A RECENT TURN - AROUND THANKS TO THE EFFECTIVENESS OF MEASURES - PowerPoint PPT Presentation

G LOBAL EXPERT IN E LECTRICAL P OWER AND A DVANCED M ATERIALS J ANUARY , 2018

M ERSEN : OUR MISSION W E DEVELOP W E PROVIDE INDUSTRIAL COMPANIES AROUND THE THE BEST TECHNOLOGIES FOR WORLD WITH INNOVATIVE SOLUTIONS ENHANCING THE THE INDUSTRIES OF THE FUTURE PERFORMANCE OF THEIR PRODUCTS AND SERVICES Mersen – January 2018 2

O UR STRATEGIC PILLARS Improve performance thanks to the new organization Improve efficiency Increase sales Mersen – January 2018 3

A N ORGANIZATION ALIGNED WITH OUR MARKETS AND DELIVERING SYNERGIES Common end- A common DNA R&D Shared operations markets (small series, niche (cross fertilisation, market leader, cash (resources allocation) (leverage Group know- central coordination) generation) how and resources) Anticorrosion equipment A DVANCED M ATERIALS Electrical Protection E LECTRICAL P OWER & Control Graphite specialties Solutions for Power Management Power transfer technologies INDUSTRIAL SYNERGIES MARKETING & SALES SYNERGIES Capex R&D Operations Customers Norms Brands Mersen – January 2018 4

S TRONG LEADERSHIP POSITIONS WITH C . 15-30% MARKET SHARE IN ALL ACTIVITIES A DVANCED M ATERIALS E LECTRICAL P OWER ANTICORROSION EQUIPMENT ELECTRICAL PROTECTION & CONTROL #1-2 WW POSITION (Graphite products) #2 WW POSITION (Industrial fuses) Competition: SGL Carbon (Ger) #1 WW POSITION (Current collection for railways) Competition: Eaton (US), Littelfuse (US), private GRAPHITE SPECIALTIES German players #1-2 WW POSITION (High temperature application) Competition: Toyo Tanso (Jp), Tokai Carbon SOLUTIONS FOR POWER MANAGEMENT (Jp), SGL Carbon (Ger), Schunk (Ger) #1 WW POSITION (Passive components for power POWER TRANSFER TECHNOLOGIES electronics) #1-2 WW POSITION (Brushes for industrial Competition: Eaton (US), Rogers (US), Methode (US), Lytron (US) motors) Competition: Morgan AM (UK), Schunk (Ger) Mersen – January 2018 5

A STRONG CUSTOMER ’ S PORTFOLIO  C LIENT PROXIMITY ( >65% “ ON - DEMAND ” PRODUCT )  R EGULAR AFTER MARKET REPLACEMENT (~65% OF SALES )  H IGH BARRIER OF ENTRY  High quality  Homologation & standards  Worldwide presence  L ARGEST CUSTOMER : < 4% OF SALES  10 LARGEST CUSTOMERS : < 13% OF SALES Non exhaustive List Mersen – January 2018 6

P OSITIVE LONG - TERM MARKET TRENDS E XPANDING MARKETS 19% ENERGY Renewable energies PROCESS INDUSTRIES 35% I NDUSTRIAL GDP ELECTRONICS € 764m 19% Semi conductors Power electronics 10% 17% TRANSPORTATION CHEMICALS Aeronautics C YCLICAL Electric vehicles FY 2016 Sales in € million Mersen – January 2018 7

A GLOBAL FOOTPRINT , SOURCE OF STABILITY AND OPPORTUNITIES WITH A STRONG PART IN A SIA E UROPE 34% 2,200 people 9% F RANCE 9% G ERMANY 3% U NITED K INGDOM 3% S PAIN N ORTH A MERICA 36% 31% U NITED S TATES 1,850 people A SIA -P ACIFIC 25%* 10 % C HINA 4 % J APAN 4 % S OUTH K OREA 3 % I NDIA 1,600 people * 17% EN 2007 R EST OF THE WORLD 5% 500 PEOPLE Sales as a % of 2016 figures Number of employees at December 31, 2016 Mersen – January 2018 8

