CAPITAL MARKETS DAY 2015
HELLA KGaA Hueck & Co
London 02 December 2015
HF-7761DE_C (2012-12) Disclaimer
This document was prepared with reasonable care. However, no responsibility can be assumed for the correctness of the provided information. In addition, this document contains summary information only and does not purport to be comprehensive and is not intended to be (and should not be construed as) a basis of any analysis or other evaluation. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, targets, estimates and opinions contained herein.
This document may contain forward-looking statements and information on the markets in which the HELLA Group is active as well as on the business development of the HELLA Group. These statements are based on various assumptions relating, for example, to the development of the economies of individual countries, and in particular of the automotive industry. Various known and unknown risks, uncertainties and other factors (including those discussed in HELLA’s public reports) could lead to material differences between the actual future results, financial situation, development or performance of the HELLA Group and/or relevant markets and the statements and estimates given here. We do not update forward-looking statements and estimates retrospectively. Such statements and estimates are valid on the date of publication and can be superseded.
This document contains an English translation of the accounts of the Company and its subsidiaries. In the event of a discrepancy between the English translation herein and the official German version of such accounts, the official German version is the legal valid and binding version of the accounts and shall prevail.
2 HELLA Capital Markets Day 2015 | 02 December 2015 HELLA Capital Markets Day 2015 Agenda for today
Time (GMT) Subject Speaker
08:30 – 09:00 Arrival Transactionand Registration summary Dr. Kerstin Dodel, Head of Investor 09:00 – 09:05 Welcome Company overview and Relations 09:05 – 09:30 HELLA’s Strategic Growth Path Dr. Rolf Breidenbach, CEO Road toinvestment Future Mobility highlights Dr. Kristian Döscher, Head of Global 09:30 – 10:00 Company overview and Market Trends & Outlook for HELLA Marketing Original Equipment New Trendsinvestment in LED-Lighting highlights- Dr. Michael Kleinkes, Head of Design & 10:00 – 10:40 Future Possibilities for Styling and Functionality Development Lighting
10:40 – 11:00 Coffee BusinessBreak overview All Smart Solutions for Automated Driving, Increased Michael Jaeger, Member of the Executive 11:00 – 11:40 Efficiency and Connectivity Board Electronics 11:40 – 12:10 Financial Overview and Perspectives Dr. Wolfgang Ollig, CFO
12:10 – 13:30 Q&A All
13:30 Lunch All
14:30 Expected End of CMD
3 HELLA Capital Markets Day 2015 | 02 December 2015 HELLA’s Strategic Growth Path CAPITAL MARKETS DAY 2015
Dr. Rolf Breidenbach, CEO
London 02 December 2015
HF-7761DE_C (2012-12)
How will HELLA’s growth path continue?
Above market growth in the last 10 years Investors and analysts comments HELLA Group sales, EURbn*
”…we understood your historical CAGR* 5.8 growth, how can we assess your 10.0% p.a. 5.3 future sales development?...” 5.0 8.7% p.a. 4.7 4.4
3.9 ”…outperformance has been 50% 3.7 3.6 3.4 in the past, at a market growth of 2- 3.3 3.1 3% in the upcoming years, is that maybe too conservative for the Sustainable long term growth across the future?...“ cycle during the last ten years (CAGR of 6.5% p.a. since FY 2004/05 vs. 4% market)
”…investors are still hesitating about your future growth rates, whereas they have no concerns with high 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 growth rates of your competitors...”
