Siemens Aktiengesellschaft (SIE.DE) Earnings Call Transcript & Summary

Good morning. Welcome, everyone. We are here to talk about growth, sustainable, profitable growth. And this is important, accelerated growth. Just look at what we have done in the last 5 years since we have become a focused technology company. This was our growth trajectory for the period starting fiscal year 2021 until fiscal year 2025. Average revenue growth, 8% per year in this period, up from 2% in the previous decade. Average profit margin of our industrial business, 15%, up from 10%; and average free cash flow margin 13%, up from 7%. The total shareholder return of 151%. We outperformed the DAX and other indices. Higher growth, higher margins, higher free cash flows. This successful performance continues. So let's take a look at our most recent past fiscal year 2025, and it was another record year for Siemens. Our orders reached EUR 88 billion, 6% above prior year's level. Revenue grew by 5%, a total of EUR 78.9 billion. And book-to-bill ratio of 1.1, a high-quality backlog of EUR 117 billion. We move with confidence in our fiscal year 2026. Our industrial business showed a strong performance, a record profit of EUR 11.8 billion. Our free cash flow at a new historic high, EUR 10.8 billion. This means we turned 14% of sales straight into cash, with EUR 10.4 billion record in net income for the third consecutive year. And finally, we achieved earnings per share pre-PPA of EUR 10.71. And we adjusted this, as you know, for effects from Dotmatics, Altair and Innomotics. And we achieved this in spite of substantial uncertainties all around the world, geopolitics, new tariffs and protectionism, slow consumer spending. We created substantial value for all our stakeholders. Now let's take a look at the performance of our industrial businesses. Let's start with Digital Industries. We met the guidance as we did with all our businesses. Revenue declined by 4% as we had predicted because of difficult market environment for our automation business and against a very, very strong base of comparison for our software business. Profit margin, 15.9%. This, by the way, excludes effects related to Altair and Dotmatics which were not part of our guidance. Smart Infrastructure, 9% revenue growth. They delivered at the upper end of the guided range, and profit margin was even more impressive with 18.3%. That's an all-time record and above guidance. Congratulations to the team. Mobility, strong revenue growth, again 10%, and that's the upper end of the guided range. Excellent execution. There is a huge backlog of orders, and the team is just producing and delivering. At the same time, they successfully balance risk and opportunities. The result, industry-leading profitability and free cash flow. Siemens today is stronger than ever. Our strategy works. We grow by combining the real and the digital worlds. And our ambition keeps growing too. With our ONE Tech Company program, we are making changes to the fabric of our company and unlock even higher growth in the future. Now when we talk about our fabric, there are two important aspects. One is the portfolio and the other one is our operating model. Our operating model versus how we support and strengthen our businesses with world-class technologies and services with higher efficiency and a huge set of high-quality industrial data, so that our businesses can innovate faster and serve our customers even better. Now let's take these two aspects one by one. Our portfolio. In the last 5 years, we have put particular focus on streamlining it, preparing ourselves for the transformation, both through divestments and high-growth acquisitions. In 2020, we spun off Siemens Energy. In the following years, we divested our so-called portfolio companies, companies for which Siemens was no longer the better owner. 6 years ago, the total evaluation was estimated to EUR 1.5 billion. In the end, our proceeds from these divestments totaled EUR 7 billion. Focus on where we can create the most value also through disciplined acquisitions. And of course, always along our strategy to combine the real and the digital worlds. We acquired intelligent hardware companies. For example, industrial drive technologies for ebm-papst; Trayer switchgear, Danfoss Fire Safety; C&S Electric in India for electrical and electronic equipment. On top, we strengthened our digital business with three SaaS acquisitions, all cloud native. Sqills, a provider for inventory management, reservation and ticketing software for our rail customers. Supplyframe, a platform that connects design and sourcing of electronic parts. Brightly, a provider for asset and maintenance solutions for buildings. And in 2025, we closed the acquisitions of Altair and Dotmatics. With Altair, Siemens has now the world's most complete portfolio for AI-powered design, engineering and simulation. Our customers can now build the most comprehensive physics-based Digital Twins. And with Dotmatics, we are adding more than EUR 5 billion to our addressed markets. Our customers can now build a digital thread all the way from R&D to production. This helps them bringing medicines and biochemicals to the market more quickly and at lower cost. Now we make another important step towards a highly synergistic Siemens portfolio. We plan to deconsolidate Siemens Healthineers. This will unlock long-term value for all our shareholders because it will allow both companies to tap fully into their respective growth potentials. Siemens Healthineers is a success story. Since its IPO, the company has grown from EUR 13 billion in revenue in 2018 to EUR 23 billion in 2025. And the Varian acquisition contributed approximately EUR 4 billion to this. Industry-leading margins, a best-in-class product offering, reliable cash flow, high free cash flow conversion. A strong attractive business, but one with increasingly less and less synergies. Siemens Healthineers serves markets which are increasingly different. They are different from the core markets of Siemens. For example, regulation in health care is comprehensive and increasing. Digitalization in the way that we do it at Siemens today doesn't really scale into the health care sector. Through the planned deconsolidation, Siemens Healthineers will benefit from a significantly higher free float. A leading pure-play med tech champion, more attractive for the capital market. So what happens now? We intend to transfer 30% of shares to Siemens AG shareholders via direct spin-off. And as a minority shareholder, we will continue to participate in the attractive business of Siemens Healthineers. In the medium term, we intend to reduce our shareholding to a financial asset. The transaction still needs regulatory clarification and a green light from both shareholder meetings. And more details will follow in early Q2, calendar year 2026. And let me assure you, Siemens is committed to managing its investments in Siemens Healthineers in a responsible and shareholder-focused manner. Our new Siemens has taken shape, a company with less complexity and with simplified governance, with a fast-growing digital business, with an unmatched portfolio of industrial software and digital services, and with a strong portfolio in hardware, connected hardware that will be increasingly software-defined and enhanced with AI. In short, Siemens with a highly synergistic portfolio ready to scale. Portfolio matters, but there's more to our fabric than the mix of our businesses. When we say we are changing our fabric, then we also mean we are improving our operating model. Remember, stronger customer focus, faster innovations, higher profitable growth. Siemens is a strong company with a rich history, but this means legacy too. Too many systems, for example, ERP systems. Still many silos, for example, data silos. Every single bit of this legacy made sense at a certain point in time, but times have changed. The world has become more competitive. Companies need to be more resilient. Scale matters more and more, speed matters more and more. We are giving our business an efficient optimal environment so they can focus, so they can innovate faster, they can serve our customers better. And that's how our new operating model is all about. We are building and rolling out services for all of our businesses, highly standardized, delivered in highly efficient ways, always up to date with the latest technology and at world-class quality for everyone and at Siemens to scale. We do that because the world is squeezing out small. Digital tools allow us to use economies of scale in every possible way. Scale matters for data. Scale matters for AI. Scale matters when you want to be a powerful partner in our global ecosystem. And that's why we are creating ONE data fabric, ONE technology fabric, and ONE sales fabric for all Siemens. Let's look at these fabrics one by one to see how they can help our businesses grow faster. Let's start with ONE data fabric for all of Siemens. We are tearing down walls and bring data where it belongs together. ONE ERP system, ONE CRM system, ONE data layer for internal data, for customer data, for external data, all connected, available real time. Today, our customers can already use 250 data products. And with our data, we are feeding our AI models. And because scale matters, our customers and partners want to connect into our data fabric. We started with machine tool industry. Seven companies joined an alliance to pool data. And here is what our partners have to say. 