Corporate presentation September 2017
2
Global megatrends
transform the automotive
industry
Technological progress
Urbanization
Scarcity of resources
Globalization
Climate change
Safety systems
Autonomous driving
Efficient propulsion
Connectivity
Shared mobility
Markets
Megatrends trigger technological transformation process
Corporate presentation | September 2017
3
Global megatrends
transform the automotive
industry
Markets
Transformation process determines ElringKlinger’s framework
• Engineering and tooling capabilities help ElringKlinger to edge ahead of competition.
• ElringKlinger is going to improve earnings and to generate cash flow.
• ElringKlinger has enacted a strong set of non-financial rules and commitments.
• Automotive is a growing market.
• The structure of market growth is biased towards green mobility.
• A global network of production sites is key to success for a supplier.
Corporate presentation | September 2017
Markets
Operations
4
Automotive is a growing market
Peak of combustion engine car cycle expected for 2021
Global combustion engines production Global EV production
Source: Morgan Stanley (2016), ElringKlinger Research
20
22
2
02
1
20
24
20
26
2
02
5
20
28
2
02
7
20
30
2
02
9
CAGR -1%
20
23
20
20
2
01
9
20
18
2
01
7
20
16
2
01
5
CAGR +2%
20
19
20
30
20
25
20
18
20
27
2
02
6
20
28
CAGR +29%
20
24
2
02
3
20
29
20
22
2
02
1
20
20
20
17
2
01
6
20
15
Corporate presentation | September 2017
5
Structure of market growth biased towards green mobility
Uncertainties characterize transformation process
Internal combustion Hybrid Full-electric
What are the global leading
markets for E-mobility
?
Who will be the player in EV market
?
What will drive customers’
acceptance of the change
?
Will there be a next stage of
emission regulations
?
Will OEMs develop a next generation of combustion
engine
? Will
full-hybrid cars be too costly
? Are OEM plans regarding full-
electric cars too ambitious
? Will urban and rural demand
be different
?
How environment- friendly is total
balance of power generation
? Corporate presentation | September 2017
Structure of market growth biased towards green mobility
ElringKlinger already well prepared for transformation
6
Internal combustion Hybrid Full-electric
ElringKlinger with traditional product portfolio, neither significantly exposed to diesel nor to gasoline
ElringKlinger with extended range of products
ElringKlinger with broadened and transformed product portfolio, based on strong innovation power
Cylinder-head gaskets
Special gaskets
Shielding parts
Plastic modules
Structural components
Battery components
Drivetrain systems
Fuel cell systems
Present Bridge Future
Corporate presentation | September 2017
Structure of market growth biased towards green mobility
ElringKlinger provides a transformed portfolio
7 Corporate presentation | September 2017
Cylinder-Head Gaskets
Shielding Technology
Lightweighting/Elastomer
E-Mobility
Specialty Gaskets Underbody protection
Metal-elastomer
gaskets
Front-end carrier
Tank shielding
Disk carrier
Metallic bipolar
plate
Cross-car beam
Dampening pan
Door module carrier
Battery module
Stra
teg
ic are
as
Functional Components
E-Mobility
Light- weighting
Engine shielding
Brake hat
Side impact
protection
Cell casing
Electric drive train
Fuel cell stack
Cell contact system
Present Future
Structure of market growth biased towards green mobility
ElringKlinger has set the course for mobility of the future
8
27%
hofer Powertrain Products GmbH
53%
47%
Battery and fuel cell systems
Besides R&D, advancement and realization capabilities
