Fact Book 2018

Knorr-Bremse Group Confidential Disclaimer

DisclaimerIMPORTANT NOTICE

This presentation has been prepared for information and background purposes only. It does not constitute or form part of, and should not be construed as, an offer of, a solicitation of an offer to buy, or an invitation to subscribe for, underwrite or otherwise acquire, any securities of Knorr-Bremse AG (the “Company”) or any existing or future member of the Knorr-Bremse Group (the “Group”), nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Company, any member of the Group or with any other contract or commitment whatsoever. This presentation does not constitute and shall not be construed as a prospectus in whole or in part. 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Knorr-Bremse Group Confidential │2 1 Introduction 7 i Knorr-Bremse leadership team 8 ii Knorr-Bremse summary 9 iii Brief history of Knorr-Bremse since 1985 10 2 Key Company Highlights 11 i Summary 12 ii Global #1 13 – 15 iii Synergistic business 16 iv Market outperformance 17 – 18 v The industry innovator 19 vi Resilience 20 – 21 vii Superior financial profile 22 viii Leadership excellence 23

Knorr-Bremse Group Confidential 3 Rail Vehicle Systems (RVS) 24 i Summary 25 ii Brake technology offering 26 - 27 iii Customers 28 iv Market shares 29 v Barriers to entry and market homologation 30 vi Market outperformance 31 vii Strategy in China and India 32 viii Kiepe Electric acquisition 33 ix Key takeaways 34 4 Commercial Vehicle Systems (CVS) 35 i Summary 36 ii Product offering 37 iii Customers 38 iv Market shares 39 v Market outperformance 40 vi Legislation and technology adoption 41 vii Air Disk Brake market 42 ix Automated Driving 43 – 45 x Strategy in North America, China and India 46 xi Key takeaways 47 Knorr-Bremse Group Confidential 5 R&D Focus 48 i Summary 49 ii Cross-divisional synergies 50 – 52 iii Process 53 iv Cooperation with customers & strategic partners 54 v Competition positioning 55 vi Future focus 56 6 Financials 57 i Summary 58 ii Long term sales and EBITDA development 59 – 60 iii Aftermarket 61 iv Sales split and EBIT development 62 – 63 v Order intake and order book 64 vi P&L summary 65 vii Cash generation, asset base, and capital structure 66 – 68 viii Medium term targets, dividend policy, and best-in-class positioning 69 – 70

Knorr-Bremse Group Confidential 7 Sustainability 71 i Corporate memberships, ratings & awards 72 - 73 ii CR policy and focus areas 74 - 75 iii Code of conduct 76 iv Sustainable development goals 77 v Responsibility areas 78 vi Culture and core values 79 8 Capital Markets Summary 80 i Share data 81 ii Bond data 82 iii Investor relations contacts 83 9 Appendix 84 i Glossary 85 - 86

Knorr-Bremse Group Confidential 1 Introduction 7

2 Key Company Highlights 11

3 Rail Vehicle Systems (RVS) 24

4 Commercial Vehicle Systems (CVS) 35

5 R&D Focus 48

6 Financials 57

7 Sustainability 72

8 Capital Markets Summary 80

9 Appendix 84

Knorr-Bremse Group Confidential The Knorr-Bremse leadership team

Klaus Deller Ralph Heuwing Dr. Peter Laier Dr. Jürgen Wilder CEO CFO Head of CVS Head of RVS

 2009-present: Knorr-Bremse  2017-present: Knorr-Bremse  2016-present: Knorr-Bremse  2018-present: Knorr-Bremse CEO, previously Head of RVS CFO Head of CVS Head of RVS (3 years) and Head of CVS (6 years)  2007-2017: Dürr (MDAX listed)  2014-2015: Benteler  2015-2017: DB Cargo AG CFO International CEO  2004-2009: Brose COO Fahrzeugteile Deputy CEO  1990-2007: The Boston  2013-2015: Siemens AG Consulting Group  2013-2014: Osram Licht Mainline Transportation Global  1991-2003: Robert Bosch Partner and Managing Director CTO Business Unit CEO Executive Vice President  Diploma in Mechanical  2000-2012: Knorr-Bremse  2011-2013: Siemens AG  Diploma in Mechanical Engineering, Master of Executive Vice President Head of Strategy Infrastructure Engineering, Applied Business Administration (MBA) and Cities Sector Mathematics, Master of  PhD and Diploma in Business Administration (MBA) Mechanical Engineering  Doctorate in Physics

Professional Years with Professional Years with Professional Years with Professional Years with Experience Knorr-Bremse Experience Knorr-Bremse Experience Knorr-Bremse Experience Knorr-Bremse 27 9 28 1 22 2 18 1

Notes: RVS - Rail Vehicle Systems; CVS - Commercial Vehicle Systems

Knorr-Bremse Group Confidential │8 Knorr-Bremse – One of Germany’s most successful industrial companies

“>1 Bn people trust Knorr-Bremse systems every day”

113 #1 YEARS

Family-Ownership, Global market leader Shared pneumatics Technology leadership heritage and unique DNA for braking systems experience between RVS and CVS

2017 key financials Sales EBITDA EBITA R&D €6.2bn Aftermarket €1.1bn €947m €359m (>10% CAGR1) ~35% of sales since 1989) (margin 18.1%) (margin 15.4%) (~6% of sales)

Balanced portfolio2) … … and diversified global footprint with high local content

Asia / 30+ countries CVS CVS Australia Europe / 45% 27% Africa Sales 47% EBIT Sales 100+ sites RVS RVS (15% Margin) 50% 53% 55% Americas c. 28k (16% Margin) 3) 23% employees Notes: Sales, EBITDA, EBITA, and EBIT for 2017 based on financial statements prepared in accordance with IFRS, other financial figures for 2017 prepared in accordance with German GAAP (HGB); Aftermarket share based on German GAAP (HGB) where BilRUG sales allocated proportionally between OE and aftermarket; RVS – Rail Vehicle Systems; CVS – Commercial Vehicle Systems; 1) CAGR 1989–2017 based on German GAAP (HGB), 1989 – first year when consolidated accounts are available; 2) Excluding consolidation/other; 3) Including human resources leased staff; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │9 Over 30 years of consistent strong growth

1985 2000 2015 2010-2017 2017 >10% sales Management buyout Bendix integrates Joint Venture with €1bn+ capex “Currently Knorr-Bremse by Mr. Thiele Westinghouse Air JV DongFeng Motor invested is considering different Brake company goes into operation to future-proof options to position the CAGR manufacturing and company for the future, 1) production facilities including the possibility 1989 -2017 1985-1990 2002 2015/16 2017 of an IPO.” Bond prospectus, TRS 21 September 2017 Successful strategy: 100% acquisition Japan 7 acquisitions Acquisition of Globalisation, focus on of Bendix in Vossloh Kiepe RVS and CVS, growth the US in connected systems

1991 2006 2016 New state-of-the-art Dawn of the ICE era 4 Joint Ventures in innovation and with high-speed Rail formed in testing centre in braking systems China Munich 2) 1995-1996 6.2

Rise of ADB technology

1999

Joint Venture with JV Bosch in Electronics

1) 0.2 0.4 1985 1989 1990 1995 2000 2002 2003 2005 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sales (€bn) Important corporate events Product innovation M&A / Strategic partnerships

Notes: 1986-2017 based on financial statements prepared in accordance with German GAAP (HGB) and H1 2017 and H1 2018 based on financial statements prepared in accordance with IFRS. 1) 1989 – first year when consolidated accounts are available; 2) Extrapolation of sales; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │10 1 Introduction 7

2 Key Company Highlights 11

3 Rail Vehicle Systems (RVS) 24

4 Commercial Vehicle Systems (CVS) 35

5 R&D Focus 48

6 Financials 57

7 Sustainability 72

8 Capital Markets Summary 80

9 Appendix 84

Knorr-Bremse Group Confidential Knorr-Bremse – A best-in-class industrial company

Number one supplier for braking systems and a leading supplier of other safety critical rail 1 Global #1 and commercial vehicle systems protected by high barriers to entry

2 Synergistic business Technology and scale benefits between rail and commercial vehicles

Consistent outperformance of attractive end-markets driven by megatrends and increasing 3 Market outperformance content per vehicle

Driving innovation in mobility and transportation technologies through R&D, quality 4 The industry innovator excellence and edge in connected systems

Resilient business model, supported by broad geographical and customer diversification, 5 Resilience high aftermarket exposure and strong localisation

6 Superior financial profile Strong growth, profitability, and cash generation with high earnings visibility

Highly experienced management team with strong track record and clear vision for future 7 Leadership excellence value creation

Knorr-Bremse Group Confidential │12 1 Global #1 – The world’s leading supplier of safety critical rail and commercial vehicle systems

RVS offering (2017: 53% of sales, 55% of EBIT) CVS offering (2017: 47% of sales, 45% of EBIT)

Train Control LRV2) Fuel efficiency Brake systems & vehicle dynamics Brake Entrance HVAC1) Management traction systems systems ▪ Engine components ▪ Brake control ▪ Automated driving Systems systems ▪ Transmission ▪ Brake systems ▪ Steering systems

Power Auxiliary Energy supply & Signaling systems Connectivity Electrification electrics power supply distribution

Modernisation and support Aftermarket services Aftermarket services including Alltrucks network3)

Preferred partner for all major OEMs4) and operators across the globe

Example car builders Example operators

Indian Railways

Notes: 2017 financials based on IFRS excluding consolidation/other; 1) HVAC – Heating, ventilation and air conditioning; 2) LRV – Light rail vehicle; 3) Joint Venture between Bosch, Knorr-Bremse and ZF providing a range of workshop services relating to the repair and maintenance of commercial vehicles across all brands; 4) OEM – Original Equipment Manufacturer; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │13 1 Global #1 – Number one supplier for braking systems and a leading supplier of other safety critical rail and commercial vehicle systems …

RVS CVS

#1 Global brakes market share 20171) #1 Global pneumatic brake system market share 20172)

~3.0x 1.2x

~50% 42% 32% 1.4x

34% 23%

~15%

% Including Drum Brakes and Brake Rotors

Market positions in key product groups (2017) Market positions in key product groups (2017)3)

