TRATON GROUP CREATING A GLOBAL CHAMPION COMPANY PRESENTATION
1 DISCLAIMER
This presentation has been prepared for information purposes only.
It does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Volkswagen AG, TRATON SE, or any company of the TRATON GROUP in any jurisdiction. Neither this presentation, nor any part of it, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any contractual commitment or investment decision in relation to the securities of Volkswagen AG, TRATON SE, or any company of the TRATON GROUP in any jurisdiction, nor does it constitute a recommendation regarding any such securities.
It contains forward-looking statements and information on the business development of the TRATON GROUP. These statements and information are based on assumptions relating in particular to the TRATON GROUP’s business and operations and the development of the economies in the countries in which the TRATON GROUP is active. As far as information or statements on Navistar are concerned, the same applies to Navistar. Please note that TRATON SE has signed definitive agreements on the acquisition of Navistar but the acquisition requires a number of approvals and is therefore not yet closed.
The TRATON GROUP has made such forward-looking statements on the basis of the information available to it and assumptions it believes to be reasonable. The forward-looking statements and information may involve risks and uncertainties, and actual results may differ materially from those forecasts. If any of these or other risks or uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, the actual results may significantly differ from those expressed or implied by such forward-looking statements and information. The TRATON GROUP will not update this presentation, particularly not the forward-looking statements. The presentation is valid on the date of publication only.
Certain financial information and financial data included in this presentation are preliminary, unaudited, and may be subject to revision. Due to their preliminary nature, statements contained in this presentation should not be unduly relied upon, and past events or performance should not be taken as a guarantee or indication of future events or performance. Financial figures might be translated from different currencies, using the exchange rate prevailing at the relevant date or for the relevant period that the relevant financial figures relate to.
All statements with regard to markets or market position(s) of TRATON SE or any affiliated company or any of its competitors are estimates based on data available to the TRATON GROUP. As far as information or statements on Navistar are concerned, the same applies to Navistar.
IHS Markit Data referenced herein are the copyrighted property of IHS Markit Ltd. and its subsidiaries (“IHS Markit”). The IHS Markit Data are from sources considered reliable; however, the accuracy and completeness thereof are not warranted, nor are the opinions and analyses published by IHS Markit representations of fact. The IHS Markit Data speak as of the original publication date thereof and are subject to change without notice. IHS Markit and other trademarks appearing in the IHS Markit Data are the property of IHS Markit or their respective owners.
The percentage figures shown may be subject to rounding differences. Due to different proportions and scaling graphs, data shown in different graphs is not comparable.
2 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
AGENDA
01.01. TRATONTRATON atat aa GlanceGlance 02. Global Champion Strategy 03. Navistar Acquisition 04. Sustainability
2021 / Corporate Communications / Company Presentation 3 TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
LEADING GLOBAL BRANDS AND STRATEGIC ALLIANCE PARTNERS
FULL CONSOLIDATED ASSOCIATES STRATEGIC PARTNER
Leader in core markets with Powerful strategic alliance partners E-Mobility joint venture and differentiated brands enabling leading global scale procurement joint venture
*
16.7%1 25% + 1 share2
* Closing of Navistar acquisition expected for mid 2021.
