[PDF] - 1 READY FOR FUTURE GROWTH CMD on 9 December 2014 Heikki Lehtonen, PDF Document

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READY FOR FUTURE GROWTH

CMD on 9 December 2014 Heikki Lehtonen, President and CEO Mika Hassinen, CFO

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COMPONENTA TODAY

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WE ARE ONE OF THE LARGEST cast component suppliers in Europe

Net sales (2013) Personnel approx.

Iron foundry production capacity tons/year

511M€ 4,300 346,000

Machining hours/year

726,000

Listed in NASDAQ OMX Helsinki

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15%

Automotive

17%

Agricultural Machinery

18%

Machine Building

19%

Construction and Mining

31%

Heavy Trucks

5

Our broad customer base supports stability and innovation

Heavy Trucks Construction and Mining Machine Building Agricultural Machinery Automotive

31% 19% 18% 17% 15%

5 9 December 2014

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NET SALES

329 MEUR 73 MEUR 116 MEUR

PERSONNEL

2,969 762 398

PRODUCTION CAPACITY

336,000 tons/year 11,000 tons/year 1,400,000 wheels 726,000 machining hour/year

PRODUCTION UNITS

Turkey 170,000 Netherlands 92,000 Finland 74,000 Turkey Turkey 350,000 Sweden 315,000 Finland 61,000

Foundry division Aluminium division Machine shop division

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Our diverse production network ensures that quality is achieved at a competitive price

Foundry division Aluminium division Machine shop division Foundry division Aluminium division Machine shop division

9 December 2014 6

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We serve our customers by combining a global network with strong local presence

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PERFORMANCE OVERVIEW

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Development of order book

(including orders for next two months)

20 40 60 80 100 120 2009 2010 2011 2012 2013 Q3/13 Q3/14 MEUR

9 9 December 2014

5%

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Development of Net sales

9 December 2014 10

Liikevaihto vuosineljänneksittäin, Me Rullaava liikevaihto 12 kk, Me 100 200 300 400 500 600 700 25 50 75 100 125 150 175 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Net sales rolling 12 months, MEUR Quarterly net sales, MEUR Net sales Net sales, rolling 12 months

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Operating profit and Result after financial items 2009 - Q3/2014

9 December 2014 11

20
10

10 20 30 40 2009 2010 2011 2012 2013 1-9/13 1-9/14 Operating profit*

40
30
20
10

10 2009 2010 2011 2012 2013 1-9/13 1-9/14 Result after financial items*

*) Excluding one-time items and exchange rate differences of operative balance sheet items. *) Excluding one-time items and exchange rate differences of operative balance sheet items.

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REFINANCING 2014

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Componenta finalised refinancing arrangements of EUR 250 million

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Average IB debt maturity from 1 year to 4.5 years Annual financing costs to decrease by EUR 8 million Liquidity situation to improve Equity ratio 18% => 27 % Term loan EUR 70 million RCF EUR 20 million Term loan EUR 61.8 million RCF EUR 7 million Two share issues total EUR 98 million

Agreement signed by

Componenta Oyj with Nordic syndicate banks

Ensure liquidity and provide

long-term stability

Maturity 3+1 years
68 million shares in two

phases

Share issue of 15 million

shares (EUR 15 million) to a limited group of investors in August 2014

53 million shares to

individuals and corporations in Finland in September 2014 Gearing to decrease

Agreement signed by

Componenta A.S. with Turkish banks

Provide long-term stability
Maturity 7 years

9 December 2014

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10 Largest shareholders 31 December 2013 vs. 30 September 2014

9 December 2014 14

Free float and especially liquidity increased significantly as a result of Q3/2014 share issues