*Sales as reported w/o adjustments for consolidation or accounting changes
5 HELLA Capital Markets Day 2015 | 02 December 2015 HELLA’s automotive segments are growing stronger than the market
HELLA’s positioning for future growth HELLA in market leadership positions1
Automotive Lighting Market size 2014 (EUR5bn)
# 1 market position in LED headlamps Market growth, CAGR 2014-19E Europe
30% 8% LED Headlamps # 3-4 global market position in OE Europe passenger car lighting Global Automotive Lighting 6% #1-2 European market position in OE Global Automotive passenger car lighting Electronics + 4%
CAGRe Global 2% LVP* Automotive Electronics # 2-3 global position in defined automotive electronic segments 0% 0% 10% 20% 30% 40% 50% Market share, 2014 # 1-2 European position
Source: External market study commissioned by HELLA (2014), HELLA analysis 1) All figures related to selected markets and product categories based on HELLA‘s *expected 5-years CAGR portfolio, as covered in the market study
6 HELLA Capital Markets Day 2015 | 02 December 2015 Value added of Lighting and Electronics in automotive expected to rise due to further innovations
Value share of modules in the auto industry Increasing value added captured
HELLA's core OE segment HELLA’s segments show healthy growth due to an ongoing trend towards sophisticated applications 800bn EUR = 100% Value share trend and innovation
Supplier gain increasing share in 19 Other value chain – need and frequency for innovations lead to more outsourcing 8 Exterior by OEMs 9 Power transmission 13 Chassis Automotive electronics experienced rapid innovation process 12 Electronics & electrics (incl. Lighting and LBAS) Innovations shifting from single, 16 Combustion engine standalone solutions to complex & aggregates system or module innovations 23 Interior
2014
Source: External market study commissioned by HELLA (2014), HELLA analysis 7 HELLA Capital Markets Day 2015 | 02 December 2015 HELLA is well positioned to benefit from the fundamental market trends in the future
Lighting Electronics (selected products) (selected products) Market trends Environment/ Energy efficiency LED Cooling Valve Efficiency Fuel System and Energy Management Rear lamp Actuator technologies for ICE & PHEV powertrains Matrix-LED 48V DC/DC Efficient lighting technologies like LED Headlight Converter
Safety Driver safety / automated driving 77GHz Light based assistance systems and Front radar optimal illumination Sensors for detection of the driving HD headlamps systems 24 GHz Rear environment (Advanced Front-Lighting) radar
Styling Styling and comfort LED Styling Optical elements for individual styling with Headlight LED or OLED lighting technology OLED Rear Design- Enhanced personalization and lamp driven Remote keys interactions (vehicle to environment) BCM ComfortComfort
Individualized and designed parts
Ambient Interior Structural Lighting Health Sensor
Unique combination of competence set in advanced electronics and lighting technologies
8 HELLA Capital Markets Day 2015 | 02 December 2015 Broad automotive product portfolio in strong growing areas
Market growth, CAGR 2014 - 2019E
Hella products (examples) Full-LED headlamps and rear lamps OLED rear lamps Engine Compartment Actuators (waste gate, TAS, TOS) Rear applications DC/DC converter Intelligent battery sensors
Hybrid rear lamps Interior lighting systems Vacuum pumps Radio transmitter keys
Small lamps (e.g. fog, CHMSL, side turn indicator) Electrical power steering Moderate growth: Accelerator pedal sensors 2-5% p.a. Body control modules
HELLA with clear strategic focus on areas that show attractive growth potential (emission reduction, safety increase) Electronic components projected to substantially benefit from higher electronic content in future cars Multiple innovative products already on the market and innovations to come from current pipeline
Source: External market study commissioned by HELLA (2014), HELLA analysis
9 HELLA Capital Markets Day 2015 | 02 December 2015 HELLA’s automotive portfolio has outperformed the market by 600bsp, acceleration to >900bsp in the last 3 years
HELLA market outperformance in Automotive Sources of growth by business divisions
88 87 90 HELLA one of the 82 7% 81 85 technology leaders in +3% 75 80 LED with competence set in Light Based Assistance 70 75 Automotive 70 Systems +13%** 5,835 Lighting 65 57 5,343 LVP* 60 Next development steps +13%** 4,835 (m) 4,637 55 in lighting solutions and 4,198 50 LED penetration strong 45 organic growth drivers EUR 3,405 4,364 40 m 3,924 HELLA solutions played 2,940 3,436 3,316 35 key role in automotive 3,029 30 progress since decades 25 2,476 2,049 20 Automotive 15 Electronics Well positioned in 10 automotive trends energy 1,321 1,399 1,419 1,471 891 929 1,169 5 efficiency and automated 0 driving 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
*Global Light Vehicle Production; ** CAGR Automotive segment only (external sales) including FX 10 HELLA Capital Markets Day 2015 | 02 December 2015 Aftermarket and Special OE will contribute to growth and profitability
HELLA’s positioning for future growth HELLA in market leadership positions1
