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Company Presentation January 2014
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1
ElringKlinger Group
ElringKlinger Group
KeplerCheuvreux13th German Corporate Conference
January 21, 2014
It’s all about emissions – Focus on green technologies
� Optimized combustion engineremains dominant mid-term
� Structural growth in core business:
turbo charging, heat shielding, lightweight
� Driver: Hybrids
� Battery-electric + fuel cell
� Value sold in increases
� Almost every engine willrequire exhaust abatement: off-
road, buses, ships, trucks
� Diesel particulate filters & coating,full exhaust abatement systems
Exhaust abatement
Downsizing/ Lightweight
E-Mobility
Minus CO2
Minus particulates
Minus CO, CH, NOX
2
ElringKlinger Group: Major divisions (share of sales 2012)
Cylinder-Head
Gaskets (15%)Shielding
Technology (25%)
Housing
Modules (20%)
After-
market (10%)
Engineered
Plastics (8%)
Specialty
Gaskets (16%)
E-Mobility (1%)Exhaust
abatement (3%)
3
It’s all about cutting CO2 – Legislation driving business
Source: A.T. Kearney Powertrain Study May 2012; EK research
130
75
~178
102
~160
112
0
40
80
120
160
200
2015 2025 2015 2025 2015 2025
CO2 limit in g/km
EU US China
2012: ~136 g/km 2012: ~232 g/km 2008: 185 g/km
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1 2 3 4 5 6 7 8 9 10 112005 2009200820072006 201320122010 2011 2014 2015
Growth prospects: Emerging markets followingEuro emission standards (CO, HC, NOx, particulate matter)
US
Mexico (Gas)
Brazil (FF)
Brazil (Diesel)
Argentina
Europe
China (Bejing)
China (Nationwide)*
Thailand
S. Korea
India (Capital area)
India (Nationwide)
TII, B8
Tier 1
Tier 1
Euro 3
Euro 2
Euro 4
Euro 2
Euro 2
Euro 2
Euro 3
Euro 3
Euro 2
TII, B5 (LEV)
Euro 4
LEV
Euro 4
Euro 3
Euro 5
Euro 3
Euro 4
Euro 4
Euro 3
Euro 3
Euro 4
Euro 3
TII, B4 TII, B2
Euro 5
ULEV
Euro 5
Euro 6
Euro 5
Euro 4 (Gasoline)
Euro 4
Euro 5
Euro 5
Euro 4
Source: CMS * tbd: alternatively as of 2013/Euro 5 drafted 5
Euro 4 Euro 5 (Diesel)
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ElringKlinger enabling efficiency Cutting fuel consumption by:
27 mpg
Powertrain
improvements/
Downsizing
Body and
accessories
advancements
47 mpg
2011 2020 2030 2040
Lightweight
construction
Hybridization
Source: www.plugincars.com
ElringKlinger enabling Downsizing – Going small in CO2
Trend towards smaller engines: Same output from lower displacement
� up to 30% lower fuel consumption
Direct injection, soaring injection pressure
� Gasketing becomes even moredemanding
Rising temperatures
� Number of thermal shielding partsincreases
Turbo-charging essential
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Turbocharged: Gaskets, V-rings and heat shields for turbochargers
Turbocharging market growing by 75% from 2011-2017 to 39 mn units; Penetration plus units per car increase(CAGR > 10%)
EK provides inlet/outlet gaskets forcold side (compression) andhot side (turbine)
V-ring coupling and sealing component
Thermal shielding module
Potential for the aftermarket
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Lightweight design: Substituting metal by plastic
Weight reduction at a lower cost = lower fuel consumption= less CO2 output
EK designs and produces polyamide housing modules incl. sealing system: cam cover modules, oil pans, gearbox casings, TC air ducts, oil suction pipes
Ramp-up of truck parts liaised to EURO VI introduction
OEM-accepted cost per kg saved: 3 to 10 Euros (ICE) / 5 to 14 Euros (HEV)
Hummel acquisition adds unique tooling competence: New composite materials for additional light weight products
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Total shielding
Shielding package all in one:Engine + underbody + exhaust system
Increasingly complex heat management in downsized engines
Structural growth: Number of heat shields in and around the engine and exhaust system goes up
Trend: Combining thermal shielding withacoustical functions
Added-value: Integration of gasketingand sensors (e.g. TC control sensor)
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Exhaust abatement technology – Every engine needs a Hug US retrofit business on the rise
CARB (California Air Resources Board)
certification for DPF-retrofit business
Mandatory for on-road vehicles above 6.3
tons in California
Hug market leader in core market
California: Market share ~35%
USP: Hug ceramic substrate &
