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Investors’ day: Internationalization/AFG Russia Ulrich Bornkessel – Head of International Markets & Sales

Leonid Evlentev, General Manager AFG Russia

November 14, 2013

1AFG – Investors’ Day | November 14th 2013

1. History and Objectives

2. AFG Hub Concept

3. Accomplishments 2013

4. AFG Russia as Hub blueprint

Outline Internationalization

2AFG – Investors’ Day | November 14th 2013

International HistoryObjective

International share (outside CH/D) ofTotal Revenue in 2016 = 40%

Organic Growth

- AFG HUBs in strategic regions ensure salesgrowth acceleration through individual local BUbusiness models, extended customer service and enhanced local presence

- local people do local business, localhierarchy cooperates with functional BUmanagement

Anorganic Growth

- future acquisitions contribute tointernational growth objective

International % flat since 2006

Business Model "Copy-Paste“

Duplicity of Resources

Undefined / unclear responsibilities

2011

21%

29%

2010

23%

2008 2009

24%

2006 2007

24%22%

International % of Total Revenue

International History and Objective

2012

20%

3AFG – Investors’ Day | November 14th 2013

1) Zu 2007 Preisen und Wechselkursen berechnet – linear auf Basis 1 EUR = 1,2 CHF umgerechnet 2) Inklusive Civil Engineering (Tiefbau)

Source: Roland Berger; Freedonia 2011

2010

1.124

2013e

1.010

2013e

317

2010

294

+3,6%

USA

+2,5%

Canada & Mexico

2013e

436

2010

410

+2,0%

Latin America

2013e

379

2010

365+1,3%

Japan

1.714

2010

1.306

2013e

+9,1%

China

+1,5%

Western Europe

2013e

1.184

2010

1.132

2013e

1.132

2010

1.326

+5,4%

South east Asia

521

2013e

576

2010

+3,4%

Africa & middleEast

436

2010

468

2013e

+2,4%

Eastern Europe incl. RUS)

World GDPWorldwide Spendingsfor construction 2)

2010

113.111 124.020

2013e 2010 2013e

15.55314.207

Global building construction markets

International construction volume [Mrd. CHF1)]

4AFG – Investors’ Day | November 14th 2013

= 2013

AFG HUB

Local adaption of BU business models

Product offer extension tolocal customer requirement

Sales focus andadministrative efficiency

Complementary local products

ChinaRussia

Middle East

tba > 2013

East EuropeNorth Africa

TurkeyIndia

CH/D

OutsideCH/D

HUBs

HUBs accelerate growth in strategic markets

40%

60%

5AFG – Investors’ Day | November 14th 2013

Strategic Region

China

Russland

ME

Urbanization / Demography / Private Income

Governmental Investments / Private Demand

Geographic Intersection / Expats Inflow

2011 2018

<520

2011 2018

<30

>100

2011 20181

15

Economic growth drivers in strategic markets

Forecasted Growth

6AFG – Investors’ Day | November 14th 2013

Business Units

HUB

Strategy

Budget

OrganizationExecution

Market Strategy

Business Model

Customer Segments

local BU Structure

regional Presence

Product Program

Sales Performance

Local hierarchical leadership cooperates with functional BU management !

Mutual Agreement

Responsibilities defined inHUB Governance Model

7AFG – Investors’ Day | November 14th 2013

Local profile assembly Implementation of heatingflagship store concept

Local shower enclosureassembly

Analysis for market entry of windows & doors

Profile businessmodel change

Heating radiatorsFrom local stock

Shower enclosuresfrom local stock

Analysis for market entry of windows & radiator product range extension

Organizational profilebusiness extension /

improved local presence

Development of localHeating distributors

Development of localSanitary distributors

HUB structure implementation

HUB structure implementation

HUB structure implementation

Preparation for market entry of doors

Project Highlight 2013: Execution of Macao Ferry Terminal

Project Highlight 2013: Various projects for Olympic Games in Sochi

Project Highlight 2013: 5* Hotel Anjum in Mekka

China

Russia

ME

HUB Accomplishments 2013

8AFG – Investors’ Day | November 14th 2013

Local culture & network

Construction industry knowledge

Sales drive & Performance orientation

Language skills

Flexibility, Courage & Curiosity

Ability & Greed to learn

Change management & Leadership

It is all about people ……

2012 2013

20%

>25%

Applications Welcome !!!

