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8,3 Oerlikon a global leader in surface 6,6 solutions and advanced materials
Jefferies 2017 Industrials Conference
0,5 Andreas Schwarzwälder
0,9 Senior Vice President, Head of Investor Relations New York, August 09, 2017
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9,1 Version September 2012 It's not allowed to change the master Key facts Oerlikon Group FY 2016 8,3
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2.3 CHF billion sales
3 segments
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>180 locations
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37 countries
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8,6 Page 2 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master Oerlikon’s strategic priorities confirmed – 8,3 focus on execution / operational performance
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Surface Manmade Drive Solutions Fibers Systems
. Creating a global . Manage market cycle . Repositioning to 0,5 surface solutions . Execution of structural allow for value- and advanced creating options 0,9 adoptions concluded materials . Remaining end powerhouse . Readiness for post- trough period market challenges . Organic investments: . Drive innovation innovation, markets and market share and technologies 4,7 Group 2017: Enlarge platform for mid-term growth . Additive • Strengthen technological leadership (Innovation, expansion, collaboration) Manufacturing • Grow existing business (Penetration, new markets/applications, service) . M&A • Identify and develop new opportunities – organic and inorganic • Further develop organization (Structure, capabilities, capacity, footprint)
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8,6 Page 4 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master Oerlikon covers a broad range of 8,3 complementary surface technologies
6,6 Bulk Surface treatment treatment
HARDENING NITRIDING THIN-FILM COATING THICK-FILM COATING . Plasma nitriding . PVD . Thermal spray . PECVD (PACVD)
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6,6 Investing in Global surface Starting point technology solutions & advanced expansion & growth materials powerhouse
Thermal spray services, Thin-film (job) coating i.e. additive manufacturing equipment & materials
. Oerlikon Balzers as Oerlikon’s . Acquisition of Sulzer Metco in . Foundation of a new business primary surface solutions 2014 to expand technology unit “Additive manufacturing” in business portfolio 2015 to address the promising 3D printing market 0,5 . Oerlikon Balzers is a global . Metco is a global leader in leader in thin-film coatings for Thermal Spray, a thicker layer . Oerlikon already today 0,9 reduction of wear and friction coating technology mainly for providing metal based mainly for tools and automotive thermal protection of e.g. aero powders; Leverage global industry and gas turbine blades footprint for production incl. post treatment (coatings) . Global footprint with more than 140 coating centers
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8,6 Page 6 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master We will grow the Segment along three 8,3 strategic directions – organic and inorganic
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Grow equipment & Grow service business Business development materials business
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0,9 . Continue expansion of . Increase number of thermal . Grow additive manufacturing thin-film and thermal spray spray powders business (powders & post- service business . Continue expansion of thermal treatment) spray equipment . Complement technology portfolio
4,7 . Develop new products / applications / end markets / regions
Leverage combined strength and interdependencies between coating services, equipment & materials
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8,6 Page 7 20160810_Oerlikon presentation_Jefferies 2016 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master Additive Manufacturing – becoming a 8,3 business in a growth market
6,6 Additive Manufacturing Market segment dynamics* . AM is moving from lab/machines to a business . Aerospace/defense, medical/dental and 1.950 general industry as major AM segments +37% 1.600 . Small series production and prototyping drive 650 Materials the market currently 1.250 . Prototyping and Tooling will remain an 900 350 important factor as entry points to production Services 600 1.300 opportunities 400 900 100 . Mass production in AM is not yet a reality 300 . Logical step for Oerlikon to develop from surface into the structure – leverage expertise 2016 2017 2018 2019 2020 2021 0,5
0,9 Oerlikon Value Proposition Footprint “Industrializing AM for reliability, productivity performance”
AM Materials “Materials that work”
4,7 AM Production & Applications Post Processing Engineering & “End-to-end Design Advanced “Deep vertical and Component domain knowledge Manufacturing” for optimal customer solutions” Materials Materials/R&D Production/Engineering Academia/R&D
8,0 * Served, metal-based AM market, “Wohlers Report 2017”, figures rounded 8,6 Page 8 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master Oerlikon driving additive manufacturing 8,3 development
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1 2 3 Systems Production services Materials Application Production Software Hardware engineering processes
Value proposition: End-to-end offering with strong interface management
. Development and certification . Optimized machine . Product design engineering of additive manufacturing parameters and software for AM (design for function) (AM) tailored materials solutions 0,5 . Application engineering . Complete powder portfolio in . End-to-end coverage of competence 0,9 large & small batch sizes digital process parameters . Optimized production . Distribution competence . Automation of process process chain through serving different routes to (linkage of hardware and end-to-end management market software tools) . Customer understanding 4,7 . Strong material handling . Conventional and tailored AM through partnerships competence finishing technologies
Industrialization of AM value chain is key to reach series production level
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8,6 Page 9 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master Strategic AM investment with impacts on 8,3 Group in 2017 and beyond
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Industrialize AM – become an integrated service player and a leading materials manufacturer: . Expand in high volume manufacturing of specialized powders/alloys (CapEx & M&A)
AM AM . Enlarge service market shares gaining economies of scale and scope (CapEx & M&A)
. Increase applications engineering & design (Organic & M&A) Investments
Sales (incl. M&A) CapEx EBITDA margin CHF M CHF M In % ~300 0,5 ~300 cum. Deliver >20% 0,9 ~170 cum.
