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Reference (apr02)
Annual General Meeting 2008
June 3, 2008
Wacker Construction Equipment AG
Reference (apr02)
Annual General Meeting 2008 – Management ReportDr.-Ing. Georg Sick, CEO and President
June 3, 2008
Wacker Construction Equipment AG
3Reference (apr02)
Overview
IPO
Financials 2007 and Q1/2008
Merger
Outlook
The Company
4Reference (apr02)
From blacksmith’s shop to profitable global market leader in 160 years
1848
1951
1957
20052006 2007
2007
2008
Wacker founded as a blacksmith’s shop in Dresden, Germany
Following total loss of production facilities, company headquarters
relocated to Munich in 1945
First affiliate in the USA
Acquisition of Weidemann GmbH, a leading wheel loader manufacturer for
the agricultural industry
Acquisition of Drillfix AG and Ground Heaters, Inc.
IPO, listing on SDAX
Company name changed to Wacker Neuson SE (AGM, June 2008)
Merger with Neuson Kramer Baumaschinen AG
5Reference (apr02)
Internal and external relations based on mature value-oriented corporate culture
Headcount
2,168
3,659
2006 20071
2,837
Keen awareness of environmental and social responsibilities
Fair competitive landscape and anti-corruption stance that fights any methods aimed at gaining improper advantage
Avoidance of all forms of staff discrimination
2003
Honest relations in all customer dealings
Value-oriented culture (extract)
Close attention to user safety
Cost-consciousness and rapid execution
2,934
1 2007 incl. Neuson Kramer Baumaschinen AG (yellow)
……
6Reference (apr02)
Extensive sales and service network with over 30 subsidiaries and more than 180 locations worldwide
More than 5,200 dealers worldwide based at over 12,400 sites
7Reference (apr02)
Strong focus on employee empowerment – giving our local people the freedom to add value to our customers
Innovative
Responsive Reliable
Quality-driven Trustworthy
Customer
8Reference (apr02)
70 percent of products in the light equipment segment are used in the infrastructure and industrial sector
9Reference (apr02)
Continuous product enhancement to meet market demands – 420 patents worldwide
Changes
0
10
20
30
40
50
60
70
80
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Four-stroke low oil shut-off and general enhancements
Major upgrade of complete line featuring improved air filtration, starting and high temperature performance
Four-stroke Wacker engine rammers
Two-stroke oil injection models and Asian rammers
All new two-stroke BS500-BS700 plus diesel DS720
10Reference (apr02)
Examples of product innovations
Special motor for rammers and gasoline breakers Altitude test in a vacuum test chamber
11Reference (apr02)
Examples of product innovations
Trend-setting security technology with infrared remote control
12Reference (apr02)
Examples of product innovations
Non-linear crash simulation of plastic Global innovation: high-performance compaction
13Reference (apr02)
Each product group1 is manufactured at a single location for natural currency hedging
Reichertshofen (Germany)
Milwaukee (USA)
Manila (Philippines)
1 Selection of products in the light equipment segment.
Internal vibrators, reversible platesBreakers, floor saws
Trowels, rammers, rollersPortable generators, pumps
New: Norton Shores (USA)
Hydronic heating equipmentMobile generators, light towers
Wet screeds, cut-off-sawsVibratory plates
14Reference (apr02)
High flexibility and personal responsibility coupled with performance-driven remuneration increases productivity
Flat hierarchy without team-leaders/self-organisation of teamsOpen communication on targets and team achievementsLeadership
Well-trained employees
Flexible working hours
High automation
27 to 50 working hours per week, depending on demandIndividual focus factory teams organise their working hours independently
Considerable investments made over the last yearsInnovative quality and improvement management
Employees trained for the broad majority of different tasks in the production process of their respective focus factory
Employee incentives
Fix Salary IndividualBonus
ProductivityBonus
QualityBonus
DeliveryBonus
Total Salary
15Reference (apr02)
Philosophy (extract)
Employee turnover in Germany2
Active staff involvement and promotion
1 Figures for Wacker Construction Equipment AG, Weidemann GmbH, Kramer-Werke GmbH2 Figures for Wacker Construction Equipment AG
5.78% 5.25%
2006 2007
Apprenticeships in Germany1
106112
2006 2007
+ 5.7 %
Voluntary benefits (extract)
Employees encouraged to “think outside the box”
Flat hierarchies and freedom to make decisions
Hermann Wacker Innovation Award for technical and process innovations
Curt Wacker foundation provides emergency financial support for employees
In-house academy for further training
Employee share program at IPO
Collaboration with the Don Bosco institute in Manila
16Reference (apr02)
Steady organic growth complemented by acquisitions since 2005
Sales 1995 through 20061
(€ million)
619.3
2006
503.2
411.2
2004 2005
1 All figures prepared according to IFRS
361.9
20032002
356.7
…….
