SMART STEEL Investor Presentation September 2018
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SMART STEEL
Investor Presentation
September 2018
1
Agenda
Business model and strategy
Market positioning
Overview financials
Business update by region
Truck and trailer market trends – what‘s next?
Company outlook
Smart Steel innovations driving the company 2020 plus
2
Business model and strategy 3
SAF-Holland Group Update: Zooming in on trailers and the Aftermarket
Total sales by region1 Europe‘s largest listed commercial vehicles supplier
with leading positions worldwide
13%
41 subsidiaries featuring 22 manufacturing sites on six
51% continents; 4,400 employees
Revenue by Trailer OEM business is approx. 63% of sales
region
36% Strong global presence
EMEA Americas One of the very few globally positioned CV suppliers
APAC/China 87% of sales in Europe and North America
Fast growing APAC/China sales
Total sales by channel1 Almost 25% of sales originate from the resilient service
and aftermarket business, the key asset of the Group
23% Most comprehensive aftermarket spare parts and service
network worldwide featuring 10,000 partners in more
Revenue by than 80 countries
Channel
77%
The #1 network in Europe and North America: Key asset
for fleets and major barrier to market entry
OE business Generates generic growth based upon consistently
Aftermarket business increased OE product population in the field
4 1as of June 30, 2018
SAF-HOLLAND: Product portfolio
Trailer axles and Truck and bus Fifth wheels and Landing gear and
suspension systems suspensions kingpins disk breaks
SAF-HOLLAND offers a comprehensive product portfolio for one-stop shopping also covering the
aftermarket.
5
Key OEM customers: Trailer, truck and bus manufacturers
Almost every major truck, trailer and bus OEM is a SAF-HOLLAND customer.
6
End customers: The fleets
SAF-HOLLAND focuses on fleet operators (infrastructure, logistics, specialty, heavy duty, port, etc.).
7
Strategy 2020: Megatrends driving SAF-HOLLAND’s business
development are in full effect
Mega trends Changing
demographics Growing middle Expanding
Strategy 2020 class road network
until 2030
Significantly growing BRIC: Middle class Global road
world population growing by 150% to network:
(+1.1 bn people) 2 bn people +25% in the last
Aging societies Next 11: Middle decade
Increasing class expanding by 2/3 of which built in
urbanization and 116% China and India
concentration in cities Share of global Chinese road
middle class network has tripled
consumption in within a 10-year
China, India, ASEAN time span
region soaring from
30% to 55% until
2030
SAF-HOLLAND
People Trucks/ Roads
key drivers Money Goods
Trailers
8
Strategy 2020: SAF-HOLLAND major beneficiary of soaring “Amazon
E-conomy” driving demand for new trucks and trailers
Persistent growth of online shopping and “E-conomy” infrastructure consistently pushes demand for new
trucks and trailers long-term. Rising number of logistic centers and hubs has transport increase.
9
All regions are delivering on Strategy 2020
EMEA Americas APAC/China
Sales in € mn and adj. EBIT margin in % Sales in € mn and adj. EBIT margin in % Sales in € mn and adj. EBIT margin in %
800 20 600 20 200 20
611.8 500 449.4
568.8 429.4
600 540.0 15 15 15
400 402.3
11.1
10.3 9.7 97.7
400 8.3 10 300 10 100 10
7.4 71.3 70.9 7.6
200
200 5 3.7 5 7.5 3.0 5
100
0 0 0 0 0 0
2015 2016 2017 2015 2016 2017 2015 2016 2017
10 Market positioning 11
SAF-HOLLAND market-leading positions in North America and EMEA in
an oligopolistic set-up
EMEA North America North America
Market-leading
Trailer Fifth Trailer axles + Fifth position in NA in
axles Wheels suspensions Wheels fifth wheels
Already Nr. 2
SAF- SAF- position in trailer
1/2 Jost 1 Hendrickson
HOLLAND HOLLAND axles in NA
EMEA
SAF-
SAF- Leading in
1/2 BPW HOLLAND / 2 Jost
HOLLAND European trailer
V.ORLANDI
axles
Nr. 2 position in
3 Schmitz Fontaine 3 Meritor Fontaine EMEA fifth wheels
strengthened by
acquisition of Nr. 3
V.ORLANDI
12 Source: Roland Berger, own researchAmong the market leaders in China and India
India
China (Premium segment) India Acquisition of Indian
market leader in