>100 AM AM 70-75 ~20 <10 3 2016 2017 2018 2019 2020 2021
Invest Investment Case Investment 2016 2017E 2019E 2021E 2016 2017E 2019E 2021E 4,7
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6,6 y-o-y y-o-y in CHF million Q2 17 Q2 16 y-o-y H1 17 y-o-y ex FX ex FX Order intake 342 311 10.0% 10.5% 694 12.5% 13.3%
Sales (3rd parties) 340 315 7.9% 8.5% 672 10.3% 11.2% EBITDA 70 71 -1.4% – 141 6.0% – In % of sales 20.6% 22.4% -1.8 pp – 20.8% -0.9 pp – EBIT 40 43 -7.0% – 80 5.3% – In % of sales 11.6% 13.4% -1.8 pp – 11.8% -0.6 pp –
RoW Operational performance: Market development: Asia / 5% Pacific . Profitable growth in orders and . Strong tooling market in all 0,5 Europe sales across all industries regions, especially strong 33% Sales 44% Q2 17 demand from Asia/Japan 0,9 . Acquisitions and material surcharges in total added . Noticeable uptake in general 18% ~CHF 6m to top-line in Q2 industries (IP1) North America . Solid growth trends in coating . Stable upward trend in services for tooling and automotive; Asia in particular Power Generation automotive/friction systems . Aerospace market remains 7% 4,7 General Tooling . EBITDA profitability above healthy driven by new engine 32% Industry 25% 20% incl. AM ramp up costs programs and MRO2 business Sales Q2 17 . Key partnership agreement . Power generation with slight 13% with GE Additive signed industry growth 23% Aviation . Technology acquisition in . Some recovery in oil & gas Automotive materials (Scoperta Inc.) 8,0 1 IP = Industrial Production 2 MRO = Maintenance, Repair & Overhaul; 8,6 Page 11 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master
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4,7 Manmade Fibers Segment
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Value chain Reducing filament Main business expansion equipment exposure
Filament spinning equipment Polycondensation i.e. staple fiber equipment
. Global market and technology . “From melt to yarn” strategy . Leading market and technology leader in filament spinning . Joint venture with Huitong position in BCF (carpet yarn) equipment Chemical to provide . Acquisition of Trützschler’s 0,5 . Project business with average polycondensation plants for staple fiber technology portfolio order size of CHF 20-50 million either direct spinning process to strengthen areas outside 0,9 (up to CHF 200 million) or PET production Chinese filament business Business opportunities in . Key markets are China, India, . US and Turkey nonwovens area
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6,6 y-o-y y-o-y in CHF million Q2 17 Q2 16 y-o-y H1 17 y-o-y ex FX ex FX Order intake 198 125 58.4% 61.0% 377 51.4% 54.5%
Sales (3rd parties) 173 98 76.5% 79.4% 279 17.7% 20.0% EBITDA 4 -2 >100% – 4 -42.9% – In % of sales 2.3% -1.6% 3.9 pp – 1.5% -1.5 pp – EBIT -1 -6 83.3% – -6 <-100% – In % of sales -0.6% -6.1% 5.5 pp – -2.2% -1.4 pp –
RoW Operational performance: Market development: Europe 6% . Large filament project orders . Continued project activities by 26% 0,5 from China, India, Turkey and Tier 1 customers in Filament Sales South America. market in China Asia / Q2 17 5% North 0,9 Pacific America 63% . Orders in CP², texturing, staple . Pricing improving, but remains fibers, BCF1 challenging . Sales pick up as a result of . Positive market sentiment in order book execution and staple fibers maintains Staple fiber/Nonwoven project timings . Activities in BCF1 (US / Turkey) 4,7 16% . Ongoing ramp-up in production exceeding expectations capacities with focus on quality 17% Sales . Positive trend in texturing Q2 17 of work, processes and costs continues BCF carpet 67% . EBITDA margin impacted by yarn/ Filament . Increased interest in Melt-to- Polymer spinning/ ramp up and project profiles Yarn / Fiber solutions processing Texturing improvement in H2 8,0 1 Bulked continuous filament (carpet yarn) 2Continous Polymerization 8,6 Page 14 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master
