Introduction TrelleborgVibracoustic Capital Markets Day Peter Nilsson, President and CEO Berns, December 6 1 2012-12-06 TRELLEBORG GROUP
The skills and strengths of both organizations are perfectly blended Global leader in automotive antivibration solutions TrelleborgVibracoustic was formed in July 2012, in a 50/50 joint venture between Trelleborg and Freudenberg Close to perfect match between two industry leaders Complementary in: - manufacturing footprint - R&D footprint - product portfolio - customer footprint Most global presence 2 2012-12-06 TRELLEBORG GROUP
Will create shareholder value Global leader in automotive antivibration solutions Revenue and cost synergies Sustainable growth above market development EBIT-margin that exceeds industry average Guest speaker today is Lennart Johansson, Managing Director for TrelleborgVibracoustic 3 2012-12-06 TRELLEBORG GROUP
TrelleborgVibracoustic Lennart Johansson Managing Director December 6th, 2012 4
Agenda Introduction Market overview The global leader in antivibration solutions Strategy and the way forward Summary & conclusion 5
A 50/50 joint venture based on a strong heritage Founded 1905 3.4 bn sales 1 21,500 employees 1 Of which: AVS 790 m sales 5,500 employees 50% Founded 2012 Of which: 690 m sales 3,300 employees 50% 1.6 bn sales * 8,800 employees Founded 1849 6.0 bn sales 1 35,000 employees 1 * Sales R12M (September 2012) 6 1 Source: Company data, 2011 Annual Report
A snapshot on TrelleborgVibracoustic Global market leader for automotive antivibration solutions with a market share of 15% All top OEMs and Tier 1 suppliers served the globe around Six business areas covering a complete product portfolio for passenger cars, commercial vehicles and trailers Strong product innovation pipeline Most global footprint with 32 production and 6 pure development sites in 18 countries ~8,800 employees generating annual revenues of 1.6 bn (Sept 2012 R12M) 7
Antivibration solutions critical components Ensures comfort, safety, and durability in all vehicle systems by: Providing damping and spring functions Preventing the engine mass shifting, improving ride, handling and safety Preventing noise transfer through the vehicle s steel structure Absorbing shock input improved road holding and driver safety Helping to provide system durability Protecting the road surface 8
Antivibration solutions driving vehicle comfort, safety and durability on a global scale Increased comfort and safety with lower emissions and reduced cost and less weight and optimal load protection with antivibration solutions 9
Agenda Introduction Market overview The global leader in antivibration solutions Strategy and the way forward Summary & conclusion 11
Automotive market with growth potential Estimated global automotive production CAGR = 6% million units 120 100 80 60 74 77 82 85 93 99 104 109 40 20 0 2010 2011 2012 2013 2014 2015 2016 2017 Source: LMC Global Automotive Production Forecast (vehicles up to 6.5 t) / September 2012 12
Commercial vehicle demand continues to grow Estimated commercial vehicle production CAGR = 4% million units 4 3 2 1.9 2.8 3.0 2.9 3.0 3.3 3.5 3.6 1 0 2010 2011 2012 2013 2014 2015 2016 2017 Source: LMC GAPF 09/12, LMC GCVF 0912, internal TBVC estimates 13
Major regional differences in automotive build 70 60 2012 2017 59 million units 50 40 30 41 20 10 12.7 14.3 9.1 6.7 15 18 4 5.8 2.0 3.1 0 Western Europe Eastern Europe North America South America Asia Rest of world Source: LMC Global Automotive Production Forecast (vehicles up to 6.5 t) / September 2012 14
OEM platform strategy is driving change Comments Share of top 20 global platforms Approx. 50% of volume built on 20 global platforms in 2017 10 of top 20 platforms developed in Asia Top 20 28% Others 72% Top 20 47% Others 53% Global footprint prerequisite for winning projects 2012 2017 TrelleborgVibracoustic currently present in 19 of top 20 global platforms 15
TrelleborgVibracoustic double growth compared to underlying market Average AVS content per car: 100+ Average AVS content per truck: 500+ 150 125 100 75 TrelleborgVibracoustic s sales vs. underlying LV production 142 121 150 125 100 75 50 2008 2009 2010 2011 2012 50 Light vehicle production, 2008-12 (index) TrelleborgVibracoustic sales, 2008-12 (index) Source: LMC GAPF 09/12, LMC GCVF 0912, internal TBVC estimates, does not include aftermarket potential 16
AVS: ~10 bn market with fundamentals supporting strong growth Emission legislations Electric vehicles / hybrids More advanced solutions Demand for comfort Low cost relative critical function and value Key market drivers Entrance barriers Market characteristics Global footprint R&D and manufacturing Polymer expertise Engineering & design expertise Simulation & testing OEM global supply approval Fragmented market Few global players supplying global platforms Consolidation expected organic /M&A 17 Source Roland Berger/TBVC research