ElringKlinger precious-metal free catalytic
coating material
First prototypes in development for US and
European truck OEM
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Every engine needs a Hug – low emissions on the high seas
Increasing retrofit business for inland water
vessels and yachts with nauticlean diesel
soot particulate filters (DPF/DeNOx/HC)
Public awareness and expected emission
legislation opens up new opportunities also
in ocean ships
Emissions caused by ocean cruisers
(e.g. per day):
NOx: 5,250 kg = 422,000 cars
Soot: 450 kg = 1,000,000 cars
CO2: 480,000 kg = 84,000 cars
Projects for ocean liners in negotiation
13
Every engine needs a Hug – shale gas on the rise
Hug offers filter technology for natural gas
engine-based power plants
First contracts for complete exhaust
abatement systems to be used in power
plants in North America
Currently under development:
Recuperation catalytic converter for large-
scale natural gas engines incl. breaking up
of methane
E-Mobility: Battery Technology for Hybrids/ BEVs and Fuel Cells
High pre-expenses: almost 100 engineers and specialists plus prototyping and general cost
In-series production contracts for 3 European OEMs: EUR 6.6 (4.5) mn sales in 2012
Several development projects with car manufacturers as well as battery producers
Fuel-cell: Auxiliary power units for trucks
Non-automotive fuel-cell applications foruse in material handling equipment
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Hybrids: Combination of combustion engine & electricdrivetrain increasing value sold in
Optimized Combustion Engine
Core business:
� Turbocharger and engine sealing
� Exhaust gaskets
� Thermal shielding parts
� Plastic housing modules
Electric Drivetrain
� Lithium-ion battery components
> Cell contact systems
> Pressure exchange systems> EMR shielding
> Cell casing
� Fuel-cell components,
APUs/ complete stacks
Hybrid
Value sold inmax. Euro 40 to 60
Value sold inEuro 100 to 150
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ElringKlinger Group – A global production network
Mexico
ChinaSouth Korea
Japan (JV)
Indonesia (JV)
Thailand (JV)
India
Great Britain
Germany
Switzerland
ItalyFrance
Spain
Hungary
TurkeyRomania
Brazil
South Africa
CanadaUSA
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Employees ElringKlinger Group worldwide – merger of Hummel-Formen has number of employees in the AG increase
AG2,266 (2,060)
Domestic subsidiaries756 (860)
International subsidiaries3,534 (3,364)
as of September 30, 2013 (py)
Group6,556 (6,284)
+4.3%
Germany3,022 (2,920)
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Group Sales by region Q3 2013 (py) Almost 55% of OE sales in Asia and the Americas
Germany 31.5% (31.1%)
NAFTA17.1% (16.8%)
incl. exports: ~25% of OE sales
South America &Others
5.4% (6.4%)
Rest of Europe 29.4% (28.9%)
Asia and Australia 16.6% (16.8%)
incl. exports: ~24% of OE sales
19
Sales revenues driven by long-term organic growth
€ mn
417459 475
528608
6581
579
796
1,033²
1,127
0
200
400
600
800
1000
1200
2003 2004 2005 2006 2007 2008 2009 2010 2011 20121 Incl. acquisitions of SEVEX (~EUR 46mn sales) and Marusan (~EUR 14 mn sales)
² Incl. acquisitions of Flat gaskets business of Freudenberg (~EUR 53 mn sales), Hug Group (~EUR 29 mn sales) and
Hummel-Formen (~EUR 1.6 mn sales)
20
Earnings before taxes
50.5
65.270.9
87.6
114.9
60.0
49.4
94.0
113.91
123.8
0
30
60
90
120
150
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
€ mn
1 Excl. one-time gain of EUR 22.7 mn from sale of industrial park
21
Normalization of capex towards 8 to 10% of sales
137.9
95.0
134.3121.6
114.3
61.771.2
82.296.8
79.4
0
40
80
120
160
200
2008 2009 2010 2011 2012
Investments in plant, property and equipment, invest. prop. and intangible assets
Depreciation and amortization
€ mn
22
Balance sheet structure as at September 30, 2013Solid Equity Ratio at 49.3%, shift to long-term debt
22.625.942.940.9
0
28.123.7
57.159.149.350.4
September 30,
2012
September 30,
2013
September 30,
2012
September 30,
2013
Assets
in %
Non-current liabilities
Current liabilities
Shareholder‘s equityNon-current assets
Current assets
Liabilities and
shareholder’s equity in %
23
A though year 2013: Western Europe at 25-years low –Russia, Brazil and India down significantly
In 2013 global car sales overall estimated to have grown by approx. 3% thanks to dynamic growth in Asia (China/ASEAN) and the US