1 As of December 31, 2020 2 Held by a subsidiary of MAN SE as of December 31, 2020 2021 / Corporate Communications / Company Presentation 4 TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
KEY FINANCIALS BY DIVISION
Industrial Business Financial Group FY 2020 Scania V&S MAN T&B VWCO Other1 Services
Sales Revenue €11.5 bn €9.7 bn €1.2 bn €(0.3) bn €22.2 bn €0.8 bn €22.6 bn
Adjusted Operating €802 mn €(553) mn €(15) mn €(206) mn €28 mn €107 mn €135 mn Result 11.1% Adjusted RoS 7.0% (5.7)% (1.2)% n/m 0.1% 0.6% (Return on Equity4)
Primary R&D2 €1.2 bn
Capex3 €1.0 bn
Net Cash Flow €0.7 bn
1 Includes holdings and investments (MAN SE: holding companies, Sinotruk investment; TRATON holding: holding companies, Navistar investment, TB Digital Services), PPA (VWCO PPA – MAN origin; Scania PPA – VW origin) as well as consolidation effects. 2 Reflecting total research and development costs comprising capitalized R&D plus period-expensed R&D. 3 Consists of the capital expenditures in property, plant and equipment and in intangible assets (excluding capitalized development costs) that are reported in the statement of cash flows. 4 Defined as profit before tax as % of average equity. 5 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
DIVERSIFIED BY GEOGRAPHY AND BY BRAND
UNIT SALES FY 2020 (% of total) SALES REVENUE FY 2020 (% of total)
Financial Services VW Caminhões e Other Germany 4% Ônibus 19% 17% 5%
S. America (excl. Brazil) MAN Truck 4% & Bus 42%
Brazil Other EU27+3 21% 1 Scania Vehicles & (excl. Germany) Services Industrial Business 39% 50% 96%
190 k Units Sold €22.6 bn Sales Revenue
Note: TRATON including Financial Services, excl. consolidation; rounding differences possible. 1 EU27+3 region (EU27 countries without Malta, plus the United Kingdom, Norway, and Switzerland) 6 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
KEY COMPANY HIGHLIGHTS
GLOBAL • Scale & global reach through leading brands & strategic alliance partners 1 CHAMPION • Unique platform enabling growth & positioning for best-in-class profitability
• Customer value-focused product and service offering GROWTH • New product generations 2 • Further expansion in key geographies
• Concrete path to profitability improvement PROFITABILITY • Stand-alone brand performance plus synergies 3 • Earnings growth and cash generation potential
EXECUTION • Strong team with industry-leading track record 4 • Committed to Global Champion Strategy
7 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
TRACK RECORD AND OVER-THE-CYCLE-TARGET
FY 2019 FY 2020 2021 outlook1 Over the cycle RoS target
242.2 k 190.2 k Unit sales Sharp increase +4% -21%
€26.9 bn €22.6 bn Group sales revenue Substantial increase +4% -16%
7.0% 0.4% Between 9% Group return on sales2 €1.9 bn €81 mn 5% and 7% Over the cycleRoS
Net cash flow3 €2,711mn4 €676 mn €500 – 700mn
1 Before expenses from the MAN Truck & Bus restructuring program and effects from the planned acquisition of Navistar International Corporation. 2 FY 2019: adjusted RoS 7.0%, adjusted operating result €1.9 bn; FY 2020: adjusted operating RoS 0.6%, adjusted operating result €135 mn. 3 The cash conversion rate for 2021 is no longer considered a meaningful indicator due to the restructuring of MAN Truck & Bus. Instead, we are reporting net cash flow in the Industrial Business segment as a key performance indicator. 4 FY 2019: reported net cash flow of €2,711 mn; adjusted net cash flow €518 mn before the sale of Power Engineering (€1,978 mn), parts of the RMMV Joint Venture (€101 mn incl. dividend) and repayment for amounts and interest resulting from security deposits provided in Brazil (€114 mn). 8 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY 5 TRATON GROUP CONTINUOUSLY DELIVERS ON ITS STRATEGIC GOALS
4
8TRA TRATON LISTED IN NEXT GOAL: FRANKFURT & STOCKHOLM INTEGRATION OF AFTER CLOSING NEW CORPORATE IDENTITY VWTB BECOMES TRATON SE 3 2 1 DEBUT SYNDICATED RCF €3.75 bn