249.8
1995
CAGR: + 4.7%
CAGR: + 22.7%
607.2
472.7 Acquisitionof
Ground Heaters,
DrillfixAcquisition of
Weidemann
17Reference (apr02)
Overview
IPO
Financials 2007 and Q1/2008
Merger
Outlook
The Company
18Reference (apr02)
Successful IPO in May 2007
Prospectus: Detailed report of merger with Neuson Kramer Baumaschinen AG
I
P
0
Start of trading: May 15, 2007
Frankfurt Stock exchange: Prime Standard, SDAX
Shares: 18.4 million shares1
Price range: 18 up to 22 Euro
Initial price: 24.60 Euro
Lock-up: 12 months for management and family
1 Total shares as of 31. December 2007: 70.14m shares
19Reference (apr02)
Share price reflects trend away from small and mid-sized caps as well as effects of US subprime crisis
SDAX
20Reference (apr02)
Share price development in line with peer group
(50%)
21Reference (apr02)
EUR 13
EUR 14
EUR 17
EUR 17
EUR 15.34
EUR 21
EUR 27
EUR 18
Target price
NeutralGoldman Sachs
BuySal. Oppenheim (IPO)
BuyDeutsche Bank (IPO)
BuySES Research (M.M. Warburg)
BuyBankhaus Reuschel
UnderperformCheuvreux
BuyDresdner Kleinwort
Buy
Recommen-dation
UBS (IPO)
Current analyst recommendations
Active Investor Relations program at and after IPO
Over 85 investor meetings during the IPO roadshow
International award for the annual report for fiscal 2006
Investor Relations
Post-IPO actions:
Two analyst conferences
Countless roadshows and investor conferences
Meetings with over 100 institutional investors
Active corporate governance
22Reference (apr02)
Overview
IPO
Financials 2007 and Q1/2008
Merger
Outlook
The Company
23Reference (apr02)
Merger creates a global market leader for light and compact equipment
Memorandum of Understanding
Approval by the Antitrust Authorities
Closing
March 30, 2007
May 4 and 11, 2007
SigningSeptember 23, 2007 and October 18, 2007
October 31, 2007
AGMJune 3, 2008
24Reference (apr02)
Neuson Kramer: From foundation to market leader for compact equipment in just a few years
2008
2007
Merger with Wacker Construction Equipment AG
Name of parent company changed to Wacker Neuson SE (AGM, June 2008)
1981
1984
1990
19981999
Neuson Hydraulik GmbH founded
First mini excavator developed
Neuson Baumaschinen GmbH founded
Acquisition of dumper manufacturer Lifton Ltd., UK
Partnership with Gehl Company, USA
2001
Merger with Kramer-Werke GmbH, name changed to Neuson Kramer
Baumaschinen AG
25Reference (apr02)
Neuson Kramer sales1
Merger executed exactly as announced in the IPO prospectus
1 All figures prepared according to IFRS2 Fiscal 1.2.-31.1., 2005 figure: expenditure format, 2006 figure: cost of sales format3 Fiscal 1.2.-31.12., only 11 months for Neuson Baumaschinen GmbH, cost of sales format
(€ million)
198.5
329.9
20062 20073
264.0
EBIT-based asset-transfer ratio using fiscal 2006 figures :
Wacker: 62.5 percent
Neuson Kramer: 37.5 percent
Transfer of around 23.5 million shares to Neuson Kramer shareholders
around 19,1 million shares from capital increases
around 4.4 million treasury shares
Payment of cash settlement of 18.1 million euros prior to merger in recognition of strong growth in 2007
20052
Merger details
CAGR: + 28.9%
26Reference (apr02)
Clearly defined brand structure for construction and agriculture
COMPACT EQUIPMENTLIGHT EQUIPMENT
NEW BRANDS
CONSTRUCTION, LANDSCAPING, MUNICIPAL BODIES, RECYCLING, INDUSTRY AGRICULTURE
produced for
OLD BRANDS
27Reference (apr02)
Business segments: Our portfolio optimizes the entire construction process flow
Wheeled excavators
Light Equipment Compact Equipment Services
Service
Wheel loaders (articulated steering)
Wheel loaders for agriculture
Wheel loaders (all-wheel steering)
Tracked excavators
Dumpers
Compact loaders