Largest shareholders on 31 December 2013 % Largest shareholders on 30 September 2014 % 1 Lehtonen Heikki 25,72 % 1 Lehtonen Heikki 11,85 % 2 Etra Capital Oy 23,07 % 2 Etra Capital Oy 11,70 % 3 Finnish Industrial Investment Ltd 9,11 % 3 Varma Mutual Pension Insurance Company 8,93 % 4 Varma Mutual Pension Insurance Company 8,15 % 4 Mandatum Life 8,24 % 5 Mandatum Life 3,50 % 5 Ilmarinen Mutual Pension Insurance Company 7,15 % 6 Nordea Life Assurance Finland 2,26 % 6 Finnish Industrial Investment Ltd 6,35 % 7 Alfred Berg Finland Fund 1,41 % 7 Elo Pension Company 5,04 % 8 Bergholm Heikki 1,28 % 8 Sampo Oyj 4,74 % 9 Laakkonen Mikko 1,26 % 9 Savings Bank Finland Fund 2,47 % 10 Danske Fund Finnish Small Cap 1,13 % 10 Etera Mutual Pension Insurance Company 1,94 % Nominee registered shares 0,99 % Nominee registered shares 0,35 % Total 77,88 % Total 68,76 % Other shareholders 22,12 % Other shareholders 31,24 % Total shares 100,00 % Total shares 100,00 % Number of shares (million) 29,3 Number of shares (million) 97,3

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Interest-bearing debt 30 September 2014

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20 40 60 80 100 120 140 160 180 200 220 IB Debt Positions 30 Sept 2014 MEUR Maturity (years) Other IB debt 4.5 Rolling Capital note 2010 2.0 1 Bonds 6.3 5 Pension loans 6.5 4 Finance leasing 12.0 5 Turkish bi-lateral loans 25.3 Rolling Nordic syndicate loan 68.8 3+1 Turkish club loan 87.8 7

Turkish club loan Nordic syndicate loan Turkish bi-lateral loans Finance leasing Bonds Pension loans Other IB debt

MEUR

Capital note 2010

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FINANCIAL OBJECTIVES

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Efficiency improvements and cost savings ensure to achieve better profitability and returns

New Force efficiency improvement program (waves 1 - 2) improves competitiveness by 35 MEUR by

2015 through:

Decreasing the number of units and fixed costs
Concentrating on big series production in Turkey
Increasing productivity in selected units
Implementing best practice processes in all units to achieve material and energy savings
New Force efficiency improvement program (wave 3) improves competitiveness by further 10 MEUR

in 2015 - 2016.

9 December 2014 17

Objectives Actual Q3/2014 Operating profit (%)

excluding one-time items
Min. 8%

4.0% ROI (%)

excluding one-time items
Min. 15%

6.3% Equity ratio (%)

Min. 40%

26.7%

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Operating profit -% excluding one-time items

6
4
2

2 4 6 8 10 2009 2010 2011 2012 2013 Q3/13 Q3/14

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Target 8%

%

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ROI -% excluding one-time items

6
3

3 6 9 12 15 18 2009 2010 2011 2012 2013 Q3/13 Q3/14

9 December 2014 19

Target 15%

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Equity and Equity ratio

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Liikevaihto vuosineljänneksittäin, Me Rullaava liikevaihto 12 kk, Me 0,0 10,0 20,0 30,0 40,0 40 80 120 160 2009 2010 2011 2012 2013 Q3/13 Q3/14 % MEUR Equity, MEUR Equity ratio, % Target 40%

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Net debt and Gearing

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Liikevaihto vuosineljänneksittäin, Me Rullaava liikevaihto 12 kk, Me 100 200 300 400 500 600 50 100 150 200 250 300 2009 2010 2011 2012 2013 Q3/13 Q3/14 % MEUR Net debt, MEUR Gearing, %

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ECONOMIC INDICATORS

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Pig Iron and Steel Scrap Indexes

9 December 2014 23

Sources: Reuters Metal Bulletin, WV Stahl 150 200 250 300 350 400 450

2009 07/2010 08/2010 09/2010 10/2010 11/2010 01/2011 01/2011 02/2011 03/2011 04/2011 05/2011 06/2011 07/2011 08/2011 09/2011 10/2011 11/2011 12/2011 01/2012 01/2012 02/2012 03/2012 04/2012 05/2012 06/2012 07/2012 08/2012 09/2012 10/2012 11/2012 12/2012 01/2013 02/2013 03/2013 04/2013 05/2013 06/2013 07/2013 07/2013 08/2013 09/2013 10/2013 11/2013 12/2013 01/2014 02/2014 03/2014 04/2014 05/2014 06/2014 06/2014 07/2014 08/2014 09/2014 10/2014 11/2014