#1 Brake Systems1) #1 Entrance #2 HVAC1) #1 Brake Systems & #1 Energy Supply #1 Fuel Efficiency Systems1) Vehicle Dynamics & Distribution (incl. Automated Driving) (Joint)

Notes: 1) 2017 RVS market share estimates for OE and aftersales without labour; Wabtec includes Faiveley; For the competitor an estimate was used; Market shares rounded to the nearest multiple of 5%; 2) 2017 Market share estimates for Truck and Bus OEM sales only including Air Disc Brake, Brake Control and Air Supply (excluding Drum Brakes and Brake Rotors; Drum Brakes are mainly produced by the OEMs and Brake Rotors are mainly sourced separately), excluding aftermarket and Trailer; Knorr-Bremse data based on market intelligence and experts estimate in 2017; 3) For 2017 global addressable Truck, Bus and Trailer OE, excluding aftermarket; Source: Knorr-Bremse information and internal market research

Knorr-Bremse Group Confidential │14 1 Global #1 – … protected by high barriers to entry

Barriers to entry for RVS and CVS markets Market specifics

Only supplier worldwide  Regulation / homologation RVS certified for all global and local standards and norms (GOST, UIC, AAR, ARA)

 Low volumes, high number of variants with high level Vast array of product variants to homologate of customisation (e.g. >100k active brake articles by Knorr-Bremse)

 High initial capital requirements, highly protected IP landscape Homologation time typically 4-8 years and economies of scale for recent Knorr-Bremse products

 Highest quality and safety requirements CVS One of only two suppliers able to offer harmonised products globally

 Long lifecycle with resulting customer loyalty, long gestation period for aftermarket Continuously increasing safety and emission standards requirements  Same industry leaders since creation of the industry over 100 years ago

Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │15 2 Synergistic business – Technology and scale benefits between Rail and Commercial Vehicles

Interdependence of RVS and CVS today Future technology development Unique scale benefits

✓ Same core technologies ✓ Shared research centres ✓ ~2x size of main competitors3)

✓ ADAS1) / HAD2) technology transfer ✓ Shared components and materials ✓ Balance sheet strength for M&A ✓ Condition monitoring, condition-based and predictive maintenance

✓ Comprehensive research and IP base ✓ Global footprint ✓ Electrification and connectivity

✓ Electromechanical brake systems

RVS CVS

Electric compressors Friction materials Air disc brakes (ADB)

Driver assistance Trailer control valve Electronic air supply

Notes: 1) ADAS – Advanced driver assistance system; 2) HAD – Highly automated driving; 3) Based on 2017 sales and status quo pre-Wabtec merger with GE Transportation; 2017 €/USD FX: 0.83346 used as of 31 December 2017; Source: Knorr-Bremse information; WABCO and Wabtec / Faiveley information based on Annual Report 2017

Knorr-Bremse Group Confidential │16 3 Market outperformance – Knorr-Bremse is well positioned to deliver continued growth above rail industry levels

Knorr-Bremse with strong track record of industry outperformance Key future growth drivers CAGR (2010-2017) RVS sales1) (HGB) and market Asia Growth Outsourcing  Chinese high-speed  Outsourcing from rail OEM’s 3.7x  Mass urban transport in APAC (trend towards de-verticalisation)  Expansion and upgrade of Indian rail rolling stock 7.3%  CRRC international expansion

M&A Digitisation Aftermarket 2.8x  Increasing demand for connected  Global rail services and aftermarket systems and other digital solutions for rolling stock

5.7% ~2% Certification capability for all global core markets Organic ✓ ✓ Partner of many Chinese OEMs and large installed base 2) Underlying Rolling Leading control and monitoring technology Stock Market ✓ (external view) Excellent engineering and R&D system and a connected systems ✓ innovation leader

Notes: 1) Based on German GAAP (HGB); 2) Underlying OE rolling stock and aftermarket volume as defined by Roland Berger (July 2018). Market CAGR based on 2010 to 2016 market volumes; Source: Knorr-Bremse information, Roland Berger - Analysis of rail vehicle market report (July 2018) for growth rate of underlying rolling stock market

Knorr-Bremse Group Confidential │17 3 Market outperformance – Strong growth in content per vehicle expected to result in continued outperformance of global commercial vehicle market

Knorr-Bremse with strong track record of industry outperformance Key future growth drivers CAGR (2010-2017) CVS sales1) (HGB) and market Megatrends and conversion of regulatory standards 6.0x  Global megatrends provide attractive growth opportunities  Convergence of regulatory standards drives global adoption of technologies 8.1%

5.6x  Disc brakes replacing drum brakes M&A

7.5% Content increase Market share gains

Organic 1.3%  Traffic Safety  Product upgrading  Fuel efficiency  Regional expansion strategy IHS truck production rate 2)

Significant market content per vehicle (CPV) growth Market CPV CAGR3) (%, 2010-2017) Market leader in a consolidated industry with only 2 global players 7,0% ✓ 5,3% 5,2% A strong technology innovator shaping the industry 3,1% ✓ Multiple trends driving growth independent of underlying market (0,9%) ✓ dynamics World Europe North America South America Asia / Australia Ideally positioned to win in market defining trend towards ✓ ADAS/HAD4)

Notes: 1) Based on German GAAP (HGB); 2) Global Truck and Bus market excluding aftermarket and Trailer; 3) Addressable Truck, Bus and Trailer OE market for “Brake Systems & Vehicle Dynamics (incl. Automated Driving)”, “Energy Supply & Distribution” and “Fuel Efficiency”; 4) Advanced Driver Assistance Systems/Highly Automated Driving; Source: Knorr-Bremse information; IHS for truck production rate

Knorr-Bremse Group Confidential │18 4 The industry innovator – Driving innovation in mobility and transportation technologies through R&D leadership and edge in connected systems

Knorr-Bremse invests more in R&D1) Consistently pioneering “first to market” innovations…

5.8% 6.2% 2.5% 5.2% 4.4% 359

207 152 123 79

2) 9 out of 10 8 out of 10 RVS CVS of most industry-defining of most industry-defining innovations4) come from innovations4) come from 2017 R&D as % of sales Knorr-Bremse Knorr-Bremse

Knorr-Bremse has a larger patent portfolio than its peers … supported by focused M&A and partnerships

Portfolio size based on patent families (public) Autonomous Safe Connected ~2.800 >10,000 individual patents3) (Steering, (TCMS, (Braking, (Braking, (Telematics, 2016) 2015) 2016) 2015) 2016)

978 Efficient 720

TRS Japan (Electrics, (Converters, (Engine air, (Transmission, 2017) 2014) 2016) 2) 2016)

Notes: €/USD conversion 0.83; 1) Knorr-Bremse R&D financial information based on German GAAP (HGB), R&D ratio as reported in annual reports; 2) PF Faiveley and excl. GE Transportation acquisition; 3) Granted and applied patents; 4) Information as per Knorr-Bremse management view; Industry defining are considered to be the top 10 innovations in the past 30 years in the rail and commercial vehicle industry; Source: Knorr-Bremse information; 2017 annual reports of Wabtec / Faiveley and WABCO; PatentSight

Knorr-Bremse Group Confidential │19 5 Resilience – Business model supported by high aftermarket exposure, broad geographical and customer diversification and strong localisation

Strong resilience of growth and profitability

Different economic cycles High aftermarket share

 ~50/50 split RVS and CVS (by sales)  ~35% total sales1) – and growing  Different market drivers ˗ 42% of RVS sales1) ˗ short vs. long cycle ˗ 28% of CVS sales1) ˗ private vs. public investment  Large installed base  High sales visibility in RVS

Diversified customer base Global footprint and local content

 Partner to all major local and global players  High level of local content in manufacturing, purchasing and R&D 2)  Top-5 customers only account for 28% of sales  Presence in 30+ countries with 100+ sites  ~80% of employees outside Germany  ~15% of employees in China, catering to local market

Notes: 1) Based on German GAAP (HGB) for 2017; BilRUG sales allocated proportionally between OE and aftermarket; 2) Based on German GAAP (HGB) for 2017; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │20 5 Resilience – Attractive aftermarket business with comprehensive service offering drives profitability and contains high future potential

Aftermarket is the growth and resilience backbone Key features Sales CAGR (2010-2017) HGB (€bn) Aftermarket sales 2017 (€bn) Annuity-like ▪ Regulated maintenance intervals 15% 1.4 0.81) 2.2 ▪ Leverages high installed base 13% 26% ▪ 20-30 year long relationships 10% 10% 31% 7% 34% Close to the customer

4% 4% 4.0 ▪ RVS: 56% - 36 service centres2) 40% - 20 service locations at customers’ premises RVS CVS Group 2017 Spares Interchangeable parts ▪ CVS: OEM AM OEM AM Services Non-interchangeable parts - >1,600 certified service partners Modernisation Wear parts & service kits - >500 Alltrucks workshops Share of aftermarket 2017 (%) Strong customer retention 42% 28% ▪ High switching costs 35% ▪ Focus on safety and quality Europe 42% 28% share of aftermarket ▪ IP protection as % of sales 2017 Americas 52% 34% Innovative business model

Asia / ▪ New connectivity-based business models 38% Australia 14% ▪ Preventive ▪ Predictive

Notes: Based on German GAAP (HGB); BilRUG sales allocated proportionally between OE and aftermarket; 1) Total CVS aftermarket sales and independent aftermarket sales EMEA (excl. South Africa & Skach) as proxy for the global split; 2) Does not include service locations at customers’ premises; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │21 6 Superior financial profile – Outstanding track record of growth and profitability improvement

Strong track record of resilient and profitable growth

30% Performance Performance pre-global post-global HGB IFRS economic crisis economic crisis Normalisation Chinese HS boom 25% CAGR 8% sales 2003-2017 Chinese HS accident 20% Global crisis

CAGR 15% 11% EBITDA +660bps 10% EBITDA

EBITDA margin and sales and margin EBITDA margin 2003-2017 5%

0% 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012 20132013 20142014 20142014 20152015 20162016 20172017 2018 HGB IFRS

Normalised RVS Group Group sales EBITDA margin: RVS Group CVS EBITDA margin1):