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So ONE data fabric. Next is ONE technology fabric. This means technologies and services, which our businesses need for their success. We build them once for everyone at world-class level, one set of technology building blocks. Take, for example, our Software-as-a-Service business. We can create the supporting infrastructure once for login, distributing, patching, cybersecurity and do that for all our SaaS offerings. The specific application on top are the differentiator and create the value for our customers. Or take software engineering. Today, we have 30,000 software engineers. They use roughly, you won't believe it, 900 separate versions of software development tools. We plan to consolidate these into just a few dozen of standardized tools. This will boost productivity. And ONE Industrial Foundation Model, and I will talk about that later. Finally, number three, ONE sales fabric. Let me be clear here. For different markets, Siemens will still have different go-to-markets. We address them through six sales organizations for automation, buildings, electrical products, electrification and automation for mobility and for software. The important part, though, is all of these sales teams are using the same sales fabric. What does that mean? Shared tools at lower cost, rigorously standardized, data-driven for full transparency real time, orchestrated by stringent account management, channel and partner management. This means Siemens will sell with ONE digital marketplace, ONE sales tool set, ONE vertical approach. And just to give you a simple example, all six teams have started using ONE and the same digital identifier for customers. This increases transparency and visibility. We see now in real time and holistically what each customer wants and buys, but also we see what they do not buy yet from us. That's where we are unlocking more and more sales opportunities. Also, more standardization means less back office work. In automation, for example, we are doubling the share of salespeople who carry a quota. In short, with greater transparency, we can allocate resources better, and this will help us grow faster. So now where will growth come from? First of all, we are in a good place because we are offering what the world needs. And we are positioned along secular growth drivers; automation, digitalization, electrification, sustainability and artificial intelligence, AI for the real world. Let's have a look at our markets. Our address markets grow at approximately 6% per year on average. And in 5 years' time, this adds up to a total addressable market of EUR 650 billion. The digital markets therein close much faster by 11% to EUR 175 billion for 2030. Now, in addition to this, we are tapping into expansions of our total addressable market. They are adding up to EUR 50 billion in fiscal year '25, but we expect them to grow between 14% and 18% per year in average until 2030. And these are very attractive growth areas for us. They include new AI applications and products, AI factory capabilities, life science software, just to name some examples. And we are able to address these markets organically. And we will, of course, also evaluate opportunities for either partnerships or acquisitions. In short, our addressed markets are growing, and we are addressing market expansions, which are even growing faster. Siemens is accelerating its growth. At our Capital Market Day 2019, we said 4% to 5%, we delivered. At our Capital Market Day in 2021, we said 5% to 7%, we delivered. Again, and here is our new midterm ambition, 6% to 9% comparable revenue growth. This is our expectation only for our existing portfolio, excluding Siemens Healthineers. Any growth from total addressable market expansions is not reflected in this ambition. And of course, we aspire not just growth, but profitable growth, growth that translates into strong earnings per share. And our midterm ambition here is EPS per share pre-PPA high single-digit increase. Now let's zoom in for a moment and look actual growth levers for growth, what are -- where are we doing strongly to tap into our growth markets and our growth opportunities. And there are four big levers: grow digital, grow regions, grow vertical and grow AI. We take them again one by one. First, grow digital. In 2021, we had committed to an average annual growth rate of 10% for our digital businesses, which consists of software, IoT and digital services and consulting services, and we delivered. Our digital business grew by 12% and reached EUR 9.4 billion in 2025, including acquisitions. Now we expect our growth to increase further 15% on average per year over the next 5 years. This means we expect this part of our business to double in revenue by 2030. How? How do we grow in this area? Of course, software is a big part of this, and especially recurring revenue from Software as a Service. Take our successful SaaS business in Digital Industries. We grew the annual recurring revenue with an average growth rate of 13% year-over-year to now EUR 5.3 billion. All in all, for our SaaS business model in PLM, we won 24,000 customers, 7 out of 10 are new customers. Almost 9 out of 10 are small and medium enterprises. And for many of these smaller companies, this easier, faster access makes them choose Siemens software actually for their first time. And there is Siemens Xcelerator, our open digital business platform. It helps us reach small and medium-sized enterprises through our marketplace and, of course, with SaaS offerings. This helps us to sell more effectively into verticals and to tailor offerings through digital threads. Here are five examples for how it is gaining market traction. First, manufacturing, Industrial Operations X. In one of their plants, Audi replaced physical controllers with virtual controllers from Siemens. The result, more flexibility, higher speed, lower cost. Audi will roll this out now to all their factories. Currently, we are evaluating with the virtual PLC with half a dozen of further customers. Building X. We help to lower cost -- operations cost, which are the lion's share of buildings cost. With data-driven optimization, customers can save up to 30% of energy and generate up to 10% more in operating income. Signaling X, which is interlocking in the cloud. Instead of physical signs at the side of the track, we offer virtual signaling in the cloud. And we have done this for Norway, for Finland, for Austria, for Barcelona. And yesterday, we announced that this will be also working for mass transit in Singapore. It scales. Gridscale X, many electricity grids are at their limits. And thanks to our software products, grid operators can increase their capacities up by to 30% without upgrading hardware or existing hardware. And the last example is Teamcenter X. We launched the Digital Reality Viewer, what is that? Running in on Siemens Xcelerator and powered by NVIDIA, Omniverse and GPUs, it lets customers explore complex products, futuristic and in 3D to speed up collaboration. And the next level will bring one unified immersive and highly realistic digital twin to factories. And Foxconn, one of the largest contract manufacturers in the world will be the first user. [Presentation]