Steelscrap FOB R'dam 80/20 Steelscrap WV Stahl sorte 8 Steelscrap Colakoglu Pig iron CIS export Combi 2/3 steelscrap 1/3 pig iron China domestic

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AlSi11MgSr (DA-177) price development

Increase in aluminium raw material prices will impact Componenta’s results 2.4 MEUR on H2/2014

9 December 2014 24

1331 1319 1262 1278 1229 1242 1253 1270 1315 1341 1483 1535 1526 1624 329 336 326 328 333 329 311 391 384 334 408 382 482 406 0 € 200 € 400 € 600 € 800 € 1 000 € 1 200 € 1 400 € 1 600 € 1 800 € 2 000 € 2 200 € 0 € 200 € 400 € 600 € 800 € 1 000 € 1 200 € 1 400 € 1 600 € 1 800 € 2 000 € 2 200 € Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Componenta Premium Componenta LME (€) LME Cash S&S (€)

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Development of Turkish Lira

9 December 2014 25

Source: Reuters

Daily EURTRY=

4.12.2013 - 3.12.2014 (GMT) Line; EURTRY=; Ask(Last) 3.12.2014; 2,7610 SMA; EURTRY=; Ask(Last); 90 3.12.2014; 2,8438 Price TRY Auto 2,7 2,75 2,8 2,85 2,9 2,95

3

3,05 3,1 3,15 16 01 16 03 17 03 17 01 16 01 16 02 16 01 16 01 18 01 16 01 16 03 17 01

Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

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Manufacturing Purchasing Manager Indices

9 December 2014 26

Source: Reuters 30 35 40 45 50 55 60 65 03-2006 06-2006 09-2006 12-2006 03-2007 06-2007 09-2007 12-2007 03-2008 06-2008 09-2008 12-2008 03-2009 06-2009 09-2009 12-2009 03-2010 06-2010 09-2010 12-2010 03-2011 06-2011 09-2011 12-2011 03-2012 06-2012 09-2012 12-2012 03-2013 06-2013 09-2013 12-2013 03-2014 06-2014 09-2014 Below 50 = Contraction US ISM EU 27 Markit UK Markit China Markit India Markit

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IFO Expectations

9 December 2014 27

75 80 85 90 95 100 105 110 115 120 125 Business Climate Business Situation Business Expectations Source: IFO

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CDS Index

9 December 2014 28

Source: Reuters

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CURRENT BUSINESS ENVIRONMENT

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Heavy Trucks

Registration numbers for Heavy trucks in September - October are encouraging.

Cheap and improving availability of financing together with the ageing fleet will build a positive momentum but market is very sensitive for instability.

“The forecast of 230,000 trucks for the heavy-duty truck market in Europe for 2014 is

maintained, however, with some downside risk. For 2015, the total market for heavy-duty trucks in Europe is expected to be at a level of about 230,000 trucks.” Source: Volvo Q3/2014

“There are good growth opportunities in the longer term and the expansion of

annual technical production capacity towards 120,000 vehicles is continuing.”

Source: Scania Q3/2014

9 December 2014 30

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Development of Supply Chain in Heavy Trucks Industry Compared to Previous Year

9 December 2014

Sources: Volvo website, ACEA

Componenta’s deliveries to heavy trucks industry in 1-10/14 vs. 1-10/13 Volvo Group’s deliveries to distributors in Europe 1-10/14 vs. 1-10/13 Registrations of new heavy trucks in Europe 1-10/14 vs. 1-10/13

1%
6%

+4%

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Registrations of New Heavy Trucks in Europe (EU27)