TRATON INNOVATION DAY 2019 TRATON WANTS TO BECOME LEADER IN E-MOBILITY 9 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
STRONG MANAGEMENT TEAM AND TWO-TIER BOARD STRUCTURE WITH INDEPENDENCE SECURED BY SUPERVISORY BOARD COMPOSITION
TRATON SE EXECUTIVE BOARD SUPERVISORY BOARD
Composition ‣ Supervisory Board composition reflects target shareholder structure ‣ Broad complementary skills and experience 34 21 44 ‣ Chairman of the Supervisory Board: Hans Dieter Pötsch Matthias Gründler (CEO) Christian Schulz (CFO) Bernd Osterloh (CHRO) ‣ Deputy Chairman: Athanasios Stimoniaris ‣ 20 members with equal number of international shareholder and employee representatives Audit Committee ‣ Comprises 6 members ‣ Equal number of shareholder & employee representatives 26 30 41 Christian Levin Dr.h.c.Andreas Tostmann Antonio Roberto Cortes (CEO SCANIA) (CEO MAN) (CEO VWCO)
Years of experience in the automotive/commercial vehicle industry
10 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
AGENDA
01. TRATON at a Glance 02. Global Champion Strategy 03. Navistar Acquisition 04. Sustainability
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GLOBAL CHAMPION STRATEGY BASED ON FOUR PILLARS
Leader in Profitability | Global Presence | Innovation
Brand Cooperation Global Customer Focused Performance & Synergies Expansion Innovation
Increase performance Increase cooperation and Leverage scale through Transforming of brands with individual exploit synergies global footprint transportation identity, strength, and between brands clear positioning
Creation of Sustainable Value
12 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
CLEAR POSITIONING OF BRANDS
DRIVING THE SHIFT TOWARDS A SIMPLIFYING BUSINESS BY BEING THE LESS YOU DON’T WANT SUSTAINABLE TRANSPORT SYSTEM MOST RELIABLE BUSINESS PARTNER MORE YOU DON’T NEED Premium customer-focused innovation Reliable business partner with value Best value for money and leader for sustainable transport solutions package and full-line offering tailor-made products
13 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
STRONG POSITION OF ALL BRANDS WITH NEW TRUCK LINES
NTG NEW TRUCK GENERATION NEW DELIVERY & METEOR
Current launch
New generation for New state of the art Modern trucks for all truck lines (R, G and P truck generation for all truck logistics tailored for trucks, new S and L trucks) lines (TGX, TGS, TGM, TGL) customers in emerging markets Launch/ramp-up 2016 - 2019 2019 - 2021e 2017 - 2020
Launch of 1995 2000 2005 preceding truck (4-Series) (TGA) (Delivery) generation
14 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
LEADING TRUCK BRANDS AND #1 MARKET POSITION IN EUROPE AND SOUTH AMERICA
Core markets of TRATON brands TRATON truck market share in 2020 (>15t)
Europe1 32% Market leader with 32% market share Market leader in Germany with 37% market share
South America2 31% Market leader with 31% market share Market leader in Brazil with 37% market share Export business 38% 39% 35% 38% 29% 31% 32% 24% 24% 27% 25% 25%
DE FR UK PL IT ES NL BE CZ BR AR CL
Note: Smaller presence in additional countries not highlighted (TRATON active in > 120 countries worldwide, including bus activities) 1 EU27+3 region (EU27 plus the United Kingdom, Norway, and Switzerland). 2 Incl. Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Peru, Uruguay, Venezuela, excl. Paraguay as no IHS Markit data for trucks > 15t available. Source: IHS Markit 15 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
LEVERAGE POWERTRAIN COMPONENTS ACROSS BRANDS TO GENERATE SIGNIFICANT COST SAVINGS IN YEARS TO COME
>50% Common base engine (CBE) CBE Enhanced fuel efficiency expected to be installed in Reduced weight about half of TRATON heavy- duty trucks per year from 2025e Low maintenance onwards.
The majority of the manufacturing $ costs of a truck relates to the powertrain.
