Dave Carroll Capital Markets Day 2004 Markets Update
Tomkins Operates in Diverse End Markets Breakdown 2003 Sales ( 3,150m, US$4,795m) Non-Residential Construction 11% Other 9% Automotive OE 27% Residential Construction 14% Industrial Aftermarket 10% Industrial OE 10% Automotive Aftermarket 19% Source: Tomkins Sales to end market mix has been very stable over the past 3 years 2
Agenda Automotive Market Aftermarket Industrial Markets Non-Residential Construction Residential Construction Summary 3
Automotive Market Global Automotive Faster Growth in 2004 S. America N. America Asia Europe CAGR 97 03-5.5% 0.3% -0.1% 1.4% Production YTD Growth 27.8% -1.1% 2.8% 5.3% Total 0.3% 3.4% Source: CSM Autobase YTD growth is up this year 4
Automotive Market Global Automotive Production Outlook Millions of Units 70 60 50 40 Production CAGR 04-09 Emerging Markets 2 10.6% S. America 4.8% Europe 1.9% 30 20 N. America 1.4% 10-2004 2005E 2006E 2007E 2008E 2009E 1. Asia includes: Japan, S. Korea 2. Emerging Markets includes: Australia, China, India, Indonesia, Malaysia, Philippines, South Africa, Taiwan, Thailand Source: CSM Autobase Asia 1 1.3% Emerging Markets leading future production, overall market growing at 3.1% 5
Automotive Market State of the North American Auto Market Latest Trend Comments Production Q3 3.6m -1.6% from 2003 Inventory 63 days +9.0% > 5 year average Incentives $3,125 +7.3% from 2003 Financing Rates 5.6% 5.3% from 2003 Auto Sentiment 68% 73.0% from July 2003 Q4 Forecast 3.9m -3.4% from 2003 04 Full Year Forecast 15.8m -0.9% from 2003 05 Full Year Forecast 16.0m +1.7% from 2004 Market Share (Big 3) 61.7% 63.1% in 2003 Used Car Prices -6.6% Same as 2003 Source: CSM Autobase, Analyst Reports A weaker market than last year 6
Automotive Market State of the European Auto Market Latest Trend Comments Registrations 1.1m -3.5% from 2003 Production Q3 3.5m +2.5% from 2003 Q4 Forecast 4.1m -0.7% from 2003 Full Year Forecast 16.5 +1.7% from 2003 Market share (Top 6) 1 60.2% 62.0% in 2003 Foreign share 2 34.5% 33.5% in 2003 1 Top 6 Europeans consist of: VW, PSA, Fiat, Renault, DCX, BMW 2 Foreign consists of: Japanese, GM, Ford Source: CSM Autobase, Analyst Reports A soft market, but not substantially down from last year 7
Automotive Market State of the Rest of the World Auto Markets Latest Trend Comments 04 Asia* FY Production 12.8m +2.7% from 2003 05 Asia* FY Production 13.1m +1.4% from 2004 04 China FY Production 3.8m +13.9% from 2003 05 China FY Production 4.5m +20.0% from 2004 04 S. America FY Prod. 2.3m +22.8% from 2003 05 S. America FY Prod. 2.5m +9.0% from 2004 * Asia includes Japan and S. Korea only More positive news from Asia and South America 8
Agenda Automotive Market Aftermarket Industrial Markets Non-Residential Construction Residential Construction Summary 9
Aftermarket Global Aftermarket Growth A Large and growing market $610bn 2001 2010 growth ROW 3% Asia 9% Europe 20% 4.3% U.S. 68% CAGR Faster growing market than OEM on a global basis 10
Aftermarket Aftermarket Growth Outperforming GDP 10% 8% 6% 4% 2% Automotive Aftermarket GDP 0% -2% OEM -4% 1998 1999 2000 2001 2002 2003 Source: MEMA Aftermarket growth more stable than OEM and GDP growth 11
Aftermarket Key Factors Driving Aftermarket Growth 240 Motor Vehicle Registration (millions) 10.0 Average Age in Use (years) 220 CAGR = 2% 9.5 Cars Light truck 9.0 200 8.5 180 8.0 160 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 7.5 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 3,200 3,000 2,800 2,600 2,400 2,200 Total Miles Traveled (billions of miles) CAGR = 2% $1,400 $1,200 $1,000 $800 $600 $400 $200 Average Annual Cost of Repair by Age Average Age 2002 Up 70% 1990 2,000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 $0 1 2 3 4 5 6 7 8 9 10+ Source: 2004 / 2005 AAIA Factbook; MEMA; AASA 2003 12
Agenda Automotive Market Aftermarket Industrial Markets Non-Residential Construction Residential Construction Summary 13
Industrial Markets Industrial Production and Capacity Utilization 1997 = 100 Industrial Production Index % Capacity Utilization 120 80 115 2004 78 2004 110 2003 76 74 2003 105 72 100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 70 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: U.S. Federal Reserve Both indicators ahead of 2004 14
Industrial Markets Construction & Agricultural Production Indices 140 140 120 120 100 100 80 80 60 60 40 1998 1999 2000 2001 2002 2003 2004 40 Agricultural Equipment Index Construction Equipment Index Source: Federal Reserve Board, Ind. Prod. (G17) Release Main U.S. Industrial indices showing upward trend 15