Leadership in European Aftermarket # 1-3 in IAM, WD, and diagnostic Market size* 2014 (€1bn) systems HELLA Aftermarket generating Market growth, CAGR 2014-19E structurally slower but stable 6% growth Stable cash flow generation by 5% HELLA Aftermarket Future market discontinuities 4% + . Consolidation Wholesale* SOE Lighting . Digitalization 3% Europe CAGR . Changing customer preferences Wholesale** 2% IAM Garage Europe CAGR Leadership in Special OE Diagnostics* IAM** 1% # 1 in Special OE Lighting Europe 0% The transfer of competence offers 0% 10% 20% 30% 40% 50% 60% opportunities like LEDification Market share, 2014 Importance of generating critical business sizes
Source: External market study commissioned by HELLA (2014), HELLA analysis 1) All figures related to selected markets and product categories based on *Wholesale includes DN,PL,NOR, Garage diagnostics DACH, ** expected 5-years CAGR HELLA‘s portfolio, as covered in the market study
11 HELLA Capital Markets Day 2015 | 02 December 2015 Unique Aftermarket positioning in the value chain to capture opportunities of new market trends
Unique position Strategic focus Key trends Consolidation and new players Customer proximity and Optimization and increase of high distribution power current portfolio Wholesale consolidation and together with core Additional potential through professionalization at wholesale and
clearly defined portfolio garage level IAM product competences competence as OE supplier Influence of intermediaries Improvement of customer A access Low cost parts suppliers entering market Completion of NORDIC
Strong network concept FORUM organization to utilize Digitalization that integrates HELLA synergies and economies of New online business channels and wholesalers to achieve scales interfaces scale benefits Selected share increase and Big data and comparability of Wholesale acquisitions offering B Use UCANDO as digital asset
Integration of HELLA Changing customer preferences Portfolio development Gutmann into HELLA network
E-mobility and autonomous driving tailored to meet market Systematic use of HELLA need highly sophisticated products requirements and Gutmann date and diagnostic and garages
Garage technological trends competence Offer advanced high tech Less importance of car and need for more efficient repairs C products and technologies
12 HELLA Capital Markets Day 2015 | 02 December 2015 HELLA’s stable IAM business is well positioned for future key market trends A
HELLA historic growth path Levers for execution of growth strategy EUR millions Achieve sales growth through portfolio competence and a portfolio roll-out in all local entities 5% . OE production 502 488 498 493 . Qualified IAM production 447 . Re-packaging
390 Increase share of HELLA products at core European customers. Improve customer access . International KAM-structure Other . Key account improvements
Closure of regional distributions gaps
Maintain competitiveness through cost 214 217 optimization HELLA 208 195 161 175 products Explore e-Commerce opportunities
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 13 HELLA Capital Markets Day 2015 | 02 December 2015 HELLA’s wholesale business participates in European consolidation and digitalization B
NORDIC FORUM integrated concept Levers for execution of growth strategy UCANDO – Organic growth Future development - Big Data Further optimization of . Higher degree of utilization of . Utilization of NF foot print HELLA Gutmann, UCANDO procurement . Utilization of 3rd party WDs . Nordic Forum internal workshop data Further harmonization of IT . Development of an Digitalization integrated platform Ramp-up and expansion of Expansion of NF to Extension by M&A new markets NORDIC and new JVs digitalization strategy with e- . Czech/Slovakia FORUM . Further improvement of commerce (B2C) . Sweden market position in Organic Inorganic . Other Poland Developing and testing the regions Growth / Growth . Further targets in Europe Focusing . Founding new digitalization strategy for B2B2C joint-venture Nordic Forum Concept (Integrated Services Platform)
Historical growth path Inorganic expansion EUR millions +14% 496 468 Takeover of 100% shares in INTER- 400 421 366 TEAM and FTZ in September and 253 November 2015
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
14 HELLA Capital Markets Day 2015 | 02 December 2015 Workshop business with pivotal role for buying process based on high tech offering and competences C
HELLA Gutmann positioning Market & trends Development from diagnostics provider to Customer repair and maintenance specialist for high Requirement E-mobility and autonomous driving tech workshop products Car-sharing solutions Generation, analysis and usage of “Big Data” Less importance of car in new business fields Premium provider of workshop solutions, diagnostic tools and garage equipment Technology & Increasing complexity, functionality and Market interfaces in modern cars Workshop proximity enables technical services for HGS and whole HELLA IAM Steering of customers/ drivers and related organization parts’ purchase by OEMs, IAM & Intermediates High tech offering based on diagnostic competence (camera systems, radar, exhaust Historicalsystems) growth path High tech product portfolio and service offering EUR millions Calibration & Repair Concepts Alignment Testing & Analysis 61 CAMERA EXHAUST 17% DIAGNOSIS SYSTEMS SYSTEMS 49 44 39 SOFTWARE RADAR AIR SOLUTIONS SENSORS CONDITIONING 28 31 TECHNICAL BATTERY HEADLIGHTS DATA SYSTEMS
HAND TOOLS TIRES LEAKS
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Unique high tech workshop competence
15 HELLA Capital Markets Day 2015 | 02 December 2015 Growth path for HELLA’s Special OE segment to be strengthened by clear product and marekt strategy