Notes: Financials based on German GAAP (HGB) prior to 2014 and IFRS 2014-2017; Data presented in accordance with German GAAP (HGB) may not be comparable to data prepared in accordance with IFRS; 1) Normalised margin estimate for China accident impact and recovery; Estimate based on Knorr-Bremse assumptions; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │22 7 Leadership excellence – Clear vision for future value creation

Expand technology Capture opportunities leadership position from megatrends 1 2

▪ Growth potential from new technologies ▪ RVS as natural outsourcing partner for OEMs ▪ Introduction of ADAS1), HAD2) and ▪ Win in RVS de-regulated markets connected systems ▪ Continued market outperformance in CVS ▪ Focus on digitisation and connectivity through ADAS, connectivity and e-mobility ▪ Significant profitability improvement in ▪ Megatrends drive continued content growth non-braking technology products

Drive internationalisation strategy 3

▪ Leverage profitable mass urban transport opportunities, in particular in China and India Continued cost focus ▪ Benefit from Belt and Road Initiative (BRI) 5 ▪ Increase exposure to high margin countries ▪ Set of initiatives to drive up the margins ▪ Global supply chain & unified purchasing Grow profitable aftermarket ▪ Global process standards (KPS)3) 4

▪ Permanent cost discipline ▪ Leverage large installed base ▪ PMI in newly acquired companies ▪ Apply new business models (digital & ▪ Operating leverage data based) ▪ Close to customer

Consistent M&A and integration strategy

Medium-term target organic growth of 4.5-5.5% p.a. Target medium-term EBITDA margin complemented by value-add M&A expansion of +150bps Notes: 1) ADAS – Advanced driver assistance system; 2) HAD – Highly automated driving; 3) KPS – Knorr-Bremse production system; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │23 1 Introduction 7

2 Key Company Highlights 11

3 Rail Vehicle Systems (RVS) 24

4 Commercial Vehicle Systems (CVS) 35

5 R&D Focus 48

6 Financials 57

7 Sustainability 72

8 Capital Markets Summary 80

9 Appendix 84

Knorr-Bremse Group Confidential Rail Vehicle Systems – Nucleus of Knorr-Bremse’s success: the leading safety critical systems supplier for rail with a track record of market outperformance

Highlights 2017 key financials 2017 sales split4) by region #1 Rail brake systems 1) €3.3bn sales Asia / supplier globally Australia 38% Europe 50% #1 Rail entrance systems supplier globally1) 3) Americas 7.3% CAGR 2010-2017 12% by product Others 19%

#2 HVAC systems HVAC Brake supplier globally1) €639m EBITDA (19.6% margin) 6% systems 66% Entrance systems 9% ~50% Global brakes market share1) €523m EBIT (16.1% margin) by segment (OEM only) Freight Present in 50-55% of global 16% installed base2) 5) 42% aftermarket share Passenger c.16k employees 84% 2.0k o/w engineers Notes: Sales, EBITDA and EBIT based on IFRS, other figures based on German GAAP (HGB), BilRUG sales allocated proportionally between OE and aftermarket; 1) 2017 RVS market share estimates for OE and aftersales without labour; 2) All active rail vehicles without freight cars with a minimum of one Knorr-Bremse system related to brakes, entrance systems and HVAC installed; 3) Total reported RVS sales growth including OE and aftermarket at actual currency based on German GAAP (HGB); 4) Sales split by region based on IFRS; Other splits based on German GAAP (HGB); 5) Based on German GAAP (HGB) for 2017; BilRUG sales allocated proportionally between OE and aftermarket; Source: Knorr-Bremse information and internal market research

Knorr-Bremse Group Confidential │25 Deep dive into RVS braking technologies of Knorr-Bremse (1/2)

Key elements of a braking system in RVS

Electronic & pneumatic/hydraulic Wheel slide Master controller (man-machine-interface) brake control system protection system

Sanding Brake calipers & discs Compressor & air Magnetic track brakes systems Tread brake units treatment systems Eddie current brakes Friction material

Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │26 Deep dive into RVS braking technologies of Knorr-Bremse (2/2)

Customer-specific brake systems are provided based on a highly comprehensive product portfolio

Electronic & Pneumatic Brake Control System Air Supply Bogie Equipment Hydraulic System

Distributor Electronics EP2002 EP Compact CCB-3 Compressor AirDryer Disc and Tread brake Track Compact freight Hydraulic Hydraulic Valve & Software caliper unit brake car brake unit suspension

Selected key elements of a braking system Homologation requirement throughout

High degree of customization for all components

Multiple unit ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Locomotive ✓ ✓ ✓ ✓ ✓ ✓ ✓

Freight car ✓ ✓ ✓

Passenger car ✓ ✓ ✓ ✓ ✓ Multiple traintypes Trams / LRV1) ✓ ✓ ✓ ✓ ✓

Note: 1) LRV – Light rail vehicle; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │27 Global Tier-1 partner of choice for OEMs and rail operators in all regions

Top 10 customers 2017 (% of sales) Other major Knorr-Bremse customers >>300 Relevant rail operator customers 15% Europe / Africa

9%

Locomotive & Car 8% Research Institute Americas 5%

3% Asia / Australia 3% Top 10 = 52% of total Indian Railways RVS sales 2017

3%

3% >50 Relevant OEM customers

2%

2%

OEMs Rail operators

Notes: Sales based on German GAAP (HGB); Share of top 10 customers as % RVS sales 2017 may not add up due to rounding; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │28 Knorr-Bremse is the global #1 across key product categories

Global market share 20171) (% of sales)

Brake systems (66% of RVS sales) Entrance systems (9% of RVS sales) HVAC (6% of RVS sales)

King #1 #1 ~15% Others ~35% ~25% ~50% #2

Others Market size Market size Market size Others ~15% ~€1bn ~€4bn ~55% ~€1bn ~60%

~20% ~10% ~15%

Market share by region Market share by region Market share by region

#1 #1 #1-2 Europe ~50% Europe ~40% Europe ~20%

(Joint)

#1 #2 #1-2 Americas ~45% Americas ~15% Americas ~25%

(Joint)

Asia / Australia ~45% #1 Asia / Australia ~15% #2 Asia / Australia ~10% #2

Notes: Based on German GAAP (HGB); Market share estimates are rounded to the nearest multiple of 5%; For competitors a price estimate was used; 1) Market share estimates for OE and aftermarket without labour. Wabtec includes Faiveley; Source: Knorr-Bremse information and internal market research

Knorr-Bremse Group Confidential │29 Knorr-Bremse is the only supplier worldwide certified for all local standards and norms

Market protected by unique level of complexity … ... and long homologation time for each component Typical time-to-market Major global standards 4 Standard1) Key regions Development (yrs)2) Certification (yrs)2)

Unique configurations for vehicle types 7 4 4

Brake subsystems 3 GOST 4 3

Safety-critical components >100 3 1 Country- and customer-specific variants Multiple

3 1 ✓ 100k active brakes articles to homologate

Combination of IP ownership and homologation creates high barriers to entry

Notes: 1) GOST based on actual recent homologation process, other norms based on expert estimates by Knorr-Bremse; 2) Estimated average required ″time-to-market″ of a basic freight car solution Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │30 Significant historical market outperformance through consistent focus on fastest growing markets and segments especially in aftermarket

Strong growth both in OE and AM Significant outperformance of rolling stock market

CAGR (2010-2017) RVS sales by type (HGB, €bn, 2010-2017)1) CAGR (2010-2017) RVS sales2) (HGB) and market Total

3,3 3,3 7.3% 3.7x

3,0 3,0 7.3% AM 1,2 1,4 14.7% 1,0 M&A 1,2 2,2 2,2 2,2 2.8x 2,0

0,7 0,7 0,5 0,8

OE Organic 5.7% 2,0 2,1 ~2% 1,8 1,9 3.8% 1,5 1,5 1,5 1,4

Underlying Rolling Stock Market 2010 2011 2012 2013 2014 2015 2016 2017 (external view)3)

Notes: 1) Sales based on German GAAP (HGB), BilRUG sales allocated proportionally between OE and aftermarket; 2) Based on German GAAP (HGB); 3) Underlying OE rolling stock and aftermarket volume as defined by Roland Berger (July 2018). Market CAGR based on 2010 to 2016 market volumes; Source: Knorr-Bremse information and internal market research; Roland Berger - Analysis of rail vehicle market report (July 2018) for growth rate of underlying rolling stock market

Knorr-Bremse Group Confidential │31 Local growth strategies to optimally capitalise on positive rail infrastructure developments in China and India

CHINA INDIA

 Large installed base and trusted relationships  Entrepreneurial culture with close with leading Chinese railway players alignment on key customers’ needs

Nankou Daxing Faridabad Qingdao Wuxi 7 Plants 2 Plants Suzhou Pune Guangzhou

Jiangmen

Footprint Footprint

799 1) 613 1) Presence 126

7 7 28

Sales (€m) Sales (€m) Sales

2005 2010 2017 2018 2022 2005 2010 2017 2018 2022 FTE 241 2,756 3,039 FTE 176 373 918

 Infrastructure improvements prioritised  Electrification and modernisation Mainline network  Aggressive network growth plans  Dedicated and high-speed freight corridors planned (Very) High Speed vs.  Strong HS2) train and VHS3) development  Limited HS2) train rail network Regional & Commuter  Underdeveloped R&C4) train network  Developed EMU6) commuter network  Steady growth, doubling every 5 years  Networks to grow mainly in 6 mega-cities Metros  In 3rd tier cities only monorail and LRV5)  Metros currently only in mega-cities  No political requirement (but 50% local  Localisation political requirement Localisation content preferred)  Local ownership & technology control requirements  Local value added, local employment

Notes: Sales based on external (third party) sales German GAAP (HGB); FTE includes leasing (EOP); TCI (Technology Centre India) allocated to India; 1) Converted at actual average FX rates; 2) HS – High- speed; 3) VHS – Very high-speed; 4) R&C – Regional and commuter; 5) LRV – Light rail vehicle; 6) EMU – Electric multiple unit; Source: Knorr-Bremse information and internal market research; Chinese 13th 5-year-plan

Knorr-Bremse Group Confidential │32 Kiepe Electric acquisition constitutes latest milestone for Knorr-Bremse to become a complete systems supplier for RVS and CVS