Rental in Central and Eastern Europe
Over 40 product groups
Telehandlers for agriculture
Telehandlers Tele wheel loaders
Over 250 product groups
Utility
Concrete technology Soil and asphalt compaction
Demolition
28Reference (apr02)
Compact equipment – premium product portfolio marketed under the Wacker Neuson brand
29Reference (apr02)
Compact equipment – premium product portfolio marketed under the Kramer Allrad brand
30Reference (apr02)
Compact equipment – premium product portfolio marketed under the Weidemann brand
31Reference (apr02)
In compact equipment, production mainly involves assembly work (low degree of vertical integration)
Linz (Austria) Tredegar (Great Britain) Korbach (Germany)
Track and mobile excavatorsSkid-steer loaders (SSL)Track dumpers
Dumpers Wheel loaders (articulated)
Pfullendorf (Germany)Wheel loaders(all-wheeled)Tele wheel loadersTelehandlers
Gotha (Germany)Tele-handlers
Note: Selected products.
32Reference (apr02)
Interplay between light and compact equipment for the same customer processes
Light towers Generators Pumps
Utility
Breakers Vibratory platesFloor/cut-off saws Wheel loadersMini excavators Rammers
Cutting Breaking Excavation Filling Compaction Asphalt compaction
33Reference (apr02)
Utilizing sales synergies in line with merger strategy
Introduction of compact class leveraging Wacker’s sales and service network
Introduction in 2008: USA, France, Spain, Great Britain, Switzerland, Russia, Australia and New Zealand
Introduction USA:
14 models presented at several trade shows in the USA, e.g. Conexpo in March in Las Vegas
High dealer interest
Planning to build a production facility for compact products in North America
34Reference (apr02)
Wacker Neuson Management – delivering on strategy
Dr. Georg SickCEO and President
Richard MayerLight Equipment
Werner SchwindSales, Service,
Rental
Martin LehnerDeputy Chairman of the Executive BoardCompact Equipment
Günther BinderCFO, IT
Supervisory BoardHans Neunteufel (Chairman of the Supervisory Board)Dr. Ulrich Wacker (Deputy Chairman of the Supervisory Board)Dr. Eberhard Kollmar, Kurt HelletzgruberHerbert Santl and Elvis Schwarzmair(Employee Representative)
Management structure
35Reference (apr02)
Overview
IPO
Financials 2007 and Q1/2008
Merger
Outlook
The Company
36Reference (apr02)
Expansion of rental business in CEE
Geographic Expansion
Expansion Light Equipment
Expansion Compact Equipment
2
3
4
1
Strategy Result
Significant investment (2007 capex ~ 25m €), broadening of offering
Expansion sales and service coverage in Russia and India
47 new products / product launches – new Manila plant for Light Equipment products
Launch of own compact equipment range for construction business New Weidemann plant for wheel loaders Merger with Neuson Kramer
2007 saw Wacker pursue its growth strategy as announced and fulfill all promises made at the time of the IPO
37Reference (apr02)
Revenues1
EBITDA incl. PPA1,2
2007: Strong growth and high profitability
1 All figures prepared according to IFRS; figures for 2007 include Q4 results for Neuson Kramer.2 PPA = Purchase Price Allocation
(€ million)
(€ million)
619.3
742.1
2006 2007
100.2117.0
2006 2007
720
Forecast
+ 19.8 %
+ 16.7 %
EBITDA before PPA1,2
(€ million)
100.2119.6
2006 2007
120
Forecast
+ 19.4 %
38Reference (apr02)
2.976.778.9(11.5)90.4EBIT
48.6
(27.6)
76.2
12.4
(45.3)
(16.1)
(123.9)
41.3
255.7
619.3
2006
-10.6-12.2EBIT margin (in %)
2.678.2(11.6)89.8EBT
-38.1-39.5Gross margin (in %)
10.5282.5(10.6)293.2Gross profit
29.2(20.8)(0.8)(20.0)Research and development costs
6.6(48.3)(0.1)(48.2)Administration cost
(12.7)(24.1)3.5(27.6)Taxes on income