Trailer axles Trailer axles trailer axle systems
York
#1 position in trailer
1 BPW 1 SAF-HOLLAND / YORK axles in the fastest
growing TA market
worldwide
2 SAF-HOLLAND 2 Tata Motors China
Organic growth
driven by new
Fuwa H.D. Trailers greenfield operation
3 3
in Yangzhou
Legislation boosting
the premium
segment in China
13 Source: Roland Berger, own researchGlobal presence reduces cyclical risks and provides for regional and
structural growth in new markets
Sales regions: 85% of sales in Europe and North America
22 production sites
Turkey
Italy Germany Duzce-Istanbul
Canada Bessenbach / Keilberg
Flero (Brescia)
Woodstock Bessenbach / Frauengrund
Nave
Singen United Arab Emirates
Dubai
China
Bautou
Xiamen
Qingdao
USA
Cincinnati Singapore
Dumas
Warrenton South
Warrenton North
Wylie
Australia
Melton
India
Brazil Pune
Alvorada
South Africa
Johannesburg Sriperambadur Taluk
14Unique selling model based upon direct access to broad end customer
base that specifies products
Customer feedback as regards technical
and market requirements
High brand
recognition:
Push Pull
Superior product
performance OEM End customer
combined with
aftermarket Sales Sales
excellence
Sales focusing on fleet managers
> 80% of purchasing decisions taken by the fleets
15The most comprehensive aftermarket spare parts and service network
worldwide provides for generic growth and consistent cash flows
The Key Asset: Approx. 10,000 spare parts dealers • “Razor and blade” business model generates growth
and service stations in more than 80 countries based on consistently increased OE product population
guarantee spare parts availability in the field
• # 1 Network in Europe and North America a key asset
for fleet customers and huge barrier to market entry
• Narrows down volatility from OEM industry cycles
• Add-on potential from expanding PDC network and
positioning of GoldLine/ Sauer Quality Parts brands
SAFH axle population in EMEA has more than tripled!
4,000,000
3,000,000
2,000,000
North America RoW 1,000,000
Europe
59% 36% 5%
0
2003 2005 2007 2009 2011 2013 2015 2017
16 Overview financials 17
Group sales and adj. EBIT by quarter
Sales in € mn Adj. EBIT in € mn. and adj. EBIT margin in %
400 35
14%
345.4
350 30
26.3 26.7 12%
300.3 294.9
300 287.3 25.1
273.7 277.1 274.2 25 23.8
259.9 255.8 252.6 22.7
21.6 10%
250 8.9% 20.9 20.3
9.6% 19.8
20 7.5% 18.5
8.7% 8%
200 8.7% 8.4% 7.8% 6.7% 6.9% 6.9%
15
6%
150
10 4%
100
50 5 2%
0 0 0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2016 2017 2018 2016 2017 2018
Q2 2018 top line grew by 15.0% (organically 11.7%) reaching a record level of € 345.4 mn (py: € 300.3
mn). Adj. EBIT margin impacted by US plant network realignment at 6.9% (py: 8.9%).
18Solid trend in organic sales growth continues in all regions
60%
52.9%
49.2%
50%
40% 38.3%
35.8%
30%
20%
15.1%
11.0%
10% 8.6% 8.1% 7.6%
5.1% 5.2% 6.4%
0%
EMEA Americas APAC/China
Q3 2017 Q4 2017 Q1 2018 Q2 2018 (versus py quarter)
SAFH product remain in high demand. Positive trend in organic sales growth has continued in all regions.
Noteworthy: in the APAC/China region strong growth on already solid py comparables.
19Strong FCF generation provides for growth and dividend payouts
Free cash flow after taxes, pre-dividend and pre-M&A Dividend payments
in € mn in € per share
80 0.60
70 67.7
0.44 0.45
60
0.40
0.40
50
0.32
40 35.0 0.27
30.8 29.7
30
0.20
20
11.3
10
0 0.00
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Sustained strong cash returns (cash conversion of 81%) providing for 2.5 to 3.2% dividend yields in recent
years; SAF-HOLLAND dividend policy in general is to distribute 40 to 50% of net income.
20Net debt at € 252.0 mn - equity ratio remains solid at 30.4%
Net debt Equity ratio
in € mn
Σ 105.5* Σ 252.0*
500
400
300 30.2% 30.4%
200 442.6
368.9
100
0
-116.9
-100
-200 -337.1
-300
-400
Dec 31, 2017 Jun 30, 2018 Dec 31, 2017 Jun 30, 2018
Cash Debt
* Net debt including cash and cash equivalents and other short-term investments sequentially increased to
€ 252.0 mn (Dec. 31,2017: € 105.5 mn). Cash and cash equivalents and other short-term investments
amounted to € 116.9 mn (Dec. 31, 2017: € 337.1 mn). The equity ratio as of June 30, 2018 was 30.4%.