Industrial Markets Heavy Truck Market Units 40,000 Heavy Truck Net Orders Units 40,000 Medium Truck Net orders 35,000 30,000 25,000 2004 35,000 30,000 25,000 2004 20,000 2003 20,000 15,000 15,000 2003 10,000 10,000 5,000 5,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Goldman Sachs Heavy truck up 104% and Medium truck down 2% on YoY basis 16
Industrial Markets ISM Purchasing Managers Index (PMI) 80% 75% 70% 65% 60% 55% 50% 2004 2003 45% 40% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Institute for Supply Management 17 straight months of manufacturing expansion (> 50%) 17
Recreational Vehicles & Manufactured Housing Units 35,000.00 Recreational Vehicle Shipments Units 20,000.00 Manufactured Housing Shipments 30,000.00 25,000.00 2004 16,000.00 20,000.00 12,000.00 15,000.00 10,000.00 5,000.00 2003 8,000.00 4,000.00 2004 2003 0.00 Jan Mar May Jul Sep Nov 0.00 Jan Mar May Jul Sep Nov Source: Recreational Vehicle Industry Association, Manufactured Housing Institute Higher demand for RVs whilst manufactured housing stable from last year 18
Agenda Automotive Market Aftermarket Industrial Markets Non-Residential Construction Residential Construction Summary 19
Non-Residential Construction U.S. Non-Residential Construction Historical Non-Residential Sq. Ft Non-Residential YTD Growth 2004 Square feet (millions) 2,000 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1999 2000 2001 2002 2003 2004 0% -2% -4% -6% -8% -10% -12% -14% Jan Feb Mar Apr May Jun Jul Aug Sep Source: Dodge 2003 was 27% off the peak in 2000, but 2004 on course for a recovery with improving YTD growth each month 20
Non-Residential Construction Key Drivers of Non-Residential Construction U.S. Office Rental Rate ($/Sq. Ft) U.S. Office Vacancy Rates $22.0 17.0% $21.5 $21.0 $20.5 16.8% 16.6% 16.4% 16.2% $20.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 16.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 2003 2004 2003 2004 Source: REIS Falling rent slowly driving down vacancy rates, but vacancies still at historically high levels 21
Non-Residential Construction Non-Residential Construction Growth Forecast Square feet (millions) 2,000 1,900 1,800 1,700 1,600 1,500 CAGR 4.8% 1,400 1,300 1,200 1999 2000 2001 2002 2003 2004 2005 2006 Source: Dodge Recovery is forecast, but at more sustainable levels 22
Non-Residential Construction Well-Positioned in Fastest Growing Segment 2003 Market Size (Million Sq. Ft) CAGR 03 08 Tomkins Content per Sq. Ft Industrial Buildings Warehouses 831.1 2.8% $5.00 169.9 2.9% $2.00 Office Buildings Education Hospitals 139.5 7.1% $8.50 240.2 0.4% $10.00 89.2 0.2% $16.00 Source: Dodge; Tomkins Estimates 23
Agenda Automotive Market Aftermarket Industrial Markets Non-Residential Construction Residential Construction Summary 24
Residential Construction Residential Construction Expected to Fall ( 000s) 2,000 1,900 1,800 Residential Housing Starts High level 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: U.S. Census Bureau, National Association of Home Builders but still historically high when compared to the last 20 years 25
Residential Construction Residential Supply and Demand Millions of Units Past 10 Years Next 10 Years Net Under-Supply Net Under-Supply 3.0 1.4 17.5 16.1 20.0 17.0 Immigration, Population Growth, Second Home Buyers, Demographics Demand Supply Demand Supply Source: National Association of Home Builders; National Association of Realtors Ongoing under-supply of housing 26
Residential Construction Remodelling Market Consistent Even During Recession U.S. GDP YoY % Change 14% $ millions 250,000 12% 10% 8% 6% U.S. Renovation Expenditure 200,000 150,000 4% 2% 100,000 0% -2% -4% U.S. GDP YoY % Change Recession Recession 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 50,000 0 Source: US Census Bureau CAGR of 3.7% for the last 20 years 27
Agenda Automotive Market Aftermarket Industrial Markets Non-Residential Construction Residential Construction Summary 28
Markets Outlook Market Automotive OE Automotive Aftermarket Industrial OE Industrial Aftermarket Residential Construction Non-Residential Construction Today Stable Outlook Stable to growth Growth continues Growth continues Stable / strong Projected recovery Overall positive market outlook for 2005 29
Dave Carroll Capital Markets Day 2004 Markets Update