LATIN AMERICA
EUROPE
Introduced into brand 21e 22e 23e 24e 25e 2026e
16 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
PARTNERSHIPS PROVIDING ACCESS TO GLOBAL PROFIT POOLS
North America – partnership since 2016 15T) 12%1 • Technology cooperation: first SoPs by 2020/21 (> • Synergies in procurement JV achieved, further
20 20 potential 20
~35% China – partnership since 2009 ASSOCIATES 17%2 • Intention to localize MAN heavy-duty truck in ~30-35%4 world’s largest market 5 ~0% • Evaluation of technology/procurement cooperation ~25%
Japan & Southeast Asia – cooperation since 2018 32%3 • Cooperation: future logistics/transportation, technology, and e-mobility
• Procurement JV signed with global synergy potential TRUCK MARKETSHARE IN
• E-mobility joint venture started in October 2020 STRATEGIC STRATEGIC PARTNER CORE MARKETS OF # TRATON BRANDS Note: SoP = start of production PROFIT POOL6 1 Truck market share in North America (Canada, Mexico, United States). ALLIANCE PARTNERS 2 Truck market share of CNHTC in Greater China. Share 2018 3 Truck market share in Japan and Southeast Asia (Australia, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Thailand, Vietnam). Source: Market share data IHS Markit; profit pool data McKinsey 17 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
GLOBAL EXPANSION THROUGH STRONG ALLIANCE PARTNERS
ASSOCIATES STRATEGIC PARTNER
LARGEST NETWORK OF ~1K ONE OF THE LEADING TRUCK TOP POSITION IN HEAVY- AND MEDIUM- DEALERS IN NORTH AMERICA2 MANUFACTURERS IN CHINA DUTY TRUCK SALES IN JAPAN
#4 MARKET POSITION | 12% MARKET SHARE1 #3 MARKET POSITION | 17% MARKET SHARE3 #1 MARKET POSITION | 32% MARKET SHARE4 Technology cooperation and procurement JV Intention to localize MAN truck in China; E-mobility, procurement, and technology potential tech/procurement cooperation cooperation
Note: market share data based on trucks > 15t in 2020 1 Truck market share in North America (Canada, Mexico, United States). 2 Information according to Navistar. 3 Truck market share of CNHTC in Greater China. 4 Truck market share in Japan and Southeast Asia (Australia, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Thailand, Vietnam). Source: IHS Markit 18 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
CURRENT STRATEGIC ALLIANCE WITH NAVISTAR FOCUSED ON TECHNOLOGY COOPERATION AND PROCUREMENT JOINT VENTURE
OVERVIEW OBJECTIVES
Technology cooperation: joint powertrain – common powertrain systems give Navistar access to excellent powertrain technologies and allow the TRATON GROUP to benefit from higher volumes
Technology cooperation: future technologies – cooperation in many aspects of future commercial vehicle development
• Strategic alliance established in 2016 Procurement JV – fully operational procurement JV to pursue joint global sourcing opportunities • TRATON GROUP currently holds 16.7%1 • TRATON can nominate two persons to Navistar's Board of Directors: TRATON's Access to North American market – cooperation and equity stake current nominee is Christian Schulz and allow the TRATON GROUP to capture a share of North American the other TRATON nominee position profit pool currently remains open
1 As of December 31, 2020 19 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
STRATEGIC PARTNERSHIP WITH SINOTRUK FOCUSED ON TECHNOLOGY COOPERATION AND PROCUREMENT SYNERGIES
OVERVIEW OBJECTIVES
Technology cooperation – joint efforts in areas of powertrain, new technologies
Localization of MAN truck – intention to localize MAN heavy-duty truck in world’s largest market
Procurement synergies – sourcing synergies targeted • Long-term strategic partnership between through joint scale MAN and Sinotruk established in 2009 • MAN TGA Truck technology including powertrain localized under SITRAK brand • MAN holds 25% + 1 share1 in Sinotruk
1 As of December 31, 2020 20 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
OVERVIEW AND OBJECTIVES OF COOPERATION AGREEMENT WITH HINO
OVERVIEW OBJECTIVES
E-Mobility cooperation, shared development efforts, and combined marketing of products – Hino with largest running fleet of hybrid commercial vehicles in the world
Procurement joint venture – Joint venture aims at realizing synergies in global procurement for a wide range of parts and technologies
Technology cooperation – Focus on possibility of joint utilization • Strategic long-term partnership agreed of existing technologies such as powertrain and joint development in April 2018 of innovative technologies • Alliance Board based on Strategic Cooperation Framework Agreement Utilize complementary know-how – Hino with focus on light- and • October 2019: procurement joint venture established medium-duty trucks complements the TRATON GROUP’s innovation power in heavy-duty segment • October 2020: e-mobility products joint venture started
