Siemens Aktiengesellschaft (SIE) Earnings Call Transcript

Ladies and gentlemen. The Chairman of the Board of Siemens AG, Jim Hagemann Snabe, will now talk at the introduction of this year's Annual General Meeting.

Ladies and gentlemen, dear shareholders, I hereby open the Annual General Meeting 2020 of Siemens AG, and according to the articles of association, I take the chair of this meeting. I would like to welcome you both on my own behalf, but also on behalf of the managing board and the supervisory board. So welcome to all the shareholders, to the representatives of the shareholder associations and the depository banks of our shareholders. A cordial welcome to all of you. I would also like to welcome the ladies and gentlemen of the press and all those who follow our AGM on the Internet. I would like to especially welcome the representatives of the family -- of the Siemens family; and my predecessor, Dr. Gerhard Cromme. I would also like to welcome our former supervisory board colleagues, Reinhard Hahn and Olaf Bolduan, and all former and present employees of our company. Thank you very much for your presence today. And I'm looking forward to the exchange with all of you at this Annual General Meeting. Ladies and gentlemen, Siemens can look back on another successful fiscal year. In a difficult geoeconomic environment, the company achieved its announced targets in all points. On behalf of the supervisory board, I'd like to cordially thank the managing board and all the employees and employee representatives of Siemens AG and all group companies for their impressive performance in the past fiscal year. I'd, particularly, like to thank them for their determination in driving Siemens transformation in a time of success. In fiscal 2019, reinventing Siemens from a position of strength remained a priority for the supervisory board. Before we take a closer look at the work of the supervisory board, please allow me to make a few remarks on the formalities of this meeting. The supervisory board and the managing board are all present here, apart from Dr. Leibinger-Kammller, who apologizes for her absence. The AGM was convened in due form and time in the Federal Gazette on the 11th of December 2019. This Annual General Meeting will be notarized by notary public, Dr. Tilman Gotte, who's here on stage with us. The assembly room comprises all the areas of the Olympiahalle, which are limited by the entrance and exit gates and which are opened to the shareholders, that also includes the ancillary rooms and the smokers' area. The whole AGM will be broadcast for our own shareholders live on the Internet. Until the beginning of the general debate, we will also broadcast our Annual General Meeting for everyone interested via the Internet and in part also on TV. The speeches of Mr. Kaeser and myself with our reports to the AGM will be recorded and made available on the website of the company later on. Other than that, the cameras and microphones you can see are here to transmit the meeting to the monitor, to the screens and loudspeakers in the assembly hall and in the back office. If you want to speak in during the AGM or if you want to file any motions, please turn to the speakers' registration desk as early as possible. Ladies and gentlemen, as already announced in the -- as we did already in the AGM last year, also today, we want to use mobile voting devices for the ballots. For these, you need an AGM card, which was either sent to you after your registration to the Annual General Meeting or which you have received at the entrance gates after presenting your entrance tickets. Please keep your AGM cards until the end of the ballots. Should you have any AGM cards, which you haven't presented for registration at the entrance counters, please do so. And also, if you still have entrance tickets for which you don't have any AGM cards yet, please present them at the entrance counters to receive your AGM cards. That is the only way you can secure that your shares will be counted in the ballots. I will explain details on the voting procedure following the general debate. If you want to leave the AGM early on, please follow the remarks in the information leaflets, which you can find at the counters and on the back of your AGM card. To avoid any disturbances during the Annual General Meeting, I would ask you to refrain from making any audio or video recordings of the AGM. And I would also kindly ask you to switch off your mobile phones down here at the floor and in the stands of the arena. I will now come to item 1 of the agenda, the presentation of the adopted annual financial statements of Siemens AG and the approved consolidated financial statements, together with the combined management report of Siemens AG and the Siemens Group as of September 30, 2019, as well as the report of the supervisory board and the corporate governance report for fiscal year 2019. In my presentation today, I would like to give you a broad overview of the supervisory board work. Further details, you can find in the supervisory board report. Ladies and gentlemen, the annual financial statements and the consolidated financial statements, together with the combined management report of Siemens AG and the Siemens Group for fiscal year 2019 have been audited by Ernst & Young GmbH Wirtschaftsprufungsgesellschaft and have all received unqualified audit opinions. Managing board and the auditors explained all the documents, both to the audit committee and also the plenary session of the supervisory board in detail. The supervisory board approved of the statements following the audit. The annual financial statements of Siemens AG have thus been adopted. Ladies and gentlemen, before we take a closer look at the work of the supervisory board, please allow me to make a few remarks on a topic of current interest. Siemens has been criticized in recent weeks for an order in Australia. The managing board has addressed this criticism and will do so again today. I can certainly understand that there has been much discussion of this matter. However, the way the debate has been conducted has shifted attention from the truly important questions. How can we make Siemens as a whole more sustainable? Or the question, how we can help our customers become more sustainable? And also the question, how much responsibility should Siemens assume for the sovereign decisions of nations and other companies? Siemens is striving for a carbon-neutral future and focusing its activities on achieving that. On this fundamental goal, Siemens and the climate protection movements that are expressing their opinions here today are in full agreement. It's important for me to emphasize this point and to remind you of the facts. Already in 2015, Siemens became the first multinational industrial company in the world to make a commitment to becoming carbon-neutral, and to do so by no