Wacker Neuson Group May 2019 Agenda 01 Overview 02 Financials - - PowerPoint PPT Presentation

Wacker Neuson Group

May 2019

Agenda

2 Wacker Neuson SE, May 2019

Overview

01

Financials Q1/19

02

Outlook

03

Product range to meet the full spectrum of customer needs

3

Light Equipment Compact Equipment

1 FY 2018. 2 In selected countries.

Concrete technology Compaction Demolition Power & Lighting Pumps Heating Excavators Dumpers

Telehandlers Wheel loaders

Skid Steers Backhoe-loaders

Academy Used machines2 Repair2 & Maintenance2 Financing Rental service2 E-Store2 Genuine parts Telematics

Services

53% of sales1 27% of sales1 20% of sales1

Wacker Neuson SE, May 2019 Concrete solutions

Target industries besides construction

4

Markets Light equipment Compact equipment Agriculture Renovation/rehabilitation Development Infrastructure (road and highway construction, bridge construction) Gardening and landscaping Handling logistics/port logistics Residential construction Demolition Maintenance/repairs Industry & Recycling Underground construction Oil & gas/energy industry Events Municipalities Target group oriented sales:

Light equipment 27% Compact equipment 53% Services 20%

Revenue split (FY 2018, as %)

Business segments Most industries demand both light an compact equipment

Wacker Neuson SE, May 2019

Our brands and target groups

5

Construction, gardening/landscaping, energy sector etc. Agriculture, horse breeders, tree nurseries etc.

Wacker Neuson SE, May 2019

Global footprint

6

Sales by region Core markets: EMENA & NAM, further internationalization ongoing Europe 73% Americas 23% Asia-Pacific 4%

Revenue split (FY 2018)

Wacker Neuson SE, May 2019

5 year comparison

7

Revenue and EBIT margin 2014-2018

Wacker Neuson SE, May 2019

1,284 1,375 1,361 1,534 1,707

10.2% 7.4% 6.5% 8.6% 9.4%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 500 1,000 1,500 2,000 2014 2015 2016 2017 2018

CAGR +7.4%

[€ m]

Agenda

8 Wacker Neuson SE, May 2019

Overview

01

Financials Q1/19

02

Outlook

03

Key figures

9

1 Net working capital/annualized revenue for the quarter. 2 Days inventory outstanding: (inventory/annualized cost of sales for the quarter)*365.

NWC ratio1: 45.8%

(+6.5PP yoy)

DIO2: 179 days

(+26 days yoy)

Equity ratio: 57.7%

(-7.8PP yoy)

March 31, 2019

Revenue yoy

+17%

EBIT yoy

+31%

• Op. CF

€ -116m

FCF

€ -143m

(margin: 6.9%)

Q1/19

(€ 435m) (Q1/18: € -45m) (Q1/18: € -41m)

Wacker Neuson SE, May 2019

339 425 379 392 371 455 416 466 435

4.2% 11.0% 10.6% 7.8% 6.2% 12.3% 10.1% 8.4% 6.9%

0% 5% 10% 15% 20% 100 200 300 400 500 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Revenue and earnings

10

+17% Q1/19: Accelerated revenue growth continues from Q4/18 Income statement (excerpt) Q1/19: Comments Revenue +17.3% yoy (adj. for FX effects: +15.6%)

▪ Double-digit growth in all reporting regions ▪ Compact equipment for the agricultural sector grew at a significantly higher-than-average rate (+42% yoy)

Gross profit +15.3% yoy (gross profit margin -0.5PP)

▪ Restructuring at the plant in Wisconsin, USA, continued as planned ▪ Increased costs in production and logistics caused by changes in the product mix, additional shifts required to manage increased production volumes and handle unfinished machines

EBIT +31.3% yoy (EBIT margin: +0.7PP)

▪ Operating costs increased at a disproportionately low rate despite a moderate increase in headcount, wage increases and costs for Bauma trade show ▪ Operating costs as a share of revenue fell by 1.2PP on the prior year