Source: ACEA

9 December 2014 32

Change +% Change -% 2010 2011 2012 2013 2014

70%
50%
30%
10%

10% 30% 50% 70% 90% 110% 130% 150% 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 50 000 55 000

JAN 09-10 FEB 09-10 MAR 09-10 APR 09-10 MAY 09-10 JUN 09-10 JUL 09-10 AUG 09-10 SEP 09-10 OCT 09-10 NOV 09-10 DEC 09-10 JAN 10-11 FEB 10-11 MAR 10-11 APR 10-11 MAY 10-11 JUN 10-11 JUL 10-11 AUG 10-11 SEP 10-11 OCT 10-11 NOV 10-11 DEC 10-11 JAN 11-12 FEB 11-12 MAR 11-12 APR 11-12 MAY 11-12 JUN 11-12 JUL-11-12 AUG 11-12 SEP 11-12 OCT 11-12 NOV 11-12 DEC 11-12 JAN 12-13 FEB 12-13 MAR 12-13 APR 12-13 MAY 12-13 JUN 12-13 JUL 12-13 AUG 12-13 SEP 12-13 OCT 12-13 NOV 12-13 DEC 12-13 JAN 13-14 FEB 13-14 MAR 13-14 APR 13-14 MAY 13-14 JUN 13-14 JUL 13-14 AUG 13-14 SEP 13-14 OCT 13-14

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Construction & Mining

Caterpillar’s global dealer deliveries

9 December 2014 33

Source: Caterpillar

“Caterpillar believe there is a reasonable likelihood that world economic growth could improve in 2015 and that there is potential for increased investment in infrastructure in countries such as the United States, India and Turkey. As a result, Caterpillar’s preliminary

utlook for 2015 expects sales and revenues to be flat to slightly up from 2014.”

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Machine Building

Development in Componenta’s Machine Building customer segment has been good

due to strong global customer base and Componenta’s increased market share among the customers

“KONE’s net sales is estimated to grow by 6–8% at comparable exchange rates in

2014 compared to 2013.” Source: Kone Q3/2014

“Based on the expected delivery plan for the remainder of the year and the improved

cost base, Vestas upgrades guidance for revenue, EBIT margin before special items and free cash flow.” Source: Vestas Q3/2014

“Wärtsilä expects its net sales are expected to grow by about 5% in 2014.”

Source: Wärtsilä Q3/2014

34 9 December 2014

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Machine Building

"I'm more positive on Europe than anyone else. What we see with the Euro/dollar,

Swedish (krona)/dollar or Swedish (krona)/Euro, it helps the economy in the competitiveness… There's a lot of political talk going on about slow growth. I see positive (business) development in Europe. When I look at the yellow canaries (Atlas Copco's small to medium size compressors), I see that really going well.“

Source: Atlas Copco CMD 19 Nov 2014 - CEO Ronnie Leten

“2014 revenue growth is expected to be in the mid-single digit range over 2013,

excluding currency impacts”. Source: Bombardier Q3/2014

“The long-term demand outlook for ABB’s businesses remains clearly positive.

The need for efficient and reliable electricity transmission and distribution will continue to increase… In the short term, macroeconomic and geopolitical developments are signaling a mixed picture with increased uncertainty.” Source: ABB Q3/2014

35 9 December 2014

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Agricultural Machinery

“Overall market conditions for agricultural machinery in Europe are expected to

remain challenging throughout 2015. Manufacturers see the investment climate among customers adversely affected by the recent drop in agricultural commodity

prices. In addition, the new rules for EU subsidy payments under the Common

Agricultural Policy (CAP) to be introduced in 2015 will add further uncertainties, especially in Central European countries. As a result, CEMA expects the agricultural machinery market to drop by another 5-10% in 2015.” Source: CEMA

“At the same time, the industry believes that worldwide trends – such as global

population growth, urbanisation and climate change – will continue to structurally support demand for high-end farm machine technology in the years ahead.” Source: CEMA

36 9 December 2014

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Business expectations in Agriculture Industry

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Source: CEMA

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Agricultural Machinery

“The priority for the remainder of 2014 continues to be lowering our dealer and

company inventories in order to better align us with current market demand. Despite the softer market conditions we face today, the healthy, long-term fundamentals of

ur industry remain intact. We will continue to invest in new product

development, distribution enhancements and productivity improvements to enable our growth and improve our profitability.” Source: AGCO – Richenhagen.

