thyssenkrupp Equity Story Components Technology May 2018
thyssenkrupp a diversified industrial group Sales 41.4 bn 1 ; EBIT adj. 1.7 bn 1 Continuing operations Components Technology (CT) 7.6 bn 377 mn Elevator Technology (ET) 7.7 bn 922 mn Industrial Solutions (IS) 5.5 bn 111 mn Materials Services (MX) 13.7 bn 312 mn Steel Europe (SE) 8.9 bn 547 mn MoU for JV with Tata on Sep. 20 th, 2017; Board decisions expected within first half of this year signing planned afterwards 1. Financial figures FY 16/17 2 Components Technology I Equity Story Components Technology
Safety, comfort and efficiency Quality and efficiency durability and performance reliability and advanced engineering 3 Components Technology I Equity Story Components Technology
Mission critical components for leading automotive and industry customers Total sales FY 16/17 7.6 bn Automotive ~70% of sales Industry ~30% of sales 1 Steering Damper Automotive Systems Bearings Camshafts Springs & Stabilizers Forged Technologies 1. Forged Technologies partially addressing the automotive industry 4 Components Technology I Equity Story Components Technology
Solid market positions with established OEMs and new players Examples Established premium and mass market OEMs NEW Electric vehicle OEMs NEW Chinese OEMs Well established partner of leading automotive OEMs Supplier for key EV players Serve top Chinese OEMs 5 Components Technology I Equity Story Components Technology
Positive five-years outlook in major markets Light vehicles 1 Heavy duty 2 Construction equipment Wind power Production in mn units Production in mn units Sold units in 1 000 Connected capacity in GW 92 94 +2% 3.6 3.4-0.5% 732 757 +2% 49 55 +19% +5% 17 18e 20e 22e 17 18e 20e 22e 17 18e 20e 22e 17 18e 20e 22e % CAGR % Offshore wind CAGR 1. Light vehicles < 6 ton, only CBU (completely built up) units 2. Heavy duty vehicles > 6 ton, only Full (no kits) Sources: LV: IHS LV Global Production Forecast (02/2018) HV: IHS HV Global Production Forecast (Q1/2018) CE: Off-Highway Research & Yengst (09/2017) WP: MAKE Consulting (Q4/2017) 6 Components Technology I Equity Story Components Technology
Light vehicles: Growth driven by strong SUV segment Light vehicle (LV) production forecast [mn units] Light vehicle 1 segments Exemplary customer examples +2% +6% Sport 0% Pick-up 92 1 6 7 9 94 1 6 6 9-1% MPV 0% Van 30 32 40 40 +5% SUV +1% Car 17 18e 20e 22e % CAGR 1. Light vehicles < 6 ton, only CBU (completely built up) units Sources: IHS global LV forecast (02/2018), only CBU (completely built up) units 7 Components Technology I Equity Story Components Technology
Light vehicles: China remains future growth driver albeit with lower pace Light vehicle (LV) production forecast [mn units] Europe NAFTA Greater China +2.9% +1.1% 21.6 22.1 +0.1% 27.9 28.1 30.7 17.0 17.4 17 18e 20e 22e 17 18e 20e 22e 17 18e 20e 22e % CAGR Sources: IHS global LV forecast (02/2018), only CBU (completely built up) units 8 Components Technology I Equity Story Components Technology
Consistent growth and efficiency gains [ mn] FY 13/14 FY 14/15 FY 15/16 FY 16/17 Q1 16/17 Q1 17/18 Guidance FY 17/18E Sales 6,172 6,753 6,807 7,571 1,743 1,906 EBIT adj. 268 313 335 377 75 77 EBIT adj. margin [%] 4.3 4.6 4.9 5.0 4.3 4.0 Growth at automotive vs. lower volumes wind, FX effects BCF 16 177 114 31 (192) (279) 9 Components Technology I Equity Story Components Technology
Growth Performance Benchmark profit target supported by performance & growth plan Strategic Way Forward @ Components Technology Plant network Operational excellence Technology shift 4.3% 4.6% 4.9% 5.0% Growth Performance EBIT adj. margin 6-8% + Customers Markets 13/14 14/15 15/16 16/17 Target Innovations 10 Components Technology I Equity Story Components Technology
Plant network New plant ramp-ups fostering growth and operational excellence San Miguel de Allende Camshafts & Damper Launch: FY 17/18 Jászfényszaru Camshafts & Steering Launch: FY 16/17 Changzhou (extension) Steering Launch: FY 17/18 Puebla Puebla Debrecen Pinghu Automotive Systems Launch: FY 16/17 Steering Launch: FY 17/18 Springs & stabilizers Launch: FY 17/18 Springs & stabilizers Launch: FY 17/18 Glocalisation in growth markets to strengthen competitiveness Notes: Indicated dates refer to tk fiscal year 11 Components Technology I Equity Story Components Technology
Operational excellence Striving for operational excellence by digitalization Big Data & IIoT First projects running, experts established Manufacturing Execution Systems Rollout in plants ongoing Advanced Robotics & Automated Vehicles Robotics lab established, robots & AGVs 1 in production Connectivity ~50% of priority machines with network access 1. Automated guided vehicles 12 Components Technology I Equity Story Components Technology