Areas Strategic direction Highway & Leisure Premium & Special Off-highway Vehicles Vehicles Drive LEDfication Drive advantage of synergies with automotive sector
Customized / semi-customized headlamp solutions with innovative technology
Push technology upgrade growth with E/E off-the-shelf
Leverage lighting customer Historical growth path base to develop electronic EUR millions +8% product portfolio
294 Local portfolios for emerging 281 278 269 230 markets 179 Parts of business to be analyzed if competitive size is achievable
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 16 HELLA Capital Markets Day 2015 | 02 December 2015 HELLA is well positioned to outperform the market in the future
Historical performance Concept for future growth
Track record of long System competence in Lighting and Electronics to term market participate in fundamental market trends outperformance
Products for the reduction of C02 emissions and increase of energy efficiency
Product for prevention of accidents
Existing position Products for higher individualization and personalization Strong competitive positions Products for comfortable convenient driving Attractive market segments Aftermarket business is well positioned to capture major Technological key trends (consolidation, digitalization and change in leadership customer preferences) Special Applications business pushed by extended product-market strategy
17 HELLA Capital Markets Day 2015 | 02 December 2015
Road to Future Mobility - Market Trends & Outlook for HELLA CAPITAL MARKETS DAY 2015
Dr. Kristian Döscher Head of Global Marketing Original Equipment London 02 December 2015
F-7761DE_C (2011-06) 20 HELLA Capital Markets Day 2015 | 02 December 2015 •
•
Figure 1: Levels of autonomous driving (Source: NHTSA, modified)
5.6
• 3.1 2.7 2.4 2.1 1.5 1 1 •
Figure 2: Growth of driver assistance technologies in bn USD (Source: Strategy Analytics) Sources: IHS, NTHSA, Strategy Analytics
21 HELLA Capital Markets Day 2015 | 02 December 2015 - 36% 225
185 180 - 43% 170 • 139 125 140 - 47% 120 103 95 90 - 23% 80 • - 29%
Figure 3: Global emission regulations in C02 (g/ km) per NEDC (Source: IHS)
62.38 58.67 54.14 • 40.28 36.1 24.01 • 6.23 1.85 5.3
Figure 4: Allocation of powertrain technologies in mill. vehicles (Source: IHS) Source: IHS, Strategy Analytics
22 HELLA Capital Markets Day 2015 | 02 December 2015 152 •
23 5 •
Figure 5: Number of vehicles connected to the internet in mill. pieces (Source: IHS)
49.3 39.6 •
15.5 13.4 9.5 6 •
Figure 6: Market potential for connected car technologies in bn. USD (Source: PwC) Source: IHS, FIPA, Visiongain
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27 HELLA Capital Markets Day 2015 | 02 December 2015 28 HELLA Capital Markets Day 2015 | 02 December 2015 29 HELLA Capital Markets Day 2015 | 02 December 2015 F-7761DE_C (2011-06) New Trends in LED-Lighting - Future possibilities for styling and functionality CAPITAL MARKETS DAY 2015
Dr. Michael Kleinkes Head of Design & Development Business Division Lighting London 02 December 2015
F-7761DE_C (2011-06) Lighting Portfolio on the Road to Future Mobility HELLA Products as Perfect Fit to Future Market Trends
32 HELLA Capital Markets Day 2015 | 02 December 2015 Lighting + Electronics + Software offer further innovation potential Market demand for new headlamps features require high tech solutions
Increase of safety and comfort by new … headlamp functionalities Pedestrian Info 1 +30m detection distance Road Markings 2 +1,3s additional reaction time Laser Spot HD Matrix (at speed of 80km/h) Matrixbeam Matrixbeam Conventional low beam 3 Glare values not increased Study Darmstadt University 2013 Marker Light HB Spot
Glarefree HB Marker Light
HB Assist Glarefree HB
Glare-free high beam aCOL AFS HB Assist
HB Assist Bend lighting AFS
AFS Laser Bend lighting
AFS Bend lighting Xenon 25W Laser
Bend lighting Bend lighting LED LED LED
Xenon Xenon Xenon Xenon Xenon Xenon
Halogen Halogen Halogen Halogen Halogen Halogen Halogen
<1990 1992 2003 2006 2009 2015 >2020
33 Confidential HELLA Capital Markets Day 2015 | 02 December 2015 Miniaturization in LED-Technology – opportunities and challenges Car stylists just discover the opportunities of LED lighting
Standardization in LED-Package- Technology seems very challenging
34 Progress in LED-Technology “Standardization of LEDs” by reducing package size
Miniaturization Singlechip-LED Miniaturization Multichip-LED
2007 30 lm/W 2005 SMD- 30 lm @ 1W Technology 2009/10 65 lm/W
2010/11 SMD- 70 lm @ 1W Technology 2012/13 90 lm/W
> 2014 CSP- > 90 lm @ 1W Technology
> 2017 RealCSP-/ > 2014 SMD- ? lm @ 1W WLP-LED > 110 lm/W Technology tomorrow Source: Philips, Datasheet Big challenge in LED-Technology: High degree of innovation, growing complexity, miniaturization of LED package, increasing mix of technologies, robustness on system level
35 HELLA Capital Markets Day 2015 | 02 December 2015 Miniaturization in LED-Technology – opportunities and challenges Opportunity: New light functions
Audi A3 Day-time- Running Light and Turn-Indicator out of one light guide
36 HELLA Capital Markets Day 2015 | 02 December 2015 Miniaturization in LED-Technology – opportunities and challenges Opportunity: Capable of adapting LED AFS light sources
Prototypes of LED-Arrays with CSP-LED technology for an LED AFS headlamp
37 HELLA Capital Markets Day 2015 | 02 December 2015 Matrix Systems Principle Addressable LEDs enalbe selective fading out of other road users.