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Drive Systems Streamlined Business Segment product portfolio opportunities
Broad technology portfolio for Gears, shifting solutions i.e. e-drives/hybrids attractive end-markets & planetary drives
. Agriculture Machinery . Streamlining of product . The Segment’s latest . Constructions Machinery portfolio with main focus on innovations for electric and product lines gears, shifting hybrid vehicles are targeted . Transportation solutions and planetary drives at reducing emissions and 0,5 . Energy and Mining environmental pollution 0,9 . Automotive (Sports Cars and e-mobility)
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6,6 y-o-y y-o-y in CHF million Q2 17 Q2 16 y-o-y H1 17 y-o-y ex FX ex FX Order intake 184 158 16.5% 16.1% 365 15.9% 16.2%
Sales (3rd parties) 176 164 7.3% 7.0% 346 7.1% 7.5% EBITDA 19 12 58.3% – 33 57.1% – In % of sales 10.8% 7.1% 3.7 pp – 9.6% 3.2 pp – EBIT 8 1 >100% – 11 >100% – In % of sales 4.5% 0.6% 3.9 pp – 3.3% 3.5 pp –
Asia/Pacific RoW Operational performance: Market development: 3% 14% . New customers and projects in . Agricultural overall improving; 1 0,5 the agriculture, construction, with exception of 100+ HPT Sales 48% Europe Q2 17 automotive and transportation and large combines in the US 0,9 markets North 35% . Construction recuperated with America . Sales growth mainly driven by growth in the US and Europe agricultural, construction and and notably higher investments automotive (incl. e-mobility) in China and India Energy/Mining . All regions contributing to . Transportation market mixed Automotive 4,7 3% sales growth 19% Agriculture . A slight increase in the US 36% . Higher volumes and reshaping energy market through shale Sales measure lead to an improved oil and gas 15% Q2 17 EBITDA margin of 10.8% . Automotive with increasing Transportation 27% activities in e-vehicles, good Construction demand for high-perform. cars 8,0 1 HPT = horsepower tractors 8,6 Page 17 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master
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4,7 Oerlikon Group Q2 and Outlook
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8,6 Page 18 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master Overall Group performance builds on good 8,3 performance in all Segments
6,6 Top-line development at constant FX (y-o-y) in CHF million1 Q2 17 Q2 16 y-o-y H1 17 y-o-y +22.6% 728 Order intake 724 594 21.9% 1 436 21.6% 594
Sales (3rd parties) 689 577 19.4% 1 297 10.9% Order intake Order intake Q2 2016 Q2 2017 at constant FX EBITDA 92 80 15.0% 178 13.4% +20.1% In % of sales 13.4% 13.9% -0.5 pp 13.7% 0.3 pp 0,5 577 693
0,9 EBIT 44 36 22.2% 84 23.5%
Sales Q2 2016 Sales Q2 2017 In % of sales 6.4% 6.2% 0.2 pp 6.5% 0.7 pp at constant FX
. Surface Solutions Segment with continued strong order Q2 17 vs. Q2 16 Q2 17 vs. Q1 17 Sales growth 4,7 and sales growth and sustainable profitability (y-o-y) (q-o-q) => 11th consecutive quarter with EBITDA margin >20% Reported 19.4% 13.3% . Manmade Fibers and Drive Systems Segments with improved order and sales sentiment Performance 20.1% 13.0%
. Group book-to-bill clearly >1 FX translation -0.7% 0.3%
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8,6 Page 19 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master 2017 Group guidance confirmed– 8,3 Positive sentiment continuous
6,6 ~ 8.0% Underlying Group/Segment assumptions Order around Oerlikon Group 2,413 intake 2,600 . Economic and political environment to remain uncertain . Around 8% order growth and >11% organic sales growth 2016 2017E . Reported EBITDA margin approach 14 % . Smaller acquisitions included in guidance >11.0 % Surface Solutions Segment Sales around . ~ 5 % organic sales and order growth 2,331 2,600 (excluding AM and smaller acquisitions, reported ~6 %) . Confirming EBITDA margin in corridor of 20 – 22 % 0,5 2016 2017E excluding AM investments (reported 18 – 20 % )