Research and development capabilities
hofer AG
Corporate presentation | September 2017
Transmission systems, electric engine, electronics,
software
• Extension of ElringKlinger‘s core competences in the field of drivetrain solutions for hybrid and electric cars
• Focus on small-series production in sports and luxury car segment
9
Global network of production sites is essential for success
ElringKlinger represented in all important auto regions
Production locations of global top 15 OEMs ( ) ElringKlinger production sites ( )
South Africa
Southeast Asia
China
Japan
Korea
Eastern Europe/ Turkey
South America
Germany
Italy Spain
France
UK
USA/Canada
Mexico
India
Corporate presentation | September 2017
Engineering and tooling capabilities help ElringKlinger to edge ahead of competition
Large-scale contracts received in lightweighting technology
10
Organo sheets
Technology: reinforced thermoplastics with injected plastic devices
Launching order of door module carriers by Brose: Received in H1 2016 Volume: more than EUR 100 million until 2024 SOP in H2 2017 in Hungary and 2018 in China
Hydroform-hybrid technology
Commonly developed with German premium OEM, license agreement in 2015
Launching order with a volume of more than EUR 120 million until 2020, produced in China and Canada since 2015
Large-scale order for next generation of vehicles from US market Received in H2 2016 Representing a triple-digit million Euro volume over five years New location in close proximity to customer, ramped up in mid-2017
Corporate presentation | September 2017
© Brose
11
Engineering and tooling capabilities help ElringKlinger to edge ahead of competition
ElringKlinger will benefit from continuous industry growth
Providing drivetrain and propulsion system for
full-electric vehicle
Increasing sales contribution of for generating
stable sales
gaskets know-how
As market leader, using
lightweight components
of Aftermarket in NAFTA and
China
Higher market share
at Shielding Technology into
profitable sales
high order situation
Turning
Euro in sales
2 bn Close to
2020
fuel cells
Market introduction of
Corporate presentation | September 2017
Growing Aftermarket business by gaining
new market shares in NAFTA and China
12
Earnings improvement and cash flow generation
Most important building blocks to improve profitability
EBIT margin pre PPA – in %
Reducing high operational fixed cost base
at Shielding Technology division step by step FY 2016
9.0%
Mid-term
~ 13%
Basic business
Improving product mix by further marketing highly sophisticated lightweight products
Increasing sales at Exhaust Gas Purification division by
providing solutions for new ship regulations
Improving product mix at Engineered
Plastics segment
Corporate presentation | September 2017
Outlook FY 2017
Guidance confirmed
13
1,033 1,127 1,150
1,326 1,507 1,557
12.6% 12.5% 13.0% 12.2%
9.3% 9.0%
2011 2012 2013 2014 2015 2016 2017e … Mid-term
EBIT margin pre PPA
Sales
~13% ~ 9 to 10%
Sales – in EUR million EBIT margin pre PPA – in % of total sales
Organically 2 to 4%
above market growth
Expected market growth 2017: 1-2%, mid-term on average at 2%
Organically 2 to 4% p.a.
above market growth
Corporate presentation | September 2017
Appendix
15
ElringKlinger
Structural overview
ElringKlinger Group
Original Equipment Sales: EUR 1,294 million Employees: 7,536
All figures refer to FY 2016
83.1% of Group sales
Aftermarket Sales: EUR 147 million Employees: 174
9.5% of Group sales
Engineered Plastics Sales: EUR 102 million Employees: 698
6.5% of Group sales