later than 2030. We've made considerable progress in realizing this commitment. This year, Siemens' CO2 emissions will already be at least 50% lower than in fiscal in 2014. At the same time, Siemens is supporting its customers day-by-day in their efforts to operate on a more sustainable basis. Our environmental portfolio of ecofriendly products and solutions accounts for nearly EUR 40 billion of our annual revenue. So these are ecofriendly products and solutions. And we'll continue to resolutely pursue our sustainability targets. As part of this effort, the managing board has proposed the establishment at Siemens Energy of a sustainability committee, some of whose members will be from outside the company. The supervisory board welcomes this proposal. A committee of this type will enable the productive and fact-based exchange of ideas, and thereby, make it possible to find solutions for concrete sustainability-related issues. If there has been something good about the public discussion, it's certainly this. It's encouraged us to accelerate Siemens' transformation into a sustainable company and to make an even greater contribution to sustainability in global markets and for our customers. Ladies and gentlemen, the global discussion of climate change is a sign that a new era has begun. Today, and in the future, companies must give greater consideration to the environmental impact of their actions when making business decisions. This new era also includes trailblazing technological changes that are being made possible only by digital transformation. Here, the digital transformation matches with sustainability. Digital technologies are the major lever for making business operations sustainable. Against this backdrop, businesses must fundamentally reinvent themselves. And Siemens has every right to claim that it began this process of reinvention early on and has been implementing it systematically. For the supervisory board, the focus here has been on 3 areas: strategy, structure and leadership in exactly that order. Strategy answers the questions, where do we want to go to and why? Structure is about changing -- about choosing the best organizational form for executing our strategy. And leadership, in the last step, focuses on finding the right people to shape, change and lead our businesses into the future. The supervisory board made a very conscious decision to do things in exactly this order. And we're following it because it's necessary for reinventing a company systematically and successfully. Let's take a look at the first step. That is strategy. In 2014, Joe Kaeser and the managing board presented Vision 2020. And the years that followed Vision 2020 enabled us to considerably strengthen our operating performance, our power of innovation and the satisfaction of our customers across all our business fields. Siemens completed Vision 2020 successfully by 2018. In other words, faster than originally planned. The managing board recognized and used this highly favorable situation to continue the company's strategic development. The ambitious Vision 2020+ program was presented in August 2018. It is the blueprint for next-generation Siemens, and aims at enabling a greater speed and stronger, sustainable growth. Vision 2020+ is creating focused and more specialized Siemens' companies. Over the medium and long term, these companies aim to take leading positions in the future-oriented markets of industry, infrastructure, mobility, health care and energy. In each of these markets, they intend to drive the transformation towards sustainability and digitalization. Dear Mr. Kaeser, most CEOs would have shied away from such major changes towards the end of their term in office. You and your managing -- management team, however, accelerated the transformation of the company, once again, with the Vision 2020+. The past few years have been successful for Siemens from a business perspective and they've also been an era of renewal. On behalf of the supervisory board, I'd like to sincerely thank you, Mr. Kaeser, and the managing board, for your forward-looking action and decisiveness. The second step, structure, has been derived from our strategy, and more specifically from Vision 2020+. In times of ever faster market developments, traditional conglomerates are facing major challenges. Size used to be a crucial competitive advantage. Today, however, it's speed that is crucial. For this reason, Siemens will in the future be divided into 3 companies that have the required speed and flexibility to be successful and capture leading positions in their specific markets. These companies are: Siemens AG, that is our industrial core, comprising digital industries, smart infrastructure and mobility; the health care technology provider, Siemens Healthineers AG; and Siemens Energy, the pure-play energy company that's currently being formed. In fiscal 2019, the supervisory board provided particularly close support in the decision to publicly list Siemens Energy via a spinoff. This step will create an independent company that can play a vital role in shaping and driving the worldwide transformation of energy systems in the move to renewable energies. At the extraordinary shareholders meeting planned for July 9, 2020, we will explain the spinoff to you, our shareholders, and submit it for a vote. We hope you will support the course that Siemens Energy business has taken. Siemens Energy's independence marks a milestone in our company's history. Some people say these steps are making Siemens smaller. The supervisory board and managing board see this differently. The 3 Siemens companies that will form next-generation Siemens will remain connected just like the members of a family. But they will also be able to pursue their development independently. As a result, they will have all the prerequisites they need to be among the best in their respective industries, and help shape the digital and sustainable economy of the future. The third step is about finding leaders to fill our structure and strategy with life, people who will forge ahead and take responsibility. Given our strategy and structure, it's already possible to draw this conclusion, the responsibility for leading the 3 Siemens companies will be or already is in the hands of their own individual CEOs. Monitoring, on the other hand, is the responsibility of the relevant supervisory boards. As a result, there will no longer be one CEO. Instead, there will be 3, one at the head of each of the 3 companies. Bernd Montag and his team have been leading Siemens Healthineers AG for some time now, and are rigorously implementing the company's strategy. The supervisory board appointed Michael Sen, co-CEO of Siemens Gas and Power operating company effective October 1, 2019. After the conclusion of today's Annual Shareholders Meeting, he will be Gas and Power's sole CEO. He announced