Operational excellence Forged Technologies: Creating a global forging champion Integration of former forging and undercarriages business units on Oct. 1 st, 2017 Sales 2016 1 Global forging market Examples customer markets Competitor 1 Forged Technologies Competitor 2 Competitor 3 Forging & Machining Competitor 4 Heavy vehicles Mining Construction New segments Undercarriages Competitor 5 Broader product offerings for customers Process competence in forging business Global footprint 1. tk sales fiscal year 2016/17 Sources: Publicly available annual reports 13 Components Technology I Equity Story Components Technology
Autonomous Driving Sustainable Mobility Starting market penetration around 2020 beginning in restricted areas E-Hailing / car sharing continue their growth across the world, starting from small base Future Mobility Aggressive and tightening CO2 reduction targets in Europe, US and China Connectivity driven by OEMs, business models develop over time Ownership 14 Components Technology I Equity Story Components Technology Connectivity
Innovations Our innovation pipeline is targeting future mobility demands Examples: Chassis innovations Steer-bywire Single-wheel Steering >4% R&D intensity >100 first filings p.a. ~2,000 FTE R&D >80% of R&D FTE outside Germany Active damping Mobility Research Platform Torque Vectoring 15 Components Technology I Equity Story Components Technology
Innovations Steer-by-wire proves our system competency Standard EPAS Feedback Actuator Wire Redundant ECU Redundant Power pack Key advantages New installation space freedom Design freedom of steering feel and vehicle response Cost reduction by variant reduction Standing steering wheel for AD 1 Focus of R&D First prototype built Flexible and modular R&D platform Development of A sample with series design Construction of various customer vehicles Single wheel steering projects First customer with A sample provided series development ongoing 1. Autonomous Driving 16 Components Technology I Equity Story Components Technology
Innovations Already supplying three major customers w/ key components in e-engines Example: Powertrain innovation rotor shaft Modular electric platform of German large scale OEM Basis for majority of EV models Supply of e-drive manufacturer to serve German sports car OEM Integrated electric platform of German luxury OEM Basis for future (PH-/H-/B-)EVs OEM: Original equipment manufacturer, EV: Electric vehicle, PH: Plug-in hybrid, H: Hybrid, B: Battery 17 Components Technology I Equity Story Components Technology
Committed to realize the value upside from tk s Strategic Way Forward Diversified customer portfolio of established and new OEMs Expanding global production network + 4.3% 4.6% 4.9% 5.0% Growth Performance EBIT adj. margin 6-8% Technology shift with high acceptance in market 13/14 14/15 15/16 16/17 Target Innovation pipeline targeting major market trends 18 Components Technology I Equity Story Components Technology
Disclaimer thyssenkrupp AG The information set forth and included in this presentation is not provided in connection with an offer or solicitation for the purchase or sale of a security and is intended for informational purposes only. This presentation contains forward-looking statements that are subject to risks and uncertainties. Statements contained herein that are not statements of historical fact may be deemed to be forward-looking information. When we use words such as plan, believe, expect, anticipate, intend, estimate, may or similar expressions, we are making forward-looking statements. You should not rely on forward-looking statements because they are subject to a number of assumptions concerning future events, and are subject to a number of uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from those indicated. These factors include, but are not limited to, the following: (i) market risks: principally economic price and volume developments, (ii) dependence on performance of major customers and industries, (iii) our level of debt, management of interest rate risk and hedging against commodity price risks; (iv) costs associated with, and regulation relating to, our pension liabilities and healthcare measures, (v) environmental protection and remediation of real estate and associated with rising standards for real estate environmental protection, (vi) volatility of steel prices and dependence on the automotive industry, (vii) availability of raw materials; (viii) inflation, interest rate levels and fluctuations in exchange rates; (ix) general economic, political and business conditions and existing and future governmental regulation; and (x) the effects of competition. Please note that we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. 19 Components Technology I Equity Story Components Technology