Combined Management Report Smart Infrastructure showed very strong performance in fiscal 2023. Orders increased clearly compared to the high prior-year level, which included proactive purchasing by customers. Growth was mainly driven by the electrification business and included a number of larger contract wins from data center, semiconductor, power distribution and battery manufacturing customers. Revenue rose in all businesses, with the strongest growth contributions coming from the electrification and the electrical products businesses. On a geographic basis, orders and revenue rose in all three reporting regions. The strongest growth contribution came from the Americas region, driven by the U.S., while growth in the Asia, Australia region was held back by declines in China, which were due mainly to negative currency translation effects. Profit also rose in all businesses. Growth in profit and profitability was driven by the electrical products and the electrification businesses due to higher revenue, by increased capacity utilization and by cost reductions achieved through the execution of Smart Infrastructure’s competitiveness program. Severance charges were €50 million, up from €28 million a year earlier. At the end of fiscal 2023, Smart Infrastructure’s order backlog was €16 billion, of which €10 billion are expected to be converted into revenue in fiscal 2024. Overall, markets served by Smart Infrastructure grew clearly in fiscal 2023. Market dynamics were influenced by a further recovery from COVID-19-related effects; easing of supply chain and logistics constraints, which resulted in shorter lead times for order fulfillment; strong price inflation; and effects from the war in Ukraine. Furthermore, rising interest rates burdened building construction markets. On a geographic basis, all reporting regions contributed to growth. Price inflation affected all regions and was particularly high in the U.S. While on the one hand rising interest rates impacted growth in the U.S., economic activity was boosted by stimulus programs on the other hand. In China, the recovery from lockdown measures was significantly weaker than expected, which also impacted growth dynamics in other countries, while Europe was most strongly affected by the war in Ukraine and high energy prices. Grid markets grew clearly, driven by demand for integration of energy from renewable resources. Industrial markets also grew clearly on strong demand in the battery, semiconductor, and automotive industries. The buildings market overall also grew but activity in the commercial building market rose only moderately. In fiscal 2024, markets served by Smart Infrastructure are expected to grow clearly but at a slower pace than in fiscal 2023 due to a substantially lower effect from price inflation and a cooling of the general economic environment. While growth is expected to be weak in residential and commercial building markets and in some industrial markets, continued robust demand is expected for data centers and power distribution. Overall, market development in fiscal 2024 is expected to continue to be influenced by rebalancing of supply chains, trade conflicts and effects from geopolitical tensions. 3.4 Mobility Mobility combines all Siemens businesses in the area of rail passenger and rail freight transportation. Within its rolling stock business, its offerings encompass vehicles and selected components for urban and regional transport such as metro systems, trams and light rail, and commuter trains as well as trains and passenger coaches for intercity and long-distance services, such as high-speed rail. Rolling stock offerings furthermore include locomotives and solutions for automated transportation such as automated people movers. Offerings in its rail infrastructure business include products and solutions for rail automation, such as automatic train control systems, interlocking, operations control and telematic systems, digital station solutions and railway communication systems, signaling on-board and signaling crossing products and yard and depot solutions; and for electrification such as AC and DC traction power supply, contact lines and network control. With its service business, Mobility provides maintenance and digital services, among others, for rolling stock and rail infrastructure throughout the entire lifecycle. In its turnkey business, it bundles consulting, planning, financing, construction, service and operation of complete mobility systems. Mobility’s software business comprises train planning systems, trip planning, mobile ticketing, Mobility as a Service (MaaS) platforms, on-demand transportation and fleet management, data analytics, and inventory and reservation management. Mobility sells its products, systems and solutions through its worldwide network of sales and execution units. The principal customers of Mobility are public and state-owned companies in the transportation and logistics sectors, so its markets are driven primarily by public spending. Customers usually have multi-year planning and implementation horizons, and their contract tenders therefore tend to be independent of short-term economic trends. Large contracts in the rolling stock and the rail infrastructure business are often awarded together with service contracts, which start to generate revenue only after the respective products and solutions have been put in operation, which can be a number of years after the contract award. Mobility’s principal competitors are multinational companies. Consolidation among Mobility’s competitors is continuing and may lead to increased competitive pressure within the rail transport industry and also to fewer sourcing options for rail customers. The main trends driving Mobility’s markets are urbanization, decarbonization and digitalization. Increasing populations in urban centers need daily mobility that is simpler, faster, and more flexible, reliable and affordable. At the same time, cities and national economies face the challenge of cutting CO2 and noise emissions and reducing space requirements and costs of transportation. The pressure on mobility providers to meet all these needs is expected to rise continuously. Furthermore, improving availability, connectivity, and sustainability of rail infrastructures increasingly requires digital solutions, which generates growth opportunities for providers of such solutions. IoT systems and new software-based solutions such as MaaS are expected to become major growth enablers for the rail industry. Overall trends towards urbanization, decarbonization and digitalization persist and many countries have been allocating significant funds to rail and public transport operators to address these trends. Mobility’s R&D strategy is focused on reducing life-cycle costs of rail infrastructure and rolling stock, securing system availability, increasing network capacity of rail infrastructure, optimizing the processes of rail operators and improving passenger experience. With Siemens Xcelerator, Mobility intends to make software more modular and increasingly move it to the cloud. At the same time, Mobility intends to enhance connectivity of hardware and software and provide open application programming interfaces. Thereby Mobility accelerates the pace and impact of digital innovation, which in turn benefits owners, operators, and customers of rail transport. Mobility’s major R&D areas include the development of efficient vehicle platforms with optimized lifecycle cost; eco-friendly, alternative power supplies for trains; the Railigent X open application suite for maintenance of rail assets; smart connected products; the Distributed Smart Safe System (DS3), which allows for hardware-independent and cloud-enabled signaling; automatic train operation for European Train Control System (ETCS); safe artificial intelligence for driverless trains; air-free brake systems, 5G for wireless-based activities; the Mobility Software Suite X for operators and passengers; and cyber security. Mobility’s investments focus mainly on maintaining or enhancing its production facilities, on meeting project demands, and on enhancing its depot services. 9