Investor Presentation March 2018 Forward-looking statement
This presentation contains forward-looking information based on numerous variables and assumptions that are inherently uncertain. They involve judgments with respect to, among other things, future economic, competitive and financial market conditions and future business decisions, all of which are difficult or impossible to predict accurately. Accordingly, actual results are likely to vary from those set forth in this presentation.
2 Nemak overview
Company highlights Financial highlights (2017) Revenue • Leading global provider of innovative lightweighting RoW solutions for the automotive industry 10% US$4.5 bn North • Began operations in 1981 America EBITDA(1) / Margin Europe 55% • Global footprint comprising 38 plants across 16 countries 35% • Diversified product portfolio and customer base US$715 M / 16% . More than 50 customers worldwide . Supplying ~650 / 1,200 vehicle platforms Volume by customer
• Sole source supplier in ~90% of volume Others (Incl. )
• Experienced management team 17% 24% North America
3% Product portfolio 3% 3% North America 4% 13% 4% 11% Europe 6% 8% Electric Cylinder Engine Structural Transmissions vehicle heads blocks components components
1 out of 4 light vehicles sold worldwide has a Nemak component
(1) EBITDA = Operating Income+ Depreciation, Amortization & other Non-Cash Charges 3 Focus on lightweighting solutions for the automotive industry
Powertrain · Heads · Blocks · Transmissions Structural Comp. · Longitudinal Members · Shock Towers · Cross Members
EV Components · E-Motor Housings · Battery Housings
4 Nemak is a global leader in lightweighting solutions
1 Leading position in lightweighting solutions
Broad portfolio of casting technologies focused on high value-added products 2 and leading R&D capabilities
3 Solid customer relationships
4 Global footprint with modern facilities near customer sites
5 Proven track record of profitable growth and financial resilience
6 Prepared to capture future growth from key industry megatrends
7 Experienced management team
8 Well positioned to withstand changes in U.S. trade policy
5 Strong competitive position Global Market Product portfolio Share Relative size
M units 25
26% 4 Cylinder heads Competitor 1
10 18% 3
Engine blocks Competitor 2
14 13% 11 Transmission components Competitor 3
Contracts signed worth ~US$320 M / year
Structural & EV components
6 Broad portfolio of leading casting technologies with outstanding quality standards
(2) Nemak Volume by Process(1) Market Nemak global production – based on weight (Competitors by casting process)
Sand Others Competitor Regions GSPM HPDC Rotacast® 3% Package NA, SA, EU, Asia
HPDC Linamar NA, EU 26% Honsel NA, SA, EU Permanent Mold KS EU 51% Ryobi NA, EU, Asia Sand Package GF EU, Asia 20% DongSeo Asia
(1) GSPM stands for Gravity Semi-Permanent Mold, a casting technology used to produce cylinder heads; Sand (2) Large-scale production process Package refers to a casting technology used to produce engine blocks; HPDC refers to High Pressure Die Casting, a casting technology used to produce engine blocks, transmission parts and other components; and ROTACAST™ refers to a casting technology used to produce cylinder heads and engine blocks.
7 Solid customer relationships with diversified revenue stream
Years of Number of Vehicle OEM Relationship Platforms (1)
30+ 72
30+ 110
30+ 80
20+ 104
20+ 13
15+ 19
15+ 37
15+ 80
12+ 50
Others 80
Total 645
(1) Source: HIS Automotive and Nemak research 8 Global footprint with modern manufacturing facilities
Slovakia
Hungary
Germany
China
India Argentina Turkey
Brazil
9 Proven track record of profitable growth
Revenues (US$bn) 4.6 4.4 4.5 4.5 4.3 3.9 3.6
3.0 3.0 2.9
2.0
1.3 1.4 1.0 0.9 0.9 Canada Foundries 0.8 0.4 0.4 0.2 0.3 0.1 0.1 0.2 0.2
'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 15 16 17 EBITDA (US$M) 17 715
Since 1993, both revenues and EBITDA have grown at a CAGR >17%
10 Experienced management team
A. Tamez A. Sada M. Nolte CEO CFO VP of Commercial 32y 22y 21y
M. Landeros R. Montero M. Winterhalter VP of HR VP Manufacturing and VP Purchasing 20y Product Development 20y 22y
J. Pons J. Nüschen K. Bentin VP of Business VP Vehicle Structures BU Director Mexico Development 21y 19y 21y
K. Lelling L. Peña E. Saenz BU Director Europe BU Director BU Director Asia 19y USA/CAN & SA 20y 19y
11 Nemak Strategy Key industry trends for Nemak
Environmental regulations More stringent emissions control
Combustion engine (ICE) More complex and new features
Lightweighting Use of lighter materials in vehicle structure
Electrification Development of alternative propulsion systems Nemak strategic priorities
Structural Powertrain Machining EV components components
14 Powertrain
Market growth • Aluminum penetration in engine blocks • China market
Continue with efficiencies • Cost • Performance • Capex
Expect higher cash flow generation Higher complexity • Fund growth Capture growth • Cash to shareholders Aluminum penetration
15 Machining
Attractive profitability • Additional value added • Margin expansion
Further integration • Currently 56% of volume is machined in-house • Machining capacity expansion in all regions
Target of 70% in-house machining
16 Structural components
Aluminum penetration • Strong quotation pipeline • Attractive profitability • New production facilities
High value added • Assembly • Design engineering High-growth segment • Other processes such as straightening, Complex products heat treatment, and joining Dedicated organization
17 EV components
Incremental content and complexity
• Lightweighting key for EV performance • Aluminum as the main material of choice
• More machining and subassembly requirements
• Higher value-added capabilities needed
• Compatible with existing capacity Additional content per vehicle
18 Nemak strategic priorities
Powertrain Machining SC&EV business of US$320 M
Total sales backlog of US$1.7 bn
19 Financial Overview
20 Financial performance
Volume Sales (M Eq. Units) (US$bn)
47.6 49.4 50.7 50.1 49.9 4.4 4.6 4.5 4.3 4.5
13 14 15 16 17 13 14 15 16 17
EBITDA Net Leverage Ratio (US$M)
759 798 1.9 1.8 1.8 702 715 623 1.6 1.6
13 14 15 16 17 13 14 15 16 17 21 Debt profile
• >US$1 billion refinanced in debt capital markets . April 2017: €500 M due 2024 . January 2018: US$500 M due 2025 • Average life of 6.1 years
Revised Amortization Schedule Final Debt Currency Exposure (US$M, Pro-forma Dec ‘17)
Other 676 4% 532 566
500 500 Euro USD 50% 60 46% 51 46 23 23 32 66 18 19 20 21 22 23 24 25
Current Debt 2023 US Bond New 2025 Bond 22