the composition of his management team at the end of October. Mr. Sen is to be nominated for CEO of Siemens Energy. The supervisory board is convinced that he and his team will leverage the opportunities provided by the public listing and lead Siemens Energy business to sustainable success. Congratulations, Mr. Sen. I wish you and your colleagues every success in this vital task. Lisa Davis has been a member of Siemens managing board for more than 5 years. Since October 1, 2019, she has also served with Mr. Sen as co-CEO of the Gas and Power operating company, a position she will continue to hold until the conclusion of today's Annual Shareholders Meeting. At the end of February, Ms. Davis is leaving the managing board by mutual agreement. Dear Ms. Davis, as a member of the managing board, your services to Siemens' energy businesses have been outstanding. In a difficult market environment, you've implemented the necessary changes. You've also contributed to a long-term orientation, particularly, with regard to the decision to publicly list Siemens Energy. On behalf of the supervisory board, I'd like to cordially thank you for your dedication. We've made important personnel decisions regarding Siemens AG as well. The supervisory board appointed Roland Busch Deputy CEO, effective October 1, 2019 and Labor Director, effective December 1, 2019. Congratulations, Mr. Busch. Siemens' industrial core combines strong businesses, all of which have excellent perspectives, particularly, in linking electrification, automation and digitalization. For your exciting new tasks, I'd like to wish you every success. The supervisory board will decide on Mr. Kaeser's managing board appointment in the summer of 2020. I must ask why the supervisory board has chosen this time plan. The answer is simple. We want to focus now on the carve-out of Siemens Energy and on our business activities before the supervisory board takes the next decision regarding the planned succession process. For the first time in 15 years, this process has been structured and initiated at an early stage. For their trust-based cooperation in its implementation, I would like to thank the members of the supervisory board and Mr. Kaeser. And there's also been another change in the managing board. Janina Kugel left the managing board of Siemens AG when her regular term of office expired at the end of January. Unfortunately, she can't be here today due to another obligation. Ms. Kugel promoted, in particular, the topics cultural change, diversity and inclusion, an achievement that has gained wide recognition, both within our company and far beyond. The supervisory board would like to thank Ms. Kugel for her 5 years of successful work as Chief Human Resources Officer and Labor Director of Siemens AG and for a total of nearly 2 decades of service to our company. Ladies and gentlemen, in upcoming managing board appointments, there will be a sharper focus on the goal of diversity, and particularly on the appointment of women to managing board positions. The new system's managing board compensation on which the Annual Shareholders Meeting will be voting today is also intended to help create a modern form of company management. In creating this new system, Siemens is an innovator because the system already complies with the new German Corporate Governance Code of December 2019, and with the German act implementing the Second Shareholder Rights Directive, which has now entered into force. Let me just highlight some of the new compensation system's key features and advantages. First of all, I'd like to emphasize that the target cash compensation will remain basically unchanged. As a result of the income review, long-term compensation has been strengthened. In the future, the stock awards granted to the managing board will be measured on the basis of total shareholder return relative to the MSCI World Industrials Index. To anchor our sustainability strategy even more firmly, the stock awards will now be oriented not only on capital market development, but also on the achievement of sustainability targets and achievements that will be measured on the basis of a Siemens sustainability index. For fiscal 2020, the index includes 3 equally weighted factors: the reduction of Siemens CO2 emissions, employee training and customer satisfaction. So as you can see, we're creating incentives for sustainable company management, and we're making the results measurable and transparent. In the new system, supervisory board will no longer have the option of adjusting the annual bonus upward or downward by up to 20%. External experts have reviewed the new compensation system and judged it to be appropriate. It's a further important and logical step in our efforts to support our strategy and to align our company with the interests of all our stakeholders. Additional details are set out under Item 6 of the notice of Annual Shareholders Meeting 2020. Many of the changes are the result of shareholder suggestions, that is your suggestions. And I hope you'll support the new compensation system with your votes today. In this connection, I'd like to thank Werner Wenning, the Chairman of the Compensation Committee, for his outstanding work. I'd also like to sincerely thank Werner Brandt, the Chairman of the Audit Committee. In addition, I'd like to thank Birgit Steinborn, the Deputy Chairwoman of the supervisory board and all the supervisory board members, both the employee representatives and the shareholder representatives for their excellent collaboration and their trustful collaboration in fiscal 2019. Dear shareholders, ladies and gentlemen, with its focus on strategy, structure and leadership, the supervisory board has supported Siemens' reinvention and closely assisted, advised and monitored the managing board in its implementation of Vision 2020+. As supervisory board Chairman, I have great respect for the managing board's willingness to initiate change for the progress that's been made in the company's strategic development and for the operating successes that have been achieved at the same time. For me, reinvention means carefully examining your own assumptions and asking tough questions. In particular, the question, how your environment will change in the medium and long term? Reinvention means making Siemens a pioneer for sustainable digital future. And last but not least, reinvention also includes the will to implement difficult decisions, even if they might be criticized at the outset. With Vision 2020+ and the planned carve-out of Siemens Energy later this year, we are well prepared to successfully help shape the new era of sustainability and digitalization. And I would also like to thank you, our shareholders, for your cooperation in fiscal 2019 as well as for your trust. And with that I'd like to turn the floor over to Mr. Kaeser, the President and CEO of Siemens AG.