Services Sales: EUR 10 million Employees: 181
0.6% of Group sales
Industrial Parks Sales: EUR 5 million Employees: 2
0.3% of Group sales
Cylinder-Head Gaskets
13%
Specialty Gaskets
18%
Lightweighting/Elastomer
22%
Shielding Technology
26%
Exhaust Gas Purification
3%
E-Mobility 1%
Other <1%
Sales: EUR 1,557 million EBIT EUR 135.6 million Employees: 8,591 EBIT margin 8.7 %
Corporate presentation | September 2017
16
Product portfolio
Concept Car
Cylinder-head gaskets
Specialty gaskets
Shielding Technology Thermal shielding Acoustic shielding
Lightweighting/ Elastomer Technology Door module carrier Cockpit cross-car beam Plastic devices (cam cover)
E-Mobility Battery module Fuel cell
Corporate presentation | September 2017
17
Mission statement
What is driving us
Green mobility
Our vision
Being an essential partner by
(1) Providing technologically sophisticated solutions for customers’ needs
(2) Shaping performance and quality to the next level
(3) Assuming social responsibility as a global corporate player
Our mission
Corporate presentation | September 2017
18
Track record
Focused acquisitions supplemented Group’s growth
Year of selected acquisition and product area
ElringKlinger Group 2005: EUR 475 million 2016: EUR 1,557 million
SEVEX Group Heat shields 2008
Marusan JV Gaskets, heat shields 2008
Freudenberg (parts) Gaskets 2011
Hug Engineering Exhaust gas purification 2011
Hummel Tools, plastics 2011
new enerday Fuel cell technology 2014
Polytetra Heat management 2014
M&W Transmission plates 2015
COdiNOx Distribution of Hug products 2016
Stake in hofer Transmission systems, electronics, software 2017
Corporate presentation | September 2017
19
Q2 2017
Order situation favorable, FX headwinds in sales
Order intake – in EUR million
Sales – in EUR million
Order backlog – in EUR million
Sales – in EUR million
+4.3%
Q2 2017
407.8
Organic
18.1 +4.6%
M&A
2.6 +0.7%
FX
-3.8 -1.0%
Q2 2016
390.9
+4.3%
Q2 2017
408
Q1
433
Q4
407
Q3
374
Q2 2016
391
494445
384441 413
-6.3%
Q2 2017 Q1 Q4 Q3 Q2 2016
+12.9%
Q2 2017
999
Q1
994
Q4
933
Q3
895
Q2 2016
885
Corporate presentation | September 2017
20
Q2 2017
Operating result increased despite high Swiss fixed cost base
EBITDA – in EUR million
Net income (attr. to shareholders) – in EUR million
EBIT (pre PPA) – in EUR million EBIT margin (pre PPA) – in % of total sales
Earnings per share – in EUR
-19.4%
Q2 2017
0.29
Q1
0.40
Q4
0.31
Q3
0.30
Q2 2016
0.36
+3.4%
Q2 2017
60.5
Q1
62.6
Q4
64.5
Q3
55.1
Q2 2016
58.5
-18.6%
Q2 2017
18.4
Q1
25.1
Q4
19.7
Q3
19.0
Q2 2016
22.6
+2.8%
Q2 2017
37.2
9.1
Q1
39.1
Q4
39.5
Q3
32.6
Q2 2016
36.2
9.3
Corporate presentation | September 2017
21
Q2 2017
Capex mainly spent for ramp-ups in the US and Hungary
Net working capital – in EUR million
Operating free cash flow – in EUR million
Capex (in PPE) – in EUR million
Net financial debt – in EUR million
581
Q4
539
Q3
529
Q2 2016
532
+15.6%
Q2 2017
615
Q1
-61.9%
Q2 2017
-10.2
Q1
-11.6
Q4
0.4
Q3
1.8
Q2 2016
-6.3
+17.5%
Q2 2017
42.4
Q1
29.6
Q4
54.7
Q3
43.0
Q2 2016
36.1 573
Q4
571
Q1
+5.4%
Q2 2017
541
Q2 2016
525
Q3
542
Corporate presentation | September 2017
22
Q2 2017: Segments
Profitable sales growth in all major segments
Original Equipment (OE) Aftermarket
Engineered Plastics Services & Industrial Parks
Sales – in EUR million EBIT margin – in %
+4.6%
Q2 2017
338
6.9
Q1
360
Q4
347
Q3
309
Q2 2016
323
6.8
+3.1%
Q2 2017
40.2
21.9
Q1
40.2
Q4
33.1
Q3
35.9
Q2 2016
39.0
22.6
+3.6%
Q2 2017
26.3
14.4
Q1
29.5
Q4
24.3
Q3
25.8
Q2 2016
25.4
16.1 3.4
2.9
Q1
3.8
Q4
3.3
Q3
4.0
Q2 2016
-2.9%
Q2 2017
3.5
8.6