Which brings us to lever 2, grow regions. Siemens is both a global and a local company at the same time. We are present almost everywhere on the planet. And we grow where markets are growing and where markets grow particularly fast. We double down increasingly our investments. The focus countries for us, United States, China and India. This broad footprint also increases our resilience. So when tariffs or trade restrictions come up, we can buffer their impact for us. Most of our competitors cannot. This supports our growth relative to the market. And here's the CAGR for our addressable markets over the next 5 years in these three regions. United States, about 6%; China, nearly 4%; India, more than 7%. These figures, by the way, exclude the Healthineers market. And here is now how Siemens fits into their respective growth stories. The United States wants to strengthen its critical infrastructure, reshore manufacturing and keep boosting its AI capabilities. We invested nearly EUR 1 billion in the United States in the last 2 years. This includes an expansion of our local footprint in manufacturing for electrical products. We are transforming public transport with the first high-speed link between Los Angeles and the Las Vegas area with locally manufactured trains. We are a partner for hyperscalers and their massive build-out of data centers. More on this in the deep dives later. We are offering software for production optimization for the needs of small and medium-sized enterprises. It can enhance their shop floor performance by 30%. Let's move to China. China is moving up the value chain with high-tech manufacturing building out its digital infrastructure, and the country wants to strengthen its position as a global leader in AI. We keep providing high-end automation in China, but we also started building value products for the local market. Specified locally, manufactured globally, developed locally and sold locally and that with China speed. In the last year, we have seen 18 new automation products, and we have more than 20 new products in the pipeline for the next year. We see great potential for Siemens Xcelerator in the Chinese market, more than 0.5 million registered users in China and over 400 offerings by now. India. India wants to boost domestic and export-oriented manufacturing, and the country is rapidly building up their AI infrastructure and rail infrastructure across the whole country. Siemens is upgrading the country's transportation sector. Recently, we started full production of our locally manufactured electric locomotives. 1,200 are on order, including a 35 years full-service maintenance contract. This is a EUR 3 billion contract in total. We bought C&S Electric, a local manufacturer for low-voltage equipment. They have been growing with a CAGR of 20%. And for medium voltage, we started manufacturing the environmentally friendly gas insulated switch gear in India as well. And this is, by the way, very much recognized. We were awarded best multinational company of the year in 2025. And yes, there are opportunities in Europe, too. We continue to invest in Germany for its world-class industrial ecosystem, strong small and medium-sized companies and outstanding talent and research. We invested EUR 250 million to upgrade Europe's most modern train factory in Munich. And we have started building our EUR 500 million technology campus in Erlangen, which will bring the industrial metaverse to life. Lever number three, grow verticals. Verticals are becoming more important for Siemens because our new fabric allows us to serve them even better. In verticals -- and this is important, what we can do since this is a smaller view on a market, we identify recurring customer problems, and we resolve them in repeatable offerings. In other words, this is another great potential to scale. Here is the expected market CAGR for five verticals -- growth verticals over the next 5 years. Rail transportation, 5%; aerospace and defense, 9%; life science, 9%; semiconductors, 10; and data centers and AI, 11%. Our target is to consistently grow faster than these respective markets. A bit more on the five verticals I just mentioned. Let's start with data centers. Our revenue has increased to EUR 2.9 billion with a growth in 2025 of 40%. Our customers are building the next generation of data centers now through AI factories, larger, denser, higher energy intensity. Through this vertical, we bring everything we already have to offer. And we are developing new offerings, too, from advanced building management, automation with PLCs, DC switching for efficient power, and of course, a full digital twin simulation all the way from the chip to the buildings. Life science, 9 out of 12 top pharma companies rely on both Smart Infrastructure and Digital Industry offerings, and we integrate what they typically need. And with Dotmatics, we expand into software for their R&D processes. Rail transportation, we are technology leaders in many areas, including rolling stock, signaling, you heard about it, and the cloud and AI-based predictive maintenance. Our ability to support with financing solutions is an additional advantage for us. In the rail transportation market, we expect to benefit also from the government stimulus programs. And we will take a deep dive on these three verticals in the afternoon. And by the way, we have an exhibition there, which you might want to enjoy, and we have some experts who love to show their products to you. So let me share a bit more on the following two: aerospace, defense and semiconductors. In aerospace, we support our partners, use fewer resources. And we help them to develop more sustainable aircraft. 95% of the world's aircraft engines are developed and manufactured with Siemens software. 90% of satellites in the orbit have been developed with Siemens software. Defense budgets are growing globally with a CAGR of approximately 7% between '25 and 2030, and we have been a trusted technology partner for this industry for a very, very long time. Semiconductors. Globally, semiconductors companies plan to invest about $1 trillion through 2030 in new fabrication plants. 29 out of 30 semiconductor companies rely on Siemens technology. Two examples. Our automation and design software enables the production of 2-nanometer chips. We offer high-precision building technologies for clean rooms. Now lever number four, grow AI. More specifically, we talk about Industrial AI. And this is not really new to Siemens. We have been developing AI-based tools and products for more than 50 years. Today, we have 1,500 AI experts all around the world. And we use AI in three big ways to boost innovation and productivity, to enhance our products, but we're also building our own new AI offerings. And let's take them one by one. AI to boost our innovation speed and our productivity. We are using applications from Google for AI-powered improvement of our code, for example, for software-defined automation. And this is really genuine code programming. The same tools help us dramatically speed up our bids for complex projects, train projects, for example. We can shorten tender application from weeks to hours. Secondly, providing -- powering our existing products with AI. Today, we have 38 AI offerings and the number keeps growing. Two examples. AI that finds the best production path for machine tools. This will be possible, thanks to our data alliance with a machine tool industry we talked about. We use Anthropic model Claude to refactor our own software. In simple terms, AI cleans up and simplifies code. This makes both our software and the hardware, it connects faster and more performant. Concrete benefits for our TIA Portal software, customers profit from updates faster and with higher quality. And third, we are building new AI products. Siemens is developing an industrial foundation model. With our domain know-how and with the vast industrial data we have, including those from our partners. And this model will speak the language of engineers. It will ingest any kind of data, industrial data. We are working also on AI agents for industrial agents that plan, think, use tools and cooperate with humans to achieve clear goals. We are doing this with our partner, AWS. Our award-winning Industrial Copilot is already used by a number of customers. It offers up to 30% higher productivity in factories and we developed it together with Microsoft. For the AI opportunity, we've strengthened our team with Vasi Philomin. He joined us a few months back from AWS. You will get to know him later in the breakouts. He is scaling an AI development center in Seattle, connected to our AI and domain experts all over the world. This is super important, bring domain know-how and AI and data together. In the next 3 years, we will invest more than EUR 1 billion in our AI capability and offerings. And we will work even more closer with our partners. Don't mix up EUR 1 billion with hundreds of billions in data centers. This is not investment in infrastructure, this is making this infrastructure work for the Industrial AI. This is where this EUR 1 billion goes. Now one example, NVIDIA. And Jensen Huang, their CEO sent us this video message. Enjoy and it takes approximately 3 minutes. [Presentation]