Earnings per share +42.9% yoy ▪

The financial result was EUR 2.1m up on the previous year: Positive FX effects (EUR +2.9m yoy) in particular due to the appreciation of currencies in several emerging economies; interest income slightly below prior year (EUR -0.8m yoy), mostly due to the initial application of IFRS 16

▪

The tax rate increased slightly to 30.4% (Q1/18: 29.1%)

Revenue [€ m] EBIT margin

€ million Q1/19 Q1/18 Δ Revenue 434.6 370.5 17.3% Gross profit 110.9 96.2 15.3%

as a % of revenue 25.5% 26.0%

• 0.5PP

SG&A incl. other income/expenses

• 80.7
• 73.2

10.2% as a % of revenue

• 18.6%
• 19.8%

1.2PP EBIT 30.2 23.0 31.3% as a % of revenue 6.9% 6.2% 0.7PP Profit for the period 20.8 14.6 42.5% EPS (in €) 0.30 0.21 42.9%

Wacker Neuson SE, May 2019

Q1/19: Compact equipment driving growth

434.6 13.4 104.5 316.7 Total Q1/19 Asia-Pacific Americas Europe

Business development by region and business segment

11

Q1/19: Double-digit growth in all regions Revenue Europe +18.3% yoy (adj. for FX effects: +18.4%)

▪ Strong demand for compact and light equipment in all regions ▪ Rapid growth in the UK (significant gains with dumpers and excavators), above-average growth in France, Poland and Austria with increased market shares ▪ Revenue generated with Weidemann- and Kramer-brand compact equipment for the agricultural sector +42% yoy

Revenue Americas +14.0% yoy (adj. for FX effects: +6.7%)

▪ Worksite technology (especially generators and light towers) and compact equipment were key growth drivers ▪ Growth dampened by pre-buy effects in Q4/18 related to changes in emissions legislation in Canada ▪ Positive developments in South America, uncertainties remain ▪ Earnings bolstered by improved currency situation, restructuring in the US continued as planned

Revenue Asia-Pacific +21.8% yoy (adj. for FX effects: +20.9%)

▪ Production in China ramped up on schedule, positive development with light equipment and excavators ▪ First mini and compact excavators delivered to John Deere

73% 24% 3% 100% +18% +14% +22% +17% share yoy 46.1 2.5

• 1.7

30.2 EBIT1

Q1/19: Comments

Revenue [€ m]

434.6 82.3 245.8 109.8 Total Q1/19 Services Compact equipment Light equipment 25% 56% 19% 100% +6% +25% +12% +17% share yoy

1 EBIT for regions before consolidation. 2 Revenue by business segment before cash discounts.

Revenue [€ m]2

Wacker Neuson SE, May 2019

Rise in inventories and receivables drive up net working capital

12

Inventories Trade payables Trade receivables

▪ Seasonal rise in inventories, further increase in pre-buy engines ▪ Rise in trade receivables due to the increased volume of business and expansion of the dealer network in North America ▪ Rise in trade payables due to the increased volume of business and an increase in inventory compared with the prior-year quarter. → Significant, temporary rise in net working capital (see the following slide)

1 Days inventory outstanding = (inventories/(cost of sales*4))*365 days; 2 Days sales outstanding =

(receivables/(revenue*4))*365 days; 3 Days payables outstanding = (payables/(cost of sales*4))*365 days.