“Deere's worldwide sales of agriculture and turf equipment are forecast to

decrease by about 20 percent for fiscal-year 2015 as a result of weaker conditions in the global farm economy. Lower commodity prices and falling farm incomes are putting pressure on demand for agricultural machinery, especially for larger models. Deere's worldwide sales of construction and forestry equipment are forecast to increase by about 5 percent for 2015.” Source: John Deere, 26 November 2014

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Automotive

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Automotive registrations development has remained healthy and grounds for

reasonable development in 2015 remains.

“The automotive market in Europe is expected to recover by +5% in 2014 and

2015, but is still a long way from its pre-crisis level. The cannibalism among European auto makers continues to rage, eating away at margins already suffering from

vercapacity.” Source: Euler Hermes, Economic Outlook, August-September 2014
”In Europe... we expect more moderate gains in 2015 from the previous year's high

base... Looking ahead to 2015, we see a more sombre story… as the recovery period

f 2014 will set up a high base. We expect growth in the Western Europe markets

to slow to 2.8%.” Source: Automotives Insight, November 2014

“Ford is forecasting that Europe's car market will expand to between 14.8 million and

15.3 million vehicles in 2015 from 14.5 million to 14.6 million deliveries in 2014.”

Source: Ford – Stephen Odell, 2 October 2014

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Registrations of New Passenger Cars in Europe (EU27)

9 December 2014 40

30%
20%
10%

0% 10% 20% 30% 300 000 600 000 900 000 1 200 000 1 500 000 1 800 000

JAN 09-10 FEB 09-10 MAR 09-10 APR 09-10 MAY 09-10 JUN 09-10 JUL 09-10 AUG 09-10 SEP 09-10 OCT 09-10 NOV 09-10 DEC 09-10 JAN 10-11 FEB 10-11 MAR 10-11 APR 10-11 MAY 10-11 JUN 10-11 JUL 10-11 AUG 10-11 SEP 10-11 OCT 10-11 NOV 10-11 DEC 10-11 JAN 11-12 FEB 11-12 MAR 11-12 APR 11-12 MAY 11-12 JUN 11-12 JUL 11-12 AUG 11-12 SEP 11-12 OCT-11-12 NOV-11-12 DEC-11-12 JAN 12-13 FEB 12-13 MAR 12 - 13 APR 12-13 MAY 12-13 JUN 12-13 JUL 12-13 AUG 12-13 SEP 12-13 OCT 12-13 NOV 12-13 DEC 12-13 JAN 13-14 FEB 13-14 MAR 13-14 APR 13-14 MAY 13-14 JUN 13-14 JUL 13-14 AUG 13-14 SEP 13-14 OCT 13-14

Source: ACEA Change +% Change -% 2010 2011 2012 2013 2014

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STRATEGY IMPLEMENTATION

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STRATEGIC ACTIONS - MWB’s - FOR IMPLEMENTING STRATEGY AND MEASURING PERFORMANCE

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9 December 2014

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Short-term focus on profitability improvements pave the way for future growth with our customers

9 December 2014 43

“Enable ability to invest in growth” 2013-2014 “Build stronger platforms for growth” 2015-2016 “Growing together with our global accounts” 2017-2018 Securing profitability through improved productivity and quality Further improving industrial footprint and competitiveness together with leveraging growth with our key customers When balance sheet on target levels, then potentially expand together with our global accounts into new growth markets

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Proforma EBITDA

including New Force wave 3 program

10 20 30 40 50 60

FY/12 Adjusted EBITDA Volume loss margin impact Cost savings realized Cost inflation and FX diff. of B/S items Q3/14 LTM EBITDA*) Proforma cost savings**) Q3/14 LTM PF EBITDA*) New Force 3 2016 EBITDA*)

9 December 2014 44

26.1

11.4

26.0

2.3

38.4 8.6 47.0

*) Excluding one-time items and exchange rate differences of operative balance sheet items. **) Proforma cost savings: Annual impact of implemented and/or decided cost savings and improvement actions.