FULL RVS SYSTEM COMPETENCES

Integrated and connected systems and aligned strategy  Knorr-Bremse now a complete systems supplier  Outstanding competences in traction equipment for e-vehicles  Aligned strategies between Knorr-Bremse and Kiepe

Further synergies between RVS and CVS  Transfer of product knowledge from RVS into CVS  Strong synergies between RVS and CVS in traction technologies  Kiepe caters to both RVS and CVS customers EXCELLENCT CVS COMPETENCES FOR E-VEHICLES Eco-efficiency  New growth opportunities given increasing demand for electrification CVS  Rail vehicle modernisation for mass urban transport

Increased systems value offered  Supply up to ~35-40% of the vehicle value vs. ~15% without Kiepe in LRVs

Source: Knorr-Bremse information and estimates

Knorr-Bremse Group Confidential │33 Knorr-Bremse RVS key takeaways

#1 ▪ Brakes1)

Market #1 1 Global market leader ▪ Entrance systems1) leadership #2 ▪ HVAC1)

Technology 2) 2 A strong technology innovator shaping the industry 9 of 10 Top innovations leadership

High 3 Only supplier certified for all standards and norms globally GOST barriers to entry 100k active brakes articles to homologate

CAGR (2010-2017) 3.7x Strong 4 Long track record of growing faster than the market 3) 7,3% growth profile ~2% Underlying Rolling Stock Market

5 Resilience Customer / regionally balanced with sizeable and growing aftermarket 42% 2017 aftermarket share4)

2017 margin5) 19.6% 16.1% 6 Profitability Outstanding profit margins and track record of margin expansion EBITDA margin EBIT margin

Notes: 1) 2017 RVS market share estimates for OE and aftersales without labour; 2) Knorr-Bremse management view; 3) Knorr-Bremse RVS revenue growth based German GAAP (HGB) compared to underlying OE rolling stock and aftermarket volume as defined by Roland Berger (July 2018); 4) Based on German GAAP (HGB); BilRUG sales allocated proportionally between OE and aftermarket; 5) Based on IFRS; Source: Knorr-Bremse information and internal market research; Roland Berger - Analysis of rail vehicle market report (July 2018) for rolling stock CAGR

Knorr-Bremse Group Confidential │34 1 Introduction 7

2 Key Company Highlights 11

3 Rail Vehicle Systems (RVS) 24

4 Commercial Vehicle Systems (CVS) 35

5 R&D Focus 48

6 Financials 57

7 Sustainability 72

8 Capital Markets Summary 80

9 Appendix 84

Knorr-Bremse Group Confidential Commercial vehicle systems – Knorr-Bremse is one of two global leaders with an outstanding position in braking and safety relevant systems

CVS

Highlights 2017 key financials 2017 sales split5) by region Asia / Australia #1 1) €2.9bn sales 16% Europe Global market position 50%

Americas 34% 8 4) 7,600 out of top 8.1% CAGR 2010-2017 patents 10 innova- Technology leader tions2) by product (OE only) Brake Systems & Vehicle 8) Fuel Efficiency Dynamics6) 14% (incl. Automated Driving) €504m EBITDA (17.4% margin) 71% 25%1) Global market share Energy Supply & Distribution7) 15%

€421m EBIT (14.6% margin) by end-market 17.3m ADB3) sold Aftermarket OE Truck & Bus 28% 66%

c.11k Employees 28% aftermarket share OE Trailer 1.6k o/w engineers 6%

Notes: Sales, EBITDA, EBIT and respective margins based on IFRS; other figures based on German GAAP (HGB); BilRUG sales allocated proportionally between OE and aftermarket; 1) 2017 global addressable Truck, Bus and Trailer OE market, including “Brake Systems & Vehicle Dynamics (incl. Automated Driving)”, “Energy Supply & Distribution” and “Fuel Efficiency”; excluding aftermarket; Knorr- Bremse data based on market intelligence and experts estimate in 2017; 2) Knorr-Bremse management view; 3) Air Disc Brakes sold between 2008-2017; 4) Total reported CVS sales growth including OE and aftermarket at actual currency, 2017; based on German GAAP (HGB); 5) Sales split by region based on IFRS; Other splits based on German GAAP (HGB); 6) Air Disc Brake, Valves / Pedal Unit, Actuators, Foundation Drum Brake, Steering, ABS, EBS, ESP, DAS, ELC; including segment Others; 7) Compressors, Air Treatment; 8) Vibration Dampers, Engine Air Control, Transmission - Gear Actuation, Transmission - Clutch Actuation; Source: Knorr-Bremse information and internal market research

Knorr-Bremse Group Confidential │36 Complementary product portfolio provides foundation for positioning as key integrated systems and services provider

Knorr-Bremse CVS comprehensive offering - 2017 sales by product segment (%)

Brake Systems & Vehicle Dynamics1) (incl. Automated Driving) Energy Supply & Distribution Fuel Efficiency2) 71%¹ 15% 14% ▪ Brake System ▪ Air Treatment ▪ Engine Components ▪ Brake Control ▪ Compressors ▪ Transmission Sub-systems ▪ Electronic Levelling Control ▪ Steering ▪ Automated Driving

Notes: Sales split by product as of 2017 based on OE only; based on German GAAP (HGB); 1) Air Disc Brake, Valves / Pedal Unit, Actuators, Foundation Drum Brake, Steering, ABS, EBS, ESP, DAS, ELC; including segment Others; 2) Vibration Dampers, Engine Air Control, Transmission - Gear Actuation, Transmission - Clutch Actuation; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │37 Knorr-Bremse is the partner of choice for global OEMs with long-standing relationships

Top 10 customers 2017 (% of sales) Years of relationship Other major Knorr-Bremse customers

13% >90

11% >30

10% >90

9% >30

5% >20

4% >90

3% >20

2% >30 Top 10 = 61% of total CVS sales 2017 2% >60

2% >5

Notes: Based on German GAAP (HGB); share of top 10 customers as % CVS sales 2017; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │38 Knorr-Bremse is a global leader in safety-relevant products across key geographies

Global market share 20171) (% of sales)

Brake Systems & Vehicle Dynamics (71%)2) Energy Supply & Distribution (15%)3) Fuel Efficiency (14%)4) (incl. Automated Driving)

#1 #1 #1 Others Others Others 23% 25% 54% (Joint) 58% 40% 23%

Market size Market size Market size €4.6bn €0.6bn €0.9bn

#1

19% 35% 23% (Joint)

Market share by region Market share by region Market share by region

Europe 32% #1 Europe 58% #1 Europe 20% #2

Americas 37% #1 Americas 42% #2 Americas 11% #2

Asia / Australia 8% #2 Asia / Australia 23% #2 Asia / Australia 38% #1

Notes: 1) 2017 addressable Truck, Bus and Trailer OE market, including “Brake Systems & Vehicle Dynamics (incl. Automated Driving)”, “Energy Supply & Distribution” and “Fuel Efficiency”; excluding aftermarket; Knorr-Bremse data based on market intelligence and experts estimate in 2017; 2) Air Disc Brake, Valves / Pedal Unit, Actuators, Foundation Drum Brake, Steering, ABS, EBS, ESP, DAS, ELC; including segment Others; 3) Compressors, Air Treatment; 4) Vibration Dampers, Engine Air Control, Transmission - Gear Actuation, Transmission - Clutch Actuation; Source: Knorr-Bremse internal market research

Knorr-Bremse Group Confidential │39 Historical market outperformance with strong position to take further advantage of the highly attractive and stable aftermarket opportunity

Strong growth both in OE and AM Strong market outperformance

CAGR (2010-2017) CVS sales by type (HGB, €bn, 2010-2017)1) CAGR (2010-2017) CVS sales1) (HGB) and market Total 2,9 8.1% 6.0x

2,5 2,5 AM 8.1%1) 0,8 4.0% M&A 2,2 5.6x 2,1 2,1 2,1 0,7 0,8

0,7 1,7 0,6 0,6 0,6

Organic 0,6 OE 7.5% 2,1 10.1% 1,7 1,8 1,4 1,4 1,4 1,5 1,1 1.3%

IHS truck production rate2) 2010 2011 2012 2013 2014 2015 2016 2017

Notes: 1) Based on German GAAP (HGB); BilRUG sales allocated proportionally between OE and aftermarket; 2) Global Truck and Bus market excluding aftermarket and Trailer; Source: Knorr-Bremse information and internal market research; IHS for truck production rate

Knorr-Bremse Group Confidential │40 Conversion in legislation drives the global adoption of technologies provided by Knorr-Bremse

Convergence of legislation creates growth opportunities for products respectively Case studies

Traffic Safety – Vision Zero Accident 1 Blind Spot Assistant ESC, ADB EBS  New framework for general safety and protection of AEBS, FCW, dangerous dangerous LDWS, vulnerable road users2) ESC LKAS, goods goods AEBS vehicles veh.>12t  Mandatory measures for trucks: 2016-2019 2019-2022 2020 2021-2022 ̶ Blind Spot Information System ̶ 3 Reversing Safety measures General Automated Safety ̶ Tire Pressure Monitoring System ESC LDWS ABS Steering Regu- Functions lation 2

2016 2017-2019 2019-2021 2020 2021 Air Disc Brake Product solutions Product  Increase safety of dangerous goods vehicles AEBS V2X Monitor & ESC ABS AEBS ESC System light for indirect 3) LDWS vehicles vision  2020 onwards: Need to be equipped with disc brakes 2016-2018 2017-2019 2018 2019-2020 2020-2022 2021 2022  Affects both, truck & trailer brakes

2016 2017 2018 2019 2020 2021 2022

3 Engine Air Management Valves & Dampers

CHINA Rota CHINA EPA 16 EPA 17 EPA 21 V 20301) VI  Increasing legislative emission standards

2016 2017 2018 2019-2020 2020 2021  Technology as enabler to achieve norms

BS VI  supports fulfilment of strictest standards EURO BS IV (Euro V VI)

2016 2016-2017 2019-2021 Emission standards Emission Fuel Efficiency – Vision Zero Emission Legislative decisions foster demand for Emission standards Traffic and safety Automated Driving Expected/in discussion Knorr-Bremse solutions