E FFICIENT R&D SET UP TO MAXIMISE INNOVATION POTENTIAL  N EW POSITION OF CTO (2016) TO FASTER DECISION MAKING AND INCREASE EFFICIENCY  S EGMENT ’ S CTO S TO DEVELOP SYNERGIES BETWEEN BU S Exemples of innovation Disruptive innovation Hybrid switch and Optical mirrors DC fuse for EVs for laser technologies Adjacent innovation Flexible and rigid felt UL-standard surge insulation for protection semiconductor solutions for the electronics US market Mersen – January 2018 9

A LEANER AND MORE COMPETITIVE STRUCTURE  C OMPETITIVENESS PLAN  O PERATIONAL EXCELLENCE  Reorganization of the manufacturing  A new position at management level (2016) footprint serving chemicals  All sites involved, with a special focus on  Streamlining of product lines in EP safety and lean culture (quality, inventory turns, delivery time) for LT benefits  Reducing fixed costs Competitiveness plan 2017 2018 Total 2016 H1 2017 announced* announced* announced* Cost savings ( € m) 16.5 8 [13-16] [11-13] [43-45] Impact on the P&L (22) (3) (10) (32) before tax ( € m) Impact on Cash- (5) (8) (25) (5) (35) flow** ( € m) * announce in March 2017 ** including capex Mersen – January 2018 10

S TRONG CASH - FLOW GENERATION FCF yield in %: Free cash-flow/ Sales 7.4% 7.3% 55 55 Free cash flow in € m: Operational Cash-flow - Capex  F ORTHCOMING DRIVERS :  Operational excellence 2.7%  Lean culture 17 Average Average Average 2004-2008 2009-2013 (1) 2013-2016 (1) (2) (1) Continuous activity (2) excl. Exceptional items Mersen – January 2018 11

A RECENT TURN - AROUND … … THANKS TO THE EFFECTIVENESS OF MEASURES IMPLEMENTED FOR 2 YEARS ( ORGANIZATIONAL STRUCTURE , COMPETITIVENESS PLANS ) N ET DEBT IN € M C URRENT OPERATING MARGIN O RGANIC GROWTH IN SALES Net debt /EBITDA 10 236 10 250 FY guidance FY guidance 7%-8% 8 [9% - 9,2%] 203 9,5 197 200 +4.9% 6 8.9% 2.4 9 2.1 4 1.8 8.8% 8,5 150 -0.2% 2 7.8% 8 0 7.5% 100 7.5% -2.2% 7,5 -2 50 7 -4 2015 2016 H1 2017 2015 2016 H1 2017 2015 2016 H1 2017 Reported figures Restated figures Mersen – January 2018 12

A SOUND ACTIVITY IN BOTH SEGMENTS IN H1 2017 A DVANCED MATERIALS +6% E LECTRICAL POWER +3%  Growth in electronics, aeronautics,  Growth in Power Electronics and chemicals and process industries Process Industries (notably, strong contribution of glass forging for smartphones)  Electrical distribution improvement € 412m at the end of the semester but still  Renewable energies stable lower than last year +5% Sales H1 2017 in € million – organic growth vs H1 2016 Mersen – January 2018 13

S TRONG INCREASE IN PROFITABILITY IN H1 2017 in € m and % of sales In % 37 EBITDA margin H1 2016* 12.7% 30 Current Operating margin H1 2016* 7.7% Volume /mix effects +0.8% 8.9% Price impact -0.4% 7.7% Competitiveness +1.9% Inflation -1.1% Current Operating margin H1 2017 8.9% H1 2016* H1 2017 EBITDA margin H1 2017 13.6% * Restated (cf. press release) Mersen – January 2018 14