21 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
CUSTOMER-FOCUSED INNOVATION: NEED TO BE PREPARED FOR “ACE”
750k+ Hybrid Dec-20 Natural gas Autonomous transport system Broadest range of alternative Large connected fleet HVO BEV in customer operation1 450k+ fuel technologies2 Dec-18 FCEV Ethanol Biogas Autonomous mining system Connected vehicles on the road Here and now solutions
Testing of automated Utilization of collected data Sold electric solutions and and autonomous driving for service offering new e-Consortium3 trucks in real use
MAN Truck & Bus & HHLA RIO, Scania Flexible Maintenance, VWCO e-Delivery (Hamburger Hafen und Logistik AG) MAN Digital Services
Note: HVO = hydrogenated vegetable oil; BEV = battery electric vehicle 1 Scania and Rio Tinto trialing autonomous truck in Australia 2 Based on a company comparison with other offerings in the market 3 In October 2019, Bosch, CATL, Moura, Semcon, Siemens, Meritor, and Eletra created the new e-Consortium for the manufacturing of the first Brazilian electric trucks; the first mass-produced truck will be the 14-ton e-Delivery and full-scale production is scheduled to start in 2021. 22 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
THE TRATON GROUP ALREADY HAS MULTIPLE SOLUTIONS FOR AUTONOMOUS DRIVING ON THE WAY
PROJECT MINING SYSTEM PROJECT HAMBURGER HAFEN New Scania AXL presented on Innovation Day UND LOGISTIK AG (HHLA) 2019. Autonomous vehicles been operating Testing of automated and autonomous in real-life conditions at Rio Tinto´s mining driving trucks in real use. Field trials at the operations in Australia since August 2018. Hamburg Container Terminal.
Autonomous Transport Solutions Mining Pilot Complexity HUB2HUB PROJECT WITH TUSIMPLE 2018 2019e 2020e 2021e+ Scania tests self-driving trucks in motorway traffic on the E4 motorway between Safety driver, Safety driver, No safety Autonomous Södertälje and Jönköping. no dynamic with dynamic driver operation obstacles obstacles
23 TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
VARIETY OF CONNECTED SERVICE SOLUTIONS INTRODUCED
SCANIA service offering – selected examples Number of connected trucks in operation MAN T&B service offering – selected examples
Scania Zone – position- Remote Diagnostics – Almost every Scania truck and MAN T&B based service for boosting uptime for MAN Service Care 1 MAN Euro VI heavy-duty and medium-duty truck Maintenance automatic vehicle each vehicle Proactive maintenance will be connected from 2019 onwards Cloud-based adjustment increasing vehicle maintenance data availability
MAN DIGITAL SERVICES Fleet Care – uptime FMP – Scania-connected solution for entire fleets services portal >1.3m (with uptime guarantee) MAN Perform MAN Compliant 750,000+ Driver performance Remote download analytics of tachograph data Today2 2025E+
1 All MAN T&B Euro VI HDT and MDT for EU-27+3 region plus selected retrofits 2 As of December 2020 24 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
COMMON BASE ENGINE (13L) COMPATIBLE WITH CONVENTIONAL AND ALTERNATIVE FUELS
IN THE SHIFT TO ALTERNATIVE FUELS, TRATON EXPECTS TO BENEFIT FROM ITS BROAD RANGE OF ALTERNATIVE FUEL SOLUTIONS
Theoretical CO2 reduction potential
UP TO 15% UP TO 85% UP TO 90% BIO UP TO 90% UP TO 90% 90% PLUS NATURAL GAS BIO DIESEL GAS HVO ETHANOL HYBRID & HVO COMMON BASE 13L ENGINE (CBE) – PART OF FAME OUR JOINTLY DEVELOPED HD POWERTRAIN PLATFORM • More than 50% brake thermal efficiency1 • Designed to address expected future emission legislation • Expected to be installed in >50% of TRATON's HD trucks per year from 2025 onwards
1 More than half of the energy is converted into mechanical energy 25 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
ELECTRIFICATION DRIVEN BY TCO AND REGULATION – FASTEST ADOPTION FOR CITY BUSES Indicative potential timeframe for TCO parity1 broader market adoption in Europe TCO parity drives electrification penetration
Heavy duty
TRUCKS Medium & light duty
City bus BUSES & COACHES Coach
2020 2025e 2030e 2035e
1 TCO parity: TCO of an electric vehicle equals the TCO of a vehicle with a conventional powertrain. 26 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
OUR BRANDS FOCUS ON E-MOBILITY LEADERSHIP
SINCE 2020 BY 2025 BY 2030 Common modular electric powertrain Electrified vehicles will account for Electrified vehicles will account for toolkit, used in the first series produced around 10% of Scania’s total vehicle 50% of Scania’s total vehicle sales all-electric city buses from Scania and sales volumes in Europe. Half of MAN’s volumes. At least 60% of MAN’s MAN. new buses will run on alternative delivery trucks and 40% of long-haul drives. trucks will be emission-free.