Comment

Trade payables [€ m] Inventories [€ m] 462 428 439 434 459 462 500 553 633

171 129 150 141 153 130 151 144 179

100 200 300 400 100 200 300 400 500 600 700 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 DIO1 [days] 241 272 249 235 273 320 304 303 371

65 58 60 55 67 64 67 59 78

50 100 150 200 100 200 300 400 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 113 114 120 134 149 163 167 213 208

42 34 41 43 50 46 50 56 59

100 200 300 400 100 200 300 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Trade receivables [€ m] DPO3 [days] DSO2 [days]

Wacker Neuson SE, May 2019

13

Net working capital Free cash flow Cash flow from operating activities

▪ Increase in net working capital due to a temporary rise in inventory and increased trade receivables (see previous slide) ▪ Financing programs used to establish a network of anchor dealers in North America (rise in other assets) ▪ Increased investments in growth ▪ Major yet temporary impact on free cash flow, normalization of inventory levels and reduction in trade receivables expected over the coming months

• 19

33 61 63

• 41

6 10 8

• 116
• 150
• 100
• 50

50 100 150 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Comment

• 26

28 51 46

• 45

57

• 3
• 12
• 143
• 160
• 120
• 80
• 40

40 80 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Free cash flow [€ m] Cash flow from operating activities [€ m] Net working capital [€ m] 590 586 568 536 583 620 638 644 797

44% 34% 38% 34% 39% 34% 38% 35% 46%

0% 20% 40% 60% 80% 100% 200 400 600 800 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Net working capital [as a % of sales]

Cash flow impacted by a rise in net working capital

Wacker Neuson SE, May 2019

1,102 1,083 1,103 1,115 1,122 1,170 1,200 1,221 1,241

67% 65% 67% 69% 65% 65% 65% 64% 58%

0% 20% 40% 60% 80% 100% 200 400 600 800 1,000 1,200 1,400 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 237 245 195 148 193 188 193 205 358

22% 23% 18% 13% 17% 16% 16% 17% 29%

0% 10% 20% 30% 40% 50% 60% 70% 100 200 300 400 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Increased gearing in balance sheet

14

▪ Temporary reduction in equity ratio due to increased debt and a structural reduction of around 2PP due to the first-time application of IFRS 16 ▪ Marked rise in net financial debt, gearing1 increased to 29% ▪ May 2019: Promissory note (Schuldschein) successfully issued with attractive interest rates and terms of five and seven years to secure long-term funding for the Group’s accelerated growth

1.9 0.9 0.8 0.7 1.2 0.6 0.8 0.8 1.6 0.0 0.5 1.0 1.5 2.0 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Net financial debt [€ m] Equity [€ m]

Net financial debt and gearing1 Equity and equity ratio Net financial debt/EBITDA2

1 Net financial debt/equity. 2 Net financial debt/annualized EBITDA for the quarter.

Gearing1 Equity ratio Net financial debt/ EBITDA2 [x]

Comment

Wacker Neuson SE, May 2019

50 75 100 125

Wacker Neuson SDAX DAX Peergroup

Share Development

15

The share in 2018/191 Key figures per share Special dividend proposed to AGM

1 As at May 1, 2019 2 Peergroup: Ashtead, Atlas Copco, Bauer, Caterpillar, Cramo, Deutz, DoosanBobcat, Haulotte,

Husqvarna, John Deere, Komatsu, Manitou, Palfinger, Ramirent, Terex, United Rentals, Volvo. 3 As at May 1, 2019.

1.30 0.94 0.81 1.25 2.06 0.50 0.50 0.50 0.60 38% 53% 62% 48% 43%

• 100%
• 80%
• 60%
• 40%
• 20%

0% 20% 40% 60% 80% 100% 0.00 0.50 1.00 1.50 2.00 2.50

2014 2015 2016 2017 2018

EPS in € Dividende je Aktie in € (2018: Vorschlag) Ausschüttungsquote

Family 63% Free float 37% in € Q1/19 Q1/18 Earnings per share 0.30 0.21 Book value per share 17.69 16.00 Share price end of period 21.20 28.14 Market capitalization (€ m) 1,487.0 1,973.7

(Total shares: 70,140,000)

Coverage3 Shareholder structure

Bank TP (€) Recom. Date Hauck & Aufhäuser 36.50 Buy Apr 29, 2019 Berenberg 27.00 Buy Jan 20, 2019 Warburg 28.00 Buy Apr 10, 2019 MainFirst 28.00 Buy Apr 23, 2018 Commerzbank 25.80 Hold Apr 29, 2019 Metzler 25.00 Buy Mar 14, 2019 Bankhaus Lampe 23.00 Buy May 03, 2019 Pareto 21.30 Hold Apr 10, 2019 Kepler Cheuvreux 21.00 Hold Mar 19, 2019

