Wacker Neuson Group · H1/19: Growth in all regions Revenue Europe +15.5% yoy (adj. for FX effects: +15.6%) Rapid growth in the UK (significant gains with dumpers and excavators),

Wacker Neuson Group

August 2019

Agenda

2Wacker Neuson SE, August 2019

Overview 01

Financials H1/19 02

Outlook 03

Product range to meet the full spectrum of customer needs

3

Light Equipment Compact Equipment

1 FY 2018.2 In selected countries.

Concrete technology Compaction

Demolition Power & Lighting Pumps

Heating

Excavators

Dumpers

Telehandlers Wheel loaders

Skid SteersBackhoe-loaders

AcademyUsed machines2

Repair2 &

Maintenance2

Financing

Rental service2

E-Store2

Genuine parts

Telematics

Services

53% of sales127% of sales1 20% of sales1

Wacker Neuson SE, August 2019

Concrete solutions

Target industries besides construction

4

Markets Light equipment Compact equipment

Agriculture

Renovation/rehabilitation

Development

Infrastructure (road and highway

construction, bridge construction)

Gardening and landscaping

Handling logistics/port logistics

Residential construction

Demolition

Maintenance/repairs

Industry & Recycling

Underground construction

Oil & gas/energy industry

Events

Municipalities

Target group oriented sales:

Light equipment 27%

Compact equipment 53%

Services 20%

Revenue split (FY 2018, as %)

Business segmentsMost industries demand both light an compact equipment


Our brands and target groups

5

Construction, gardening/landscaping, energy sector etc. Agriculture, horse breeders, tree nurseries etc.


Global footprint

6

Sales by region Core markets: EMENA & NAM, further internationalization ongoing

Europe 73% Americas 23% Asia-Pacific 4%

Revenue split (FY 2018)


5 year comparison

7

Revenue and EBIT margin 2014-2018


1,2841,375 1,361

1,534

1,707

10.2%

7.4%6.5%

8.6%9.4%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

500

1,000

1,500

2,000

2014 2015 2016 2017 2018

CAGR +7.4%[€ m]

Agenda


Overview 01

Financials H1/19 02

Outlook 03

Key figures

9

NWC1 ratio: 41.6%

(+7.5 PP yoy)

DIO2: 155 days

(+25 days yoy)

Equity ratio: 52.5%

(-12.5 PP yoy)

June 30, 2019

Revenue yoy

+15%

EBIT yoy

+7%

Op. CF

€ -145m

FCF

€ -186m

(margin: 8.9%)

H1/19

(€ 951m)

(H1/18: € 12m)(H1/18: € -35m)

1 Net working capital / annualized revenue for the quarter.2 Days inventory outstanding = (inventory / annualized cost of sales for the quarter)*365 days.

Revenue yoy

+14%

EBIT yoy

-3%

Op. CF

€ -29m

FCF

€ -43m

(margin: 10.5%)

Q2/19

(€ 516m)

(Q2/18: € 57m)(Q2/18: € 6m)

Wacker Neuson SE, H1/19 conference call, August 6, 2019

425379 392 371

455416

466435

516

11.0% 10.6%

7.8%6.2%

12.3%

10.1%

8.4%6.9%

10.5%

0%

5%

10%

15%

20%

0

100

200

300

400

500

Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Revenue and earnings

10

+14%

Q2/19: Accelerated revenue growth continues

Income statement (excerpt)

Comments on H1/19

Revenue +15.2% yoy (adj. for FX effects: +13.7%)

▪ Growth across all reporting regions and segments

▪ Compact equipment for the agricultural sector grew at a significantly

higher-than-average rate (+32% yoy)

Gross profit +9.7% yoy (gross profit margin -1.3PP)

▪ Increased costs in production and logistics (additional effort due to higher

production and material volumes, handling and rework of unfinished

machines, changes in product mix)

▪ Restructuring of US plant continued

EBIT +7.4% yoy (EBIT margin: -0.6PP)