27 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
TRATON INCREASES R&D INVESTMENT IN E-MOBILITY TO €1.6 BILLION
TRATON invests All brands are shifting budgets from €1.6 billion in R&D for conventional drives to e-mobility e-mobility from 2021 to 2025
Share of product development1 for e-mobility will be doubled until 2025
Less than 20% of product development budget for conventional drivetrains in 2025
1 Product Development budget comprises the share of primary R&D costs, that could be assigned to specific Product Projects or Product Project Roadmaps before start of production. Product Development budget does not include efforts for general base research or R&D support after start of production (i.e. for quality assurance or product cost optimization during the lifecycle). 28 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
PRODUCT HIGHLIGHTS IN ELECTRIFICATION 2020 Fully invested in the future: new truck lines with BEV, FCEV product solutions.
May 2020 May 2020 August 2020 Scania delivers 75 battery MAN Lion's City 18E Scania first German e-road trial electric trucks to ASKO celebrates sales launch fully operational
September 2020 October 2020 Scania introduces first VWCO to deliver first 100 electric truck range e-trucks to Ambev in 2021
Note: vehicles in regular operation or in practical trials (including concept vehicles) 29 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
AGENDA
01. TRATON at a Glance 02. Global Champion Strategy 03. Navistar Acquisition 04. Sustainability
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TRANSACTION OVERVIEW
• No 4 in US market for trucks; long history since 1831 NAVISTAR • Revenue of USD 7.5 bn and adjusted EBIT of USD 221 mn in fiscal year 20201 AT A GLANCE • More than 1,000 dealers
• Access more than 75% of global truck market profit pools ACQUISITION • Deliver on Global Champion Strategy RATIONALE • Leverage powertrain components across brands to generate significant cost savings in years to come • Achieve a well-balanced and global footprint with complementary geographies
• Cash acquisition of 83.3% of outstanding Navistar common shares STRUCTURE • Transaction structured as one-step merger • The two major Navistar shareholders2 supportive of transaction
VALUE • Equity purchase price of USD 3.7 bn based on USD 44.50 per share
• Fully committed transaction financing by Volkswagen AG FINANCING • TRATON committed to maintaining an investment grade rating
• On March 2, 2021 Navistar shareholders approved TRATON’s proposal to acquire Navistar TIMING • Closing expected mid-2021 subject to regulatory approvals and customary closing conditions
1 Adjusted EBIT: calculated as adjusted EBITDA – depreciation and amortization; FY 2020 as of October 31, 2020 2 I.e. certain shareholders of Navistar affiliated with Carl. C. Icahn with a stake of approx. 16.8% and certain shareholders of Navistar affiliated with Mark H. Rachesky with a stake of approx. 16.4% (each as of January 22, 2021). 31 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
STRATEGIC ALLIANCE FOCUSED ON TECHNOLOGY COOPERATION AND PROCUREMENT JOINT VENTURE, INCREMENTAL SYNERGY POTENTIAL
Almost four years of partnership Objectives
Access to North American Market – cooperation and equity stake allow the TRATON GROUP to capture a share of North American profit pool
Procurement Joint Venture – fully operational procurement joint venture to pursue joint global sourcing opportunities
Technology Cooperation: Future Technologies – cooperation in many aspects of future commercial vehicle development
Technology Cooperation: Joint Powertrain – common Strategic partnership and purchase of 16.6%1 stake powertrain systems give Navistar access to excellent in Navistar announced in September 2016 powertrain technologies and allow the TRATON GROUP to benefit from higher volumes
1 Current stake as of the end of September 2020 amounts to 16.7%. 32 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
