Kongsberg Automotive Second quarter 2014 | July 11, 2014 1 1 - PowerPoint PPT Presentation

Kongsberg Automotive Second quarter 2014 | July 11, 2014 1 1

Group highlights for Q2 2014 Revenues of EUR 254.4 million in line with guiding ► REVENUES Market outlook for Q3 indicates revenue level of EUR 230 million ► EBIT was EUR 17.8 million in Q2, in line with Q2 2013 ► Operating profit in line with last year, despite 3% lower revenues, due to ► FINANCIALS operational improvements Financial gearing ratio reduced to 2.2 X NIBD/EBITDA ► Europe: Flat Q2 in Light vehicle segment but bright spot for the premium ► brands MARKETS ► North America: Steady growth in Commercial vehicle segment 2

New business wins ▸ New business wins LTM EUR 46 million per annum of new business booked EUR Million in Q2 2014 200 ▸ After a period of strong operational focus, the 180 attention needs to move more towards growth 160 ▸ Increased focus on BRIC and innovations are key 46 140 levers to strengthen our growth momentum 120 100 80 60 119 40 20 0 Q3 2013 to Q1 2014 Q2 2014 3 3

Hans Peter Havdal, President & CEO OPERATIONAL REVIEW 4 4

Q2 2014: Business areas overview Interior Driveline Fluid Transfer Driver Control 29% of revenues 27% of revenues 19% of revenues 25% of revenues MARKET MARKET MARKET MARKET Safety and comfort related Gear shift systems for light Fluid handling systems Driver control systems, cabin products for vehicle duty vehicles for commercial vehicles suspension and vehicle dynamics interiors and passenger cars for commercial vehicles 13.3% 12% 12% EBIT-margin 9.8% 8.9% 8.3% 3.3% 1.1% 2Q13 2Q14 2Q13 2Q14 2Q13 2Q14 2Q13 2Q14 5 5

COMMERICAL VEHICLES Highlights and performance ▸ O perational update – Increased R&D effort for Driver Control on developing Automated Manual Transmission (AMT) technology which is growing in mature markets – Increased R&D spend will continue – Industry still consolidates further with Volkswagen increasing ownership in Scania to 99.6% in Q2 – KA has strong foothold in Scania – Opportunities for growth at VW/MAN 6 6

PASSENGER CARS Highlights and performance ▸ O perational update – Driveline continues to further improve margins & increase focus on profitable growth – New program launch for Chrysler for automatic shifters • Volume 270.000 units annually from Nuevo Laredo (Mexico) facility – Interior increasing market momentum by demonstrating new innovations • Successful Tech Day with BMW in May 7 7

KA in the Premium automotive segment IMPORTANT BUSINESS WINS IN Q2 8 8

Premium automotive market & KA ▸ Booked EUR 142 million in Q2 contract wins in premium segment ▸ Importance of premium segment for KA – Continuous drive for innovation and quality – High content & value per car – Leveraging global footprint – Premium features migrate to medium segment with higher volumes Premium segment market characteristics: Innovative solutions and technologies in comfort, safety, fuel savings & sustainability 9 9

Premium segment contract wins across BAs Driveline Interior Fluid Transfer Shift by wire for AT plus MT Seat comfort systems Air suspension lines shifter Luxury SUV maker Major European OEM European premium car maker EUR 8 million over 7 years 7year, EUR 119 million contract 7 year, EUR 15.4 million contract SOP: 2016 SOP: Q4 2015 SOP: Q1 2016 10 10

Trond Stabekk EVP & CFO FINANCIAL UPDATE 11 11

Revenue and EBIT Revenues EBIT and EBIT margin EUR million EUR million and percent 7.1% 7.0% 6.7% 5.8% 262 3.5% 256 254 242 235 18.1 17.7 17.8 13.6 8.4 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 12

Segment financials 2 nd quarter Revenues and EBITDA margin EUR million and percent Interior Driveline Driver Control Fluid Revenues Revenues Revenues Revenues 78 78 78 74 72 72 71 71 69 69 67 67 67 60 58 50 48 48 49 47 EBIT EBIT EBIT EBIT 10.6% 12.0% 13.1% 12.9% 13.2% 13.3% 9.8% 12.0% 8.3% 9.8% 7.3% 7.4% 8.9% 3.3% 8.4% 1.6% 2.6% 1.1% 0.9% -0.6% 5.8 6.2 6.2 6.6 6.5 6.5 5.2 5.4 8.3 7.6 0.8 1.0 2.3 8.7 4.8 1.6 6.6 5.9 0.6 -0.4 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2013 2013 2013 2014 2014 2013 2013 2013 2014 2014 2013 2013 2013 2014 2014 2013 2013 2013 2014 2014 13