Notes: 1) Approved in May 2018, government intends to stimulate efficiency & vehicle safety; 2) European Commission: COM(2018) 286 & Vulnerable Road Users Directive (VRUD); 3) General Administration of Quality Supervision, Inspection & Quarantine of People’s Republic of China, technical specification for safety of power driven vehicles operating in roads; Source: Knorr-Bremse internal market research; Roland Berger market study: Trends in the truck & trailer market (August 2018)

Knorr-Bremse Group Confidential │41 Knorr-Bremse is clear market leader in Air Disc Brake with further strong market growth potential

Knorr-Bremse to benefit from strong ADB1) growth globally … … with growth opportunities independent of TPR … 1 Competitive landscape2) Market size2) Estimated units indexed to 100% (2017) Value (€m)  Growth opportunity in geographies predominantly using drum brakes ✓  Driven by convergence of legislation and higher safety standards ✓ 12%  Independent of underlying truck production market growth ✓

North America North 321 162 … and next generation ADB1) 2 A B C 2017 2023 Defined fields of action as enablers for growth & upside protection

 Fuel Saving and Emission Reduction  Predictive maintenance 8%  Enablers for Highly Automated Driving

China Trends to be considered for next Air Disc Brake generation

113 184 Emission Reduction Active Caliper Release Brake Condition

D E F G A 2017 2023 (ACR) New ADB1) Monitoring ity

▪ Reduced fuel generation v ▪ Monitoring is a consumption HAD3) prerequisite 2% ecti ▪ Less wheelend Synact NexTT ▪ Wireless

drag torque Conn connection 575 650

▪ Easy to apply for ▪ Multi sensor Europe OE & aftermarket + HAD3) approach +

A B H C 2017 2023 Automated drive and condition-based maintenance ready % CAGR 2017-2023 Notes: 1) Air Disc Brake; 2) Indicative estimates based on Knorr-Bremse market intelligence and interviews with experts; 3) Highly Automated Driving; Source: Knorr-Bremse internal market research

Knorr-Bremse Group Confidential │42 Automated Driving: Knorr-Bremse is a technology leader in Driver Assistance Systems

Timeline of Knorr-Bremse’s product innovation in Driver Assistance Systems Knorr-Bremse capabilities

2000 2010 units Cumulative deliveries

) Forward collision Stationary Integration with AEBS¹ ✓ > 20 years of experience

warning object warning brake controller fusion Collision Collision Mitigation ✓ ~ 600k units installed base globally 210k units3) ) ✓ Technology leadership: Throttle and ACC² with 4)

retarder control brake control ACC²) fusion (e.g. Brake Systems, Steering, ADAS ) Control

✓ System know-how & system supplier Adaptive Cruise Adaptive

Lane Driver Safety direct Lane departure ✓ Broad customer base detection warning integration prevent 250k

units ✓ Retrofit initiative in North America

Lane Departure Lane Warning System Warning ✓ Competence in driving dynamics Object Object Cost and detection Turning detection tracking improvement Assist 110k ✓ Know-how in vehicle model simulation

units

Warning Blind Spot Blind

Notes: 1) Advanced Emergency Braking System; 2) Adaptive Cruise Control; 3) Collision Mitigation and Adaptive Cruise Control are based on same hardware today, but applications use different software; often sold in a bundle; 4) Advanced Driver Assistance Systems; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │43 Knorr-Bremse with clear strategy to be leading system supplier for Automated Driving

Redundancy Steps Action Provider 4 concept

PERCEPTIONPerception Complete environment perception of truck & trailer Partner + Safety relevant 1 functions backed up by redundancy:

▪ Control ▪ Sensors DECISIDecisioOnN Continuous situation analysis for motion planning Partner ▪ Steering + 2 HAD[Pic]1) Situation analysis ▪ Braking 2) ECU Trajectory planning ▪ Electric on-board net Truck Motion Control (GSBC3))

AACTUctuAatiTIoOnN Coordinated interaction of actuators for vehicle dynamics 3 Continuous vehicle dynamic control Actuators physically perform actions such as ensured applying brakes, steering or changing lanes

System supplier – one interface for customers as the system integrator

5 Optimally designed for Cost efficient redundant system Profound ADAS4) and truck dynamics expertise commercial vehicle needs architecture as solid basis for HAD1) up to level 5

Notes: 1) Highly Automated Driving; 2) Electronic Control Unit; 3) Global Scalable Brake Control; 4) Advanced Driver Assistance Systems; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │44 Knorr-Bremse teams up with Continental to become a leading Automated Driving system supplier for commercial vehicles

 Function know-how based on passcar experience & carryover from passcar  Truck- & trailer-specific vehicle dynamics: Vehicle guidance and stability control  Hardware for localization (radar, camera) and Automated Driving Control Unit  Fail-operational architecture  Commercial vehicle-specific function development, application and release

Perception Decision Actuation

Redundancy

System integration

Consumer Benefits Joint Project Scope ▪ Industry benchmark perception decision and actuation from the one source ▪ Development of systems, components and functionality for Automated Driving ▪ Superior performance through full-system approach ▪ Validation and release of complete highly Automated Driving systems ▪ Cost-optimized systems for commercial vehicles ▪ Collaboration in joint project house

Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │45 Internationalisation: Global growth strategy focuses on North America penetration as well as Chinese and Indian market share expansion

Exploit leading position Leverage local presence Expand market share

Elyria Dalian Huntington Shiyan

Footprint Shanghai Pune1) Acuña Bowling Green Chongqing

(€m)2) (€m)2) (€m)2) 10% 38% 2%

925 266 26 489 22

Totalsales 28

2010 2017 2022 2010 2017 2022 2010 2017 2022

%

FTE 2,174 3,364 225 1,133 2813) 6073) CAGR 2010-2017

 Bendix acquisition as enabler for footprint expansion  Intensive localisation with key local players  Strong business growth with major Indian customers  Capitalisation of technological expertise and brand  Capitalise on strong position in OE channel  Expansion of product portfolio  Increased content per vehicle (technology as driver)  Increased content per vehicle (technology as driver) (dampers, drum brakes)  Strong potential for growth from ADB roll-out (12%  Strong potential for growth from ADB roll-out (8%  Localisation programme creating scale effects CAGR 2017-2023)4) CAGR 2017-2023)4)  Continuous cost structure improvements  Expand network to establish truck aftermarket  Exploit position in electric bus Notes: Based on German GAAP (HGB); FTE includes leasing (EOP) 1) Plant under expansion; 2) Based on external third party sales; 3) TCI allocated to India; 4) Indicative estimates based on Knorr-Bremse market intelligence and interviews with experts; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │46 Knorr-Bremse CVS key takeaways

#1 ▪ Brake Systems & Vehicle Dynamics1)

Market #1 1 Global market leader ▪ Energy Supply & Distribution2) leadership #1 (Joint) ▪ Fuel Efficiency3)

Technology 2 A strong technology innovator shaping the industry 8 of 10 Top innovations4) leadership

Brake Systems & Vehicle Dynamics1),5) High ~4.0x 3 Only two suppliers with global technological know-how and capabilities barriers to entry Competitor #3

Strong New ADB6) 4 Long track record of growing faster than the market generation growth profile

5 Resilience High aftermarket share and content per vehicle growth 28% 2017 aftermarket share

2017 margin7) 17.4% 14.6% 6 Profitability Outstanding profit margins and track record of margin expansion EBITDA margin EBIT margin

Notes: EBITDA and EBIT margins based on IFRS; aftermarket share based on German GAAP (HGB); BilRUG sales allocated proportionally between OE and aftermarket; 1) Incl. Automated Driving; Air Disc Brake, Valves / Pedal Unit, Actuators, Foundation Drum Brake, Steering, ABS, EBS, ESP, DAS, ELC; including segment Others; 2) Compressors, Air Treatment; 3) Vibration Dampers, Engine Air Control, Transmission - Gear Actuation, Transmission - Clutch Actuation; 4) Knorr-Bremse management view; 5) 2017 global addressable Truck, Bus and Trailer OE market, including “Brake Systems & Vehicle Dynamics (incl. Automated Driving)”, “Energy Supply & Distribution” and “Fuel Efficiency”; excluding aftermarket; 6) Air Disc Brake; 7) Based on IFRS; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │47 1 Introduction 7

2 Key Company Highlights 11

3 Rail Vehicle Systems (RVS) 24

4 Commercial Vehicle Systems (CVS) 35

5 R&D Focus 48

6 Financials 57

7 Sustainability 72

8 Capital Markets Summary 80

9 Appendix 84

Knorr-Bremse Group Confidential R&D is at the very core of Knorr-Bremse’s DNA

1) With over 10,000 patents 5 state of the art R&D Focussed & disciplined Knorr-Bremse secures the future centres globally complemented by approach ensuring highest innovation roadmap. Largest patent 23 local engineering entities with efficiency portfolio in the industry2) customer proximity

More than 80% of the most industry- Significant synergies Extensive external network with over between RVS and CVS defining innovations over the last 15 R&D partnerships decades came from Knorr-Bremse

~50% of Knorr-Bremse’s 327 newly filed patents in 2017, out of 6% of sales in R&D3) – efforts target which the majority in automated driving & R&D new Knorr-Bremse invests more in future and connected systems technologies future technologies than any of its competitors related themes

Notes: 1) Granted and applied patents; 2) Based on published number of patent families (granted and applied); 3) Knorr-Bremse 2017 R&D financial information based on German GAAP (HGB) Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │49 Significant R&D portfolio synergies between RVS and CVS …

Vehicle control & Energy Supply & Services Chassis systems Braking Driving automated driving Distribution

Telematics (iCom Driver assistance (ACC, maintencance, iTAP-push) AEBS, ASR, LEADER) Hydraulics Wheelend/ bogie equipment Conventional actuation Compressed air

Remote & on-demand Combustion engine maintenance and diagnostics Motion control Electronics Disc brake components Compressed air generation

Training drivers/ work shops HMI & driver information (Safety direct, dimulator) Brake control (iTAP, etc.) Brake actuator Electronic actuation (Kiepe) Air treatment

Spare parts ABS / wheel slide protection Level control Wear-resistant brakes E-motor

Electronic board net / Charge Electrodynamic brakes / Remanufacturing Emergency brake regulation (Kiepe) recuperation Converter / traction control