Technology change triggers further AVS market growth Measure Fuel Economy Improvement Potential Impact for AVS Market The Solution Start- Stop 10-15% Sudden changes in drive mode require variable damping and stiffness, active and switchable mounts. Increased number of starts require isolators with improved durability. Cylinder deactivation 8-12% Sudden changes in drive mode require variable damping and stiffness, active and switchable mounts Turbo-Charging 10-15% Source of high frequency noise: Increased cylinder pressure requires more torsional vibration damping. Super-Charging 5-7% Source of high frequency noise: Increased cylinder pressure requires more torsional vibration damping. Dual Clutch, Variable Transmissions 5-10% Source of high frequency gear whine tuned mass dampers Additional forward gears 2-5% Source of high frequency gear whine tuned mass dampers Weight Reduction (for every 45kg, circa 3% of GVW) 1-2% Demand for smart design, new materials, composites, fewer components. Source LMC Automotive Market Presentation Oct 2011 18
Agenda Introduction Market overview The global leader in antivibration solutions Strategy and the way forward Summary and conclusion 19
TrelleborgVibracoustic a winning combination Global leader in antivibration solutions Most comprehensive geographical footprint Most comprehensive customer portfolio Most comprehensive product range Engineering and technology leader Best global partner for OEMs Focus on growth Fully focused on one segment in automotive market Best positioned in the industry Cost & capital efficiency Two global leaders sharing best practice Cost efficiency in all dimensions Synergies 20
The clear leader in a fragmented market Estimated global market value for automotive AVS 10 bn TrelleborgVibracoustic 15% Others 36% Tokai 12% Market share varies considering market segments and geographies Product scope varies greatly among competitors ZF Friedrichshafen 5% Pyung Hwa 2% Dong Ah 2% Anvis 2% KKC 2% Yamashita 3% Hutchinson 3% Toyo 4% Bridgestone 5% Cooper Standard 4% Continental 5% Source: TrelleborgVibracoustic internal estimates 21
Competitive edge from broadest product portfolio Chassis Mounts Engine Mounts Air Springs TVD Isolators & Dampers MCU TrelleborgVibracoustic Tokai Toyo ZF Friedrichshafen Cooper Standard Continental 22 Source Roland Berger/TBVC research
Unrivalled global footprint 32 manufacturing incl. 11 with engineering facilities 6 dedicated R&D centres 23
Most complete emerging markets presence Zavolzhye, RU Yantai, CN Wuxi, CN Shanghai, CN Chandigarh, IN Daegu, KR Taubate, BR Guarulhos, BR East London, ZA Manufacturing Dedicated R&D centres 24
A balanced customer portfolio (2011 proforma sales) Other passenger cars Asian OEMs Trucks VW Fiat / Chrysler Ford PSA Renault Nissan BMW Daimler GM 25 Source: Estimated end-user customer (incl. tier 1-2)
Future innovation drivers Integrated Mass Dampers Fuel Efficiency Weight & Space Saving High Frequency Noise Thermoplastics System Integrated Dampers Decoupled Pulleys Improved Spring Rate Cost Reductions Dual Rubber Bush R&D: 5% of sales > 50% sales with products younger than 4 years Improve Performance Active Mounts 26
Unlocking synergies for further profitable growth Accelerating growth Cost optimization Increased negotiation power Offering full product range to a wider client base Cross selling to each others client base Best positioned for global platforms evolution Manufacturing footprint optimization Parts standardization R&D efficiency improvement Streamlining overhead and administration Larger purchasing volumes Aligned design processes 27
Agenda Introduction Market overview The global leader in antivibration solutions Strategy and the way forward Summary & conclusion 28
Long-term strategies for profitable growth 1 Be the leading global automotive AVS supplier and solution provider 2 Have sales geographically mirroring vehicle production 3 Aim for a significant market share in selective must-win innovation areas 4 Become the cost leader in the industry 29
Long-term strategies for profitable growth 1 Be the leading global automotive AVS supplier and solution provider 2 Have sales geographically mirroring vehicle production Sustainable growth above total market development EBIT margin exceeding industry average 3 Aim for a significant market share in selective must-win innovation areas 4 Become the cost leader in the industry
Way forward from July 2012 to end of 2015 Integration Common culture, structures, systems and procedures Identification of synergies Best practices, purchasing, manufacturing footprint and scale efficiencies Implementation of savings Execution of profitable growth strategy 31
Significant margin potential from optimizing and scaling up business Underlying EBIT-margin potential Margin enhancement drivers 6.0% 7.5% 10% Global footprint Cost base optimization Standardized engineering / R&D Standardized production 2011 2015 2015 Proforma excl. incl. Synergies* Synergies* Cross-selling Combined purchasing 32 * Based on current market estimates by LMC
Agenda Introduction Market overview The global leader in antivibration solutions Strategy and the way forward Summary & conclusion 33
Leveraging market drivers and customer demands Globalization Technology development Cost pressure Consolidation 34
Strong foundation for profitable growth Global leader in antivibration solutions Strongest and broadest product portfolio Stand-alone entity with full strategic flexibility Presence in 18 countries with global R&D footprint Leading presence in emerging markets Solid financial base Execution & leverage platform 35
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