0.60 Special dividend 0.50

Dividend per share (proposed to AGM) Payout ratio

%

• 45%

2

+48%

1.10

Wacker Neuson SE, May 2019

Agenda

16 Wacker Neuson SE, May 2019

Overview

01

Financials Q1/19

02

Outlook

03

17

▪ Extension of contracted dealer network for compact and light equipment ▪ Pro-active relationship management with key account rental customers and construction companies ▪ Focus on diversification of sales channels and industries ▪ Light equipment established in new retail channels ▪ North American market for skid steers accounts for ~70% of world market ▪ Essential product to be attractive for dealers and rental companies ▪ Large potential for further compact equipment sales

81,000 89,000 91,000 25,000 50,000 75,000 100,000 2016 2017 2020e

Skid Steer market North America1 2016 – 2020e (units)

Roadshow Truck, Franklin Equipment.

Wacker Neuson SE, May 2019

Relocation of skid steer production to the US pays off

Skid steer as key product for North American market Development of contracted dealers in North America

1 Source: CECE, Off-Highway, 2018.

36,800 50,000 50,000 20,000 40,000 60,000 2017 2018e 2022e

18

New plant located in Pinghu, 30 km from Shanghai city border.

▪ Mini and compact excavators for Asia-Pacific, production of the first model (1.7 tons) started in Q1/18, production of larger models (5-7 tons) started in Q4/18 ▪ OEM cooperation with John Deere will help to improve capacity utilization (cooperation covers machines in the range of 1.7 to 7.5 tons) ▪ Building on local/regional presence  Demand for repair and maintenance

• f infrastructure is growing, especially in megacities

Wacker Neuson SE, May 2019

Setting the base for further growth in Asia

Successful start of production in Pinghu (China)) Mini excavator market China 2017 – 2022e (units)1

Excavator: EZ17.

1 Source: Off-Highway, August 2018.

Strategic alliances and partnerships leverage our sales

19

1 Not in Japan. 2 Commonwealth of Independent States. 3 Kramer “green line” only. 4 WN = Wacker Neuson.

Wacker Neuson produces for Caterpillar1 Kramer3 distributes via JD‘s dealer network

Weidemann via ISEKI‘s network WN4 via MHE‘s network

HAMM produces for Wacker Neuson

OEM (global) OEM (global1) Distribution (EMENA & CIS2)

OEM (Latin America) Distribution (Japan) Distribution (ASEAN)

Core Markets: Europe & North America Latin America & Asia

Wacker Neuson SE, May 2019

Randon produces for WN4 WN4 produces for John Deere

OEM (Asia-Pacific)

Strategic alliance with John Deere in EMENA and CIS1

20

1 Commonwealth of Independent States. 2 Revenues of FY 2017 in € bn, agricultural sectors only. 3 FY ending October 31. 4 FY ending September 30. Source: Annual reports.

Wacker Neuson SE, May 2019

John Deere: Market leader within agricultural machinery2

9 small and compact wheel loaders 9 telehandlers 4 tele wheel loaders

Start in EMENA & CIS1 (Region 2)

1.3 3.8 7.4 9.9 11.3 17.9 SAME Deutz-Fahr Claas AGCO CNH Industrial Kubota John Deere

4 3

[€ bn]

Outlook for 2019

21

Revenue and earnings guidance for 2019 confirmed Business index for construction industry at a high level Business index for agricultural industry subdued

▪ CECE business index at a high level, slight decrease in order intake in April; expectations in the agricultural sector have cooled slightly according to CEMA, high inventory levels among dealers ▪ IMF lowered its economic outlook once again in April, macroeconomic uncertainties remain in place ▪ Situation in the supply chain has improved compared with 2018; however, the risk of delayed deliveries remains ▪ Revenue and earnings guidance for 2019 confirmed, with revenue expected in the upper half of the projected range ▪ Net working capital expressed as a percentage of revenue is expected to be slightly lower than the prior-year level