9AFG – Investors’ Day | November 14th 2013

1. History and Objectives

2. AFG Hub Concept

3. Accomplishments 2013

4. AFG Russia as Hub blueprint

Outline Internationalization

10AFG – Investors’ Day | November 14th 2013 Source: World bank, Bloomberg, Datastream, IMF, Credit Suisse

GDP recovery after strong recession

High capacity utilization

Low unemployment rate

Comparatively high earnings / capita

Business Constraints

Russian EconomyFacts & Figures

11AFG – Investors’ Day | November 14th 2013 Source: Rosstat, Ministry of Economic Development, Interfax

Russian Housing Construction MarketFacts & Figures

Market DynamicsResidential & non-residential building

industry forecast

12AFG – Investors’ Day | November 14th 2013

Total Market = 13 M units (1.2 Bill. €)Total Market = 184 K units (20 M€)

Russian actual relevant marketsFacts & Figures

3.3 4,3 6,

2

2010 2011 2012

Market Size Steel Profile in US$ Mio.

65

35 SteelStainless Steel

70

30 Fire RatedOthers

Steel/Stainless Profile Systems Classification

136'000

32'000

14'000 2'000

< 500 €

500 - 1.000 €

1.000 - 2.000 €

> 2.000 €

Shower EnclosuresHeating Radiators

65%

16%

9%

7%

1% 1% Aluminium andbimetallic radiators

Steel panel radiators

Convectors

Steel tube-typeradiators

Design radiators

Cast Iron Radiators

13AFG – Investors’ Day | November 14th 2013

AFG Russia

Heating SanitarySteel

Profiles

WindowsDoors

(under evaluation)

Compl.Products

(tba in 2014)

2011 2018CHF30 Mio. > CHF 100 Mio.

Strategy Highlights Increased customer proximity through enhancing regional presence Improved customer satisfaction through local warehouse and possible

smaller order volumes Upgraded customer service through short lead times, regional transport

and local technical support Accelerated revenue growth through market opportunities

AFG RussiaActivities

14AFG – Investors’ Day | November 14th 2013

Double Tree by Hilton Moscow Vnukovo Airport, Moscow

Federal Medical Complex, MoscowHotel of International Olympic Committee, Sochi

Gorki-Gorod Media Village, SochiGorki-Gorod Media Village, Sochi

Club Type Village, Kazan

Selection of AFG Russia Project References 1

15AFG – Investors’ Day | November 14th 2013

White Square office center, Moscow

Swissôtel Krasnye Holmy, MoscowLotte Plaza, Moscow

Mercury Tower, MoscowMetro Station Wistawochnaja, Moscow

Federation Tower, Moscow

Selection of AFG Russia Project References 2

region Moscow

partner Stroy Park

product Forster unico, Forster thermfixvario Forster presto

quantity 100m2 facade, several doors

Developer Lotte Konstruktion

Date 2011/20122

region Moscow

partner Remak

product Forster unico

quantity Several entrance doors

developer -

date 2010

region Moscow

partner Nayada

product Forster presto stainlesssteel

quantity Over 200 internal doors

developer Enka

date 2012

region Moscow

partner MMZ-3

product Forster thermfix vario, Forster presto stainless steel

quantity Over 200m2 fire resistantpartitions EIW60

developer MetroGiproTrans

date 2012

region Moscow

partner Intersteklo Projekt

product Forster presto stainlesssteel

quantity Fire resistant doors EI60

developer Enka

date 2011

region Moscow

partner Trauschke

product Forster presto stainless steel

quantity Fire resistant doors EI60

developer Mirax Group

date 2010

16AFG – Investors’ Day | November 14th 2013

Examples of AFG Russia Growth Accelerators

Country coverage ensures customer proximity

Projected Moscow city growthby 120% until 2020

65% of Heating market (780 M€)not yet addressed

Installation components market(120 M€) not yet entered

PVC Windows market = 58 M sqm(10 x Switzerland) not yet entered(CAGR YOY 5%)

World Expo 2020 potentially inEkaterinburg (competing with Dubai)

GDP Growth YOY >5% until 2020

17

Thank You !