Dimmed area
Illuminated area
Viewing area of the front camera recognizes oncoming traffic and vehicles being followed
38 HELLA Capital Markets Day 2015 | 02 December 2015 HD-Matrix Systems Market and Customer Situation for the next 2-5 Years
maximal
Different matrix systems are under development. Concepts with 5 – 90 illuminated segments will enter the Complexity market in near future.
minimal
• High Resolution Matrix Systems: ~84 Pixel , SOP 2015 - 2019 • Additional Matrix System: 7 - 50 Pixel, SOP 2015 - 2019
39 HELLA Capital Markets Day 2015 | 02 December 2015 Matrix Systems Audi A8 (SOP 2013)
MATRIX BEAM 5 reflectors each with a 5-chip-LED
• First glare-free high beam functionality
masking out of up to 8 different road users at the same time • 25 individually controllable segments per headlight • Vehicles driving ahead are detected in a FEATURES distance of 300- 400m
• Elimination of glare for oncoming vehicles • Increased safety: 30m more detection distance means 1,3s additional response time
• Reduced driver fatigue due to an automatic BENEFITS system
40 HELLA Capital Markets Day 2015 | 02 December 2015 Matrix Systems Audi A8 (SOP 2013) Complexity of data & facts
15 29 27 31 3 control units meters of plug-in connections heat sinks thermal sensors in an interconnected electric cables system
4 1 control units ventilator on the headlamp
5 19 printed circuit boards adjustments/settings
224 82 966 million 51 84 mechanical LEDs light distributions cut-off lines tools components
41 HELLA Capital Markets Day 2015 | 02 December 2015 Matrix Systems Daimler Next generation Daimler Multibeam in the new E-class
• High-Resolution LED Grid Module with 84 LEDs MULTIBEAM • Freely configurable light Precision LED Grid Module distribution • Resolution increased by a factor of 3.5 • Up to 2.5 times greater illuminance compared with regularly available systems
• Specific cells of the Light Distribution can be hidden/
covered up High Beam • Dynamic functions within Low Beam and low beam mode High Beam • Ultra-high speed, precision Low Beam and performance Road Surface
42 HELLA Capital Markets Day 2015 | 02 December 2015 Matrix Systems Daimler Next generation Daimler Multibeam in the new E-class
HIGHER RESOLUTION
• Precision • Use of high beams • Reduced glare • Glare-free hazard lighting
43 HELLA Capital Markets Day 2015 | 02 December 2015 HD(High-Definition)-Matrix Systems Next Generation Headlamps until 2020 Customers searching for new functionalities, demand for higher resolution
Possible Functionalities
• Lane guidance • Animations • Illuminated information on the road
• Combination of light functions FEATURES • Project adaption by software
• Increasing safety • Early obstacle detection • Information in field of view keeping eyes on the road
• Increased visibility due to high beam always BENEFITS on
44 HELLA Capital Markets Day 2015 | 02 December 2015 HD-Matrix Systems Overview of possible Technologies for Next Generation Headlamps
1 2 3 4
High definition Laser Scanner LCD-Technology DMD-Technology solid state lightsource
High definition concepts with switchable light emitting areas („pixel“) between 1.000 and 400.000 pixel are under development to realize free programmable light distribution.