Thank you, Jim, especially, of course, also for your recognition at these crucial times. Esteemed ladies and gentlemen of the supervisory boards, dear board colleagues, members of the Siemens family, Dr. Cromme, valued shareholders, thank you very much for your interest and, above all, for your trust in Siemens. Dear employees, I know that many of you are here today, either in person or joining us online, thank you very much. A very, very warm thank you for your loyalty and your tireless efforts on behalf of our company. Ladies and gentlemen, we're going to look back on a successful and eventful fiscal 2019. And the new year began no less eventful. While the first quarter of the current fiscal year started out slowly, as expected, Siemens has taken center stage of the public climate debate. Activists in the FridaysForFuture movement and other environmental organizations have loudly spoken out on social media and in the streets. And of course, they are also continuing their protests, both here in the hall and on the sidelines of our AGM. As I said, Siemens has taken center stage of the climate debate, but unfortunately not because nearly 5 years ago, we were the first major industrial company worldwide to pledge to be carbon neutral by 2030. And not because we're already close to reaching the halfway mark in our way to carbon neutrality. And certainly not because our innovative products and solutions enabled our customers to abate CO2 emissions, amounting to almost 640 million tons of CO2. 640 million tons of CO2 emissions in fiscal 2019. Ladies and gentlemen, by the way, this is almost equivalent to 80% of Germany's total annual CO2 emissions. Now ladies and gentlemen, we're actually in the center of public debate because we accepted an order. The order called for delivering the signaling system for the rail line, linking a coal mine and the port where the coal will be shipped. Much has been discussed and written about the order. And there are many opinions and emotions about it. And admittedly, we failed to see the overall picture involving this order correctly in time. But it is also a fact that we're complying with all legal provisions. And that the Carmichael mine has, in fact, received all necessary permits from the Australian authorities. Moreover, it is a fact that the great majority, the large majority of the indigenous population in Australia and the region has also approved the project. Still, we do acknowledge that we must better prepare our company for dealing with the environmental and societal impact of our direct or indirect participation in controversial projects. And this is, of course, particularly true for Siemens Energy. The new company is scheduled for public listing in September 2020 as planned. This leading energy company will be in the midst of the worldwide energy transition and in the midst of public debate. And ladies and gentlemen, we will simply have to be prepared for this. Now for that reason, we've decided to establish a Siemens Energy Sustainability Committee, in which independent public leaders will also be represented. This committee will be able to report and escalate sensitive projects regardless of whether we are directly or indirectly involved. The climate crisis is real. It is global. And it is an existential threat to millions of people. We are probably one of the last generations of business managers who can achieve a turning point in the climate crisis in time. And the diagnosis, ladies and gentlemen, is clear. We need effective and timely solutions. And it is good and it is important that our children take their future into their own hands. It is right that they warn us and that they shake us up. However, protests alone won't solve anything. And if you continue to refuse to engage in dialogue and collaboration in order to find solutions, you forfeit the moral right to discredit those who are making enormous contributions to a better and cleaner world through the energy and commitment of hundreds of thousands of motivated employees and through the investment of billions of euros in innovation. In any case, we will thoroughly analyze our entire value chain. And our goal is a faster and a more comprehensive reduction of emissions in all parts of this value chain, from the supplier, to ourselves, to our customers, all the way to governments. And we can, of course, support them in the energy turnaround. And for that reason, ladies and gentlemen, until 2025, we are earmarking a total of EUR 1 billion to spend here. Now this money is flowing into new technologies, new sustainable products and concrete measures to reduce emissions along the entire supply chain. And with this commitment, we are taking sustainability to an entirely new level in our company. Ladies and gentlemen, Siemens Energy will be able to take on an important role in the worldwide energy transition from conventional power generation to renewable energies as well. This also applies to contributions to everything from fossil fuels to synthetic fuels and energy systems based on green hydrogen. Now for this transition, we need a robust profitable and innovative business with renewables. This is going to be a key requirement. And this for us is Siemens Gamesa Renewable Energy or, as we call it, SGRE. And this is exactly -- that is exactly what our decision yesterday is aiming at. We're increasing our stake in SGRE to around 67%. And to do this, we're acquiring Iberdrola's 8.1% stake in the company. We will then transfer our entire stake in SGRE, the entire 67% to the future Siemens Energy. Now in order to have a successful energy transition and turnaround, we need to rigorously pursue it. But we also must do it in a way that's acceptable to both society and the economy. We must bear in mind that the energy industry is part of a highly integrated global value chain. The conditions for decarbonizing an economy are not the same in all regions of the world. There are clear difference, for instance, between industrialized and