21 Business update by region 22
EMEA: Solid organic OE and aftermarket sales growth provides for
operational leverage
Sales in € mn In 15 years axle population in EMEA has more than tripled
250 4,000,000
200 177.9 3,000,000
159.6
150
2,000,000
100
1,000,000
50
0 0
Q2 2017 Q2 2018 2003 2005 2007 2009 2011 2013 2015 2017
Q2 2018: sales growth of 11.5 %, organically
Adj. EBIT in € mn and margin in %
up +5.2% yoy, clearly outperforming the
25 16%
20.4 14%
slight growth market trend
20 17.3 12% Strong margin development despite steel
11.5% 10%
15
10.8% price burdens
8%
10 6% Moderately favorable macroeconomic
5
4% environment supports, fleet age still in line
2%
New products (Air Damping) and share gains
0 0%
Q2 2017 Q2 2018 Sustained aftermarket (AM) growth of 4.0%
23Update US: Successive operating improvements in NA burdened by
soaring steel price level
Washington Maine Add-on operating Adj. EBIT
Montana
North Vermont
New
costs in € mn margin in %
Dakota
Hampshire
Oregon
South
Minnesota
Wisconsin
Michigan
Rhode
6.3 10%
Idaho Dakota Island
Wyoming PennsylvaniaNew 6.0
Nebraska
Iowa Jersey 4.5% 6%
Illinois
Nevada IndianaOhio West 3.9
California
Utah
Colorado
Missouri Virginia
Virginia
4.0 4.0 0.6% 2%
Kentucky
Kansas North
Arkansas
Tennessee Carolina
South - 4.1% 2.3 -2%
Oklahoma
Arizona New
Mexico
Carolina
2.0 -0.7%
AlabamaGeorgia
Mississippi -6%
Texas
Louisiana Florida 0.0 -10%
SAF-HOLLAND receiving enlarged production locations Q3 2017 Q4 2017 Q1 2018 Q2 2018
Sales in € mn Soaring customer demand: order intake boom
200 coincides with strained industry supply chain
Despite progressing plant network realignment
123.0 measures, strong organic sales growth of
116.8
15.1% (reported sales up 5.3%)
100
Focus on long-term customer retention
Successive improvement of unsatisfying plant
efficiency rates and profitability enhancement
0 Process improvement and price increases
Q2 2017 Q2 2018
24Update China: New legislation prompts structural sales growth through
2019 and 2020
Sales in € mn New regulatory load limits for CVs and manda-
50
tory first fit of disk breaks and air suspensions for
44.5
hazardous goods transporters as of 2020 trigger
40
expansion of the premium segment in China
30
23.9 On an organic basis, sales Q2 2018 up 38.3%;
20 York acquisition contributes add. € 14 mn in sales
10 Focus on organic growth with implementation of
Yangzhou greenfield plant, ramp-up in Q2 2019
0
Q2 2017 Q2 2018 Consistent double-digit organic growth
25Post merger integration running well: York and V.ORLANDI
First-time consolidation as of May 1, 2018
Instantly Nr. 1 in trailer axles in India
Strong brand
Strong position in adjacent Asian markets
Realization of synergies in sourcing and
manufacturing plus intensive expansion plan
for the Aftermarket to grow margin
India highest growth trailer market worldwide
Further expansion of capacities
First-time consolidation as of April 1, 2018
Nr. 2 and Nr. 3 in fifth wheels joined forces
Complementary coupling technologies, i.e.
specialties
State-of the art automated production
SAF-HOLLAND organization provides for
access to new customers
Significant cross-selling potential at Group level
Strong mid-teens EBIT margin profile
26 Truck and trailer market trends
What‘s next?
27A long-term growth industry driven by mega trends: Continued increase
of global trailer axle production until 2025
Global trailer axle production
in thsd.
