EL RING KLIN GER ANNUAL RePORT 2014 process ANNU pure A L L Re PORT 2014 PORT keY FIGURES — ElringKlinger Group at a glance Key Figures ElringKlinger Group (IFRS) 2014 20134 2012 2011 2010 2009 2008 Order intake € million 1,418.6 1,284.4 1,134.8 1,089.0 886.6 612.9 621.3 Order backlog € million 688.2 595.4 456.0 448.4 333.1 242.2 208.6 Sales revenue € million 1,325.8 1,150.1 1,127.2 1,032.8 795.7 579.3 657.8 Cost of sales € million 967.4 824.5 815.0 744.2 557.0 426.3 464.2 Gross profit margin 27.0 % 28.3 % 27.7 % 27.9 % 30.0 % 26.4 % 29.4 % EBITDA € million 233.4 238.65 218.0 247.9 6 198.2 134.5 137.4 EBIT1 € million 154.0 164.25 138.6 151.16 116.0 63.3 75.8 EBIT margin 11.6 % 14.3 %5 12.3 % 14.6 %6 14.6 % 10.9 % 11.5 % Earnings before taxes € million 153.1 148.95 123.6 136.66 94.0 49.4 60.0 Net income € million 110.6 111.25 89.2 97.6 6 68.6 34.8 43.2 Net income attributable to shareholders of El ring Klin ger AG € million 105.7 105.45 85.7 94.96 65.6 33.2 39.8 Net cash from operating activities € million 149.9 119.0 112.3 74.5 126.2 148.8 98.2 Net cash from investing activities € million - 168.0 - 126.4 - 108.2 - 147.4 - 128.1 - 93.6 - 211.7 Net cash from financing activities € million 20.1 14.7 - 13.3 35.4 74.0 - 49.3 116.9 Operating free cash flow 2 € million - 12.4 - 4.2 8.2 - 10.5 - 1.9 58.2 - 37.6 Balance sheet total € million 1,558.8 1,392.1 1,268.6 1,217.6 991.3 772.3 764.5 Equity € million 775.2 701.3 642.2 610.1 522.3 318.3 288.1 Equity ratio 49.7 % 50.4 % 50.6 % 50.1 % 52.7 % 41.2 % 37.7 % Return on equity after taxes 15.0 % 16.6 %5 14.2 % 17.2 % 6 16.3 % 11.5 % 15.2 % Return on total assets after taxes 8.2 % 9.2 %5 8.2 % 9.9 %6 9.2 % 6.4 % 8.2 % Return on Capital Employed (ROCE) 12.4 % 14.4 %5 13.3 % 16.7 %6 15.2 % 8.8 % 13.6 % Earnings per share € 1.67 1.665 1.35 1.506 1.11 0.58 0.69 Dividends paid € million 34.83 31.7 28.5 36.7 22.2 11.5 8.6 Dividend per share € 0.553 0.50 0.45 0.58 0.35 0.20 0.15 1 EBIT corresponds to operating result (excl. currency effects) 2 Net cash from operating activities minus net cash from investing activities (excluding acquisitions) 3 Proposal to the Annual General Shareholders’ Meeting 2015 4 Prior-year figures restated in accordance with IFRS 11 5 including one-time gain from assumption of control of ElringKlinger Marusan Corporation (EUR 17.6 million before taxes; EUR 12.7 million after taxes) 6 including one-time gain from sale of Ludwigsburg industrial park (EUR 22.7 million before taxes; EUR 16.5 million after taxes) HIGHLIGHTS — of the Year 2014 Highlights of the Year 2014 January September Entry into lightweight automotive Automechanika proves successful engineering The focus of the Aftermarket division’s booth at ElringKlinger received its first large-scale order Automechanika, the leading international auto- to make innovative polymer-metal hybrid com- motive trade show held in September 2014 in ponents, in addition to supplying the required Frankfurt/Main, was on its “Elring – das Original” tooling technology. The new production method brand and on “Partnership” within the whole- combines hydroforming with plastic injection sale/retail industry. One of the highlights of the molding in a single step and has the potential to event was the presentation of a new online train- shape the future of lightweight construction. ing tool, “Elring Academy,” for the division’s From 2015 the company will supply front-end partners in vehicle workshops and the retail carriers and cockpit cross-car beams made us- aftermarket. Visitors were also shown the new ing the new hybrid hydroforming technology. July augmented reality app, which allows users to look into a vehicle via a screen in order to ex- 014 2 Takeover boosts fuel cell expertise amine the components made by ElringKlinger. ElringKlinger AG’s acquisition of a 75% stake EAR Y in new enerday GmbH (Neubrandenburg, Ger- E H T many) gives it access to wide-ranging devel- F opment and production expertise for complete O fuel cell systems. New enerday specializes in ts high-temperature fuel cells that generate elec- H G tricity and heat from natural gas, liquid gas, li bioethanol and diesel for numerous applica- H tions, e.g. in yachts, mobile homes and holi- ig H — day homes. igures Y F E K May Work begins on new factory in Suzhou October (China) 25 kilometers from its current site in Suzhou, Acquisition strengthens Engineered the new factory will provide ElringKlinger China Plastics division Ltd. with a solid foundation from which to drive In October 2014, ElringKlinger Kunststofftechnik further