Automated manual Energy measurement V2X communication Pantograph (Kiepe) Tread brake transmission

Vehicle control Windscreen wiper and wash Electromagnetic brake Ticketing (TCMS / UCS) systems system

Transport and logistics Brake distance management/ optimisation sanding Entrance systems / doors Eddy current brake RVS & CVS Dynamic driving control (ESP) Air conditioning Drum brake & adjuster RVS

Vehicle dynamics Conventional steering Exhaust brake CVS

Torque overlay steering system

In >50% of Knorr-Bremse’s portfolio the underlying technology can be applied to both divisions Source: Knorr-Bremse information │50 Knorr-Bremse Group Confidential …resulting in high synergies and cross-proliferation

Cross-divisional R&D examples

1990: Technology transfer for ADB 1992: Air Disc Brake from RVS to CVS Air Disc Brake

1985: RVS Screw Compressor 2011: Screw technology adopted for CVS Screw Compressor applications Compressor

Collision Avoidance for RVS 2021/2022: based on CVS system know- 2008: Collision Collision Avoidance how within the field of sensor Avoidance technology

✓ Faster time to market ✓ Higher cost benefit ✓ Focused customer solutions

Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │51 Leveraging Knorr-Bremse’s synergies & partnerships: centres of excellence as basis for sustained technology leadership

Americas, Σ ~413 FTE1) Europe, Σ ~2,382 FTE1) Asia, Σ ~926 FTE1)

Wülfrath Schwieberdingen Düsseldorf Melksham Berlin Aldersbach Watertown Munich Elyria Lyss Budapest Dalian Getafe Sakado Faridabad Pamplona Suzhou Lisieux Vienna Shanghai Buccinasco Arcore Chongqing Holzkirchen Kematen Pune

Joint development & production site Itupeva Sydney

R&D center in R&D center Schwieberdingen in Budapest R&D center in • Opened in 1997 Munich • Opened in 1999 R&D center R&D • CVS engineers: ~160 • RVS engineers: ~230 in Pune center in Elyria • Opened in 2016 • CVS engineers: ~190 • ~€90m investment • Opened in 2013 • Opened in 1942 • 17,000m² facility with • RVS engineers: ~180 • CVS engineers: ~180 100 state-of-the-art • CVS engineers: ~170 testing rigs • RVS engineers: ~490 • CVS engineers: ~160 Knorr-Bremse’s innovations are supported by a network of specialized development centres with joint production and R&D

Notes: 1) FTE refers to number of employees in R&D function (includes engineers, technicians, merchants) EOP 2017, TCI allocated to Asia Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │52 Knorr-Bremse deploys structured and effective processes to drive innovation results

Knorr-Bremse R&D process

1 2 3 Smart Capitalisation Idea Business Project ≥ €500,000 and/or ≥ 7,500h Business Description Story Case

Detailed Production Idea Potential Requirement Solution design Realisation to system generation evaluation concept preparation planning validation

Authorisation of proof of Authorisation of development concept by Executive Board by Executive Board

Proof of concept Proof of ConceptDevelopmentDevelopment and Idea generation Idea screeningIdea Generation Idea Screening Application in series Development & supportDevelopment & Support testingand Testing

Knorr-Bremse’s innovations are designed for clear customer impact… …and maximum economic benefit for Knorr-Bremse

Optimisation of TCO1) All projects assessed based on NPV2)

Reduction of energy consumption, noise, weight Prioritisation of projects according to IRR3)

Safety & reliability Optimise time to market

Connectivity, wireless solutions, ethernet Short payback time of investment

Adaption to regulation Ability to leverage innovation across customer portfolio

Notes: 1) TCO refers to total cost of ownership; 2) NPV refers to net present value; 3) IRR refers to internal rate of return; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │53 Close cooperation with customers & strategic partners

GOVERNMENT PARTNERSHIPS VC PARTNERSHIPS WITH STARTUPS ▪ Shift2Rail: EU supported initiative amongst ▪ Partnerships with accelerators suppliers and OEMs to jointly develop an ▪ Investment in start-ups efficient transportation system ▪ VDA1) participation in ~20 committees ✓ Technology access ✓ Design of norms/standards ✓ R&D acceleration ✓ Early anticipation of industry trends ✓ Grants/subsidies Acceleration of PRODUCT INNOVATION in digital age requires DIVERSE PARTNERSHIPS PARTNERSHIPS WITH UNIVERSITIES to outperform competitors JVS WITH OEMS / TECHNOLOGY ▪ Research cooperations PARTNERS ▪ 18 joint ventures globally ✓ Access to future talent ▪ Joining complementary competences to ✓ Scouting of new extend product and service lines, and technologies at minimal cost capacities

✓ IP protection ✓ Local presence ✓ Flexible solutions for customers

Countries Knorr-Bremse is present

Notes: 1) VDA - Verband der Automobilindustrie (German Association of the Automotive Industry); Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │54 Knorr-Bremse significantly outspends competition in R&D, translating into clear technology leadership – the backbone for future growth

Knorr-Bremse invests more in R&D1) Knorr-Bremse has a larger patent portfolio than its peers Portfolio size based on patent families (public) 5.8% 6.2% 2.5% 5.2% 4.4% >10,000 individual 359 2.755 patents3)

207 152 123 978 79 720

2) 2) RVS CVS 2017A R&D as % of sales

Knorr-Bremse has been consistently able to translate its R&D investment into pioneering “first to market” innovations

High quality and amount of patents ensure competitive  advantage 9 out of 10 of 8 out of 10 the most industry- of the most  Investment in future top line growth defining industry- defining innovations4) come innovations4) come  Maximum alignment to megatrends from Knorr- from Knorr- Excellent R&D capabilities (patents, engineers, process Bremse Bremse  efficiencies)

Notes: €/USD conversion 0.83; 1) Knorr-Bremse R&D financial information based on German GAAP (HGB), R&D ratio as reported in annual reports; 2) PF Faiveley and excl. GE Transportation acquisition; 3) Granted and applied patents; 4) Information as per Knorr-Bremse management view, for reference see slide 28 and 56; Industry defining are considered to be the top 10 innovations in the past 30 years in the rail and commercial vehicle industry; Source: Knorr-Bremse information; 2017 annual reports of Wabtec / Faiveley and WABCO; PatentSight

Knorr-Bremse Group Confidential │55 Knorr-Bremse focuses resources on the most important future technologies

Knorr-Bremse’s R&D spend has a balanced split between customer and proprietary innovation projects 2017 figures Software Digital ▪ Success and growth in OE driven by ability solutions to provide customer specific solutions Future product ▪ Focus on complex high value-add projects development ▪ Project pricing reflects upfront R&D spending ▪ Enables customer to outsource entire Specific Electronics / Mechanical systems engineering customer mechatronics solutions projects Our focus is on future 1) 1) R&D allocation R&D spend allocation technologies and on

Energy supply & Fuel complex customer distribution efficiency projects where Knorr- Future Bremse delivers a high product value-add development Steering ▪ Disproportionate investments in Brake Control and Automated Driving (11 % of Other / 4) Brake sales ) serial Brake control & systems ▪ Targeted R&D investment focused on support Automated Driving key future technologies 3) R&D allocation2) R&D spend allocation

Notes: 1) Approximation based on Knorr-Bremse management view; 2) Based on hours spent in 2017; 3) Based on R&D expense in 2017 (German GAAP (HGB)); 4) R&D expense in % of sales in 2017 for Brake Control and Automated Driving (German GAAP (HGB)); Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │56 1 Introduction 7

2 Key Company Highlights 11

3 Rail Vehicle Systems (RVS) 24

4 Commercial Vehicle Systems (CVS) 35

5 R&D Focus 48

6 Financials 57

7 Sustainability 72

8 Capital Markets Summary 80

9 Appendix 84

Knorr-Bremse Group Confidential Review of Knorr-Bremse financial profile

Track record of sustainable growth and margin 1 improvement

2 High degree of earnings resilience & visibility

3 Focus on quality of earnings and returns

4 Strong balance sheet & financing structure

Knorr-Bremse Group Confidential │58 1 Track record of strong and sustainable top-line growth …

Historical sales1)2) by division

(€m) CAGR2) 2005-17 2010-17 2016-17 Group 6.154 7.0% 7.5% 12.5% 5.824 5.471 5.206 5.217

2.891 4.2% 7.9% 16.0% 4.241 4.300 4.303 2.492 2.493 2.228 2.228 3.712 3.384 3.251 3.121 2.068 2.098 2.070 2.743 2.761 1.701

1.975 1.966 1.968 1.221 1.773 3.331 3.260 2.982 2.993 2.979 10.4% 7.0% 9.4% 2.024 2.187 2.217 2.247 1.553 1.304 1.431 991 1.174

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 2015 2016 2017

German GAAP Transition2) IFRS RVS CVS Notes: 1) Divisional historic figures do not add up to group sales excluding consolidations/other; 2) 2014 represents the first year that Knorr-Bremse prepared its financial statements in accordance with IFRS. Prior to 2014, financial statements were only prepared in accordance with German GAAP (HGB). IFRS differs in certain aspects from German GAAP (HGB), and accordingly data presented in accordance with German GAAP (HGB) may not be comparable to data prepared in accordance with IFRS; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │59 1 … combined with disproportionate EBITDA growth …

Historical EBITDA1)2) profitability

(€m) CAGR2) 21,8% 20,3% 2005-17 2010-17 2016-17 19,0% 19,2% 18,1% Group 15,7% 15,7% 14,2% 14,6% 10.2% 11.3% 6.0% 13,2% 13,5% 12,7% 12,4% 1.269 9,7% 1.116 1.060 1.052 987 468

349 504 7.1% 14.3% 18.3% 338 426 667 678 628 528 264 290 438 257 410 420 349 198 797 691 268 634 624 639 247 258 230 13.4% 9.6% 2.5% 222 61 379 389 336 354 193 212 141 150 178

2005 2006 2007 2008 2009 2010 3) 2011 2012 2013 2014 2014 2015 2016 2017 HGB IFRS German GAAP Transition2) IFRS RVS CVS EBITDA Margin (%)

