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Carraro Business Plan 2017-2021 - Milan, 26th September 2017 1 AGENDA 11.00 CARRARO VALUES ENRICO CARRARO, CHAIRMAN 11.20 BUSINESS PLAN: ALBERTO NEGRI, CEO WE KNOW HOW TO DO IT - CARRARO TWIN SHIFTTM FULVIO LO CONTE, R&D 12.00 FINANCIAL SUMMARY 2017-2021 ENRICO GOMIERO, CFO 12.30 CLOSING REMARKS & Q&A Carraro Business Plan 2017-2021 - Milan, 26th September 2017 2 CARRARO VALUES WE ARE ACCOUNTABLE WE CREATE VALUE WE DEVELOP TALENTS WE STIMULATE INNOVATION WE WORK TOGETHER Carraro Business Plan 2017-2021 - Milan, 26th September 2017 3 BUSINESS PLAN: WE KNOW HOW TO DO IT ALBERTO NEGRI, CEO Carraro Business Plan 2017-2021 - Milan, 26th September 2017 4 CARRARO AT GLANCE . FOUNDATION: 1932 . HEADQUARTERS: CAMPODARSEGO, PADOVA – ITALY . 2016 TURNOVER: 593.7 MLN € . 2016 PEOPLE: 2,979 (1,289 IN ITALY) Carraro Business Plan 2017-2021 - Milan, 26th September 2017 5 CARRARO MANAGEMENT TEAM ENRICO TOMASO ALBERTO ENRICO CARRARO CARRARO NEGRI GOMIERO CHAIRMAN VICE CEO CFO CHAIRMAN FRANCO CALVO ALESSANDRO GIGLI MARCO STELLA SALES & MARKETING IT & PURCHASING CARRARO AGRITALIA ANDREA CONCHETTO STEFANO IMAGE MARIO TOLUSSO OPERATIONS SPARE PARTS & HR & LEGAL AFFAIRS CARRARO TRACTORS MASSIMO DEL GOBBO FULVIO LO CONTE ENRICO TRACANZAN QUALITY ASSURANCE R&D DRIVELINES R&D TRACTORS FABIO GALLO STRATEGIC MARKETING Carraro Business Plan 2017-2021 - Milan, 26th September 2017 6 CARRARO GLOBAL FOOTPRINT PLANTS: ITALY (1932), ARGENTINA (2000), BRAZIL (2015), CHINA (2004), INDIA (1998) ENGINEERING CENTERS: ITALY, ARGENTINA, CHINA, INDIA SPARE PARTS CENTERS: ITALY, USA, ARGENTINA, CHINA, INDIA SALES OFFICES: USA (1993) JV Carraro Business Plan 2017-2021 - Milan, 26th September 2017 7 CARRARO PRODUCTS SPECIALIZED AGRICULTURAL CONSTRUCTION EQUIPMENT TRACTORS DRIVELINES DRIVELINES & OTHERS TODAY CARRARO IS THE ONLY GLOBAL PLAYER ABLE TO PROVIDE COMPLETE SOLUTIONS FOR SPECIALIZED AGRICULTURAL TRACTORS, DRIVELINES AND COMPONENTS FOR AGRICULTURAL AND CONSTRUCTION MACHINERY. Carraro Business Plan 2017-2021 - Milan, 26th September 2017 8 MARKET SEGMENTS & MAIN CUSTOMERS SPECIALIZED AGRICULTURAL CONSTRUCTION EQUIPMENT TRACTORS DRIVELINES DRIVELINES & OTHERS Carraro Business Plan 2017-2021 - Milan, 26th September 2017 9 SALES BREAKDOWN SEGMENT AUTOMOTIVE 2.7% GEOGRAPHICAL AREA CHINA & APAC 4.9% OTHER 2.3% MATERIAL HANDLING 4.1% INDIA 11.6% SPARE PARTS LATAM 7.6% 8.6% AGRICULTURAL EMEA CONSTRUCTION 51.3% NAFTA 64.8% EQUIPMENT 11.1% 30.9% OTHER 2.3% PRODUCT TYPE CUSTOMERS CNH OTHERS 12.6% 46.6% TRACTORS JOHN DEERE 20.6% AXLES 10.4% 42.1% SPARE PARTS AGCO 8.6% 10.2% GEARS & COMPONENTS CLAAS 6.6% CAT 8.5% TRANSMISSIONS 7.1% MH TRANSAXLES 15.8% WACKER NEUSON SANKO 3.6% *2016 Sales w/out Santerno 2% 2.7% Carraro Business Plan 2017-2021 - Milan, 26th September 2017 10 THE MARKET Carraro Business Plan 2017-2021 - Milan, 26th September 2017 11 CARRARO TECHNOLOGY DRIVERS SECULAR TRENDS OFF HIGHWAY TRENDS CARRARO TECHNOLOGY DRIVERS TOTAL COST EFFICIENCY & POPULATION GROWTH OF OWNERSHIP PRODUCTIVITY (ELECTRONIC POWER MANAGEMENT, ELECTRIFICATION) ROBUST & EFFECTIVE SCARCE RESOURCES SOLUTIONS WIDER RANGE OF PRODUCTS DEVELOPING NEW TECHNOLOGICAL (MORE VEHICLE