▪ Operating costs increased at a disproportionately low rate despite a

moderate increase in headcount, wage increases and costs for Bauma

▪ Operating costs as a share of revenue decreased by 0.6PP vs. H1/18

Adj. earnings per share1 +13.0% yoy

▪ The financial result was EUR 0.6m up on the previous year: Positive FX

effects (EUR +2.2m yoy), i.a. due to the appreciation of the USD and

currencies in some emerging economies; interest income slightly below

prior year (EUR -1.6m yoy), mostly due to the initial application of IFRS 16

▪ The tax rate increased to 31.8% (H1/18: 26.4%); the sale of a real-estate

company had a positive impact on the tax rate in the previous year.

Revenue

[€ m]

EBIT

margin


€ m Q2/19 Q2/18 H1/19 H1/18

Revenue 516.1 454.6 950.7 825.1

Gross Profit 136.0 128.9 246.9 225.1

as a % of revenue 26.4% 28.4% 26.0% 27.3%

SG&A incl. other income/expenses -81.7 -73.2 -162.4 -146.4

as a % of revenue -15.8% -16.1% -17.1% -17.7%

EBIT 54.3 55.7 84.5 78.7

as a % of revenue 10.5% 12.3% 8.9% 9.5%

Financial result -4.4 -2.9 -4.7 -5.3

Taxes on income -16.3 -27.8 -25.4 -33.8

Profit for the period 33.6 79.8 54.4 94.4

EPS (in €) 0.48 1.14 0.78 1.35

Adj. EPS (in €)1 0.48 0.48 0.78 0.69

1 Adjusted for the extraordinary income in the amount of EUR 45.8m after tax

from the sale of a real estate company held by the Group in Q2/18.

H1/19: Compact equipment remains growth driver

950.7

28.9

229.5

692.3

Total H1/19

Asia-Pacific

Americas

Europe

Business development by region and business segment

11

H1/19: Growth in all regions

Revenue Europe +15.5% yoy (adj. for FX effects: +15.6%)

▪ Rapid growth in the UK (significant gains with dumpers and excavators),

above-average growth in France, Poland, Germany, Austria, Italy and

Spain, increased market shares in many product groups

▪ Revenue generated with Weidemann- and Kramer-brand compact

equipment for the agricultural sector +32% yoy

Revenue Americas +13.7% yoy (adj. for FX effects: +7.2%)

▪ Continued growth in the Group’s business with anchor dealers

▪ Restrained demand in Canada, partially related to changes in emissions

legislation which had led to pre-buy effects in Q4/18

▪ Double digit growth in South America, uncertainties remain

▪ Restructuring in the US continued as planned, Brazilian plant for

generators was closed in H1

Revenue Asia-Pacific +19.9% yoy (adj. for FX effects: +19.5%)

▪ Continued ramp up of production in China, strong growth especially with

excavators, Australia behind expectations

▪ First mini and compact excavators delivered to John Deere

▪ Increased price pressure in the Chinese mini excavator market

73%

24%

3%

100%

+16%

+14%

+20%

+15%

share yoy

104.0

5.8

-1.1

84.5

EBIT1

Comments on H1/19

Revenue [€ m]

960.5

175.5

537.9

247.1

Total H1/19

Services

Compact equipment

Light equipment 26%

56%

18%

100%

+7%

+21%

+10%

+15%

share yoy

1 EBIT for regions before consolidation.2 Revenue by business segment before cash discounts.

Revenue [€ m]2


Rise in inventories and receivables drive up net working capital

12

Inventories

Trade payables

Trade receivables

▪ Inventories on high levels, actions to reduce stocks have been taken

(i.a. appropriate reduction of production output)

▪ Rise in trade receivables due to the increased volume of business and

an unfavorable regional and customer mix (related to the expansion of

the dealer network in North America)

▪ Rise in trade payables yoy due to the increased volume of business

and an increase in inventory

→ Significant, temporary rise in net working capital (see next slide)

1 Days inventory outstanding = (inventories/(cost of sales*4))*365 days; 2 Days sales outstanding =

(receivables/(revenue*4))*365 days; 3 Days payables outstanding = (payables/(cost of sales*4))*365 days.