Three-minute run through the technology stack, but also the market opportunities which we have. We are forging together with companies like NVIDIA and a very, very strong global ecosystem. We are in the pole position. Siemens is the leader in Industrial AI for the real world. And we have everything we need to build from here, the data, the domain know-how, the right people, the right partners. And of course, we do have the resources to invest. Now you know how Siemens will accelerate growth -- profitable growth with a highly synergistic portfolio and a new fabric, an operating system for speed and scale. As ONE Tech Company, Siemens can address new markets with new products, software and AI-enabled offerings, and tap into an unmatched ecosystem of world-class partners. We have the gravitas to do that. At the same time, we benefit from our traditional strengths, trust, trust from our customers grown over decades, a global footprint, a great team, our management and team Siemens around the world. And here are the key takeaways regarding our ambition. Revenue growth, up 6% to 9%, picking up momentum over the next years. EPS pre-PPA, high single-digit increase. New fabric, new markets, new products. Siemens has entered its next stage of growth. And now, I'm happy to hand over to Ralf for more details about our financials. Thank you.

Thank you, Roland, and good morning, everyone. Thank you for joining us here in Munich and on the webcast for our Siemens ONE Tech Strategy and Results event. Roland has been elaborating on our vision for the future and how Siemens has been successfully transforming. I'm excited to add my CFO perspective now on these topics. But first let's look at our impressive results for the fourth quarter of fiscal '25. Our top line showed strong contributions from both Digital Industries and Smart Infrastructure. In particular, DI software business posted a record quarter that was supported by quite a number of large deals. SI saw broad-based volume growth from already high levels, including larger contract wins from data center and energy customers. Mobility's order and revenue growth faced tough comps, as you know, in the prior year quarter. Overall, this resulted in a book-to-bill ratio of 1.02 and a high-quality order backlog of EUR 117 billion, as Roland mentioned before, providing visibility and supporting future value-generating growth. All regions have been contributing towards the 6% comparable revenue growth for the group. Most notably, Asia, Australia increased 8%, with China up 6% and India up 11%. The Americas and EMEA both grew 6%. Stringent execution converted into a sound industrial business profit of EUR 3.2 billion. As a result, the profit margin came in at 15.3%. This included material severance and M&A-related effects at Digital Industries as previously announced and guided. Smart Infrastructure once again extended its proven track record of continuing margin improvement. Earnings per share before purchase price allocation accounting, or so-called EPS pre-PPA, reached EUR 2.51, excluding Altair and Dotmatics effects, totaling a negative of EUR 0.21. Since cash generation is the ultimate yardstick for any business' performance, I'm extremely proud of our EUR 5.3 billion of free cash flow, the highest level we ever recorded for a quarter. I applaud team Siemens for this truly outstanding performance. Our dividend proposal of EUR 5.35 reflects our company's strength and our focus on providing an attractive shareholder return. Following our progressive dividend policy, this proposal represents an increase of EUR 0.15 based on our share price at just below EUR 230 at close of the fiscal year on September 30. The proposal equals an attractive dividend yield of 2.3%. As another important pillar for shareholder return, we will continue executing our successful and accelerated share buyback program which has had an average price of EUR 198 with EUR 3.6 billion being bought back so far. Looking ahead, we will flexibly react to market development by leveraging our technological leadership, now expanded through the acquisitions of Altair and Dotmatics, of course. And we will drive value creating growth in fiscal '26. I will come to our assumptions in a moment. First, however, let me walk you through the fourth quarter's results for our businesses. At EUR 5.5 billion, orders for Digital Industries were up substantially, both sequentially and over the prior year quarter. This led to a book-to-bill ratio of 1.1. In a continuously challenging market environment, the automation business grew 30% on easy comps, however, in the prior year and showed a clear uptick in orders sequentially. DI software business exceeded our expectations and recorded an all-time high quarterly orders of above EUR 2.5 billion. Several large contracts in the product life cycle management and electronic design automation businesses helped in setting this record. Digital Industries orders backlog rose to EUR 9.5 billion, with a further increasing software share. Revenue for DI increased 9% on a broad basis and reached the high-end of our expectations. Therein automation achieved 10% growth led by discrete up 10%, driven by the factory automation business. The software business grew by 8%, driven by PLM up 11% and EBITDA was up 3% on tough comps. On an operational level, DI's margin benefited from already implemented capacity adjustments in automation as well as from strong conversion in software. Driven by broad-based productivity gains, DI's economic equation remained net positive, which is very important. The reported margin of 15.5% included material negative effects as indicated previously. They had a magnitude of 440 basis points and were mainly related to the automation business. Excluding Altair and Dotmatics, DI's margin of 17.5% came in slightly above our own expectations. A clear highlight was the excellent free cash flow across all businesses which expanded from an already high prior year level. Annual recurring revenue from DI software business continued to show good momentum with a healthy growth rate of 10% on high comps. Our SaaS business is well on track as evidenced by EUR 2.3 billion of cloud ARR. Excluding Altair and Dotmatics, the cloud ARR share was close to 50%. This outcome is clearly above our initial target of 40% by the end of fiscal '25. All customer-related performance indicators continue to show a favorable trajectory too. Now looking at the regional top line perspective, DI's automation business has showed growth across the board. Their growth rates reflect easy comps for orders as well as support from typical seasonal tailwinds as indicated previously. Germany and the U.S. drove sequential order improvement on a global level, while China was seasonally softer compared to Q3 of fiscal '25. Overall, DI's automation market momentum remains subdued and behind initial recovery expectations. So no V-shape. Many indicators continue pointing to restrained activities in the near future. We expect this challenging market environment to persist into fiscal '26. In contrast, DI's industrial software market clearly shows favorable dynamics on high levels with AI remaining a key driver. However, difficult macro and regulatory aspects are causing uncertainty in this highly attractive market, too. Against this backdrop, DI is continuing its transformation very successfully. The team is committed to turning groundwork into performance. The automation business will continue to drive its adjustment measures, which have been making good progress. Having digested a huge portion of severance cost in fiscal '25, we do expect a significant lower amount of severance charges in fiscal '26. We also expect further positive effects from severance to materially unfold from fiscal '26 onwards. The software business will rigorously focus on completing the SaaS transition and on integrating Altair and Dotmatics to leverage market dynamics and synergetic effects. Integration efforts are expected to result in a negative impact of around 120 basis points for fiscal '26 on DI level. For Digital Industries in total, we do expect comparable revenue growth in the range of 5% to 10% in fiscal '26. Growth across automation and software as well as tailwinds from cost reduction and productivity measures will support profitability at DI. We are again aiming for a net positive economic equation for the year, obviously. We expect the profit margin for fiscal '26 to be in the range of 15% to 19%. For the first quarter, we see comparable revenue growth in the upper half of our annual guidance range. We anticipate that DI's profit margin will be slightly up over the prior year's level, reflecting ongoing severance cost and M&A-related effect. Now Smart Infrastructure. Once again, impressed with flawless execution and extended its track record of operational margin improvement to 20 quarters in a row. Leveraging supportive market opportunities, orders increased 5% from an already high prior year level with all businesses being up. Book-to-bill was just slightly below 1% and resulted in a strong backlog of EUR 18.6 billion. Large orders materially recovered sequentially from a lower level in the third quarter but remained below the extremely strong prior year's fourth quarter. Most of these orders, again, were related to data center customers. Revenue growth was broad-based and reached a 9%, slightly above expectations growth. The strong contributions once again came from the electrification business. It was up 17% on stringent backlog execution, especially in Europe and in the U.S. In fiscal '25, revenue in SI's data center business reached EUR 2.9 billion, up 40% over the prior year level. The book-to-bill was clearly above 1. As a result, SI's data center exposure has been steadily growing and now amounts to around 15%, give or take, of revenue. We do intend to keep leveraging opportunities in this fast-growing market and anticipate revenue growth in the 10% to 20% range for fiscal '26. Smart Infrastructure, stringent backlog execution also led to margin expansion of 120 basis points, ladies and gentlemen. The profit margin of 13 -- of 18.7% even topped our own expectations. Smart Infrastructure continued to benefit from economies of scale due to higher revenue and high capacity utilization. Its economic equation remained clearly net positive, supported by productivity gains and adequate pricing measures. Cash conversion was again excellent and led to a superb free cash flow above EUR 1.4 billion, only slightly below last year's all-time high level. In particular, effective working capital management fuel the seasonally strong free cash flow again. Let's turn to regional top line development at SI. The U.S. stood out with strong performance in both orders and revenues. In this region, all businesses saw top line growth led by remarkable growth in electrification on data center wins. In contrast, China recorded declines in orders and revenue. This decrease was due to a drop in the buildings business, given the ongoing market weakness, especially in the sluggish real estate market. On a global basis, we do expect consistent market trends with