MEUR 57.0 10.0

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New Force efficiency improvement program

Wave 3

9 December 2014 45

Componenta has launched a third wave in New Force efficiency

improvement program in the beginning of December 2014 to further improve competitiveness and reduce costs by minimum EUR 10 million

Fixed costs will be cut by EUR 4 million with full impact for 2016. Majority of

these cost savings will be realized already in 2015

Industrial footprint will be improved by closing 2 - 3 foundry lines by end of 2016

to increase the capacity utilization of the remaining foundry lines and save in direct costs minimum EUR 6 million

Savings are estimated to improve cost structure by EUR 3 million in 2015 and

with the full impact on 2016.

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Geographic footprint

9 December 2014 46

Key Points

Broad service & logistics

network with just-in-time capability

Continuous shift of

production to Turkey to take advantage of low cost labour

Larger size series

(>#300k) produced in Turkey

Smaller series and more

complex parts produced in Western Europe

Company has consistently

increased sale and distribution network consistent with its manufacturing capabilities and footprint

Customer proximity is a key differentiator of Componenta given collaborative approach to R&D, JIT and logistics requirements for small production runs

Production Sites Phase III – 2004 Production in Netherlands and Access to European Customers Phase IV – 2006 Shift to low cost production Phase II – 1990s First Expansion Phase I – 1980s Customer Service Centers Phase V – 2011-2016 Closure of PRS MS Divestment of Nisamo MS Closure of PRS foundry Closure of Orhangazi Line 8 Closure of Smedjebacken forge Transfer of production to low-cost Turkey Further 2-3 foundry line closures in 2015-2016

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Shifting production to low cost location

Continuous shift of production to Turkey significantly improves cost structure

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36% 38% 45% 48% 48% 47% 48% 53% 55% 57% 59% 64% 62% 55% 52% 52% 53% 52% 47% 45% 43% 41% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008A 2010A 2012A 2014E 2016E 2018E

Revenue Breakdown – Europe vs Turkey

Turkey EU 43% 42% 48% 54% 56% 56% 0% 10% 20% 30% 40% 50% 60% 2008A 2009A 2010A 2011A 2012A 2013A

Development of Iron Casting Volumes in Turkey

Turkey (% of iron foundries production)

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COMPETITOR ANALYSIS

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Iron casting - competitive landscape

Componenta is the European market leader non-automotive iron castings

9 December 2014

Attractive Market Position

Focus on non-automotive

applications in iron

Clear #1 for small-mid series

production of complex castings

Market highly fragmented

with c.1,700 players with average size of c. €10m revenues

Small players not able to

meet demand for high-end total solutions and product bundling

Smaller players likely to

continue exiting the market and /or losing business to Pan-European casters – lack economies to effectively compete Company Iron Sales (€m) Batch Size Small Medium Mass Series

Fritz Winter Eisengießerei

712

 

GeorgFischer

709

 

Teksid

680

 

Componenta(1)

445

 

Georgsmarienhütte

431

 

Neue Halberg-Guss

338



Brühl

280



SLR Group

175

 

Gienanth

157

 

SHW Casting Technologies

119



Infun

117



Castings

102

 

Vald.Birn

78

 

12-14 years 10-12 years 8 years

Key:

Construction & Mining Machine Building Agricultural Machinery Trucks Automotive Life Cycle Customer Segments

(1) Includes Iron Foundries and Machine Shop

Key-Focus Also Active

49

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Aluminium casting - market positioning

Componenta has a focused business strategy on complex, high margin automotive/truck products