45 HELLA Capital Markets Day 2015 | 02 December 2015 Laser in Automotive Lighting Now And In The Future
46 HELLA Capital Markets Day 2015 | 02 December 2015 Laser in Automotive Lighting Now And In The Future
47 HELLA Capital Markets Day 2015 | 02 December 2015 Laser in Automotive Lighting Now And In The Future
48 HELLA Capital Markets Day 2015 | 02 December 2015 Laser in Automotive Lighting Now And In The Future
49 HELLA Capital Markets Day 2015 | 02 December 2015 Laser in Automotive Lighting Foreground Illumination
Total light distribution: Laser allows for a foreground light output of Foreground left + right headlamp only 10 mm in height
Features Benefits • Light Output ≈ 1600 lm • New headlamp design with very thin • Efficiency: 57% appearance • Peak Performance ≈ 30 lx • Reduced space for headlamp integration • High-tech image of laser
50 HELLA Capital Markets Day 2015 | 02 December 2015 Laser in Automotive Lighting Signal Lighting
Features Benefits • Red laser diode for signal lighting • High tech styling • Stop light with line-laser and EdgeLight light • Intense color saturation guide • Dark-red color of laser diodes (648 nm)
51 HELLA Capital Markets Day 2015 | 02 December 2015 OLED Lighting – opportunities for new night time appearances The market for OLED lighting sees strong growth
OLED lighting panel forecast sees technology Further OLED lighting panel cost reduction will break through in 2020 boost market penetration
Source: ElectroniCast Consultant, Sep 04, 2015
OLED in vehicle lighting will accelarate market penetration due to it‘s drive on cost reduction
Form factor, light controllability Cost reduction acceleration Lifetime improvements and light quality
Office and Industrial Lighting Automotive Lighting Architectural and Shop Lighting Source: IDTechEx, Sep 03, 2014 Adoption Timeline By Sector
52 HELLA Capital Markets Day 2015 | 02 December 2015 OLED - Innovative Graphics and Future Possibilities OLED Technology
N LED + LIGHT GUIDE OLED O O N Al
O N • anorganic semiconductors • organic semiconductors: carbon (InGaN, AlInGaP): solid hydrates, small molecules or polymers state crystals • ultra thin layers (< 1µm) deposited on • point light source large area substrates surface emitter
Advantages • new styling possibilities • no optical system needed • homogeneity • Segmented areas
53 HELLA Capital Markets Day 2015 | 02 December 2015 OLED - Innovative Graphics and Future Possibilities Next Generation of OLED Technology
2D OPAQUE
FLEXIBLE/ 2 ½ D TRANSPARENT MULTICOLOR
54 HELLA Capital Markets Day 2015 | 02 December 2015 OLED - Innovative Graphics and Future Possibilities Flexible OLED
NEW STYLING POSSIBILITIES
Flexible OLED 2 ½ D OLED module 2 ½ D OLED rear lamp
55 HELLA Capital Markets Day 2015 | 02 December 2015 The Road to Future Mobility Mult-Lens Array for dynamization of Exterior and Interior Lighting
Welcome Function Advanced Exit Lighting Hazard Warning
Possible Applications Size of Multi Lens Array Staging and 10 x 10 x 2 mm Interaction of Light as general trend . Welcome-Light . Entrance- / Exit Light with color change
Emotionalization . Maneouvering Light with additional by Light Scenarios side lighting
170 micro . Light Animations in Headlamps or Rear Lamps lenses per Multi Opportunities of . Advanced warning scenarios for Lens Array additional Comfort broke down cars generating and Safety 1 image Features . Light Scenarios for Interior lighting with dynamic color change
56 Confidential HELLA Capital Markets Day 2015 | 02 December 2015 The Road to Future Mobility LED/OLED technology – Safety, Efficiency and Styling drive penetration
Global LED trend Share in the global headlamp market: • Establishment of LED technology in the The LED era begins volume segment and development of complex high-definition headlamps
• New functionalities adds to road safety
• Accelerated development in the OLED segment STYLING increases scope for brand differentiation through lighting design SAFETY • Ambient lighting sets the stage in the passenger compartment
• Energy efficient lighting systems reduce the total energy consumption of the car and long lifetime to create a cleaner environment
57 HELLA Capital Markets Day 2015 | 02 December 2015
Smart Solutions for Automated Driving, Increased Efficiency and Connectivity CAPITAL MARKETS DAY 2015
Michael Jaeger Member of the Executive Board Business Division Electronics London 02 December 2015
F-7761DE_C (2011-06)
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Market Development of 48V Power Systems
Source: HELLA (2015)
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75 HELLA Capital Markets Day 2015 | 02 December 2015 76 HELLA Capital Markets Day 2015 | 02 December 2015 F-7761DE_C (2011-06) Financial Overview and Perspectives CAPITAL MARKETS DAY 2015
Dr. Wolfgang Ollig, CFO
London 02 December 2015
HF-7761DE_C (2012-12) Track record of steady growth across the cycle and resilience of business model
HELLA GROUP sales* in EURbn