most verticals pointing to further growth opportunities. In particular, data centers and power utilities remain key growth drivers. Building on this strong technology and global footprint, we see as I geared for further profitable growth in the future. For the full fiscal year '26, we expect Smart Infrastructure to achieve comparable revenue growth in the range of 6% to 9%. Leveraging ongoing growth opportunities and a relentless focus on productivity, we anticipate that Smart Infrastructure will achieve a profit margin within the range of 18% to 19%. For the first quarter, we expect SI's comparable revenue growth rate to be within full year guidance range. Considering seasonal effects on exchange rate headwinds, we anticipate that the first quarter profit margin will be below SI's annual guidance range. Nevertheless, SI has the potential for another quarter of year-over-year margin expansion. Now let's move to Mobility. Mobility closed a strong fiscal '25 on a positive note and with excellent free cash flow. At EUR 2.5 billion, orders remained below the strong prior year level, due to a lower volume from large orders. However, going forward into fiscal '26, the order pipeline looks very promising again. Mobility's order backlog stands at EUR 52 billion, and it has a very healthy gross margin improved over the prior year level. As indicated previously, revenue of EUR 3.2 billion developed flattish on tough comps. The rolling stock and customer services business came in below their strong level of the prior year quarter and outweighed growth in rail infrastructure. The profit margin of 8.5% reflects a less favorable business mix compared to the prior year's fourth quarter. In terms of cash generation, Mobility followed through on its commitment and delivered an excellent EUR 1.4 billion of free cash flow in the fourth quarter. The strong year-end finish pushed fiscal '25 free cash flow to more than EUR 1 billion. And our cash conversion rate of 0.93, this result is well in line with our 1-minus growth target. As you know, Mobility has an attractive asset-light business model and has delivered consistently healthy cash flows and conversion for many years. Over the last 12 years, Mobility is growing top line, generated a cumulative EUR 10.2 billion of profit, which resulted in EUR 9.9 billion of free cash flow. With that, Siemens Mobility is a clear industry benchmark in terms of profitability and free cash flow conversion. For fiscal '26, we do assume that both comparable revenue growth and profit margin will be within the corridor of 8% to 10%. For the first quarter, we anticipate revenue growth and margin within the same corridor. Now as I mentioned, I couldn't be more proud of about EUR 5.3 billion of free cash flow, all in for the Siemens Group. This was not only an all-time high fourth quarter, but also pushed our fiscal '25 free cash flow to a record of EUR 10.8 billion. This success is attributable to strength across the entire industrial business landscape, each of which delivered more than EUR 1 billion by themselves; a clear testament of the strength and dedication of the entire team Siemens. This record performance resulted in an outstanding cash return of 13.7%, and it marked the sixth consecutive year of double-digit free cash flow return on sales. Continuing to build on this industry-leading track record remains our clear ambition. Now let me use this opportunity to highlight the most relevant assumptions for our fiscal '26 outlook. We do assume that the global economic environment will stabilize, and that global GDP growth will remain near prior year level. As a percentage of revenue, we will remain -- we will maintain R&D and SG&A at similar levels as in fiscal '25. These investments will help drive even stronger customer focus, faster innovations and higher profitable growth. To further support momentum, we will also increase CapEx to optimize our global footprint and expand capacity in targeted growth fields. Severance costs are expected to be in the range of EUR 350 million to EUR 400 million, significantly below fiscal '25. Up to half of the group's total '26 severance expenses are expected to occur at Digital Industries. We will continue working on ongoing capacity adjustments, of course, particularly in the automation business and on ensuring competitiveness across our entire business go. Unfortunately, we have to expect exchange rate to be a strong burden for fiscal '26. Based on current U.S. dollar forward rates in the market, we see a negative translation impact of around 4% on our top line, and 50 basis points on our industrial margin. We do expect this impact to convert into a headwind of around EUR 0.70 to EUR 0.80 for EPS pre-PPA. Now let me share our assumptions for the line items below Industrial businesses. We expect governance costs to be net 0 of brand fees, in line with the target we set to ourselves last Capital Market Day back in '21. Innovation costs will be broadly comparable to the prior year level and will reflect investments related to our ONE Tech Company program, as outlined from Roland. Financing, elimination and others depend on portfolio topics, of course, and we expect them to be roughly on the prior year level again. And finally, we assume a tax rate of 23% to 27%. I have already described our fiscal '26 assumptions for our industrial businesses. On the Siemens Group level, we expect 6% to 8% comparable growth. We again anticipate a book-to-bill ratio above 1. We expect EPS pre-PPA in a range of EUR 10.40 to EUR 11 in fiscal year '26. This range reflects material negative impact from exchange rate, as mentioned before and compares to fiscal year '25 amount of EUR 10.31, which includes effects from Altair and Dotmatics. As always, this outlook excludes burdens from legal and regulatory matters. So in a nutshell, we are entering fiscal '26 from a clear position of strength and with a very ambitious outlook. Now let's move to the second part of my presentation for today. And first, a review of and status update on the transformation that we have been driving successfully in recent years, and then a look ahead for our financial ambitions and priorities for the future. Let's start by looking back quickly at the substantial value Siemens has been creating in the 5 years since Roland took office as President and CEO of Siemens AG. Siemens is in excellent shape and has been transforming successfully. Our teams have maneuvered Siemens very well through a period of market -- of really marked by volatility markets and geopolitical challenges. All this resulted in a 151% total shareholder return since the beginning of fiscal '21, clearly over and above industry-leading levels. Today, Siemens is delivering faster growth and higher profitability at the same time. Our cash generation is stronger and more consistent than ever, and we have further strengthened our rock solid balance sheet. We have allocated capital stringently to our shareholders while investing for profitable growth at the same time. Beyond that, we have been continuously optimizing our portfolio and have reduced complexity. At our Capital Market Day back in '21, we challenged ourselves. We set ambitious targets with an upgraded financial framework, and we delivered. For comparable growth and revenue, we had set out to achieve a compound annual growth rate, so called, CAGR of 5% to 7%, and we delivered 8%. For EPS, before purchase price allocation accounting, reached a CAGR of 15%. At 16.2%, our average capital efficiency over the cycle stayed within our target band of 15% to 20%. And as promised, our capital structure did not exceed 1.5x. Another tremendous success was cash generation where we accomplished free cash flow all in of EUR 46.7 billion throughout that cycle and have achieved also a very strong cash conversion rate of 1.20 since 2021. Finally, we announced that we would pursue a progressive dividend policy, and our dividend has grown at a CAGR of 9% since back then. Beyond executing on our group targets, we also drove our transformation. We delivered on strategic initiatives as promised. As I mentioned earlier, our SaaS transition is nearing completion, and we clearly exceeded our initial targets. Annual recurring revenue, or ARR, in DI software has grown 13% on average. The cloud share of ARR is now close to 50%. This result has been achieved well ahead of the initial schedule. In addition, we simplified our structure by divesting portfolio companies that were no longer core activities. More on that in a few minutes. Year-by-year, we have been making progress towards an even leaner and more effective governance. We are achieving these improvements by consistently supporting our strong growth in operations with an adequate level of highly efficient resources in support and governance functions. In addition, we want the fees we receive for the use of the Siemens brand to fully offset our governance cost. Now we can confirm that we expect to reach net 0 governance costs in fiscal '26 as promised. Team Siemens can point to an impressive achievement in recent years. And these successes also clearly show that we have further strengthened our excellent financial foundation. Our outstanding free cash flow generation, which is unique in our industry, is a crucial part of this rock solid foundation. I'm particularly proud that for 6 years in a row, we have achieved a double-digit free cash flow return on sales. Free cash flow is the ultimate yardstick for any business's performance and it has been and will be a key enabler for our prudent capital allocation. On top, I'm very pleased to see that rating agencies recognize our strong cash generation and resilient business model. Our industry-leading credit ratings by Moody's and Standard & Poor's reflect their trust in this regard. And of course, we want our shareholders to participate in our financial strength. Between '21 and '25, we paid EUR 17 billion in dividends to our shareholders. And we delivered on our promise to pursue a progressive dividend policy. As I mentioned earlier, for fiscal '25, we are proposing a dividend of EUR 5.35. This will put our progressive dividend on a remarkable trajectory. It has been growing at a CAGR of 9% since fiscal 2020, as mentioned before. We have also meaningfully accelerated our current 5-year, EUR 6 billion share buyback program. It has been running well ahead of schedule and at an attractive average price of EUR 198 so far. While providing these attractive shareholder returns, we have been simultaneously investing in future profitable growth. To expand on our position of technological leadership, we have maintained a peer-leading R&D ratio of 8% with expenditures of EUR 29 billion over the last 5 years. In addition, we have further strengthened our well-balanced global footprint by making targeted CapEx investments totaling EUR 12 billion. And finally, we have selectively expanded our portfolio by investing in inorganic growth. Over the last 5 years, we enhanced our portfolio with several bolt-on acquisitions and three larger acquisitions for a grand total of EUR 32 billion. For years now, we have been simplifying our