9 December 2014 50

Automotive aluminium casting industry highly fragmented with various product segments and different process

requirements and margins

Componenta is focused on : (1) complex engine, powertrain and safety-critical chassis parts with high differentiation

potential and (2) light alloy wheels for the independent aftermarket which offers a more attractive pricing compared to the OEM market

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Aluminium casting - market trends & drivers

Strong underlying growth drivers: Aluminium is key for meeting stricter emission regulations

9 December 2014 51 Source: CO2 Emissions Report 2012, European Environment Agency, The aluminium Association Inc. “Automotive aluminium continued gain in fuel economy” 2011, IHS Automotive

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KEY STRENGTHS

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Key Strengths

9 December 2014 53

Industry leading player in target markets Specialized business model with barriers to entry Long-term relationships with blue-chip customer base Balanced and diversified business Well positioned to capitalize on improved competitiveness Flexible and improving cost structure 1. 2. 3. 4. 5. 6.

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Specialized business model with barriers to entry

9 December 2014 54

High initial Investment

Significant initial investment for setting up a modern iron foundry (approx. €50-100m)
In addition significant investment in logistics and inventory

Technical know- how and expertise

Focus on high end products requires substantial application, process, material know-how, and

experience

Entrenched development partnerships with customers (high win rate when involved in R&D)

Economies

f scale
Substantial economies of scale in production, sourcing and product development
Size a competitive advantage as customers are looking to consolidate their supply base via “bundling”

1

High switching costs

Technological interdependence in development and high tooling investment of customer
Designed into customers platforms – useful lives of c. 8-15 years
Sole supplier for over 85% of all products with no immediate alternative supplier available

2

Requires a broad production footprint close to customers as well as a global service & logistics network
Emerging market players not able to meet just-in-time requirements of customers

JIT delivery requirements

3

Required certification

Customers have a mandatory, increasingly strict supplier certification process for each project
Customer requirements for complex safety critical parts are significantly higher than on simpler parts

4 5 6

Componenta has only once been replaced by a customer on a running platform which took c. 10 years

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Specialised business model with barriers to entry

Sole supplier status with blue-chip customer base

9 December 2014 55

88% 82% 98% 80% 93% 93% 92% 12% 18% 2% 20% 7% 7% 8% 0% 25% 50% 75% 100% Heavy Trucks MB Nordic MB Europe Agriculture Automotive Wheels Construction & Mining Single sourced Double sourced

High proportion of single sourcing demonstrates significant degree of customer integration / value perception and inability for clients to substitute Componenta’s products

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Specialised Business Model with Barriers to Entry

Revenue streams are characterised by long product lifecycles

9 December 2014 56 Sources: Management information and Thomson Reuters

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Balanced and diversified business

High degree of diversification by customer segment and geography

9 December 2014 57

Net sales by customer segment Q1 - Q3 2014

Heavy trucks 32% Construction and Mining 19% Machine building 19% Agricultural Machinery 15% Automotive 15%

Net sales by geography Q1 - Q3 2014

Germany 21% Sweden 18% Turkey 12% UK 9% Finland 8% Benelux 8% Italy 7% France 6% Others 11%

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Well positioned to capitalize on improved competitiveness

9 December 2014 58

Market situation

European market is still uncertain due to Russian embargo
There are some signals of market recovery in certain customer segments, but especially Agriculture

Machinery customer segment is impacted negatively by the Russian embargo

1

Market consolidation

Number of foundries decreased by 25% between 2008-12
Downturn impacted smaller players, who lack scale to provide sufficient service quality and maintain

profitability

Customers are seeking to consolidate suppliers (e.g. Caterpillar is in the process of reducing global

supplier base from 100 to 6) to achieve both innovation and cost savings, and focus on financially stable suppliers – Componenta is one of only a few providers, given their scale and capabilities, with whom customers can concentrate their exposure / sourcing across product categories

2

Trend to total solution

Increased focus by customers on solution sourcing in form of complementary services such as design,

colouring and machining are getting common – Opportunity for Componenta to increase its share of wallet with existing customers by effectively

ffering solutions including more value added processes

3

Industry de- stocking and move to just-in- time processes

Previous downturn in 2008-2010 was characterised by significant over-stocking of products by end-

customers, which amplified the down-turn for casting products suppliers

Customers have significantly de-stocked since 2009 downturn and moved to a just-in-time model
Today casting industry is more insulated to market cyclicality