Corporate presentation | September 2017
23
FY 2016: Income Statement
Ongoing internationalization and diversified customer structure
Sales 2016 by region – in EUR million resp. % Sales 2016 by customer – in % of total sales
Germany 412.3
27% (27%)
Rest of Europe 489.1
31% (31%)
NAFTA 292.0
19% (20%)
Asia-Pacific 299.0
19% (18%)
South America/
Rest of World 65.1
4% (4%)
Previous year‘s figures grey-colored in brackets
Ford 11%
GM 8%
Daimler 8%
VW Group 7%
BMW 5%
Renault-Nissan
3%
Volvo Trucks
3%
PSA 2%
FCA 2%
Tier 1 15%
Aftermarket 9%
Other 27%
Corporate presentation | September 2017
24
Balance sheet
Placement of a Schuldscheindarlehen in early Q3 2017
• Originally planned volume: EUR 100 million
• Tranches: 5, 7 and 10 years
• Use of proceeds: General corporate purposes, refinancing of short-term liabilities
• Sole-Lead Manager: Landesbank Baden-Württemberg
• Closing in early Q3 2017:
Volume: EUR 200 million
Interest rate: 1.23% on average
44
Improvement of maturity structure
Non-current (>5 years)
+200
Non-current (between 1
and 5 years)
272
On daily basis and current
257
-200
Financial liabilities as at Dec. 31, 2016 – in EUR million
Corporate presentation | September 2017
25
Balance sheet
Continuing healthy equity ratio at around 50%
Equity – in EUR million Equity ratio – in % of total equity and liabilities
642 701
775
856 886
50.6 50.4 49.7 48.5
47.2
30.0
40.0
50.0
60.0
70.0
0
200
400
600
800
1,000
2012 2013 2014 2015 2016
Equity Equity ratio
40 - 50% of total assets
Corporate presentation | September 2017
26
Dividend policy
Payout ratio within long-term range of 30 to 40% of EPS
Dividend payment – in EUR Payout ratio – in % of group EPS
0.45
0.50
0.55 0.55
0.50
33 30
33 38
40
0
25
50
75
0.00
0.10
0.20
0.30
0.40
0.50
0.60
2012 2013 2014 2015 2016
Dividend payment Payout ratio
30 - 40% of Group earnings per share
Corporate presentation | September 2017
Engineering and tooling capabilities help ElringKlinger to edge ahead of competition
Focused R&D activities, tooling affects working capital
27
Net working capital – in EUR million
230 257 290 322 328
186 207 245 287 300
-58 -69 -69 -86 -103 -100
100
300
500
700
900
2012 2013 2014 2015 2016
Trade payables
Trade receivables
Inventories
8 9 9 10 7
58 57 58 61 67
0
20
40
60
80
100
2012 2013 2014 2015 2016
thereof capitalized
66 66 67 71 75
R&D highlights
• Integration of tools implies a technological lead position in the development of ideas
• Main focus: lightweight components, e-mobility
• 570 R&D employees at sites of parent company and 18 subsidiaries
• 68 new international patents in 2016
• Mid-term indication: ~ 5-6% of total sales
Working capital highlights
• Tools included in inventories until sale with start of serial production
• Organizational measures regarding receivables and inventories with positive impact
• Mid-term indication: Improvement of net working capital by 1 to 2 percentage points compared to 2016 level of 33.7%
R&D – in EUR million R&D ratio – in % of total sales
5.8% 5.7% 5.0% 4.7% 4.8%
32% 34% 35% 35% 34%
Corporate presentation | September 2017
28
Expectations for 2017
Global markets expected to grow, esp. in Asia and Europe
NAFTA
+0%
Western Europe
+2%
Germany
-1%
Asia/ Pacific
+5%
China
+2% Japan
+0%
Global
+1-2%
Brazil
+1%
Eastern Europe
+5-7%
Light vehicle production – in million units
Source: OICA, HSBC, ElringKlinger research
Corporate presentation | September 2017
Outlook
Further indicators for FY 2017 and the medium term
29
FY 2016 actual
FY 2017 expected
Mid-term targets
ROCE in % 8.7% Slight year-on-year improvement
15%