portfolio and sharpening its focus. By spinning off Siemens Energy, we created a unique and leading player in the energy market. Despite its bumpy start, Siemens Energy has become a poster child for crystallizing value. Its market cap is now 5x higher than at the time of its listing in September 2020. Meanwhile, we have taken several steps towards phasing out our investment as announced from the very beginning. This way, we have realized around EUR 3 billion in cash proceeds. We also materially strengthened our pension assets by contributing more than EUR 3 billion to our pension fund. Our stake in Siemens Energy currently stands at 10.1%. We remain committed to fully exiting Siemens Energy in a meaningful time frame and by mindful -- being mindful of market conditions. In addition, we have successfully divested our former portfolio companies, implementing a private equity style value creation approach proved to be very effective. We executed full potential plans and pursued strategic options. Over time and using tailor-made approaches, we found the best owners for each and every of those companies. In total, the portfolio company divestments generated more than EUR 7 billion in enterprise value. Siemens Healthineers has been a separately listed company since its initial public offering in March 28. The strategic rationale for that IPO was opening the business for new investors while preparing for a bold consolidation move. Healthineers made such a move a few years later by acquiring Varian Medical Systems, as you know. The integration of Varian has been going very well. We have now reached the perfect moment to take a major transformational step again. As Roland outlined, deconsolidating Siemens Healthineers will align our portfolio even more closely with exciting growth drivers of automation, digitalization, electrification, sustainability and AI. And now it's also time to shift gears as ONE Tech Company to go for the next level of performance. Roland already did explain the growth trajectory. We want to leverage opportunities from operating in attractive markets that have promising adjacencies. And we will expand our share of digital businesses even further and faster. As a result, we are upgrading our revenue growth target to the range of 6% to 9%, and we continue to expect our EPS pre-PPA to grow faster than revenue. Increasing profitability in our industrial businesses over the next few years will drive this development. On top, we will maintain our high level of ambition for our other midterm targets according to our financial framework for the group. I will go into the details for those metrics in a minute. Incremental growth and profitability in our industrial businesses are driving continued high single-digit growth in EPS pre-PPA. As part of our ONE Tech company program, we are initiating steps to take our company to the next level of performance. In terms of our markets and portfolio, we are continuing to grow our digital business and grow in the most attractive regions and the most promising verticals as Roland pointed out. These measures will structurally improve our growth and margin profiles. While our go-to-market can be distinct for different markets and business models, our teams will use ONE sales fabric. Standardizing and sharing information and tools will ultimately lead to better resource allocation. Our businesses will also benefit from ONE technology fabric. We will build technologies and services once and leverage them across the entire organization. This approach will, for example, boost productivity and software development company-wide. On top, we are establishing ONE data fabric for all of Siemens. This step is crucial for driving advances in areas such as powerful AI usage. In the end, it will help to optimize our processes even further. All in all, we are building an efficient optimal environment to enable our businesses to focus sharply and innovate faster. These levers will help in lifting our businesses more and more so that they can realize their full potential. At Digital Industries, our industry-leading and unique portfolios enable us to leverage opportunities in our markets and drive customer impact. In DI software business, we are about to finalize our SaaS transition. As a result, we are expecting tailwind for growth and profitability going forward. The teams have created a stable, high-performing operating model. Overall, profitability in this business will benefit from stringent integration of the recent Altair and Dotmatics acquisitions and continued productivity efforts. In DI's automation business, we are strengthening our sales teams by reducing back office work and doubling the share of quota-carrying customer-facing salespeople. We will also further boost digitalization and vertical offerings. On top, we are rigorously executing ongoing productivity programs to drive margin expansion. You know and they know that I'm exceptionally proud of how the team at Siemens infrastructure has delivered on their commitments since the last Capital Market Day back in '21. Not many believed in their ambitious targets back then, yet Smart Infrastructure proved what can be achieved with a good plan, intense dedication and strong execution capabilities in an attractive market environment. SI's track record is speaking for itself. The team has now achieved the 20th quarter of year-over-year operational expansion in a row. And SI's margin was north of 18% for fiscal '25. Looking ahead, we expect Smart Infrastructure to continue to expand their margin. A year ago, at SI's capital market event in Zug in Switzerland, we outlined the strong market positions of SI businesses and their levers for further profitable growth. Those key levers are targeted capacity expansion to execute on the strong order backlog, intensifying expansion into high-growth regions and verticals, and driving growth of digital business, and relentlessly improving productivity in operations on even higher levels than before. Now as I mentioned earlier, Siemens Mobility is the industry benchmark when it comes to terms of profitability and cash conversion. Mobility achieved this performance level by prudently managing risks and opportunity time and again. We are proud of how the whole Mobility team has been maintaining their enduring commitment to our customers to deliver our orders on time at the right quality and within budget. The teams will continue to work on increasingly shifting Mobility's business mix towards accretive profit pools in services, software and platform businesses. Diligent capacity ramp-up and enhanced productivity will be key focal points for Mobility on top of maintaining the highest quality standards. Now let me turn to the group perspective. I want to once again strongly emphasize our continuing commitment to profitable growth by rigorously implementing our ONE Tech Company program. We have achieved a very attractive trajectory for earnings growth in recent years. By pulling all levers I just discussed, we aim to continue this momentum and grow EPS pre-PPA by a high single-digit percentage. In fiscal year '25, EPS pre-PPA came in at EUR 10.71, excluding the effects from the Altair and Dotmatics acquisitions, which closed significantly earlier than originally expected. Including Altair and Dotmatics, EPS pre-PPA was EUR 10.31. For fiscal '26, we expect EPS pre-PPA to be in the range of EUR 10.40 to EUR 11, as I outlined earlier. And we are extremely proud of continuously achieving double-digit free cash flow margins. This multiyear track record is the fact-based result of a cash mindset that is deeply embedded across the entire organization of Siemens and of maintaining a corresponding incentive system, of course. We are very confident that we are well positioned to continue this strong streak. And of course, excellent cash generation is a key pillar of our rock-solid balance sheet. However, there is more to it. For example, an all-time low in pension provisions as well as the cash inflows from the recent sale of stakes in listed companies and extremely important, prudent capital allocation. And it goes without saying that we aspire to maintain our rock-solid balance sheet and our industry-leading credit ratings. We know that return on capital employed is a key metric for our investors. It provides a clear picture of how efficiently we are using capital to generate profitable growth and create long-term value for our company's owners. As promised at our Capital Market Day back in '21, we entered our target range for return on capital employed back in '23. Since then, we have maintained within the upper half of that range. We are committed to maintaining a ROCE between 15% and 20%, even though we will face temporary headwinds for this metric from recent software acquisitions. I mentioned earlier how we have been balancing very attractive shareholder returns with focused investment, and we will continue to strike this balance effectively. We are very confident in the trajectory of the new fabric for Siemens as ONE Tech Company, and we want our shareholders to benefit from reliable and sustainable returns. We reiterate our commitment to an attractive shareholder return and a progressive dividend policy. We will stick to this policy even after deconsolidating Siemens Healthineers to maintain our trajectory and if necessary, we will temporarily allow a higher payout ratio. In addition, share buybacks will remain a core pillar of shareholder return for Siemens Investors. And of course, on top, the intended spin-off of 30% of Siemens Healthineers shares will benefit our shareholders directly and materially. Roland outlined the significant growth opportunities that we see in our markets. You will hear more about them in our deep dive sessions this afternoon. To leverage these opportunities, we will continue to invest. We will maintain high R&D intensity to continue driving our technological leadership and further growth. Our geographic footprint is well balanced, and we will continue to optimize it through targeted capital expenditure. In addition, we will harvest selectively -- invest selectively in value-creating acquisitions. All investment decisions will be based on our well-known and clearly defined strategic imperatives and on prudent decision-making. And certainly, we will continue to monitor each M&A transaction closely based on specific criteria. Our aim is to ensure attractive returns and ultimately, strong value generation. Ladies and gentlemen, our markets are changing at a high pace, and Siemens is transforming rapidly to stay in the lead. Yet our principles for value creation remain the same and remain fully intact. You can rely on stringent capital allocation and strong cash generation to drive operational performance at Siemens. You can rely on Siemens continuing to deliver very attractive and sustainable shareholder returns. And along the way, we will ensure that rigorous execution, transparency and compliance remain paramount. Roland and I, the Managing Board and the entire team, Siemens are all fully committed to further accelerating value creation as ONE Tech Company, Siemens. Thank you.