Source: CECE, April 2019 Source: CEMA, April 2019

2012 2013 2014 2015 2016 2017 2018 2019

1,707

9.4%

8% 9% 10% 11% 12% 500 1,000 1,500 2,000 2018 Guidance 2019 1,775-1,850

9.5-10.2%

+4-8%

Revenue [€ m] EBIT margin

Comments

Wacker Neuson SE, May 2019

Agenda

22 Wacker Neuson SE, May 2019

Appendix

23

“Strategy 2022” and mid-term targets

“Strategy 2022” Mid-term targets 2022

Wacker Neuson SE, May 2019

24 Source: Off-Highway Research, August 2017.

▪ Most major equipment markets are expected to see growth in the next years ▪ Europe and Americas main growth drivers  Europe: strong business in the construction and agricultural sector  North America: skid steer loader as door opener for other compact equipment ▪ Asia-Pacific: a key driver will be China

+11% +15%

1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000

2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e

Tailwind from global markets

Construction industry: 2017–2021 machinery sales +11% Development of agricultural sector in Germany

Wacker Neuson SE, May 2019

Europe India Japan North America Rest China

Milk price development in Germany

Source: ife Institut für Ernährungswirtschaft, Kiel, March 2019. Source: German Farmer’s association, December 2018. Price [Cent / kg milk] [Units]

 Fragmented market  Dominated by niche/specialized manufacturers  Not targeted by heavy equipment manufacturers  Quality rather than price  Significant barriers to market entry

Light equipment/ construction Market structures and dynamics

 Fragmented market with local manufacturers

Compact equipment/ agriculture

 Global competitors  Similar target groups to light equipment for the construction industry  Specialized manufacturers  Compact and heavy equipment providers

Compact equipment/ construction

 Ammann  Bomag  Husqvarna  Multiquip/Mikasa  Weber MT

Competitors

 JCB  Manitou  Schaeffer  Thaler Compact equipment  Atlas Weyhausen  Bobcat (Doosan)  Kubota  Manitou  Takeuchi  Yanmar Heavy equipment  Caterpillar  Hitachi  JCB  Komatsu  Liebherr  Volvo

25

Competitive landscape for Wacker Neuson Group

Wacker Neuson SE, May 2019

26 Wacker Neuson SE, May 2019

Challenges: New emission regulations for diesel engines

Engine emissions regulations – lack of harmonization driving costs and consuming resources

27

EZ17e DW15e DT10e AP1840e AP2560e AS60e AP1850e

Continuous expansion of zero emission portfolio

Wacker Neuson SE, May 2019

Financial Calendar and Contact

28

May 7, 2019 Publication of Q1 report 2019, analysts’ & investors’ conference call May 14, 2019 Roadshow, Zurich May 22, 2019 Berenberg USA Conference, New York May 29, 2019 Annual General Meeting, Munich June 12, 2019 Roadshow, London June 13, 2019 Roadshow, Hamburg July 1, 2019 Roadshow, Paris August 6, 2019 Publication of half-year report 2019; analysts’ & investors’ conference call November 7, 2019 Publication of Q3 report 2019; analysts’ & investors’ conference call

Contact Wacker Neuson SE

IR Contact: +49 - (0)89 - 354 02 - 427 ir@wackerneuson.com www.wackerneusongroup.com

Disclaimer

Cautionary note regarding forward-looking statements The information contained in this document has not been independently verified and no representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of this information or opinions contained herein. Certain statements contained in this document may be statements of future expectations and other forward looking statements that are based on management‘s current view and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. None of Wacker Neuson SE or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its content or otherwise arising in connection with this document. This document does not constitute an offer or invitation to purchase or subscribe for any securities and neither it nor any part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Wacker Neuson SE, May 2019