R&D costs in % of total sales 4.8% ~ 5-6% ~ 5-6%
Capex (in PPE) in % of total sales
11.0% Below prior-year level ~ 9%
Net working capital (NWC)
in % of total sales
33.7% Below prior-year level Improvement by
1-2 percentage points compared to 2016
Operating FCF in EUR million
-3.8 Slightly positive Improvement by
earnings momentum, disciplined capex and
better NWC ratio
Equity ratio in % of total assets 47.2% 40-50% 40-50%
Corporate presentation | September 2017
30
Last 5 quarters
Key figures Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016
Order intake 413 494 445 384 441
Order backlog 999 994 933 895 885
Sales 408 433 407 374 391
EBITDA 61 63 65 55 59
EBIT pre PPA 37.2 39.1 39.5 32.6 36.2
EBIT margin pre PPA (in %) 9.1 9.0 9.7 8.7 9.3
EBIT (reported) 35.8 37.9 38.4 31.2 35.2
EBT 28.0 34.5 39.4 27.6 32.6
Net income attributable to shareholders 18.4 25.1 19.7 19.0 22.6
Earnings per share (in EUR) 0.29 0.40 0.31 0.30 0.36
Capex (in PPE) 42.4 29.6 54.7 43.0 36.1
Operating free cash flow -10.2 -11.6 0.4 1.8 -6.6
Net working capital 571 573 525 541 542
Equity ratio (in %) 44.4 46.3 47.2 46.9 46.3
Net financial debt 615 581 539 529 532
Employees (as at quarter-end) 9,012 8,738 8,591 8,433 8,283
All figures in EUR million unless otherwise described
Corporate presentation | September 2017
31
Last 5 quarters
Segmental figures Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016
Group Sales 407.8 433.3 407.2 374.2 390.9
EBIT (reported) 35.8 37.9 38.4 31.2 35.2
EBIT margin (in %) 8.8 8.7 9.4 8.3 9.0
Original Equipment Sales 337.9 359.9 346.5 308.5 323.0
EBIT (reported) 23.2 25.1 27.6 19.0 22.0
EBIT margin (in %) 6.9 7.0 8.0 6.2 6.8
Aftermarket Sales 40.2 40.2 33.1 35.9 39.0
EBIT (reported) 8.8 7.7 6.2 7.6 8.8
EBIT margin (in %) 21.9 19.2 18.7 21.2 22.6
Engineered Plastics Sales 26.3 29.5 24.3 25.8 25.4
EBIT (reported) 3.8 4.3 4.7 3.9 4.1
EBIT margin (in %) 14.4 14.6 19.3 15.1 16.1
Services Sales 2.4 2.7 2.3 2.5 2.5
EBIT (reported) 0.1 0.7 0.0 0.6 0.3
EBIT margin (in %) 4.2 25.9 0.0 24.0 12.0
Industrial Parks Sales 1.1 1.0 1.0 1.5 1.0
EBIT (reported) -0.1 -0.1 -0.1 0.0 0.0
EBIT margin (in %) -9.1 -10.0 -10.0 0.0 0.0
All figures in EUR million unless otherwise described
Corporate presentation | September 2017
32
Last 5 years
Key figures 2016 2015 2014 2013 2012
Order intake 1,694 1,615 1,419 1,284 1,135
Order backlog 933 796 688 595 456
Sales 1,557 1,507 1,326 1,150 1,127
EBITDA 231 223 233 239 218
(Adjusted) EBIT pre PPA 140 140 162 150 141
(Adjusted) EBIT margin pre PPA (in %) 9.0 9.3 12.2 13.0 12.5
EBIT (reported) 136 135 154 164 139
EBT 124 129 153 149 124
Net income attributable to shareholders 79 92 106 105 86
Earnings per share (in EUR) 1.24 1.45 1.67 1.66 1.35
Dividend per share (in EUR) 0.50 0.55 0.55 0.50 0.45
Capex (in PPE) 171 176 147 114 103
Operating free cash flow -4 -65 -12 -4 8
ROCE (in %) 8.7 9.5 12.4 14.4 13.3
Net working capital 525 523 466 396 357
Equity ratio (in %) 47.2 48.5 49.7 50.4 50.6
Net financial debt 539 487 348 295 260
Employees (as at Dec. 31) 8,591 7,912 7,255 6,716 6,263
All figures in EUR million unless otherwise described
Corporate presentation | September 2017
33
Last 5 years
Segmental figures 2016 2015 2014 2013 2012
Group Sales 1,557.4 1,507.3 1,325.8 1,150.1 1,127.2
EBIT (reported) 135.6 135.2 154.0 164.2 138.6
EBIT margin (in %) 8.7 9.0 11.6 14.3 12.3
Original Equipment Sales 1,294.3 1,255.8 1,089.7 925.9 906.6
EBIT (reported) 88.9 91.2 111.2 123.2 93.1
EBIT margin (in %) 6.9 7.3 10.2 13.3 10.3
Aftermarket Sales 147.3 142.2 130.7 119.3 117.8