Thank you, Ralf. Thank you, Roland, for opening the day. Welcome, everyone, also from my side. I'm Chris Ribeiro, the Chief Communications Officer of Siemens, and I'm here with Tobias, the Head of our Investor Relations. And together, we will guide you through the day.

Thank you, Chris. Also good morning from my side. I'm really happy to see so many of you taking place here in person, but also a warm welcome to the ones joining us live via the webcast.

We have a packed agenda. You received the agenda before, and you can see on the screen. We have deep dives with our experts. We have hands-on experiences showcased on that corner, network and exchange with MBMs and experts and what is next, Tobias?

Next is a break. I think we all deserved it. We will be back in 10 minutes for the Q&A with Roland and Ralf.

See you in 10. [Break]

Welcome back for the Q&A with Roland and Ralf. Let me start with a few housekeeping items. [Operator Instructions] Chris and I will moderate and take questions from both journalists and analysts. We would start with the first questions from the analysts. First question, James Moore, first row.

It's James Moore from Rothschild & Co. Thanks for all the information and Healthineers and the great growth outlook. I guess my question is about profitability, in particular, DI. If we're going to do high single-digit growth at the group level, I know you talked about the ambition of earnings above that. But if we're high single-digit growth for earnings, there's not a lot in there for margin expansion over time. And normally, record growth would drive some operational gearing. And specifically in DI, I imagine you should have some tail of the fish benefits, some productivity, some of the benefits from severance and a positive economic equation. Just wondered if you could help us with what's on the negative side of the ledger apart from currency, which you've been clear on. And in particular, just the EUR 2 billion of AI investment -- sorry, the EUR 1 billion of AI investment, whatever the number is, does that have an impact on the P&L?

So thank you, James, for giving me an opportunity to clarify a bit. I know that some of you may consider the guidance for DI margin conservative. I would rather qualify it as prudent. We clearly said and also experienced that part of the market is not yet bouncing back V-shape like to investment sentiment. And therefore, we do expect on top of exchange rate and also on top of the extraordinary integration that we mentioned and severance, which will be pretty much 50% of that what we guided for the entire company for fiscal '26. On top of that, we'll see quite a couple of challenges developing through the first couple of months in the market. We do see momentum there. They are doing their homework, but also please bear in mind that severance being booked does not implicitly mean that all the impact is immediately popping up. So that will take time to materialize. And we want the company to stand on firm ground and also learn from history. So therefore, I would call it prudent and not conservative.

So let me talk about the AI investment. So this is basically -- it's an investment which goes across the company, but there's an increment of EUR 100 million plus, which you will find in the innovation below IB in that part. This is particular for the team, which Vasi Philomin, you will get to know him later, is about to build up. But this is only part of that. Other parts are, as you know, as I talked about, we have 1,500 AI experts across the company. We have many AI projects also in the businesses, but that is not increment. This is part of our R&D budget.

I take a question now from the press side. I saw Michael Flämig. Question from the press side. Any hands?

Okay. Great. I have two questions, please. I didn't raise my hand, but nevertheless, I will take this one. What complications do you have on the regulatory side for the deconsolidation of Healthineers? And the second one, the share price today is 5% down. How do we interpret this reaction?

Yes. Thank you for your questions, Michael. Of course, too early to finally conclude on the share price development of today. But what I feel also from the responses and that what we get is feedback, we made you drinking from a firehose house, many different aspects, levers floating around, and we are happy to have now an opportunity to clarify areas that may not have been coming across completely clearly. So that's why we have a Q&A. I firmly believe that what we have to share today will have a very positive impact on the long-term value development of both Siemens AG and Siemens Healthineers AG's shares and also prospering opportunities from capital allocation in both companies. They are both leading in their markets, and I cannot imagine anything that could hold them back from being successful even more than they have been so far. So too early to jump to conclusions, but it's not a surprise that there's a lot of volatility at the moment out there, as I said, since there's room and of course, also a reason for further clarification and details. Your first question may be one of them that needs further details. I hope we didn't get across like there's regulatory problems or challenges. It's just respect for regulatory processes. And I think everyone is well advised when you do something for the first time that you respectfully look at those who have a say in the process. And therefore, I would rather consider that being a topic of time lines than content, but too early to assess that. It's in their field and respectfully wait for them. If and when regulatory processes are getting us a clarification fast, we will be fast. If it takes a while, we will have to wait. And we will then be very well prepared for the next steps to be taken.

Next question from Ben Uglow.

I think Michael wanted to add something. Sorry.

I'm sorry. I choose the word problem because maybe on the tax side, you may have problems.

Yes. As I said, I mean, if we are standing on very firm grounds with our view on matters. But still, there is a regulatory aspect in it that needs to be considered, and we respectfully addressed that. We are talking to the regulators that are relevant for these steps. We feel encouraged by all the means and initiatives we took before that, that we are on the right path, but that doesn't take away that decision power from the regulatory framework. So therefore, we are confident that there is no problems, but there is time lines and opinion-making required on the regulatory side. If we were not convinced of our view, we would never dare to show up with a proposal.

Now it's Ben's time.

Next question from Alexander Reuters.

Ben Uglow was on first. Ben?