5,000
4,549
4,349 40
4,153 40
4,000 3,782 3,964 39
3,610 38
3,449 37
3,302 36 2,063
3,167 35
34 1,946
1,833
3,000 33 1,725
1,623
1,528
1,361 1,440
1,292
2,000 1,083
1,028 1,056
974 1,001
922 948
875 898
254 272 291
1,000 206 221 237
169 180 193
859 892 927 963 999 1,035 1,072
798 827
0
2017e 2018f 2019f 2020f 2021f 2022f 2023f 2024f 2025f
North America Latin America Europe APAC MEA
28 Source: Persistence Market Research, Global Trailer Axle Market, December 2017Trailer market trend North America: Sustained strong order intake,
backlog extending up to six months
Trailer net orders
50000
40000
30000
20000
10000
0
Jan. Feb. March April May June July Aug. Sep. Oct. Nov. Dec.
2016 17649 21360 13789 15840 13302 11931 9482 14031 11746 20158 35790 34060
2017 32818 25798 20587 20056 16645 18911 13380 14620 23994 31793 42618 45792
2018 39764 32863 27811 21941 21008 18600 28000
July net trailer orders in NA were 28,000 units, up 51% mom and up 109% yoy. In the first
seven months of 2018 net trailer orders increased by 28% following up on truck segment
boom.
29 Source: FTR, August 2018Truck market trend North America: Order boom versus strained supply chain
Class-8 net orders
50000
40000
30000
20000
10000
0
Jan. Feb. March April May June July Aug. Sep. Oct. Nov. Dec.
2016 18062 17650 16147 13500 14095 13000 10263 14078 13753 13775 19300 21200
2017 21863 22886 22765 23538 16419 17375 18197 20683 22082 35613 32293 36820
2018 47426 40185 46248 34262 35319 41800 52100 52400
NA Class 8 net order intake for Aug. 2018 was 52,400 units up 153% yoy. In the first eight
months class-8 net orders soared by 114%. ELD, E-conomy, increase in ton milage and freight
rates at still moderate fuel cost keep demand at a high level.
30 Source: FTR, Truck OEMs - Total N.A. Cl. 8 Orders (US/CAN/MEX/EXP), September 2018Mildly supportive market environment in 2019
EMEA North America
Truck Production1 Trailer Production2 Truck Shipments3 Trailer Production4
2018 +4% +1% 2018 +23% +9%
2019 +2% -5% 2019 +9% -3%
NA Class 8 truck shipments forecast to continue 2018 upturn with +9% growth in 2019. NA trailer production
slightly down from record level in 2019. European truck market posting slow growth only. European trailer
market is expected to remain at an overall solid level of approx. 300,000 units.
1 LMC Global Commercial Vehicles Forecast Q4, 2017, heavy trucks
31
2 Clear , Forecast Report, May 2018; Persistence, Dec. 2017; own research
3 FTR Truck & Trailer Outlook, August 2018, Class 8
4 FTR Truck & Trailer Outlook, August 2018 Company outlook 32
Outlook: Financial targets 2018 and mid-term planning 2020
FY 2018* Strategy 2020
Organic increase of 5 to 7% Organic: € 1,250 mn
assuming stable FX rates and
unchanged scope of consolidation
Sales
+ contribution from V.Orlandi and + M&A: Coops, JVs, acquisitions
York takeovers (~ € 60 mn)
Total: € 1,500 mn
+ potential further M&A
Adj. EBIT margin 7.0 to 8.0% ≥ 8%
Net working capital ratio 12% 12%
€ 38 to 40 mn
€ 26 mn to € 28 mn p.a.
CAPEX incl. high single-digit Euro mn
amount related to new China plant
33 * Projections assume that there is no significant deterioration of the political, economic or industry-specific environment; organic projections do not
include potential sales and earnings contributions from acquisitions or JVs Smart Steel innovations
driving the company 2020 plus
34Content per vehicle opportunity with significant potential from trailer
connectivity and data interpretation excpected
Trailer content per vehicle European trailer components1
in % OEM market:
■ Chassis ■ Structural elements in € bn
- Axles - Body parts 2.0 ~ 13 %
- Brakes - Landing gear 1.5
- Suspensions - Side wings
- Tail 1.0
- Lighting 1.5
1.7
- Interieur 0.5
0.0
2017 2025e
■ Connectivity systems
- Connectivity / telematics
50.0% 48.0% - Sensoring / electronics
- Data interpretation / Predictive
maintenance
- Advanced driver assistent systems
2.0%
Connectivity and data-based applications provides for the
highest growth rates in the trailer components first fit market
35 1Comprising trailer axles, brakes and landing gear only
Source: Roland Berger, own researchSMART STEEL provides for add-on business
opportunities in a digitized transport world
1 2 3 4 5
Upgrade to Digitize New business
Integrate &
Mechanics Electro- Information & models & Digital
Connect
mechanics Data solutions
Predictive Maintenance
RECOLUBE SAFH Connect App Big Data Analytics
SAF-HOLLAND combines mechanics with sensors and electronics.