APPLICATIONS ECONOMIES GROWTH REQUIREMENTS FROM BASIC TO PREMIUM; HEV-EV SOLUTIONS) MASSIVE URBANIZATION NOX EMISSION REGULATIONS POWER INCREASE (BIGGER AND TECHNOLOGICAL ADVANCED DRIVELINES) LARGER FARM POWER INCREASE DIMENSIONS ADDENDUM FROM 2WD TO 4WD (AGRICULTURE) Carraro Business Plan 2017-2021 - Milan, 26th September 2017 12 EFFICIENCY & PRODUCTIVITY SYSTEM COMPETENCE TO SUPPORT OFF-HIGHWAY TECHNOLOGICAL EVOLUTION DASHBOARD ‣ SYSTEM INTERCONNECTION ‣ HUMAN INTERFACE ‣ FAILURE MANAGER VEHICLE ‣ CONNECTIVITY / BIG DATA CAN-BUS ‣ GPS / PRECISION FARMING ‣ TRANSMISSION CONTROL / DIAGNOSTIC ‣ POWER CONTROL CAN-BUS ‣ ASC / ABS ENGINE ECU & ECU ‣ STEER SENSOR ‣ STEER BY WIRE ELECTRONIC POWER MANAGEMENT & ELECTRIFICATION Carraro Business Plan 2017-2021 - Milan, 26th September 2017 13 WIDER RANGE OF PRODUCTS EXTEND SPECIALIZED TRACTORS RANGE ALPINE LIGHT UTILITY HYBRID ELECTRIC & ELECTRIC TRACTORS SPECIALIZED CURRENT SPECIALIZED SPECIALIZED COMPACT TRACTORS TRACTORS TRACTORS FUTURE 35HP 70HP 90HP 100HP 120HP KEY SUSPENDED FRONT AXLES DUAL CLUTCH TRANSMISSION TECHNOLOGIES CONNECTIVITY CVT TRANSMISSIONS PRESSURIZED CABIN HYBRID ELECTRIC & ELECTRIC TRACTORS STAGE V EMISSIONS & MOTHER REGULATIONS COMPLIANTS Carraro Business Plan 2017-2021 - Milan, 26th September 2017 14 WIDER RANGE OF PRODUCTS MORE VEHICLE APPLICATIONS & FROM BASIC TO PREMIUM AGRICULTURE Portal Planetary IFAS Suspension Single or Independent Suspension Electronically controlled Power High-Low/ Power Shift Electrical Mechanical Reverse Dual Clutch Continuous Variable Electronically controlled CONSTRUCTION EQUIPMENT Backhoe Loaders Wheel Loaders Tele Boom Handlers Wheel Excavators Basic: Mechanical / Premium: Electronically controlled Carraro Business Plan 2017-2021 - Milan, 26th September 2017 15 POWER INCREASE DRIVELINES ELECTRIC CVT NEW CARRARO TWIN SHIFTTM TRANSAXLES TRANSMISSION MECHANICAL MECHANICAL & & POWERSHIFT POWERSHIFT TRANSMISSIONS TRANSMISSIONS CURRENT PLANETARY & MULTILINK AXLES PORTAL AXLES SUSPENDED AXLES SUSPENDED AXLES FUTURE 35HP 70HP 150HP 200HP 250HP 400HP 500HP KEY ELECTRONIC POWERTRAIN DUAL CLUTCH ELECTRIC CVT TECHNOLOGIES CONTROL (ENGINE & DRIVELINE) Carraro Business Plan 2017-2021 - Milan, 26th September 2017 16 CARRARO STRATEGIC PILLARS SPEED GROWTH SERVICE COST QUALITY Carraro Business Plan 2017-2021 - Milan, 26th September 2017 17 CARRARO STRATEGIC PILLARS WE KNOW HOW TO DO IT MARKETS MARKETS CUSTOMER SATISFACTION EXPAND CUSTOMER BASE . CUSTOMER INTIMACY & RETENTION . TECHNOLOGY CROSS- . QUALITY, COST, SERVICE . LOCAL FOR LOCAL FERTILIZATION IMPROVEMENT . NEW AREAS/SEGMENTS . LONG TERM AGREEMENTS . STRENGTHEN EMERGING . MANUFACTURING 4.0 MARKETS . PARTNERSHIPS . WORLDWIDE SERVICE PRODUCTS PRODUCTS 140 MLN € INVESTMENTS LAST 10 GO BEYOND YEARS: “BRING NEW PRODUCTS TO . ELECTRICAL CVT THE MARKET” . ELECTRICAL HYBRID & FULL ELECTRIC SPECIALIZED TRACTOR TODAY TOMORROW FUTURE Carraro Business Plan 2017-2021 - Milan, 26th September 2017 18 CARRARO STRATEGIC PILLARS WE KNOW HOW TO DO IT MARKETS MARKETS CUSTOMER SATISFACTION EXPAND CUSTOMER BASE . CUSTOMER INTIMACY & RETENTION . TECHNOLOGY CROSS- . QUALITY, COST, SERVICE . LOCAL FOR LOCAL FERTILIZATION IMPROVEMENT . NEW AREAS/SEGMENTS . LONG TERM AGREEMENTS . STRENGTHEN EMERGING . MANUFACTURING 4.0 MARKETS . PARTNERSHIPS . WORLDWIDE SERVICE PRODUCTS PRODUCTS 140 MLN € INVESTMENTS LAST 10 GO BEYOND YEARS: “BRING NEW PRODUCTS TO . ELECTRICAL CVT THE MARKET” . ELECTRICAL HYBRID & FULL ELECTRIC SPECIALIZED TRACTOR TODAY TOMORROW FUTURE Carraro Business Plan 2017-2021 - Milan, 26th September 2017 19 CUSTOMER INTIMACY UNDERSTAND CUSTOMER NEEDS & DEVELOP TAILOR MADE SOLUTIONS NEW LOW PROFILE CAB 6 SPEED POWERSHIFT HYDRAULIC SUPER CREEPER FOR SPECIALIZED TRACTORS TRANSMISSION ELECTRONICALLY CONTROLLED WITH IRECT RIVE D D M 1.880 IFAS SUSPENSION SYSTEM EMERGING MARKET GRADER FOR SPECIALIZED TRACTORS … TODAY Carraro Business Plan 2017-2021 - Milan, 26th September 2017 20 TECHNOLOGY CROSS-FERTILIZATION SYSTEM PROVIDER APPROACH: WE KNOW HOW TO DO IT POWER HI-LO POWER REVERSER DUAL CLUTCH CONTROL ROBOTIZATION REAR HITCH OPTIONS: - DRIVER PRESENCE MONITOR REAR ELECTRO HYDRAULIC PTO - WET CLUTCH THERMAL MANAGEMENT OPTIONS: - OUTPUT SPEED READING - POWER MANAGEMENT - DRIVER PRESENCE MONITOR THROTTLE BY WIRE CRUISE CONTROL DIFFERENTIAL LOCKUP SPEED CONTROL 4WD ENGAGEMENT FRONT HYDRAULIC OPTIONS: DIFFERENTIAL LOCK - PRESSURE MONITOR SUSPENDED AXLE - STEERING ANGLE READING - VEHICLE SPEED MONITOR - BRAKE MONITOR TODAY Carraro Business Plan 2017-2021 - Milan, 26th September 2017 21 MANUFACTURING EXCELLENCE Industrial footprint optimization MANUFACTURING EXCELLENCE DOME . Gorizia plant shutdown (2015) . Argentina plant rightsizing (2016-2018) . Brazil plant startup (2015) . Spare parts Hub relocation (2018) . Local for local production (from 1998) to support global partners & local customers Manufacturing 4.0 . New ERP implementation (startup 2012) . Worldwide CAD interconnected with Manufacturing Execution System (from design to manufacturing) . Robotization . Lean manufacturing principles 100% people involved in at least one “Dome” improvement project TODAY Carraro Business Plan 2017-2021 - Milan, 26th September 2017 22 CUSTOMER PARTNERSHIP LONG-TERM RELATIONSHIPS FOR A MUTUAL VALUE GENERATION 1972 1976 1989 1991 1995 2001 TODAY Carraro Business Plan 2017-2021 - Milan, 26th September 2017 23 SUPPLIER PARTNERSHIP FROM SOURCING TO PARTNERSHIP 2014-2016 Strategic Focus: Purchasing Saving Partnership Project: continue supplier base reduction TODAY Carraro Business Plan 2017-2021 - Milan, 26th September 2017 24 CARRARO STRATEGIC PILLARS WE KNOW HOW TO DO IT MARKETS MARKETS CUSTOMER SATISFACTION EXPAND CUSTOMER BASE . CUSTOMER INTIMACY & RETENTION . TECHNOLOGY CROSS- . QUALITY, COST, SERVICE . LOCAL FOR LOCAL FERTILIZATION IMPROVEMENT . NEW AREAS/SEGMENTS . LONG TERM AGREEMENTS . STRENGTHEN EMERGING . MANUFACTURING 4.0 MARKETS . PARTNERSHIPS . WORLDWIDE SERVICE PRODUCTS PRODUCTS 140 MLN € INVESTMENTS LAST 10 GO BEYOND YEARS: “BRING NEW PRODUCTS TO . ELECTRICAL CVT THE MARKET” . ELECTRICAL HYBRID & FULL ELECTRIC SPECIALIZED TRACTOR TODAY TOMORROW FUTURE Carraro Business Plan 2017-2021 - Milan, 26th September 2017 25 CUSTOMER RETENTION MAIN AGREEMENTS 2012-2022 Most of Business Plan volumes are secured by supply agreements (LTA, contracts, product applications) TOMORROW Carraro Business Plan 2017-2021 - Milan,