S TRONG VOLUME IMPACT ON ADVANCED MATERIALS SEGMENT IN H1 2017  E LECTRICAL P OWER  A DVANCED M ATERIALS IN € M AND % OF SALES IN € M AND % OF SALES 25 19 20 16 Current Operating Margin 11.1% 11.5% 10.3% 7.9% H1 2016* H1 2017 H1 2016* H1 2017  P OSITIVE VOLUME EFFECT  U NFAVORABLE MIX EFFECTS  U NFAVORABLE GRAPHITE PRICE  L IMITED GAIN FROM EFFECTS COMPETITIVENESS PLANS  G AIN FROM COMPETITIVENESS PLANS * Restated (cf. press release) Mersen – January 2018 15

D ECREASE IN NET DEBT IN H1 2017 1.8 Net Debt/EBITDA 42% Net Debt/Equity 203 IN € M 5 -7 -16 12 197 Dec. 2016 Cash-flow from Capex Financial interests Fx and other Jun-17 operations * Operating cash flow after capital expenditure before non-recurring items/sales Mersen – January 2018 16

A SOLID BALANCE SHEET WITH A RECENT EXTENSION OF THE DEBT MATURITY C ONFIRMED LINES IN € M AT J UNE 30, 2017, AFTER REFINANCING * Syndicated loan China USPP Syndicated loan multi-currency Schuldschein 200* 44 60 37 1 3 10 16 2017 2018 2019 2020 2021 2022 2023 After refinancing* Maturity > 5 years Unused confirmed lines after commercial paper coverage: € 170m *July 18, 2017 Mersen – January 2018 17

T HIRD QUARTER 2017  S ALES  FY G UIDANCE

A QUARTER MARKED BY A STRONG GROWTH IN A SIA AND AN IMPROVEMENT IN N ORTH A MERICA € 64 M EUROPE +2% Good performance in aeronautics and space N ORTH A MERICA € 69 M +7% Growth in electronics, oil&gas and process industries Dynamism in electrical distribution A SIA - PACIFIC € 58 M +24% Growth in renewable energies, electronics, and process industries R EST OF THE W ORLD € 8 M Q3 2017: € 198m -3% +9% organic growth Mersen – January 2018 19

2017: ANNUAL ORGANIC GROWTH AND PROFITABILITY GUIDANCE RAISED AGAIN  S TRONG PERFORMANCE IN THE FIRST 9 MONTHS  F AVORABLE ECONOMIC ENVIRONMENT  P ROMISING OUTLOOK FOR OUR GROWTH MARKETS  O N - GOING COMPETITIVENESS PLANS D ISCLOSED IN M ARCH R ELEASED ON R ELEASED ON 2017 J ULY 19, 2017 O CTOBER 25, 2017 O RGANIC GROWTH IN [0-2%] [3-5%] [7-8%] SALES C URRENT OPERATING [50-100 POINTS ] [80-130 POINTS ] [150-170 POINTS ] MARGIN GROWTH 2016 RESTATED * : 7.5% * Disposal of high-power switch business Mersen – January 2018 20

ESG  C ORPORATE G OVERNANCE  C ORPORATE SOCIAL RESPONSIBILITIES

M ERSEN ’ S ESG PERFORMANCE  R ATED AS “A DVANCED ” IN 2016 BY E THI F INANCE , INDEPENDENT AGENCY SPECIALIZED IN ESG ASSESSMENT , WITH AN OVERALL SCORE OF 64%.  S IGNATORY OF THE UN G LOBAL C OMPACT SINCE 2009  P ART OF GAIA I NDEX Mersen – January 2018 22

S HAREHOLDING STRUCTURE (J UNE 2017) I NDIVIDUAL S HAREHOLDERS Main shareholders 13% As of Dec. 2017 F RENCH A RDIAN 17.7 % I NSTITUTIONAL I NSTITUTIONAL S HAREHOLDERS S HAREHOLDERS B PIFRANCE OUTSIDE F RANCE I NVESTISSEMENT 15.5 % 30% 57% S OFINA 8.2 % Mersen – January 2018 23