developing countries. We must and will take this into account in our sustainability strategy. And to do this, we want to maintain a solution-oriented dialogue with all interest groups or stakeholders, as they're called in international lingo. So our doors are open because we know we can accomplish so much together. And Siemens, ladies and gentlemen, has also achieved a great deal in the past fiscal year. And let me tell you about this now. The fiscal 2019 was a good year for this company of ours. Now despite a clearly cooling economy, we met our full year forecast across the board. Now while many other industrial companies had to revise their outlook and some competitors, some large competitors, even in the meantime struggled to survive, we were able to tick off 4 green check marks right next to our forecast figures. As predicted, revenue grew moderately by 3%. The relation of orders to revenue, the so-called book-to-bill ratio, was greater than 1, coming in at a very good 1.13. Orders grew by a substantial 6%. 6%, very, very clear growth, giving Siemens a record order backlog of EUR 146 billion, EUR 146 billion at the end of the fiscal year. Now adjusted for severance charges, our Industrial Business has achieved a profit margin of 11.5%. This figure was exactly in the middle of our target range, which was quite ambitious, I believe. Basic earnings per share adjusted for these severance charges, reached EUR 6.93, which was also within our previously defined range. Now even after all these years, of course, it's always great to have 1 successful year. Now that being said, having a winning streak is truly something else. In fiscal 2019, we succeeded in reaching or even exceeding our forecast targets for the sixth year in a row. And you can even see here, many green checkmarks on the slide from 2016 to 2018. You can actually see 2 in each year. Now those means -- these double checkmarks mean that we've actually raised our forecast during the course of the year. And also ladies and gentlemen, this is particularly important to me, we are back on a growth track again. In the '90s and at the beginning of the new millennium, Siemens impressively showed how growth works, even if the profitability actually didn't always quite keep pace. And now we're back on this growth track. This time, however, with a considerable increase in the profitability of our operating businesses. So for example, our adjusted EBITDA margin increased from about 8% to about 11%, so an increase by nearly 40% between 2013 and 2019. And ladies and gentlemen, those who are looking for lost years will find them between these 2 growth cycles. This achievement was only possible with a reliable management team and great committed colleagues throughout the world. So my warmest thanks to all of you for having achieved this together. But as Germany's famed national soccer trainer, Sepp Herberger, once commented, "After the match, is before the match." And I promise you, we'll work hard to continue this winning streak in 2020 as well, even though the preconditions have become more difficult. So Siemens is on a growth trajectory. And you can also see this based on the fact that in 2019, we brought on board around 43,400 new colleagues around the globe, including 5,300 here in Germany. Today, Siemens has over 385,000 colleagues working here as many, by the way, as the big American companies, Google, Apple and Microsoft combined. So now we only need their margins. Capable employees are our greatest asset. To be sure and to secure their skills also in the digital age and to support them even in their personal development and to do all of that, lifelong learning is essential. That's why we invested EUR 515 million in training and continuing education in fiscal 2019. Above all, of course, in providing digital skills. We're also training young people, currently around 10,900 apprentices and university students in work-study programs, who are occupied here at Siemens. So this makes us one of the private sector's biggest training institutions worldwide. And that, ladies and gentlemen, is how Siemens is shaping the future. Let me reiterate this. This is how we are shaping the future. Now while the training and skills of our employees are important, strong motivation can move mountains. So how do our colleagues feel about working for Siemens? Now our regular employee surveys show a positive picture. I'm especially pleased that 81% of our employees recently declared that, "I can fully apply my skills and abilities in my work." And no less than 91% of almost 200,000 surveyed colleagues said, they know exactly what is expected of them at work. Both figures were about 3% higher than just 1 year ago. And these are excellent results for a company that's changing as extensively and rapidly as Siemens is right now. So we are very happy about these positive results. And the fact that Siemens is perceived as a good employer, both internally and externally, can also be, of course, credited to Janina Kugel. I very much regret that she's leaving the company for we're losing a great colleague and personality. I would like to thank her warmly even in absentia for her outstanding work. Dedicated and expert employees are, of course, also a key to reliably meeting customer expectations. And since customer satisfaction and expectations, of course, are another very important asset, I'm happy to say that we set a new record here. We've improved our so-called recommendation rate, the Net Promoter Score, as it's called, again, in the business lingo. We've improved it by more than 70% since 2013. Now Siemens is the partner of choice for customers around the world. Around the world. And this trust was, of course, also reflected in concrete orders in fiscal 2019. Our order backlog reached an historic high of EUR 146 billion as of September 30, 2019. Again, a historic high. We achieved many successes in the market, and I'd like to touch just a few of them here. At digital industries, we entered and expanded