Notes: 1) Divisional historic figures do not add up to group EBITDA excluding consolidations/other; 2) 2014 represents the first year that Knorr-Bremse prepared its financial statements in accordance with IFRS. Prior to 2014, financial statements were only prepared in accordance with German GAAP (HGB). IFRS differs in certain aspects from German GAAP (HGB), and accordingly data presented in accordance with German GAAP (HGB) may not be comparable to data prepared in accordance with IFRS; 3) EBITDA 2010 including extraordinary expenses due to BilMOG; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │60 1 … all supported by strong aftermarket sales growth

RVS – Aftermarket sales (2014-2017)1) CVS – Aftermarket sales (2014-2017)1)

(€m) (€m) CAGR 12.6% CAGR 5.2%

1.387

1.205 1.218

817

971 762 743

701

2014 2015 2016 2017 2014 2015 2016 2017

Notes: 1) Based on German GAAP (HGB); BilRUG sales allocated proportionally between OE and aftermarket; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │61 1 RVS – Sales development driven primarily by Europe and China with profitability reflecting regional margin mix dynamics

Regional sales development1)2) EBIT2)

(€m) (€m) 2014-17 2014-17 CAGR: 2.9% CAGR: (6.3%)

3.331 3.260 40 (12.6%) 24 21,3% 21,7% 2.982 2.993 2.979 17,9% 18,4% 435 370 6.1% 36 36 44 14,6% 16,1% 306 310 358 724

636 2.247 28 1.230 (3.9%) 548 275 1.506 534 523 1.386 1.386 1.192

842 329

1.635 9.1% 1.385 1.252 1.259 1.348 1.100

2013 2014 2014 2015 2016 2017 2013 2014 2014 2015 2016 2017 German German IFRS IFRS GAAP GAAP Europe Asia/Australia North America EBIT margin (%) South America % Regional CAGR

Notes: 1) 3rd party historic regional sales figures do not add up to divisional sales excluding IC sales; 2) 2014 represents the first year that Knorr-Bremse prepared its financial statements in accordance with IFRS. Prior to 2014, financial statements were only prepared in accordance with German GAAP (HGB). IFRS differs in certain aspects from German GAAP (HGB), and accordingly data presented in accordance with German GAAP (HGB) may not be comparable to data prepared in accordance with IFRS; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │62 1 CVS – Sales growth driven by strong momentum across key regions coupled with significant margin expansion

Regional sales development1)2) EBIT2)

(€m) (€m) 2014-17 2014-17 CAGR: 9.1% CAGR: 13.2%

2.891 69 (11.2%)

2.492 2.493 16,0% 60 55 924 2.228 2.228 7.3% 14,4% 14,6% 2.070 99 99 13,1% 783 12,5% 113 932 421 398 11,2% 748 748 358 613 461 28.9% 362 291 282 278 195 215 215 232

1.437 7.2% 1.291 1.137 1.165 1.165 1.216

2013 2014 2014 2015 2016 2017 2013 2014 2014 2015 2016 2017 German German IFRS IFRS GAAP GAAP Europe Asia/Australia North America EBIT margin (%) South America % Regional CAGR

Notes: 1) 3rd party historic regional sales figures do not add up to divisional sales excluding IC sales; 2) 2014 represents the first year that Knorr-Bremse prepared its financial statements in accordance with IFRS. Prior to 2014, financial statements were only prepared in accordance with German GAAP (HGB). IFRS differs in certain aspects from German GAAP (HGB), and accordingly data presented in accordance with German GAAP (HGB) may not be comparable to data prepared in accordance with IFRS; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │63 2 Top-line visibility supported by high order intake and order book

Order intake 2014-171)2) Order book 2014-172)3) (€m) (€m) 1.1x 1.0x 1.0x 1.1x 69% 59% 67% 68%

1.0x 1.0x 1.0x 1.1x 44% 40% 43% 46%

1.1x 0.9x 1.1x 1.1x 87% 73% 87% 88%

CAGR 6.5% CAGR 5.3%

6.657

4.177 5.668 5.723 5.510 3.577 3.674 3.422 3.123 1.316

2.266 2.511 2.581 977 1.084 996

2.876 3.536 2.609 2.435 2.601 3.248 3.158 3.144

2014 2015 2016 2017 2014 2015 2016 2017

RVS CVS Book-to-bill ratio RVS CVS Order book / sales

Notes: 1) Non-GAAP metric; 2) Group figures include consolidations/other; 3) Calculated based on financial statements prepared in accordance with IFRS; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │64 3 Focus on quality of earnings – a closer look at key P&L items

Key items

€m 2015 2016 2017 Net sales 5,824 5,471 6,154 % growth 11.6% (6.0%) 12.5% Changes in inventory of finished and unfinished goods (7) (11) 39 Own work capitalised 19 21 32 Total operating performance 5,836 5,481 6,224 Other operating income 89 83 81 Material expenses (2,747) (2,571) (3,010) Personnel costs1) (1,272) (1,272) (1,439) Other operating expenses (636) (669) (741) EBITDA 1,269 1,052 1,116 Margin, % 21.8% 19.2% 18.1% Depreciation / Amortisation (170) (166) (211) EBIT 1,099 886 904 Margin, % 18.9% 16.2% 14.7% Financial result (51) (45) (52) EBT 1,048 841 852 Margin, % 18.0% 15.4% 13.9% Income tax (337) (274) (265) Effective tax rate 32.2% 32.6% 31.1% Net income 711 567 587 Cash / (Net Debt) 1,094 969 836

Notes: Based on financial statements prepared in accordance with IFRS; 1) Including leased personnel; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │65 3 Knorr-Bremse is a high return and cash generative business

Strong cash generation abilities Key drivers and factors

(€m) I ROCE normalisation along with EBIT in 2016 2.7x 2.8x 2.4x 2.5x  largely driven by China RVS HS 102%

92%  Additional margin upside from historical EBIT

margins acquisitions of low margin businesses with 76% 959 77% future turnaround potential 53% 49% 769 37% II  Strong asset turnover above c.2.0x

693 680  Consistent historical sales growth 38%

 Moderate decrease due to capex and Asset Asset

turnover working capital growth

723 III  Recent normalisation mainly due capex 673 program and changes in net working capital 542 515 495 504 523 resulting from China pre-payments 456 450 346  Cash flow mirrors EBITDA development in 299 301 282 combination with low WC levels (pre- 186 payments)

 2017 impacted by extraordinary costs of 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 2015 2016 2017 FCF generation FCF attempted Haldex acquisition, IPO HGB IFRS German GAAP Transition1) IFRS preparation and IFRS conversion (total ~€30m) Operating cash flow Cash conversion 2) FCF 3) ROCE 4) Asset turnover 5)

Notes: 1) 2014 represents the first year that Knorr-Bremse prepared its financial statements in accordance with IFRS. Prior to 2014, financial statements were only prepared in accordance with German GAAP (HGB). IFRS differs in certain aspects from German GAAP (HGB), and accordingly data presented in accordance with German GAAP (HGB) may not be comparable to data prepared in accordance with IFRS; 2) Cash conversion defined as: (OCF - investments in fixed assets - investments in intangible assets) / net income; 3) FCF (Free Cash Flow) defined as cash flow from operations minus cash-relevant capex; 4) ROCE defined as EBIT divided by capital employed (Fixed assets + Intangible assets + Net working capital); 5) Asset turnover defined as sales divided by capital employed; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │66 3 Fully invested asset base driving low capex requirements

Capex1) Net working capital2)

(€m) (€m) 4,1% 4,6% 3,7% 3,8% 14% 12% 13% 13% 249 239 235 47 46 52 44 192 31 46 45 782 31 748 719 208 203 710 161 190

2014 2015 2016 2017 Investments in tangibles Investments in intangibles % of sales

D&A

(€m) 2014 2015 2016 2017 3,4% 3,0% 2,9% 211 2,4% 170 166 43  Increase in D&A in 2017 mainly due to the difference in fair value and the proceeds from sale of assets held for sale resulting in additional €25m 30 126 32 impairment 16 3) 4)  Effect from step-ups included in amortisation are €9m in 2017, €8m in 168 140 134 2016 & 2015 and €1m in 2014 109

2014 2015 2016 2017 Net working capital Net working capital days NWC in % of sales Depreciation Amortisation % of sales

Notes: Based on financial statements prepared in accordance with IFRS; 1) As per asset register, defined as investments in fixed and intangible assets incl. finance leasing; 2) Net working capital defined as Inventory + Accounts receivables + Construction contracts with positive balances - Accounts payables - Construction contracts with negative balances - Prepayments received; 3) Step-ups from key PPA’s (Selectron, Powertech, GT & Kiepe Electric); 4) Including €25m from impairment of assets held for sale; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │67 4 Healthy capital structure with low leverage

Capital structure as of June-30, 2018 Minorities

(€m)  Total profit share 2017: €51.4m

 Bosch minorities recognised as liabilities of €379m (no P&L impact) 1,5601) Current 93 financial liabilities

Non-current (1.551) Low pensions liabilities as of June-30, 2018 financial 1.466 liabilities  Share of total assets: 5.5% Compares with a net cash position of €836m in Dec-2017  Plan assets: €27m

19  Provision for DBO: €310m 8

 Provision for other employee benefits: €49m Interest Cash & cash Net financial bearing equivalents debt / (cash) debt cash

Notes: Based on financial statements prepared in accordance with IFRS; 1) Liabilities to bank, bonds & leasing liabilities; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │68 Knorr-Bremse medium term targets and dividend policy

Medium term targets

 Group organic CAGR of c. 4.5%-5.5% - RVS c. 5-6% Sales - CVS c. 4-5%  Assuming constant currencies P&L

 Margin expansion c. 150 bps compared to 2017 EBITDA Margin - Driven by both divisions - RVS division slightly ahead vis-à-vis CVS division

 Capex ratio in line with 2014-2017 average Capex - RVS: c. 4% of sales - CVS: c. 4% of sales Cash flow

Working capital  DWC requirements expected to be in line with 2014-2017 average

 Maintain solid investment grade Leverage  Target leverage <1x Net debt/EBITDA, incl. post financing of acquisitions Capital structure Dividend  Target payout ratio of 40-50% of IFRS net income