0,9 Manmade Fibers Segment 200 – . Positive sentiment in filament and staple fibers equipment CapEX 2501 144 . Order intake to increase to around CHF 650m . Sales up to CHF 650m, dependent on project timings . Margin expected at upper end of guided corridor of 4 - 6% 2016 2017E 4,7 14.3 % Approach 14 %2 Drive Systems Segment . Order intake to grow 5-7 % due to new business wins and EBITDA potential recovery of end markets margin . Sales increase of 4-5 % . EBITDA margin improving towards double-digit figure as result of continued execution of repositioning initiatives 2016 2017E 8,0 1 Including CHF 70 - 75m related to Additive Manufacturing (AM); 2 Including full absorption of all related unchanged investment expenses in AM 8,6 Page 20 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master Summary – 8,3 3 key messages of today’s presentation
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Clear priorities for the portfolio with focus on profitable growth 1 in Surface Solutions – organic and M&A
0,5 Q2 with strong operational 2 performance in all Segments 0,9
4,7 Full-year guidance for 3 2017 confirmed
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8,3 Thank you. 6,6
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OC Oerlikon Management AG, Pfäffikon Churerstrasse 120 CH – 8808 Pfäffikon SZ Switzerland
Andreas Schwarzwälder 0,5 Head of Investor Relations 0,9 Senior Vive President
Phone: +41-58-360-9622 Mobile: +41-79-810-8211 E-mail: [email protected] 4,7
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8,6 Page 23 20170809_Oerlikon presentation_Jefferies 2017 Industrials Conference 9,1 Version September 2012 It's not allowed to change the master Disclaimer 8,3
6,6 OC Oerlikon Corporation AG, Pfäffikon, (together with its affiliates hereinafter referred to as “Oerlikon”) has made great efforts to include accurate and up-to-date information in this document. However, Oerlikon makes no representation or warranties, expressed or implied, as to the truth, accuracy or completeness of the information provided in this document, Neither Oerlikon nor any of its directors, officers, employees or advisors, nor any other person connected or otherwise associated with Oerlikon, shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this document.
The contents of this document, including all statements made therein, is based on estimates, assumptions and other information currently available to the management of Oerlikon. This document contains certain statements related to the future business and financial performance or future events involving Oerlikon that may constitute forward-looking statements. The forward-looking statements contained herein could be 0,5 substantially impacted by risks, influences and other factors, many of which are not foreseeable at present and/or are beyond Oerlikon’s control, so that the actual results, including Oerlikon’s financial results and 0,9 operational results, may vary materially from and differ than those, expressly or implicitly, provided in the forward-looking statements, be they anticipated, expected or projected. Oerlikon does not give any assurance, representation or warranty, expressed or implied, that such forward-looking statements will be realized. Oerlikon is under no obligation to, and explicitly disclaims any obligation to, update or otherwise review its forward-looking statements, whether as a result of new information, future events or otherwise.
4,7 This document, including any and all information contained therein, is not intended as, and may not be construed as, an offer or solicitation by Oerlikon for the purchase or disposal of, trading or any transaction in any Oerlikon securities. Investors must not rely on this information for investment decisions and are solely responsible for forming their own investment decisions.
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