Consolidated income statement Twelve months ending EUR Million 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 REVENUE run rate in line with ► Revenues 985.8 981.5 990.9 994.5 987.0 OPEX -898.3 -884.5 -893.8 -894.0 -887.1 full year guiding EBITDA 87.5 97.0 97.1 100.5 99.9 EBITDA (%) 8.9% 9.9% 9.8% 10.1% 10.1% D&A -45.2 -44.6 -43.9 -42.7 -41.9 EBIT run rate kept despite ► EBIT 42.3 52.5 53.2 57.8 57.9 lower revenues EBIT (%) 4.3% 5.3% 5.4% 5.8% 5.9% Financial items -29.6 -35.3 -40.4 -32.7 -29.4 Profit before taxes 12.7 17.2 12.8 25.1 28.5 Improved NET PROFIT Tax -6.9 -8.1 -6.2 -9.4 -12.3 ► Net profit 5.8 9.1 6.6 15.7 16.3 14

Financial KPIs ROCE (Ltm) Revenues (Ltm) Percent EUR million 995 991 987 986 982 12.1% 11.8% 10.9% 10.3% 8.1% Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Avg. Capital Employed and turnover (Ltm) EBIT and EBIT margin (Ltm) 75.3 EUR million and Times EUR million and percent 2.06 2.04 2.03 5.8% 5.9% 5.3% 5.4% 1.93 1.90 4.3% 57.8 57.9 520 53.2 52.5 508 42.3 490 486 480 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 15

Financial items Net financial items EUR million Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 ▸ Interest expenses reduced 1.5 – Lower debt level -3.0 -2.7 -3.0 -3.3 – Lower interest margin -1.4 -4.5 -4.4 -3.3 -4.8 -1.4 -0.8 -5.2 -2.6 -1.8 Other items Currency effects Net interest Net financial items 16

Cash flow and facility development Available funds Cash Unutilized facility EUR Million Cash flow Facility Other 160 (0.4) (7.7) 28.0 140 (3.8) (16.8) 0.2 16.8 128.0 120 111.6 106.3 106.5 99.2 100 82.6 34.7 80 52.1 65.6 75.3 64.2 61.8 60 40 64.6 54.4 46.0 45.4 42.1 20 0 Q2 2013 Q3 2013 Q4 2013 Q1 2014 EBITDA Change in total Investments Net financial Change in Change in Other Q2 2014 NWC, and taxes expenses drawn amount unutilized paid incl. overdraft facility 17

Financial ratios NIBD Equity EUR million EUR million 275 265 206.0 241 239 198.6 223 193.4 189.6 189.4 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Equity ratio NIBD/EBITDA Percent Times 30.1% 3.1 28.7% 2.7 27.6% 27.4% 2.5 2.4 2.2 25.2% Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 18

Philippe Toth, VP Investor Relations and M&A MARKET UPDATE 19 19

Light vehicle production – Q2 & 2014 forecast 0.3% Light vehicle production growth: revised world estimates (ch Y/Y) Europe: Strong premium export and slight return of 7% Western European demand (sales up 2% after 6 years of 6% decline), -5% in Russia 5% 4% -0.4% 3% North America: On level with last year, but strong 2% selling rate will ensure growth for 2014 1% 0% 2014Q1 2014Q2 2014Q3 2014Q4 2014 2015 2016 2017 11% World new (Jul) World old (Apr) China: Continue strong positive growth, even as GDP growth is leveling off to 7-8% 2.1% Total production: Q2-14 2.1% higher than Q2-13, mainly driven by growth in China. Total 2014 production expected to be around 87.8 million Light Duty Vehicles. Source: LMC Automotive – July 2014 20

Commercial vehicle production – Q2 & 2014 forecast -5.6% Medium and heavy duty truck production growth: revised Europe: Decline in Russia and Turkey. Slightly world estimates (ch Y/Y) better in western Europe, but market expected still to be weak in 2014 10% 8% 5.4% 6% North America: Continue growth from Q1, and 4% estimated above 11% growth for 2014 2% 0% 2.3% -2% China: Slowing down relative to previous -4% high growth -6% -8% -19.9% 2014Q1 2014Q2 2014Q3 2014Q4 2014 2015 2016 2017 South America: Highly volatile market due to political uncertainty leads to weak World new (Jul) World old (Apr) economical outlook -0.3% World Wide: Growth in North America, with decline in South America and Europe and small growth in China, sets 2014 on a path to a level just above 2013. Global production in 2014 expected to be 2.82 million vehicles (+0.6%). Source: LMC Automotive – July 2014 21

Sales by region Sales in % by region Expected 2014 growth Sales in MEUR by region* 300 7 10 54% 250 21 2% - 8.4% 20 200 Europe 96 92 ROW Asia 150 265* 262 NA 36% 3% 11.5% 100 Europe 141 142 50 North America 0 2Q13 2Q14 5.6% 2.1% 8% * Adjusted for currency effect Source: LMC Automotive – July 2014 Asia 2% ROW 22 22

Hans Peter Havdal SUMMARY & OUTLOOK 23 23

Summary and outlook ▸ Operating profit in line with last year, despite 3% Company outlook for Q3 2014 EUR Million lower revenues, due to operational improvements 300 250 ▸ Markets: North America & China remain positive while European outlook is still uncertain 200 150 ▸ KA expects Q3 2014 revenues of approx. EUR 235 230 100 230 million 50 0 Q3-2013 Q3-2014 24