Sustainable long term LVP +3% CAGR* growth across the cycle LVP +7% 5.8 during the last ten years with a 5.3 clear focus on organic growth 8.7% p.a. 5.0 10.0% p.a. 4.7 (CAGR of 6.5% p.a. since FY 4.4 2004/05) 3.7 3.9 3.4 3.6 3.1 3.3 Targeted growth trend continued Organic growth of the HELLA GROUP outperformed the automotive market by >5%- 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 points in the last 3 years Automotive* Aftermarket*
EBT Sales EBT Sales
**
03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
Resilient business model with stable cash flow generation through strong share of aftermarket business
*Cumulated Annual Growth Rate; sales as reported w/o adjustments for consolidation or accounting changes
79 HELLA Capital Markets Day 2015 | 02 December 2015 Competitive Gross Profit margin and mid-term EBIT margin potential
% sales Gross Profit margin Improvement of GP margin achieved
27.6 . Improvement driven by innovative ~27% product portfolio and operational +2%- 26.6 excellence (LiON) points 26.4 Gross 25.6 . Deviations from +/- 27% driven by Profit segment mix, one-offs and new margin launches in high tech products . Launch support especially in H1 FY15/16 Gross Profit margin level ~27% regarded as industry competitive 2011/012 2012/13 2013/14 2014/15 Adj. EBIT margin Improvement of adj. EBIT margin achieved
~8% . EBIT reduction in FY 12/13 due to 7.5 7.6 7.3 investment into future growth and globalization platform (e.g. increased EBIT R&D expenses) 6.0 margin . Scale effects and increased efficiency on structural costs drive margin . FY15/16 affected by ramp-up expenses 2011/12 2012/13 2013/14 2014/15 Over the cycle, mid to long-term adjusted EBIT margin of ~8% feasible
80 HELLA Capital Markets Day 2015 | 02 December 2015 Continued high R&D as basis for future growth
EUR millions and % sales R&D spendings Strong focus on innovations 544 . Significant R&D investments in previous 514 years set the basis for strong top line 444 +178 future growth 366 . Build-up of local know-how, high R&D investment in new technologies (basic research), increased product complexity and new product categories (e.g. radar) drove recent expenses Continuous high R&D spending to 2011/12 2012/13 2013/14 2014/15 maintain technology leadership position R&D ratio Balance between investments and -0.3% efficiency points 9.6 9.3 . Higher ratio compared to peers 9.2 underpins innovation track record +1.7% <9% points R&D . Recent and future R&D ratio 7.9 ratio improvement by ongoing efficiency- increases of teams and scale effects . Roll-out of high tech products . Ratio itself no optimization target
2011/12 2012/13 2013/14 2014/15 Mid to long-term reduction <9% feasible
81 HELLA Capital Markets Day 2015 | 02 December 2015 Proven ability to manage costs
EUR milllions and % sales Administrative expenses Dedicated improvement programs set- up 197 197 . Investments in global corporate center 183 +14 network ensure lean administrative processes Admin 167 +16 . In FY 15/16 further spendings on expenses employee qualification, infrastructure and implementation of standards Continued focus on global structure to ensure competitiveness
2011/12 2012/13 2013/14 2014/15 Performance oriented organization Administrative expense ratio . Efficiency gains through re-location (incl. +0.2% 3.8 temporary double-functions) to best cost points 3.7 countries and shared service centers 3.6 -0.4% improved OTD and TTM processes points Admin . Continuous optimization through 3.4 ratio operational excellence improvement initiatives (e.g. LiON) . Short term constant ratio expected Process improvements and scale effects 2011/12 2012/13 2013/14 2014/15 drive ratio, long term reduction possible
82 HELLA Capital Markets Day 2015 | 02 December 2015 Proven ability to manage costs
EUR milllions and % sales
Distribution expenses Under-proportional increase of variable 455 costs 435 . Global aftermarket network main cost +30 412 +43 driver 382 . IAM distribution network and European Distribution wholesale network extended expenses . Ongoing improvements monitored e.g. reduction of overhead functions in sales companies, optimized logistics concept
2011/12 2012/13 2013/14 2014/15 Development of costs well on track
Distribution expense ratio Improvements of ratio achieved +0.3% 8.5 points . Higher ratio compared to peers due to 8.2 high aftermarket share 8.1 -0.7% points . Investments in global distribution 7.8 Distribution network until FY12/13 expense ratio . Ratio reduced by efficiencies gains and declining aftermarket business . Currently increased investments in e- commerce platform 2011/12 2012/13 2013/14 2014/15 Short to mid-term optimization potential limited 83 HELLA Capital Markets Day 2015 | 02 December 2015 Continuous measure generation to facilitate operating leverage
Main achievements Continuous challenges Actions