I guess it's related to the previous question, but -- and we're all frankly in the dark about exactly what the tax situation is and the regulatory implication. And I know I understand these are probably sensitive conversations, et cetera. But Ralf, can you give us just a little bit more sense on what the tax obligations or considerations are. And the reason why I ask is, from a Siemens AG standpoint, our understanding was that had basically gone away. And what we're really talking about is from a receiving shareholder standpoint, what their withholding tax or commitment is going to be. So is that right? And then the second question is far more fun. A year ago, I think it was when we had the Handelsblatt article and various comments about this conversation. And at that point, I think that there was a -- how core is Siemens Healthineers to Siemens. We were going to do an internal review, look at the synergies and all these kind of things. And there was obviously a debate within the company. It now looks as though a decision has been made. What allowed you to come to a firm final decision? What changed in the water, what put you over the edge, so to speak, that allows you to do this?

Okay. Let me start with the tax one first. I mean there's, of course, tax implications in many different areas. For Siemens AG as a company and its tax obligations, I think we are fine. There's an immaterial amount compared to the potential deconsolidation gain involved. We didn't want to bother you with that. It would be too early to quantify anyhow. So not on the Siemens AG side. Therefore, it's difficult for us to talk about withholding tax because we are not the addresee of withholding tax. It's the depo holding banks for shareholders, and that very much depends on the nationality or jurisdiction residency of the individual being involved of the magnitude of the investment being involved of whether it's held privately or in a business environment. So therefore, we cannot jump to conclusions for the shareholder because there's not the shareholder. And therefore, withholding tax is, of course, the area we are talking. And since we are not owning the process, it's hard to comment. But we are very confident that we thought about all the relevant aspects, but it's still not our turf to decide on. So therefore, we respectfully have to wait. Maybe this is also giving me a bit of an opportunity. I mean, the time lines are not written by ourselves, obviously. You have to respectfully wait for conclusions being made in that field. But there's also, of course, the question out from that what I heard, where do we start from and where do we want to end up with. For those who are familiar with the financial and accounting language, a financial investment is considered to be below 20% typically. There's other aspects that need to be considered. If that's the midterm goal, you probably need to know where we start from. At the moment, we hold 67% in Siemens Healthineers. You also heard us talking about funding our software acquisitions, our latest software acquisitions with the sell-down of listed shares. Both Siemens Energy and Siemens Healthineers. So we didn't specify. But if you took for modeling an area of something around 60%, sell down to 60% from the 67% being a residual from that, what we wanted to do in funding, maybe a bit below, this is probably a meaningful area to think about. So starting point is 67%, but there is intent and processes that have been ongoing to do what we said clearly last year when we announced that funding for the software acquisitions would be in part be done by using the proceeds of selling listed shares.

So -- and thank you for that question. And I give you really more details. What I'm saying now is not in the sequence of priorities, but it's basically describing the whole process how we get to the decision. Let me first start. We always said we are not dogmatic about it. And we also said that since the acquisition of Varian, we have a bottom line impact of EUR 350 million, and we want to see how that materialize it. By the way, it did. So then obviously, we discussed all options, all possible options because we need to be diligent in such a big decision, so we don't oversee anything because this is a one-way street once you go there. So we're working, for example, also on the point of the question is how strong can we develop together the whole health care sector. And it's not only in the headquarter to think about, it's really on the field. I mean I started together with the team locally in the United States, also together with a consulting company to see can we together create a stronger impact. We visited hospital customers and to see that. And by the way, the teams are working also on the ground together to see can we really leverage each other's strengths, I was saying in the basement where you find the scanners and in the ground floor and others where we have the beds and all the other productivity and can we do something, including sustainability. And yes, we can, and this is also good. It's roughly EUR 1 billion business of ours, just one. But again, it was -- it's not that synergetic that you say that you can really drive much, much higher growth. But it's still good. Then we really took a deep dive in what does digitalization mean in our sectors, in industrial sector, infrastructure, transport versus the health care sector. When I talk health care sector, this is another element, increasingly clinic-driven health care sector. If you look at Siemens Healthineers strategy where they go, it's going more into therapies along with diagnostics, which is really the clinical part. You see all the regulations. I mean, hospital systems, for example, they don't scale across regions. Digitalization is different from that perspective. Then we looked into what is our capital requirement in the future, what is that one of Healthineers, a very important aspect, which you have to take into consideration. What are the fundamentals in the markets regarding growth, growth trajectory, where we can do a regional as well. And again, reevaluating how synergetic is the business with each others. At the same time, and this is a very important point, our Siemens business really developed further in terms of growth, in terms of profitability. So we are -- the way -- how much of, obviously, cash we are generating on our own. So if you take that all together, you come to a point that once we go that step, we have a much, much stronger freedom regarding capital allocation on both ends. We could not justify a synergetic case, which is as big as in order to really keep going and really leverage. And that finally we thought it's -- we are better off in making that step.

And if I may add one thing just quickly. I mean, if you look back, that's why we took the time to remind ourselves where we are coming from since Roland took over. I think it's fair to say that the company has been already changing its fabric massively. And it's not finger pointing to the past or complaining about missed opportunities. It's about just keeping the momentum of that what we have been embarking on. We are a company that is scaling on digitalization, electrification, automation, sustainability with a focus on AI that is scaling globally. The health care industries are globally fragmented. They are ruled and regulated in different jurisdictions. So if and when they scale, it's a different ball game. Second thing is the entire sector, and don't get me wrong, Healthineers is a fantastic business, and they are clear market leaders in most of their areas anyhow. So technology-wise and also growth-wise and from a profit-generating perspective. But the entire sector will most likely not grow double digit anytime soon. We can and prove that we can do that already by now in some areas. Therefore, capital allocation needs to be focused into those relevant growth areas and while harming others with our opportunities. That's a big, big difference compared to the status we had when we listed Siemens Healthineers in March 2018. That was a different shape of Siemens AG. Therefore, it's only consistent that you time and again review your portfolio, your perspectives, your capital allocations and then conclude at the right point in time to do the right thing and then consistently and as quickly as possible.

The next question is from Alexander from Reuters.

I want to follow up on this a little bit regarding your targets for the next few years when you take out the Siemens Healthineers projected or past growth rates, the 6% to 9% don't seem too ambitious. And I think that's what the market also thinks today. So this is not really -- excluding Siemens Healthineers, this is not very much more than in the last few years. Can you comment on that? How ambitious would you say is your target? And on the other hand, Siemens Healthineers has had quite a big chunk of your sales and profits in the last few years. How do you think Siemens -- or do you think Siemens can compensate this within the next few years? Or will there be a Siemens in the end that may prove to be too small and become a takeover target?

Let me start at the end. I don't think so. We are still a sizable company, and this does not cost you this night. So -- but let me start with your -- I tend to disagree that 6% to 9% growth rate going forward is a weak target. I would consider it to be very strong. Number one, I think where we're coming from, and I talked about it in the last sequence, we had 5% to 7% go now for 6% to 9%, number one. Number two, did it double check for the GDP growth in whatever the world, how that goes? Even our markets are on the high side. I talked about our markets growing 6%. They don't -- they grow only by 6% because we have a substantial part of high fast-growing digital business in there. Remember the EUR 175 million by 2030. This grows by 11%. How many companies can claim to play in such a fast-growing market, substantially in revenue. I talk about EUR 9.4 billion revenue. So all in all, if you agree that if you come to that conclusion, then talk about the industrial investment, it's hold back still. And China, by the way, is gradually picking up. This is not a recovery in the market is gradually picking up. So we are picking up momentum with that market, too. So I tend to disagree that a growth -- a midterm growth of 6.9%, picking up momentum is, we believe, a very strong target. And we have to see what others can do in that space, but I believe this is really good.