3.7bnexpected
Revenue in FY16
Siemens AG published this content on 29 June 2016 and is solely responsible for the information contained herein.
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