ACQUISITION RATIONALE: CREATION OF A GLOBAL CHAMPION
Access more than 75% of global truck market profit pools
Deliver on Global Champion Strategy
Leverage powertrain components across brands to generate significant cost savings in the years to come Export business
Achieve a well-balanced and global footprint with complementary geographies
33 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
ACCESS MORE THAN 75% OF GLOBAL TRUCK MARKET PROFIT POOLS1 Access to attractive North American market Strong market position of Scania, MAN, and VWCO Europe/ NAFTA Strong market position of Russia Navistar ~35% ~35% … Share of global profit pool 2030e2
Asia/MEA Export ~25% business
Latin America ~5%
Source: McKinsey & Company 1 Global profit pool 2030: ~€17 bn 2 Profit pool of truck industry > 6t (2030e) 34 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
DELIVER ON GLOBAL CHAMPION STRATEGY
Industrial Business sales revenue (fiscal year 2020, € bn) Combined ranking per region (sales in units)
1 Daimler 34,7 #4 2 #1 (combined) 22,2 6,7 28,8 1
22,2 (standalone)
3 Volvo 21,7
4 #1 PACCAR 15,0
5 IVECO 8,2
Source: Company information, own calculations 1 Trucks and Buses. 2 Includes Truck and Parts as per Navistar Form 10K, October 31, 2020; FX €/USD of 1.13 3 Trucks and Buses; FX €/SEK of 10.49 4 Trucks, Parts and Other; FX €/USD of 1.14 5 Commercial and Specialty vehicles segment of CNH Industrial; FX €/USD of 1.14 35 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
STATUS AND NEXT STEPS WITH NAVISTAR
Signing and announcement of merger agreement on November 7, 2020
Navistar shareholder approval received at Navistar Annual Meeting on March 2, 2021
Regulatory approvals expected in H1 2021
Closing expected mid-2021
36 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
AGENDA
01. TRATON at a Glance 02. Global Champion Strategy 03. Navistar Acquisition 04. Sustainability
2021 / Corporate Communications / Company Presentation 37 TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
TRATON GROUP SUSTAINABILITY – OVERVIEW
• Sustainability is an integral part throughout the entire TRATON GROUP • ESG aspects are already deeply anchored at TRATON’s brands Scania and MAN with transparent sustainability reporting on brand level according to GRI standards1 • Due to decentralized organization of the Group the brands set priorities, resources, TRATON GROUP and methods to ensure fit to culture, strategy, regulatory authorities, and other key Corporate Sustainability stakeholders
• Materiality matrix analysis is used to identify and evaluate the most material sustainability action fields. Focus topics for TRATON to be derived from materiality matrix analysis performed at brand level based on aligned dimensions • TRATON Sustainability Board established, which acts as - forum to develop and decide sustainability matters at TRATON GROUP level by defining minimum-standards for the TRATON GROUP and Corporate Corporate Sustainability at Scania Sustainability at MAN - platform to encourage cooperation, foster best practices, and enable knowledge-transfer in the TRATON GROUP T&B/VWCO
• Commitment to UN Sustainable Development Goals as common basis • Scania and MAN are participant and signatory of UN Global Compact2, respectively
Note: MAN comprises MAN T&B and VWCO. 1 The global reporting initiative (GRI) is an international independent standards organization that sets out principles and indicators for measuring and reporting economics, environmental and social performance. 2 Nonbinding United Nations pact to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation. 2021 / Corporate Communications / Company Presentation 38 TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
SUSTAINABILITY – SCANIA
DRIVING THE SHIFT TOWARDS A SUSTAINABLE TRANSPORT SYSTEM
Three pillars for sustainable transport. Responsible business. Doing the right things Doing things right