EBIT (reported) 30.5 28.2 25.1 22.5 24.4
EBIT margin (in %) 20.7 19.8 19.2 18.9 20.7
Engineered Plastics Sales 101.7 96.6 92.9 92.6 91.3
EBIT (reported) 14.9 13.2 15.4 16.1 15.7
EBIT margin (in %) 14.7 13.7 16.6 17.4 17.2
Services Sales 9.7 8.3 8.1 8.1 7.3
EBIT (reported) 1.6 2.0 1.9 2.3 2.2
EBIT margin (in %) 16.5 24.1 23.5 28.4 30.1
Industrial Parks Sales 4.5 4.3 4.5 4.3 4.2
EBIT (reported) -0.3 0.7 0.4 0.1 0.4
EBIT margin (in %) n.a. 16.3 8.9 2.3 9.5
All figures in EUR million unless otherwise described
Corporate presentation | September 2017
34
Senior management
(from left to right)
Dr. Stefan Wolf, CEO (since 2005)
In charge of OE Sales, Aftermarket, HR, Legal, Corporate Communications, and Group companies | With ElringKlinger since 1997 | Chairman of Baden-Württemberg‘s Employers‘ Association of the Metal and Electric Industry (Südwestmetall) | Member of the Management Board of the German Association of the Auto-motive Industry (VDA) | Chairman of the Supervisory Board of Norma Group SE
Theo Becker, COO (since 2006)
In charge of Production and Technology, all plants and New Business Areas | With ElringKlinger since 1994 | 40 years of professional experience
Thomas Jessulat, CFO (since 2016)
In charge of Finance, Controlling, Tax and IT | With ElringKlinger since 2005 | 22 years of professional experience
Corporate presentation | September 2017
35
Ownership and market capitalization
Shareholder structure as at Dec. 31, 2016
Family Walter H.
Lechler and estate of
Klaus Lechler
52%
Institutional investors
33%
Private investors
15%
Market capitalization as at Dec. 31 – in EUR million
400
933
1,679
1,215
1,616
1,874 1,825
1,489
1,006
2008 2009 2010 2011 2012 2013 2014 2015 2016
Corporate presentation | September 2017
36
IR calendar and contact
Date Event
Sep 19-20, 2017 Conferences, Munich
Oct 4, 2017 Conference, London
Nov 7, 2017 Q3 2017
ElringKlinger AG Investor Relations/Corporate PR Max-Eyth-Str. 2 72581 Dettingen/Erms Germany E-Mail: [email protected]
Dr. Jens Winter Head of Investor Relations/Corporate PR E: [email protected] T: +49 7123 724 88335 M: +49 151 1181 1184
Kathrin Graf Investor Relations/Corporate PR E: [email protected] T: +49 7123 724 88279 M: +49 175 228 1666
Heiderose Mall Investor Relations/Corporate PR E: [email protected] T: +49 7123 724 463
Christoph Staib Investor Relations/Corporate PR E: [email protected] T: +49 7123 724 9358
Corporate presentation | September 2017
Forward-looking statements and predictions
This presentation contains statements about the future. These statements are based on current expectations,
market evaluations and predictions by the Management Board, and on information that is currently available to
them. The statements about the future should not be interpreted as guarantees of the future developments and
results that they refer to. Whilst the Management Board is convinced that the statements that have been made,
and the convictions and expectations on which they are based, are realistic, they rely on suppositions that may
conceivably prove to be incorrect; future results and developments are dependent on a multitude of factors, they
involve various risks and imponderabilities that can affect whether the ongoing development deviates from the
expectations that have been expressed. These factors include, for example, changes to the general economic and
business situation, variations of exchange rates and interest rates, poor acceptance of new products and services,
and changes to business strategy.
37
Disclaimer
Corporate presentation | September 2017