. Production network . Roll out complex (LED) projects: HR Local support from optimized qualifications, production process, technology hubs quality of components, supplier Lighting . Regular design-to-cost Thorough certification workshops during enforcement of development phase . Reduction of non-quality expenses improvement programs . Global development . Global competitive TtM organization Implement recent network established, “Lessons-learned” Electronics optimized and extended . Multiple sourcing strategy implemented Improve efficiency in . Overhead functions . Further harmonization of NORDIC supply chain and own reduced with optimized FORUM (e.g. reporting, IT, value added Aftermarket & Improve key account Special logistics for sales comps procurement), strengthen structures organization Applications . Low-cost production in . Leverage of inventories Romania Improve customer penetration . Corporate center structure . Qualification of employees to enable Investments in HR established complex production & quality monitoring base Corporate . Overhead functions . Increase efficiency of corporate center HR talent review reduced structure Strengthening 2nd . Address highly qualified people mgmt. level
84 HELLA Capital Markets Day 2015 | 02 December 2015 Clearly directed investments and active Working Capital management
EUR milllions and % sales Working Capital 696 15.0 Revenue growth, expansion and active 13.8 13.4 13.0 management drive WC 874 640 648 . Regional expansion to Asia (increase in 839 receivables) 622 646 692 . Inventory mainly tied to efforts to Working improve product availability in 517 554 578 609 Capital Aftermarket (increase inventories) -499 -552 -574 -574 . Currency effects influence WC
2011/12 2012/13 2013/14 2014/15 . Continuing optimization programs in Trade receivables Trade payables logistics in place Inventories WC % sales Net CAPEX 8.8 Net CAPEX down after globalization Net CAPEX % sales . Increase in capex in FY12/13 to 6.9 6.4 significant investments in global footprint 6.0 ~7% . Continuous investments in customer- Net specific equipment with increased 427 CAPEX product complexity needed 368 347 . Reimbursements around 130 mill. EUR 297 ease need for CAPEX Net CAPEX ratio around 7% needed to 2011/12 2012/13 2013/14 2014/15 facilitate organic growth
HELLA Capital Markets Day 2015 | 02 December 2015 85 Strong cash flow and ROIC improvement achieved after globalization
EUR milllions and % IC Operative CF* development After FY11/12 consistent improvement 166 . FY12/13 influenced by high CAPEX as part of the strategic growth program as 120 well as build-up of inventories driven by higher sales and higher expenses in key 51 -227 Operative technologies and innovations CF +181 . Increase driven by profitable top-line growth and under-proportional increase of cash-effective working capital -61 . FY15/16 will by affected by supplier case
2011/12 2012/13 2013/14 2014/15 Increase in line with expectations
ROIC development ROIC implemented as KPI
. HELLA employs Return on Invested Capital (ROIC) as a further performance indicator in FY 2012/13 17.3 . ROIC improvement to 17.3% due to ROIC 1.8 increased operating leverage Not 15.5** 15.8 employed Increasing capital efficiency during the last 2 years *Operative Cash Flow before dividends and net capital 2011/12 2012/13 2013/14 2014/15 expenditure on financial assets or shares in associates (excluding cash restructuring payments) **Before reclassification of income from securities and net other financial income/expenses 86 HELLA Capital Markets Day 2015 | 02 December 2015 Capital structure provides flexibility for the long-term growth
Solid capital structure Strategic flexibility Net debt/ HELLA has a stable EBITDA Cash & assets Debt and maturity profile*, EUR millions and solid financial fundament which Euro Euro Aflac Aflac forms the basis for 0.6x 1,050 bond I bond II bond I bond II its future strategic 1,013 500 plans 300 Prudent financial 143 policy throughout 0.1x 70 105 0 0 the cycle Financing of August August August August 2015 2016 2017 2020 2032 2033 Other long-term 2014 2015 2014 2015 Debt** growth strategy Additional Revolving Credit (2015) (1+1+5) of Acquisition EUR 450m with 10 core banks as back-up facility firepower
Capital-market-oriented capital structure Good liquidity profile and consistent liquidity management EUR 87m dividends (0.77EUR/share) paid September 2015
* As of May, 2015; Euro bond I: 1.15%, Euro bond II: 2.375%, Aflac bonds hedged values **Mostly short-term
87 HELLA Capital Markets Day 2015 | 02 December 2015 Company specific outlook as given in guidance
Growth story on track, mid to high single-digit percentage growth for the full FY 15/16 expected Sales Potential for medium term- market outperformance exists through product pipeline
FY 15/16 expected to be below previous year due to one- EBIT off charges Master high-tech LED roll-outs
One-off charges Extraordinary event with effects of up to EUR 50m, (supplier failure) predominantly in Q1 – Q2 FY 15/16
EBIT adjusted by one-offs for Mid to high single-digit percentage growth for the full FY supplier failure 15/16 targeted and restructuring
88 HELLA Capital Markets Day 2015 | 02 December 2015 Thanks for your attention
Dr. Kerstin Dodel Investor Relations
Office phone +49 2941 38 - 1349 Facsimile +49 2941 38 - 471349 Mobile phone +49 174 3343454 E-Mail [email protected] Internet www.hella.com