growth in the world’s biggest automotive GmbH, a subsidiary of ElringKlinger AG, took market. The site will include an ultra-modern over the specialty plastics manufacturer Polytetra production facility for shielding components, GmbH (Mönchengladbach, Germany). Polytetra lightweight plastic modules and products made makes PTFE heat exchangers and heaters for of high-performance plastics for the Engineered July industrial use. Its product portfolio also includes Plastics division. The new factory is scheduled tubing and finished parts made of high-perfor- to begin operation in 2015 and is a clear reflec- New factory opens in South Korea mance plastics for applications outside the auto- tion of the Group’s strong growth in Asia. motive industry. Production of cylinder-head and specialty gas- kets, heat shields and plastic housing modules began in July 2014 in Gumi, known as South Korea’s Silicon Valley. The new factory reflects a top priority for the ElringKlinger Group, which generates around a quarter of its total revenue (including exports) in Asia and receives an in- creasing number of development orders from locally based manufacturers. POweRED BY SUCCESS: TURBOCHARGER GASkeTS The average car driver will probably never get to see one. And yet, the turbocharger gasket gracing the cover of this year’s annual report performs an extremely important role in modern-day engines. After all, today’s combustion engines are only so economical because the energy contained in exhaust gases is reused by one or even multiple turbochargers. The gaskets are needed to seal off the housing of the turbocharger from the ambient air and thus prevent harmful emissions from escaping – good for the environment and good for ElringKlinger. We have developed a waste-optimized manufacturing process for this product and supply millions of turbocharger gaskets over the course of one year. CONTENTS pure process “Pure Process” – the title chosen for the 2014 annual report reflects the unique Shareholders our To core competencies developed by ElringKlinger: out-and-out process expertise. The company’s skill set covers intricate metal processing operations using highly sophisticated precision die-cutting and embossing techniques as well as func- tional coating technology, complemented by an in-depth understanding of plas- Combined tics. Combined with specialist materials expertise and in-house tool construction Management Report facilities, this symbiosis of high-tech processes forms the foundation for progres- sive innovation and a steady expansion of the Group’s product and service port- folio. Applying these skills, we are committed to pursuing the key issues shaping the future of our industry. Consolidated Financial Statements 02 PURE PROCESS — Pure dedication YINGQIANG TENG ELRINGKLINGER CHINA, SUZHOU, CHINA Manufacturing lightweight body components using a hybrid hydroforming technique: Yingqiang Teng’s job is to main- tain manufacturing processes at the highest level of quality and to increase productivity. For this reason, he also works constantly on developing his own skills, although having a cordial relationship with the colleagues in his team is just as important to him. After all, teamwork is a prerequisite to success. Pure dedication — PURE PROCESS 03 CONTENTS To our Shareholders our To # 1 PURE PROCESS Combined Management Report Pure Consolidated dedication Financial Statements Success is built on personal commitment. This includes constantly work- ing on improving your own capabilities, focusing precisely on the cus- tomer’s requirements and being prepared to strike out in new directions. It is these attributes that unite all the employees at the ElringKlinger Group’s various sites worldwide. We meet people whose dedication is born out of a sense of conviction for a cause. With technical expertise, flexi- bility and a love of innovation, they are all working toward a common goal – reducing emissions and fuel consumption. 04 PURE PROCESS — Pure dedication BEATE ZIKA-BEYERLEIN ELRINGKLINGER ABSCHIRMTECHNIK, SEVELEN, SWITZERLAND The Head of Research & Development in the Shielding Tech- nology division tracks market trends and never takes her eye off what customers are developing. She is constantly working on new challenges and applications, in areas such as energy conversion or the further optimization of thermal/acoustic in- sulation systems. She most enjoys exchanging expertise with other members of her team and working together to devise solutions for her customers – this is what leads to market success.