Germany
Western Europe
Russia
Brazil
India
-10% -8% -6% -4% -2% 0%
Car registrations 2013 (yoy change in %)
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Preliminary results 2013 marked by one-time effects –negative FX effects burden
Expected one-time gain related to the assumption of control of Japanese JV amounting to EUR 16 to 18 mn
Sales 2013 growing 4.3%, organic growth at 6.1%
EBIT expected in the range of EUR 160 to 162 mn, clean EBIT adjusted for one-offs comes in at approx. EUR 146 mn
Negative FX effects related to strong Euro impact EBIT especially in H2 2013 –operating result coming in higher
One-offs 2013:> EUR 16 to 18 mn expected one-time gain as a result of the assumption of
control of Japanese JV> EUR 1.8 mn restructuring charge at ElringKlinger France> EUR 1.5 mn exceptional expenses associated with market penetration
efforts in the Aftermarket segment> EUR 1.4 mn one-time gain related to full take-over of Korean JV
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Pushing growth in Asia: Assumption of control of JV ElringKlinger Marusan Corporation
ElringKlinger concludes contract with JV partner assuming control of the 50:50 JV ElringKlinger Marusan, Tokyo, as of December 31, 2013
This results in an expected one-time gain in the range of EUR 16 to 18 mn, recognized already in BY 2013; no effect on 2013 sales
Expected impact in 2014: Full consolidation of ElringKlinger Marusan (until 2013: proportionate rate of 50%)> Additional sales revenue contribution of EUR 25 mn> Additional EBT approx. EUR 1.5 mn> PPA approx. EUR 1.5 mn
Key role in the Group’s Asia strategy (ASEAN region)> More than 20% of OE sales (incl. exports) generated in Asia> Strong growth in development projects with Asian customers
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Markets 2014
ElringKlinger expects overall worldwide LV production in 2014 to grow by around 2 to 3%
Signs of stabilization in Western European car sales, but no fast recovery: December car sales e.g. in France +9.4%, Spain +18.2%, Italy +1.4%, but ytd still -5.7% (France) and -7.5% (Italy)
China/ASEAN and North America continue to be the drivers in the short but also medium term
High degree of uncertainty in European truck sales due to pre-buying in H2 2013 related to start of EURO VI> EURO VI demand ramping up stronger as from Q2 2014 > Strong pick-up in US class 8 orders: up 40% yoy in December 2013
Product launches and structural growth in ElringKlinger’s core business unitsenable the Group to outgrow vehicle markets
27
Outlook 2014: Financial performance
Based on the development of global vehicle production described, the ElringKlinger Group expects to see organic sales growth of 5 to 7% in 2014
Full consolidation of ElringKlinger Marusan will contribute additional EUR 25 mn in sales
Group EBIT margin should continue to improve slightly in 2014
Overall ElringKlinger is planning a further increase in adjusted EBIT in 2014 –targeting a range of EUR 160 to 165 mn (2013: approx. EUR 146 mn)
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Outlook mid-term: margin drivers
Strong trend at exhaust system specialist Hug to continue
Improving operating performance at Freudenberg France;Restructuring of Freudenberg France completed, signs of slight recovery in French car market (December 2013: +9.4%)
E-Mobility: Sales ramping up against high level of pre-expenses –break-even in 2014/15 depending upon BEV take-up rates at customers
Product ramp-up (PHM) gaining momentum in truck segment liaised to EURO VI as of Q2 2014
Internationalization of Engineered Plastics division in the US and China
Expansion of Aftermarket business in France, Italy and the US
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ElringKlinger Group
Thank you for your attention!
Disclaimer – Forward-looking Statements and PredictionsThis 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 futureshould not be interpreted as guarantees of the future developments and results that they
refer to. Whilst the Management Board are 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 anddevelopments are dependant 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 tothe general economic and business situation, variations of exchange rates and interest
rates, poor acceptance of new products and services, and changes to business strategy.
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