future-oriented partnerships. For example, we're supporting Volkswagen and its integration partner in setting up a new industrial IT platform in all of its 122 factories. All 122 factories of the VW group. And of course, this means that all Volkswagen factories will be networked with each other's systems, the Internet of Things, the interconnectivity of all factories. And ladies and gentlemen, the company's suppliers will follow. Also with smart infrastructure, there were many major orders and customer successes during fiscal 2019. Too many, in fact, to highlight specific examples here. But let me just say that our smart infrastructure team did an excellent job here, especially here in Germany. Now our strong mobility business, of course, also proved that it's the first choice for customers throughout the world. It is not only the first choice, but also a reliable partner to roll out their infrastructure. And I'd like to just spotlight 2 examples. The order from the Russian Railways for the Velaro RUS, which is basically the ICE, high-speed version of the Russian train or the new trains for the London tube. The combined volume for these 2 orders is at least a full EUR 2.8 billion. And I believe in a persistently challenging market environment, even Gas and Power won some great orders and had a very attractive run in the market. One of these is, of course, Brazil-based order, where we're building a 1.3-gigawatts combined cycle power plant, for which we'll also, of course, provide long-term service for the plant, including its operation and maintenance. Now in fiscal 2019, Siemens continued to heavily invest in the future, and this is particularly true for innovation. Now during 2019, we spent EUR 5.7 billion on research and development. I say, we didn't spend it, we invested it, which marks, of course, a 40% increase compared to 2013. So ladies and gentlemen, the margin improvement is not instead of investing in the future, we've become better and we innovate and invest. In fiscal 2019, we plan to increase our research and development expenditures, again, to a total of EUR 5.8 billion. And of course, we are making targeted investments in business areas that have grown and have further strong growth prospects. They are, for example, artificial intelligence, edge computing, industrial 5G networks and cloud solutions. And with this, with all these investments, we will be able to further expand our position as a global market leader in industrialization, digitalization. Now of course you, as shareholders, will also benefit from our successes in fiscal 2019. We are proposing a dividend of EUR 3.90. It's the sixth year in a row, the sixth year running that we've raised our dividend. Now Siemens dividend policy is not only attractive, it is also reliable. The development of our share price was also quite satisfying. One indicator that is often disregarded here is the total shareholder return. So let's say you held shares you bought on July 25, 2013, a very important day. Let's say, you bought those shares on July 25 and reinvested the dividends. Then by the end of 2019, your total return was at 82%. In the same period, the 30 companies of the DAX Index showed a comparable total return of only 60%. And the average return of our main competitors was at a mere 29%. So ladies and gentlemen, these are real facts. And if you have our shares, you can rest assure that you will see the positive effects on your portfolio. Now ladies and gentlemen, even with the presentation of Vision 2020+ in August 2018, Siemens oriented its actions on its purpose. We have rearranged our strategic thrust. And we make real what matters. So that is important to us. And the purpose of our company is to create value for all stakeholders. For our customers, our employees, our shareholders, but of course, also for society at large. Now many have followed our example. By now, nearly 200 CEOs of the largest American companies have committed themselves to exactly the same purpose, at least 1 year later. Today, companies can no longer act as if the only purpose of a business is to simply make a profit. Those days are over. Today, companies have to keep a close eye on all stakeholders. And of course, we can also see this here and today in our current situation. Now at Siemens, we measure the value we create for society on the basis of the 17 sustainable development goals set in the United Nations Agenda 2030. These goals define, what is understood as sustainability and progress by the international community. Our efforts here are recognized and understood worldwide. And recognition has also come from the renowned American business magazine, Fortune. Because for the fifth year in a row, for the fifth year running, the magazine has ranked Siemens #1 as the most admired company in its industry. They see Siemens as a company that sets benchmarks and standards. Now we also have to admit that, of course, these benchmarks could be higher. But ladies and gentlemen, we are still quite happy, actually very happy about this. And I would like to, of course, thank everyone for this incredible achievement. And of course, we don't nominate ourselves, we don't award us with this award ourselves. So I would like to thank the entire management board, and I would like to thank all of our Siemens employees around the globe for this outstanding performance and achievement. And ladies and gentlemen, I also believe that I can also do so on behalf of everyone here today. Now this achievement is all the more remarkable when one considers that our markets were characterized by geopolitical and geoeconomic tensions, restrained growth and, of course, technological upheavals. At the same time, however, we're implementing our Vision 2020 strategy concept in order to achieve what is probably the largest transformation in our company's 172-year history. Vision 2020+ marks a structural and economic milestone as well as an emotional milestone for many of us. Today, of course, we are setting our company's