Comment

Trade payables [€ m]

Inventories

[€ m]

428 439 434 459 462500

553

633 645

129150 141 153

130151 144

179155

0

100

200

300

400

0

100

200

300

400

500

600

700

Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

DIO1

[days]

272249 235

273

320 304 303

371413

58 60 5567 64 67

59

78 73

0

50

100

150

200

0

100

200

300

400

Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

114 120134

149163 167

213 208 199

34 41 43 50 46 50 56 59 48

0

100

200

300

400

0

100

200

300

Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Trade receivables [€ m]

DPO3

[days]

DSO2

[days]


13

Net working capital

Free cash flow

Cash flow from operating activities

▪ Rise in net working capital due to high levels of inventory and trade

receivables (see previous slide)

▪ CAPEX at EUR 42.5m (H1/18: EUR 27.3m), mostly expansion of

production and logistics facilities

▪ Cash flow from operating activities and free cash flow significantly

below prior year levels

▪ Cash flow from financing activities at EUR 193.2m (H1/18: EUR

20.4m), placement of a promissory note of EUR 150m, increase in

short-term bank loans (see next slide)

33 61 63

-41

6 10 8

-116

-29

-150

-100

-50

0

50

100

150

Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Comment

2851 46

-45

57

-3 -12

-143

-43

-160

-120

-80

-40

0

40

80

Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Free cash flow

[€ m]

Cash flow from operating activities

[€ m]Net working capital

[€ m]

586 568 536583

620 638 644

797858

34% 38% 34%39%

34%38%

35%

46%42%

0%

20%

40%

60%

80%

100%

0

200

400

600

800

Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Net working capital

[as a % of sales]

Cash flow impacted by a rise in net working capital


1,083 1,103 1,115 1,122 1,170 1,200 1,221 1,241 1,187

65% 67% 69%65% 65% 65% 64%

58%53%

0%

20%

40%

60%

80%

100%

0

200

400

600

800

1,000

1,200

1,400

Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

245195

148193 188 193 205

358

484

23%18%

13%17% 16% 16% 17%

29%

41%

0%

10%

20%

30%

40%

50%

60%

70%

0

100

200

300

400

500

Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Marked rise in net financial debt

14

▪ Increase in both long- and short-term liabilities

▪ May 2019: Promissory note (Schuldschein) successfully issued with

attractive interest rates and terms of five and seven years to secure

long-term funding for the Group’s accelerated growth

▪ Marked rise in net financial debt, gearing1 at 41%

▪ Equity ratio at 53% significantly below last quarters’ average

0.90.8

0.7

1.2

0.60.8 0.8

1.61.5

0.0

0.5

1.0

1.5

2.0

Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Net financial debt

[€ m]

Equity

[€ m]

Net financial debt and gearing

Equity and equity ratio

Net financial debt/EBITDA

1 Net financial debt/equity. 2 Net financial debt/annualized EBITDA for the quarter.

Gearing1

Equity ratio

Net financial debt/

EBITDA2 [x]

Comment


Share Development

15

The share in 20191

Key figures per share

Dividend payout

1 As at July 31, 2019 2 Peergroup: Ashtead, Atlas Copco, Bauer, Caterpillar, Cramo, Deutz, DoosanBobcat, Haulotte,

Husqvarna, John Deere, Komatsu, Manitou, Palfinger, Ramirent, Terex, United Rentals, Volvo. 3 As at Aug. 02, 2019.