Other Tax rate  IFRS tax rate @ ~30%

Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │69 Knorr-Bremse ticks all the boxes of a best-in-class industrials company

Track record of organic growth market 6.5% organic sales CAGR (2010–2017)1) plus selective, value-added M&A outperformance

Sustainable EBITDA margin range of ~18–20% (2014–2017)2) Strong profitability & cash flow vs. peers Sustainable cash conversion range of ~80–90% (2014–2017)2)

Consistent high return on capital ROCE range of ~40–50 % (2014–2017)2)

Aftermarket exposure of ~30–35% of sales (2014–2017) Proven resilience through the cycle Well-balanced regional and divisional sales mix

Notes: 1) Based on financial statements prepared in accordance with German GAAP (HGB); Group net sales including BilRUG without acquisitions for RVS and CVS; 2) Based on financial statements prepared in accordance with IFRS; Source: Knorr-Bremse information

Knorr-Bremse Group Confidential │70 1 Introduction 7

2 Key Company Highlights 11

3 Rail Vehicle Systems (RVS) 24

4 Commercial Vehicle Systems (CVS) 35

5 R&D Focus 48

6 Financials 57

7 Sustainability 71

8 Capital Markets Summary 80

9 Appendix 84

Knorr-Bremse Group Confidential Knorr-Bremse takes active part in corporate memberships throughout the world

United Nations Global Compact (participation since 2010)

APTA - American Public UNIFE - Sustainable Transport Transportation Association, USA Committee of the Union des Industries Ferroviaires Européennes, BEL

VDA - Verband der Automobilindustrie AAR - Association of American e. V., GER Working Groups: Railroads, USA Sustainable supply chain & products

AIAG - Automotive Industry Action Railsponsible – founding member Group, USA (sustainable rail supply chain initiative)

MEMA - Motor & Equipment Manufacturers Association, USA VDB - Fachgruppe Umwelt im Verband der Bahnindustrie e. V., GER

New York and New Jersey Minority APRA - Automotive Parts Remanu- Supplier Development Council, USA facturers Association - Chairman Europe

Knorr-Bremse Group Confidential │72 Achieved CSR ratings and awards

CSR Ratings Awards

Top employer C+ 5th time in a row

Supplier Sustainability Award 2014

Silver Industrial Sustainability Supplier 2015

95% Special Price: “Green Award” 2018 D

Knorr-Bremse Group Confidential │73 Our CR policy and focus areas

Knorr-Bremse Group Confidential │74 The basis of our responsibility

Our values UN Global Compact CR Policy

• Entrepreneurship Commitment to ten basic • Comprises our understanding • Technological Excellence principles: of Corporate Responsibility • Reliability • Human rights • Sets down guidelines for our • Passion • Labor standards CR focus areas • Responsibility • Environmental protection • Points out the main focus of • Anti-corruption our efforts to realize social and environmental responsibility

Knorr-Bremse Group Confidential │75 Our Code of Conduct gives us guidance on how to behave responsibly towards colleagues, business partners and authorities.

1. Based on our corporate values and the UN Global Compact principles 2. Issued by the Board of Directors of Knorr-Bremse AG

3. Applicable worldwide for all employees

4. Regular eLearnings for the employees, available in 10 different languages, including a video statement by our CEO Klaus Deller

5. Supplemented by guidelines on specific areas, e.g. Anti-Corruption, Fair Competition, etc.

6. Additional Supplier Code of Conduct in place regarding conduct with business partners

Knorr-Bremse Group Confidential │76 In 2018 Knorr Bremse selected its Core Sustainable Development Goals (SDGs)

Knorr-Bremse Group Confidential │77 Our 8 material (non-financial) corporate responsibility areas

Evaluation of non-financial facts was carried out in the workshop on the basis of qualitative considerations regarding the extent of business relevance and its impact (2018)

Sustainability Anti-corruption and Product and system Ecological product standards in the supply fair competition safety design chain

Energy and CO Occupational safety 2 Employee satisfaction Personnel development emissions and health protection

Knorr-Bremse Group Confidential │78 Knorr-Bremse’s success is built on its culture and dedicated people

Knorr-Bremse has a distinct culture and core values Diverse Workforce

Breakdown of workforce Flexibility to match demand

Western 2% 8% Europe 10% 38% APAC  Company-wide flexibility Rail ratio of ~14% leasing CEE/ Truck 19% Africa employees North 40% Other 24% America 58% LatAm/  Target ratio range is 10-15% Mexico

Attractive age2 and functional distribution

General Management 1% 17% 19% Corporate Functions 1% 15% Human Resources 1% Project Management 2% Information Technology 2% Entrepre- Passion Reliability Respon- Techno- 12% 11% Industrial Engineering 2% 10% neurship sibility logical Finance/Controlling 3% excellence 7% Purchasing 3% 6% Administration/Services 4% Focus on development Quality Management & HSE 6% 3% Sales/Marketing 9% 1% Logistics and SCM 10% Research/Development 15% Manufacturing/Production 41% ≤20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 > 60

Reliable and potent workforce Strong employer branding Employee satisfaction Female representation

 <3% absenteeism rate¹ Average manager  ~20% more female employees  Trustful relationships with rating by than industry average employees 5th time 2nd time 5th time employees 55% of votes in a row in a row in a row 4.8/6.0 >5.0/6.0 Note: All figures based on EOB 2017; ¹ Sickness rate = Sickness days / Total working days; based on top 20 companies according to FTEs and weighted by number of employees; ² Based on SAP data where available due to personal data and privacy regulations (~60% of the workforce)

Knorr-Bremse Group Confidential │79 1 Introduction 7

2 Key Company Highlights 11

3 Rail Vehicle Systems (RVS) 24

4 Commercial Vehicle Systems (CVS) 35

5 R&D Focus 48

6 Financials 57

7 Sustainability 72

8 Capital Markets Summary 80

9 Appendix 84

Knorr-Bremse Group Confidential Share data

Share data

Type of share Bearer shares with no-par value

Bloomberg ticker KBX

Reuters ticker KBX.DE

German security identification number (WKN) KBX100

ISIN DE000KBX1006

Shares outstanding as at December 31, 2017 161.200.000

Notes: 1) As at January 2018.

Knorr-Bremse Group Confidential │81 Bond Data

The Corporate Bonds of Knorr-Bremse AG

Security Identification Number A2LQP5 Security Identification Number A2DARP

International Securities Identification Number XS1837288494 International Securities Identification Number XS1531060025

Issuer Knorr-Bremse AG Issuer Knorr-Bremse AG

Issuer ratings A2/outlook stable (Moody’s), A/outlook Issuer ratings A2/outlook stable (Moody’s), A/outlook stable (Standard & Poor’s) stable (Standard & Poor’s)

Volume EUR 750 million Volume EUR 500 million

Term 7 years Term 5 years

Settlement June 14, 2018 Settlement December 6, 2016

Maturity June 13, 2025 Maturity December 8, 2021

Coupon 1.125% p. a. Coupon 0.5% p. a.

Reoffer spread 1.188% p. a. Reoffer spread 0.571% p. a.

Listing EURO MTF Luxembourg Listing EURO MTF Luxembourg

Denomination EUR 1,000 Denomination EUR 1,000

Applicable law German law Applicable law German law

Strong current rating: S&P (A) and Moody’s (A2)

Source: [.]

Knorr-Bremse Group Confidential │82 Investor relations contacts

Harald Kinzler Justinian Späth

Phone: +49 89 3547 1498 Phone: +49 89 3547 181085

E-Mail: [email protected] E-Mail: [email protected]

Knorr-Bremse AG Knorr-Bremse AG Moosacher Str. 80 Moosacher Str. 80 D-80809 Munich D-80809 Munich

Knorr-Bremse Group Confidential │83 1 Introduction 7

2 Key Company Highlights 11

3 Rail Vehicle Systems (RVS) 24

4 Commercial Vehicle Systems (CVS) 35

5 R&D Focus 48

6 Financials 57

7 Sustainability 72

8 Capital Markets Summary 80

9 Appendix 84

Knorr-Bremse Group Confidential Glossary (1/2)

% Percentage CF Cash flow ELC Electronic leveling control

ABS Anti-lock brake system CFO Chief Financial Officer EOP End of period

ACC Adaptive Cruise Control CKR Czech Koruna ESP Electronic stability program

AD Automated Driving CNY Chinese Yuan EU Europe, European Union

Advanced driver-assistance ADAS CVS Commercial Vehicle Systems EUR Euro systems

ADB Air Disk Brake D&A Depreciation & Amortization FTE Full-time equivalent

Advanced Emergency Braking Generally Accepted Accounting AEBS DE Germany GAAP System Principles Aktiengesellschaft AG DoI Date of Implementation GBP British Pound (German: Stock Corporation)

AM Aftermarket e Expected GDP Gross domestic product

BDM Brake Distance Management EAC Electronic Air Control GSBC Global Scalable Brake Control

bn billion EBIT Earnings before Interest, Tax HQ Headquarters

Earnings before Interest, Tax, CAGR Compound Annual Growth Rate EBITDA HSR High-speed rail Depreciation, Amortization

CAPEX Capital expense EBS Electronic brake system HU Hungary

CEO Chief Executive Officer EGR Exhaust Gas Reduction HUF Hungarian Forint

Knorr-Bremse Group Confidential │85 Glossary (2/2)

Heating, ventilation & air HVAC LDW Lane Departure Warning TCO Total cost of ownership conditioning International Automobil- IAA Ausstellung (German: m million TPR Truck Production Rate International Motor Show) IAM Independent Aftermarket M&A Merger & acquisitions UIC International union of railways Intelligent Condition-Oriented iCOM OEM, OE Original equipment manufacturer US United States Maintenance International Financial Reporting IFRS OES Original equipment service USD US Dollars Standards IN India OPEX Operating expense WC Working Capital

IoT Internet of Things p.a. per annum

IPO Initial Public Offering PWM Private Wealth Management

JV Joint venture R&D Research & Development KB Knorr-Bremse ROE Return on Equity KB2020 Knorr-Bremse 2020 ROS Return on Sales

KPI Key Performance Indicator RVS Rail Vehicle Systems

Train Control Management LCC Life-cycle cost TCMS System

Knorr-Bremse Group Confidential │86