course for an entire decade: focus, accountability, adaptability. These are the success factors for the next generation. Now the Siemens brand will consist of 3 companies that concentrate on their respective markets: the new Industrial Siemens AG; Siemens Healthineers AG; and coming soon, Siemens Energy. Now we already took the first step in focusing our company on March 16, 2018, when we listed Siemens Healthineers AG on the Frankfurt Stock Exchange. It was a very good first step. The share price of Siemens Healthineers has increased by more than 50% since listing, significantly outpacing the German MDAX stock index. The company's market capitalization has grown from EUR 28 billion to EUR 43 billion as of December 31, 2019. And ladies and gentlemen, this impressively demonstrates that the valuation of this business as an independent and a focused specialist was able to develop significantly better than within the conglomerate. Now given its market capitalization, by the way, Siemens Healthineers would rank as the 11th most valuable company in the DAX Stock Index, which consists of Germany's 30 largest companies. And now we want to repeat this revaluation, experts call it re-rating, with our energy business. Now there's a lot to be said for the success of this new company. The demand for energy, more specifically for electrification, of course, is increasing worldwide, especially in developing countries, more than 850 million people still do not have access to electricity today. Now in order to cover this increasing demand, but at the same time, to radically reduce CO2 emissions is an opportunity and a challenge at the same time. Only a handful of companies can master this task as well as Siemens Energy. A robust, profitable and innovative business with renewables is, of course, an especially important prerequisite for this success, ladies and gentlemen. And that is why, we've increased our stake in Siemens Gamesa. And with that, of course, have taken the next step. Renewable energy will be a main pillar in the Siemens Energy's portfolio. Now Lisa Davis, of course, from 2014 to this very present day has been responsible for Gas and Power and has led Siemens Energy business throughout challenging times. I would even say, very challenging times. Now with that, she's also paved the way for the independence of Siemens Energy. Thank you very much, Lisa. Now on behalf of all of us, I wish you all the best for your time after Siemens. We've had our moments. But it was a pleasure to work with you. It's another sole responsibility of Michael Sen, the designated CEO of Siemens Energy, to successfully execute the public listing together with his team. And at the same time, of course, it's essential to keep a close eye on implementing measures to improve earnings in the energy business in fiscal 2020. And I believe it won't be hyperbole to say that this need was quite obvious in the first quarter of the current fiscal year. Now even though the timetable for the public listing of Siemens Energy is ambitious, we're right on track. And of course, should you approve, esteemed shareholders, Siemens Energy will be spun-off as an independent entity with a so-called spinoff. Now you'll be able to vote on the spinoff at the extraordinary shareholders meeting of Siemens AG planned for July 9, 2020. Now we are, thus, placing the largest part of Siemens Energy AG into your hands. The public listing is then scheduled for the end of September of this year. Now of course, as Siemens shareholders, you will then receive a number of Siemens Energy shares. That is still to be determined. And for the time being, Siemens AG will continue to be an anchor shareholder, holding a strong minority stake in Siemens Energy. Now you may be asking yourself, rightfully so, what will the future of Siemens AG look like after the spinoff of Siemens Energy? Ladies and gentlemen, the new Industrial Siemens after the spinoff of Siemens Energy will bundle the digital industries, smart infrastructure and Siemens mobility businesses. All 3 are outstanding businesses that have what it takes to be leaders in their respective markets. The businesses of the new Industrial Siemens AG embody, in pure form, in the purest form, if you will, our success formula for the future of the industry, EAD: electrification; automation; and digitalization or digital interconnectivity of companies, of hardware and software or for the real and the virtual world in the modern fourth industrial revolution. Now we assume that investors will honor the spinoff of Siemens Energy and the focus of the new Siemens AG on industry and infrastructure by reassessing the company. Above all, because the new Siemens AG is a focused industrial company, will have a significantly higher level of profitability, a significantly higher. And company's growth will accelerate in the medium term. Ladies and gentlemen, let's now take a look at the Vision 2020. Of course, we've realigned our approach with Siemens. We are giving our businesses much more leeway, but also more responsibility. Now for this, of course, we need to expedite growth and higher margins. Now the Siemens of the next generation will no longer be a conglomerate the way we knew it and the way we loved it. So allow me a personal remark here. In just 1 month, I would have worked at Siemens for exactly 40 years. Siemens in 1980 -- so Siemens in 1980 and Siemens in 2020, that's 2 different worlds, that's different generations, technologically, economically, structurally and culturally. Just think about the rise and fall of our communications businesses. Think about the public listing of our semiconductor business. Think about the compliance crisis, which threatened nothing less than the very existence of our company. And that has, of course, taught us many lessons. And think about how we actually turned health care into a highly profitable business, and now even its own very successful company. Or how we became a top provider for renewable energy by founding