4

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Flexible and improving cost structure

Increased flexibility in Componenta’s cost structure

9 December 2014 59

Materials 43 % Direct wages and ext. services 24 % Energy 8 % Maintenance and tools 4 % Freights 3 % Other variable costs 4 % Fixed costs 14%

Breakdown of Variable Expenses (FY2013)

20% 16% 14% 14% 14% 13% 80% 84% 86% 86% 86% 87% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2009A 2010A 2011A 2012A 2013A 1-9/14A Fixed expenses Variable expenses

Reduction in fixed cost reflective of New Force savings

Ability to also address fixed cost base to mitigate volume reductions

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Flexible and improving cost structure

9 December 2014 60

100% of sales have pass-through mechanisms for raw material costs
Covers raw materials such as Pig Iron, Scrap Steel and Aluminium
Represent 50% of variable and 44% of total costs
Time lag of 1-3 months depending on customer

Raw material cost 1

c.75% of labour costs considered variable, with the remainder included in fixed costs

– Variable labour costs comprise 28% of variable costs and 24% of total costs

Since 2009, active reduction in headcount numbers to achieve overall lower and more flexible fixed

cost base

Majority of labour force located in Turkey

– Time to redundancy of two months (same period as order book) – Wage levels for blue collar workers in Turkey ¼ of Western European levels

In Finland Componenta benefits from temporary lay-off procedure

– All personnel can be made temporarily redundant without laying them off (Government partially pays wages during this period)

In Netherlands and Sweden, majority of Componenta’s workforce are agency contractors

– In Netherlands, one week notice period for redundancy and no severance payments

Labour cost 3

Nearly all of sales have pass-through mechanisms for energy costs
Covers electricity, gas and other energy costs
Represent 9% of variable and 8% of total costs
Time lag of 1-3 months depending on customer

Energy cost 2

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Business strategy for 2014 and beyond

Well positioned to take advantage of consolidation trends and gain share from smaller

distressed competitors as customers focus on larger, more financially stable suppliers

Strong customer base offers growth opportunities both in Europe and other continents
Continued improvement in profitability is our number one priority in the short-term
New Force program is key in strategy implementation in 2015, in order to build on

already realised savings which were achieved in 2013 and 2014. EUR 26 million improvements already visible in Q3/2014 results. EUR 19 million still to come. Improving productivity and quality, and profitability of production footprint 1 Growing together with our strong customer base 2

Enhance full solution capabilities to maintain differentiation to competitors
Focus on Engineering and PDM / PDE resources

Strengthening position as full solution provider 3

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100 MEUR GROWTH PROGRAM

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Substantial amount of new business secured since the beginning of the 100 MEUR growth program

9 December 2014 63

25 9 32 15 55 78 38 68 50 100 150 200 250 Budget FC FC 2014 2015 2016

Componenta closed deals and opportunities (cumulative, MEUR)

Other Sales opportunities Hot Sales opportunities Recently closed deals Latest estimate 2014 Earlier closed deals minus erosion

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Closed deals imply an improvement of 87 MEUR

excl. market development for existing business

9 December 2014 64

87 10 170 11 7 7 10 7 20 6 18 8 17 33 4 78 Run-rate improvement Total erosion

ver period
10
4

New volumes before erosion

83
12
4

4 4

4

92 4

13
14
21

Recently closed deals Ramp-up of earlier closed deals

Development of product sales run rate, MEUR

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65 65

SUMMARY

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Summary

9 December 2014 66

Componenta’s 2013 - 2016 strategic cornerstone actions are focusing on revenue growth and efficiency improvements and cost savings.

45 MEUR savings from New Force efficiency improvement program (waves 1 - 3) World-class product management 100 MEUR revenue growth program (2015 - 2016) One Componenta

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