Sustainable transport KPIs Targets for several business areas Selected target
Energy • Ecolution by Scania Environmental footprint Science Based Targets initiative: • Driver training and coaching 1 efficiency • Maintenance with flexible plans Scania as first major manufacturer of heavy- duty commercial vehicles to have its climate 2 Diversity and inclusion targets officially approved. Renewable Scania is committed to achieving the Paris fuels and • Sales of alternative fuels and 3 Health and safety electrification agreement goals of limiting global warming to electrification 1.5°C above pre-industrial levels. 4 Human and labour rights Scania will cut CO2 emissions from its own Smart and operations (Scope 1+2) by 50% by 2025 (2015) safe • Size of connected fleet 5 Business ethics and reduce emissions from its products (Scope • BRT bus registrations transport 3) by 20% by 2025 (2015). 6 Community engagement Strategic sustainability key areas
Reducing CO2 emissions Circular business People sustainability
Green Bond Framework (rated “Dark Green” by CICERO Shades of Green)
39 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
SUSTAINABILITY – MAN T&B/VWCO
STRUCTURED MULTI-STEP APPROACH TO DERIVE SUSTAINABILITY SUSTAINABILITY ACTION FIELDS ACTION FIELDS – MATERIALITY ANALYSIS • Reducing greenhouse gas • Reducing greenhouse gas emissions • Relevance of issuing CSR over the product life cycle standards • Focus on global challenges emissions from production and logistics • Reducing pollutant emissions • Responsible handling of Identification of potential • Concrete objectives conflict minerals • Reducing pollutant emission • Improving road safety 1 fields of action for MAN • Reviewing human and • High business impact • T&B/VWCO • Adapting to climate change Sustainable mobility services employee rights in the • Alignment with corporate strategy supply chain
Responsibility for • Record of CO2 emissions in Prioritization by the supply chain • Analysis and prioritization of Products 2 dedicated corporate potential action fields sustainability council Responsibility for Production Responsibility for Supply Chain • Alignment of action fields with stakeholders Assessment by external • Stakeholders include suppliers, customers, 3 Responsibility for Responsibility for stakeholders NGOs, universities, auto OEMs, representatives of cities, and insurance companies People Society and Integrity • Holistic health management • Exemplary compliance and risk • Needs-based vocational training that is management Finalization of • Sustainability action fields linked to existing / fit for the future • Open stakeholder dialogue 4 sustainability topics with future programs of corporate functional • Working world of the future – strategy designing new forms of work • Constructive dialogue with corporate strategy policymakers based on facts • Future-proof talent management
Sustainability strategy fully integrated in CLEAN, SAFE, CARING. DRIVING RESPONSIBLE TRANSPORT the corporate functional strategy
40 2021 / Corporate Communications / Company Presentation TRATON AT A GLANCE GLOBAL CHAMPION STRATEGY NAVISTAR ACQUISITION SUSTAINABILITY
TRATON SE – ISS ESG CORPORATE RATING
• Rating puts TRATON in the top 14% of the industry (269 Highlights machinery companies) • Eco-efficiency category: A- “very good” • The overall transparency level is ranked “very high”
• Status: Prime Key results • Rating: C+ • Decile Rank: 1 • Transparency Level: Very high
A. Social and Governance Rating (40%) C+ B. Environmental Rating (60%) C+ Rating A.1 Staff and Suppliers B- B.1 Environmental Management B- categories A.2 Society and Product Responsibility C+ in detail B.2 Product and Services C- A.3 Corporate Governance and Business Ethics B B.3 Eco-efficiency A-
Source: ISS ESG. As of August 19, 2020 41 2021 / Corporate Communications / Company Presentation 42 2021 / Corporate Communications / Company Presentation