11.354.1(7.9)62.0Profit for the period
13.1(140.1)-(140.1)Sales costs
742.1
2007excl. PPA
-
PPA
742.1
2007incl. PPA
Change in %
19.8Revenues
Income Statement1,2
2007: Key figures up despite PPA effects
(€ million)
1 All figures prepared according to IFRS; figures for 2007 include Q4 results for Neuson Kramer.2 PPA = Purchase Price Allocation3 Without Other income and Other expense
39Reference (apr02)
Revenues Wacker + Q4 Neuson Kramer1
2007: Substantially enhanced revenues on pro-forma basis
(€ million)
619.3
742.1
2006 2007
658.2
Wacker
+ 19.8%
Revenues Wacker Neuson2
(€ million)
883.2
979.5
2006 2007
+ 10.9 %
1 All figures prepared according to IFRS; figures for 2007 include Q4 results for Neuson Kramer.2 All figures prepared according to IFRS; Revenues on pro-forma basis, only 11 months Neuson Baumaschinen GmbH (1.2.-31.12.)
+6.3%
40Reference (apr02)
Dividend proposal: Increased payout - rise in number of eligible shares
Dividend proposal
0.62€
70.14million shares
2006 20071
39.15 million shares
0.50€
Annual General Meeting (extract)
Resolution to authorize the procurement and subsequent resale of treasury shares within the meaning of Section 71 (1) No. 8 of the AktG
Resolution to change the legal form of Wacker Construction Equipment AG to a European company (Societas Europaea, SE)
Payout
24.27
35.07
2006 2007
+ 44.5 %(€ million)
1 Dividends of EUR 0.27 per share + bonus of EUR 0.23 per share (yellow)
41Reference (apr02)
2007: Demand in Europe and Asia remains healthy –strong demand in all business segments
Revenues Europe1
(€ million)+ 33.1%
391.1520.7
2006 2007
Revenues Americas1
(€ million)
- 4.4%205.0 196.1
2006 2007
Revenues Asia1
+ 9.0%23.2 25.3
2006 2007
1 All figures prepared according to IFRS; figures for 2007 include Q4 results for Neuson Kramer (Previous year).
(€ million)
Revenues Light Equipment(€ million)
+ 4.3%391.4
408.2
2006 2007
Revenues Compact Equipment(€ million)
+ 103.4%
88.2179.5
2006 2007
Revenues Services
+ 10.4%
144.7159.7
2006 2007
(€ million)
42Reference (apr02)
Purchase of property, plant and equipment1
Use of proceeds of the IPO to fund potential growth
(€ million)
31.4
81.6
2006 20072
+ 159.9 %
Construction of a new production plant in Manila
Construction of new production plant Weidemann GmbH in Korbach (Germany)
Expansion of the rental business in Central and Eastern Europe
Construction of new production plant Ground Heaters, Inc in Norton Shores (USA)
Construction of new training centre in Reichertshofen (Germany)
1 All figures prepared according to IFRS; figures for 2007 include Q4 results for Neuson Kramer.2 Inclusive Purchase Price Allocation
43Reference (apr02)
2007: Expansion of profitable rental business in Central and Eastern Europe
Rental business strategy:
In countries with their own regional branches (direct sales)
Not in countries with potential for conflict with existing customers, such as Spain, the US, France, Great Britain, Scandinavia
Objective: rental pool of own equipment from the light and compact equipment segments
Rental business is profitable:
Equipment at manufacturing costs in rental pool
Depreciation over four to six years
Subsequent sale as used equipment
44Reference (apr02)
Revenues1
Adjusted EBITDA2,3
Q1/2008: Revenues and earnings up due to merger
1 All figures prepared according to IFRS; figures for 2007 Wacker stand alone, for 2008 Wacker plus Neuson Kramer2 PPA = Purchase Price Allocation3 Adjusted EBITDA = EBITDA, we would have realized by selling invested compact equipment to third parties
(€ million)
(€ million)
160.4
228.2
Q1/2007 Q1/2008
29.441.3
+ 42.3%
EBITDA1,2
(€ million)
24.529.4
Q1/2007 Q1/2008incl. PPA