Siemens Gamesa Renewable Energy. When I think about simply how our customers and even our competitors respect our industrial businesses. Because we are the ones who are shaping the future of Industry 4.0, with a unique combination of hardware and software. And it is, in fact, unique, this combination of hardware and software. And with this combination, we are setting the standards, we are setting the benchmarks for the fourth industrial revolution. Now it would be easy. It would be very easy, even, to cling to what already exists and to simply rest on our laurels. Now of course, we already experienced the fatal consequences of such a course of action at our communications business and the failure thereof. So now we're doing things differently. We're building new companies and creating perspectives for the future. Now there's a lot of talk in the public about dismantling, others incorrectly believe our restructuring will be completed with the spinoff. How short-sighted. How short-sighted indeed. In fact, ladies and gentlemen, this is where the freestyle event begins, the major undertaking we're facing in the first place. All 3 companies can actively shape the transformation of their businesses. They can now be the authors and directors and leading actors in the merger endgames of their respective industries. Only then, only then will future generations proudly, confidently and gratefully hold their birthday party in 2047, on Siemens 200th birthday. That's -- with Vision 2020+, we want to create a robust ecosystem, consisting of 3 strong Siemens companies. And the ambition here can be put in one sentence. We want to, of course, be the best, amongst the best and be the best in what we do. But the question, of course, is how will these 3 companies work together in the future? What connects us? And ladies and gentlemen, the answer is, they collaborate wherever it adds value for each of them. Now that could be technology platforms or the collaboration in entering and developing regions or markets or, for example, shared services like IT and procurement. The ecosystem truly lives from and evolves through shared interests and advantages. Circulars, majorities and holding structures, are not the way to do that. Siemens is a strong brand. It opens doors everywhere in the world. And I can see that truly every single day when I'm with customers. It's not the Chairman who opens every door. It's not the Chairman or the Chairwoman, even, who gets appointments around the globe. No, it's what's on our business card that we hand over. It is Siemens. This brand holds the Siemens' ecosystem together. It stands for engineering skills, it stand for quality, for innovation, reliability and it stands for integrity. And for me, Siemens stands for responsibility and sustainability as well. And if a business with this name cannot live up to these standards, ladies and gentlemen -- then, ladies and gentlemen, it does not deserve our name. Now for me, however, Siemens is more than just a brand. It is a community of great people throughout the world, who share the same values and are united by one goal: improving the quality of life of people around the world, to making real what matters, together with 385,000 colleagues day after day, year after year. This is something I'm incredibly proud of. And of course, I know that our employees are as proud as I am. Thank you very much for your attention.

Thank you very much, Mr. Kaeser. Before we enter into the general debate, let me make some organizational remarks. As already mentioned, the notice of the Annual Shareholders Meeting was published on December 11, 2019, in the Federal Gazette. Ever since this day, it's been accessible together with all of the other necessary documents on the website of the company as well. The notice was sent to you together with the invitation to the AGM. The other documents necessary were also sent to you on request. The notice contains the full agenda and the resolution proposals of managing board and supervisory board. Only regarding Item 2, the managing board and supervisory board, as announced in the notice, will propose an -- will offer an adjusted proposal for the appropriation of net income. The reason for this is that the number of treasury shares has changed since the publication of the notice. Notice the adjusted proposal and the other necessary documents are present for you and are available for you to view on the speakers' registration desk just as well as on the information booths all around the assembly hall. I would like to acquaint you with our management report where in the different chapters, you will find detailed explanations on many of the topics Mr. Kaeser and myself have mentioned. It also contains the report of the supervisory board, the corporate governance report and the compensation report just as well as the additional report regarding the statements, according to Section 289a, Paragraph 1; and Section 315a, Paragraph 1 of German Commercial Code. You can find an overview of the agenda and explanations on the AGM. Information on how to make any request to speak and ask your questions, on appointing proxies and on the voting procedures can be found in the information brochure, which is available at the information booths. The list of participants will be updated until the end of this Annual Shareholders Meeting, and shareholders and shareholders' representatives can view the list of participants on the screens in the upper aisles and the information booths. As in the past, we will not take any verbatim minutes of the AGM. Only questions asked by shareholders and shareholder representatives will be taken down verbatim to prepare the answers. This now concludes the public broadcast of the AGM. From now on, only shareholders who've logged in by entering their shareholders number and their login credentials will be able to follow the further course of the AGM. [Statements in English on this transcript were spoken by an interpreter present on the live call.]