Family 58%

Free float 42%

in € H1/19 H1/18

Earnings per share 0.78 1.35

Book value per share 16.93 16.69

Share price end of period 22.12 21.76

Market capitalization (€ m) 1,551.5 1,526.2 (Total shares: 70,140,000)

Coverage3 Shareholder structure

Bank TP (€) Recom. Date

Hauck & Aufhäuser 36.50 Buy July 11, 2019

Warburg 28.80 Buy June 17, 2019

MainFirst 28.00 Outperform Aug 02, 2019

Metzler 27.00 Buy July 04, 2019

Berenberg 27.00 Buy Jan 20, 2019

Bankhaus Lampe 24.00 Buy July 11, 2019

Commerzbank 23.00 Hold July 24, 2019

Kepler Cheuvreux 20.00 Hold July 09, 2019


1.30

0.940.81

1.25

2.06

0.50 0.50 0.500.60

38%53%

62%48% 53%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

0.00

0.50

1.00

1.50

2.00

2.50

2014 2015 2016 2017 2018

EPS in € Dividend per share in € payout ratio

1.10 Special

dividend

0.50

0.60

% +11%

75

100

125

150

175

Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19

Wacker Neuson SDAX DAX Peergroup2

Agenda


Overview 01

Financials H1/19 02

Outlook 03

17

▪ Development of anchor dealers for compact and light equipment

▪ Pro-active relationship management with key account rental

customers and construction companies

▪ Focus on diversification of sales channels and industries

▪ Light equipment established in new retail channels

▪ North American market for skid steers accounts for ~70% of world market

▪ Essential product to be attractive for dealers and rental companies

▪ Large potential for further compact equipment sales

81,00089,000 91,000

0

25,000

50,000

75,000

100,000

2016 2017 2020e

Skid Steer market North America1

2016 – 2020e (units)

Roadshow Truck, Franklin Equipment.


Relocation of skid steer production to the US pays off

Skid steer as key product for North American market Development of anchor dealers in North America

1 Source: CECE, Off-Highway, 2018.

52,100

65,00072,000

0

20,000

40,000

60,000

80,000

2018 2019e 2023e

18

New plant located in Pinghu, 30 km from Shanghai city border.

▪ Mini and compact excavators for Asia-Pacific, production of the first model

(1.7 tons) started in Q1/18, production of larger models (5-7 tons) started in

Q4/18

▪ OEM cooperation with John Deere helps to improve capacity utilization

(cooperation covers machines in the range of 1.7 to 7.5 tons)

▪ Building on local/regional presence Demand for repair and maintenance

of infrastructure is growing, especially in megacities


Setting the base for further growth in Asia

Successful start of production in Pinghu (China))

Mini excavator market China 2018 – 2023e (units)1

Excavator: EZ17.

1 Source: Off-Highway, April 2019.

Strategic alliances and partnerships leverage our sales

191 Not in Japan, phasing out. 2 Commonwealth of Independent States. 3 Kramer “green line” only. 4 WN = Wacker Neuson.

Wacker Neuson produces

for Caterpillar1

Kramer3 distributes

via JD‘s dealer network

Weidemann distributes

via ISEKI‘s network

Wacker Neuson distributes

via MHE‘s network

HAMM produces

for Wacker Neuson

OEM (Latin America) Sales (Japan) Sales (ASEAN)

Core Markets

Further partnerships in Latin America & Asia


Randon produces for Wacker Neuson

OEM (global)OEM (global1) Sales (EMENA & CIS2) OEM (APAC) OEM (Europe)


for John Deere


for Würth

Strategic alliance with John Deere in EMENA and CIS1

201 Commonwealth of Independent States. 2 Revenues of FY 2017 in € bn, agricultural sectors only.

3 FY ending October 31. 4 FY ending September 30. Source: Annual reports. Wacker Neuson SE, August 2019

John Deere: Market leader within agricultural machinery2

9 small and compact wheel loaders 9 telehandlers4 tele wheel

loaders

Start in EMENA & CIS1 (Region 2)

1.3

3.8

7.4

9.9

11.3

17.9

SAME Deutz-Fahr

Claas

AGCO

CNH Industrial

Kubota

John Deere

4

3

[€ bn]

Outlook for 2019

21

Revenue and earnings guidance for 2019 confirmed

Business index for European construction industry subdued Business index for European ag industry decreases further

▪ Geopolitical risks and uncertainties regarding Brexit continue to have a

negative impact on the global economic climate. Many institutions have

revised their forecasts (i.e. IMF, World Bank)