The Company‘s integration and data interpretation know-how enables smart/autonomous drive systems.
36Acquisition of Axscend provides for
complementary data-based business model
Start-up innovation power … … meets market leading
position
Trailer Master turns trailers into
„smarties“ Scalable at SAF-HOLLAND
Connectivity and data interpretation Group level
Succesfully established license- License-based model to be rolled
based business model out to more than 20.000 SAF-
Already a couple of thousand HOLLAND fleet customers
licenses in the UK alone SAF-HOLLAND achieved a
significant time gain
Succesful data- and license-based business model offers a scalable platform for a roll out at the group level.
37Disclaimer
Not for general release, publication or distribution in the United States, Australia, Canada or Japan.
By attending this presentation you agree to be bound by the following limitations:
This presentation has been prepared by SAF-HOLLAND S.A. (“SAF-HOLLAND”) and comprises written materials concerning SAF-HOLLAND. It is furnished to you solely
for your information and may not be reproduced or redistributed, in whole or in part, to any other person. It contains summary information only and does not purport to be
comprehensive and is not intended to be (and should not be used as) the sole basis of any analysis or other evaluation. No representation or warranty, express or implied,
is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information, including projections, estimates, targets and
opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither SAF-HOLLAND
nor any of its directors, officers, employees or advisors nor any other person shall have any responsibility or liability whatsoever (for negligence or otherwise) arising,
directly or indirectly, from the use of this presentation, or its contents or otherwise in connection with this presentation.
This presentation contains certain statements related to our future business and financial performance and future events or developments involving SAF-HOLLAND and/or
the industry in which SAF-HOLLAND operates that may constitute forward-looking statements. These statements may be identified by words such as “believes,” “expects,”
“predicts,” “intends,” “projects,” “plans,” “estimates,” “aims,” “foresees,” “anticipates,” “targets,” and similar expressions. Forward-looking statements are not historical facts,
but solely opinions, views and forecasts which are based on current expectations and certain assumptions of SAF-HOLLAND’s management or cited from third party
sources which are uncertain and subject to risks. Actual events may differ significantly from the anticipated developments due to a number of factors, including without
limitation, changes in general economic conditions, changes affecting the fair values of the assets held by SAF-HOLLAND and its subsidiaries, changes affecting interest
rate levels, changes in competition levels, changes in laws and regulations, environmental damages, the potential impact of legal proceedings and actions and the Group’s
ability to achieve operational synergies from past or future acquisitions. Should any of these risks or uncertainties materialize, or should underlying expectations not occur
or assumptions prove to be incorrect, actual results, performance or achievements of SAF-HOLLAND may (negatively or positively) vary materially from those described,
explicitly or implicitly, in the relevant forward-looking statement.
The information contained in this presentation, including any forward-looking statements expressed herein, speaks only as of the date hereof and reflects current legislation
and the business and financial affairs of the SAF-HOLLAND which are subject to change and audit. Neither the delivery of this presentation nor any further discussions of
SAF-HOLLAND with any of the recipients thereof shall, under any circumstances, create any implication that there has been no change in the affairs of SAF-HOLLAND
since such date. Consequently, SAF-HOLLAND neither accepts any responsibility for the future accuracy of the information contained in this presentation, including any
forward-looking statements expressed herein, nor assumes any obligation, to update or revise this information to reflect subsequent events or developments which differ
from those anticipated.
This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any state, country or other
jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such
jurisdiction. This presentation is for information purposes only and does neither constitute an offer to sell securities, nor any recommendation of, or solicitation of an offer to
buy, any securities of SAF-HOLLAND in the United States, Germany or any other jurisdiction. In the United States, any securities may not be offered or sold absent
registration or an exemption from registration under the U.S. Securities Act of 1933.
38IR Contact
SAF-HOLLAND GmbH
Hauptstraße 26
63856 Bessenbach
Germany
www.safholland.com
Stephan Haas
Vice President Investor Relations / Corporate Communications
stephan.haas@safholland.de
Phone: +49 - 6095 301-617
Alexander Pöschl
Manager Investor Relations / Corporate Communications
alexander.poeschl@safholland.de
Phone: +49 - 6095 301-117
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