+ 20.0%
100%
30.0
Q1/2008before PPA
Q1/2008incl. PPA
Q1/2008adjusted
45Reference (apr02)
7.7
-
11.1
-
5.8
11.3
Factors affecting earnings
1.9
-
2.8
-
0.6
0.6
PPA
-12.9EBITDA margin (as a %)
--Neuson Kramer consolidation expenses
-8.4EBIT margin (as a %)
21.912.3Profit for the period
33.019.1EBIT
29.4
Q1/2008incl. PPA
Adjusted
41.3EBITDA
Consolidation effects1,2
Q1/2008: Earnings effects from consolidation
(€ million)
1 All figures prepared according to IFRS; figures for 2007 Wacker stand alone, for 2008 Wacker plus Neuson Kramer2 PPA = Purchase Price Allocation3 Proceeds from the sale equipment that would normally have accrued to the company had the products been sold to third
parties, but which were not realized. The reason was that these products were channeled into rental and demo fleets as part of our investment policy to stock our fleets with compact machines from our own production facilities
46Reference (apr02)
Q1/2008: Increasing revenues in Europe and compact equipment
Regions1 Business Segments1
Asia2.5% (3.0%)
Europe 78.2% (64.7%)
Americas 19.3% (32.3%)
Compact Equipment 43.1% (13.3%)
Light Equipment 39.8% (65.8%)
Services 17.1% (20.9%)
1 All figures prepared according to IFRS; figures for 2007 Wacker stand alone, for 2008 Wacker plus Neuson Kramer
47Reference (apr02)
Q1/2008: High demand in Europe and Asia – positive trend for compact equipment and services segments
Revenues Europe1
(€ million)+ 72.0%
103.3178.4
Q1/2007 Q1/2008
Revenues Americas1
(€ million)
- 15.0%51.9 44.1
Q1/2007 Q1/2008
Revenues Asia1
+ 20.9%4.8 5.8
Q1/2007 Q1/2008
(€ million)
1 All figures prepared according to IFRS; figures for 2007 Wacker stand alone, for 2008 Wacker plus Neuson Kramer
Revenues Light Equipment(€ million)
- 14.2%106.3 91.3
Q1/2007 Q1/2008
Revenues Compact Equipment(€ million)
+ 361.1%
21.4
98.8
Q1/2007 Q1/2008
Revenues Services
+ 16.0%
33.8 39.2
Q1/2007 Q1/2008
(€ million)
48Reference (apr02)
Overview
IPO
Financials 2007 and Q1/2008
Merger
Outlook
The Company
49Reference (apr02)
Source: Global Insight.
Ø p.a. +4.6%Construction industry by 2010
+7.7%Construction projects 2008
AsiaSource: Global Insight.
+7,6%South America: Construction projects 2008
+7.1%USA: Non-residential construction by 2011
+0.4%USA: Residential construction by 2011
AmericasSource: Euroconstruct.
p.a. +2.2%2009 and 2010
Ø p.a. +3.5%Underground construction by 2010
+3.1%Non-residential construction 2008
EuropeSource: Federation of the German Construction Industry.
Germany
+3.0%Construction investment 2008
Bright medium to long-term market forecasts for the construction industry
Global Construction Industry Growth
2007 2008e 2009e 2010e
+3.6%
+5.3%
+5.3%
US$ 5 trillion
Market Performance
Source: Global Insight.
50Reference (apr02)
Wacker Neuson is striving for sustained expansion through both organic growth and acquisitions
Global launch of products from the compact equipment business segment
Expansion of product portfolio in the light and compact equipment business segments
Expansion of rental business in Central and Eastern Europe
International expansion, including Russia, Eastern Europe, India and China
Acquisitions to round off product portfolio
51Reference (apr02)
Wacker Neuson is aiming for further growth in sales and earnings
Revenues
(€ million)
20071 2008e2
>1,000
742.1
619.3
2006
503.2
411.2
2004 2005
EBITDA ratio
16.1%
>17.0%
1 All figures prepared according to IFRS; figures for 2007 include Q4 results for Neuson Kramer.2 All figures prepared according to IFRS; Sales on pro-forma basis
Reference (apr02)
Annual General Meeting 2008
June 3, 2008
Wacker Construction Equipment AG