▪ CECE and CEMA see weakening market environment in European

construction and ag industry

▪ Order books continue to be at a high level thanks to strong demand from the

construction industry in particular

▪ Revenue and earnings guidance for 2019 confirmed, with revenue expected

in the upper half of the projected range

▪ Net working capital expressed as a percentage of revenue is expected to be

slightly higher than the prior-year level (previous guidance: “slightly lower”)

Source: CECE, July 2019 Source: CEMA, July 2019

2012 2013 2014 2015 2016 2017 2018 2019

1,707

9.4%

8%

9%

10%

11%

12%

0

500

1,000

1,500

2,000

2018 Guidance 2019

1,775–1,850

9.5–10.2%

+4–8%Revenue

[€ m]

EBIT

margin

Comments


Agenda


Appendix

23

“Strategy 2022” and mid-term targets

“Strategy 2022” Mid-term targets 2022


24

Source: Off-Highway Research, April 2019.

▪ Worldwide construction equipment market to remain on a high level

▪ Strategy 2022 focuses on market share gains, especially with

compact equipment

Tailwind from global markets

Construction industry: 2019–2023 machinery sales Development of agricultural sector in Germany


Europe India Japan North America RestChina

Milk price development in Germany

Source: ife Institut für Ernährungswirtschaft, Kiel, March 2019.

Source: German Farmer’s association, March 2019.

Price [Cent / kg milk]

[Units]

Fragmented market

Dominated by niche/specialized manufacturers

Not targeted by heavy equipment manufacturers

Quality rather than price

Significant barriers to market entry

Light equipment/

construction

Market structures and dynamics

Fragmented market with local manufacturersCompact equipment/

agriculture

Global competitors

Similar target groups to light equipment for the construction

industry

Specialized manufacturers

Compact and heavy equipment providers

Compact equipment/

construction

Ammann

Bomag

Husqvarna

Multiquip/Mikasa

Weber MT

Competitors

JCB

Manitou

Schaeffer

Thaler

Compact equipment

Atlas Weyhausen

Bobcat (Doosan)

Kubota

Manitou

Takeuchi

Yanmar

Heavy equipment

Caterpillar

Hitachi

JCB

Komatsu

Liebherr

Volvo

25

Competitive landscape for Wacker Neuson Group



Challenges: New emission regulations for diesel engines

Engine emissions regulations – lack of harmonization driving costs and consuming resources

27

Continuous expansion of zero emission portfolio


EZ17e

DW15e

DT10e

AP1840e AP2560e

AS60e

AP1850e

ACBe

Financial Calendar and Contact

28

August 6, 2019 Publication of half-year report 2019; analysts’ & investors’ conference call

August 28, 2019 Commerzbank Sector Conference, Frankfurt

September 24, 2019 Berenberg/Goldman Sachs German Corporate Conference, Munich

November 7, 2019 Publication of Q3 report 2019; analysts’ & investors’ conference call

Contact

Wacker Neuson SE

IR Contact: +49 - (0)89 - 354 02 - 427

[email protected]

www.wackerneusongroup.com

Disclaimer

Cautionary note regarding forward-looking statements

The information contained in this document has not been independently verified and no representation or warranty expressed or implied is made as to, and no reliance should be placed on, the

fairness, accuracy, completeness or correctness of this information or opinions contained herein.

Certain statements contained in this document may be statements of future expectations and other forward looking statements that are based on management‘s current view and assumptions and

involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements.

None of Wacker Neuson SE or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this

document or its content or otherwise arising in connection with this document.

This document does not constitute an offer or invitation to purchase or subscribe for any securities and neither it nor any part of it shall form the basis of or be relied upon in connection with any

contract or commitment whatsoever.


Documents

Wacker Neuson Group · H1/19: Growth in all regions Revenue Europe +15.5% yoy (adj. for FX effects: +15.6%) Rapid growth in the UK (significant gains with dumpers and excavators),