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Company Presentation HELLA KGaA Hueck & Co.

Company Presentation HELLA KGaA Hueck & Co. 24
Company Presentation HELLA KGaA Hueck & Co. Q1 FY 2016/2017 HF-7761EN_C (2013-01)Disclaimer This document was prepared with reasonable care. However, no responsibility can be assumed for the correctness of the provided information. In addition, this document contains summary information only and does not purport to be comprehensive and is not intended to be (and should not be construed as) a 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, any information, including projections, targets, estimates and opinions contained herein. This document may contain forward-looking statements and information on the markets in which the HELLA Group is active as well as on the business development of the HELLA Group. These statements are based on various assumptions relating, for example, to the development of the economies of individual countries, and in particular of the automotive industry. Various known and unknown risks, uncertainties and other factors (including those discussed in HELLA’s public reports) could lead to material differences between the actual future results, financial situation, development or performance of the HELLA Group and/or relevant markets and the statements and estimates given here. We do not update forward-looking statements and estimates retrospectively. Such statements and estimates are valid on the date of publication and can be superseded. This document contains an English translation of the accounts of the Company and its subsidiaries. In the event of a discrepancy between the English translation herein and the official German version of such accounts, the official German version is the legal valid and binding version of the accounts and shall prevail. HELLA Company Presentation Q1 FY 2016/17 2HELLA – Company Presentation Q1 FY 2016/17 Agenda  HELLA at a Glance  Investment Highlights  Results Q1 FY 2016/17  Outlook HELLA Company Presentation Q1 FY 2016/17 3Market and technology leadership as key strategic principles HELLA at a glance – Overview KEY FACTS KEY FINANCIALS  Founded 1899 in Lippstadt (Germany) in EUR millions and % of sales  Global footprint with around 34,000 employees at more than FY 2014/15 FY 2015/16 Change 125 locations in over 35 countries Sales 5,835 6,352 +8,9%  Integrated business portfolio in Automotive, Aftermarket, and Special Applications Adjusted EBIT 445 476 +7,1%  Leading market positions in automotive Lighting and Adjusted EBIT -0.1% 7.6% 7.5% Electronics margin points  One of the top 40 automotive suppliers in the world and Adjusted Operative 120 134 +14 Cash Flow one of the 100 largest German industrial companies SALES BY BUSINESS SEGMENTS SALES BY REGIONS external sales, fiscal year 2015/2016 end customers view, fiscal year 2015/2016 Special Applications €315 million Germany North &South €987 million America 5% Aftermarket €1,226 million 16% 19% €1,197 million 19% 43% Automotive €6,4 €6,4 Lighting billion billion €2,720 million 31% 39% Asia, Pacfic, RoW 33% Rest of Europe Automotive €1,689 million €2,450 million Electronics €2,084 million HELLA Company Presentation Q1 FY 2016/17 4Track record of steady profitable growth HELLA at a glance – Sales and EBIT development SALES ADJUSTED EBIT in EUR millions and % of sales in EUR millions and % of sales +8% 7.6 7.5 7.5 7.5 +8% 6,352 5,835 476 6.3 5,343 445 4,835 4,637 399 350 306 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 11/12 FY 12/13 FY 13/14 FY 14/5 FY 15/16 Adj. EBIT % sales ■ Sustainable growth during the last years with a clear ■ Overall stable profitability focus on organic growth ■ Scale effects and increased efficiency on structural costs drive margin adjusted for restructuring expenses and the effects of the supplier default in FY 15/16 HELLA Company Presentation Q1 FY 2016/17 5Continued high R&D & CAPEX as basis for future growth HELLA at a glance – R&D expenses and Net CAPEX development R&D EXPENSES Strong focus on products and A A in EUR millions and % of sales 9.8 technology 9.6 9.3 9.2  Significant R&D investments in 7.9 previous years set the basis for strong top line future growth  Build-up of local know-how, high 623 investment in new technologies 544 514 (basic research), increased product 444 366 complexity and new product categories (e.g. radar) drove recent expenses FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 NET CAPEX in EUR millions and % of sales Continuous investments in B B 8.8 customer-specific equipment and footprint increase 7.3 6.9 6.4 6.0  Strong product portfolio geared to megatrends 463 427  Global production and R&D 368 347 network 297 FY 11/12 FY 12/13 FY13/14 FY 14/15 FY 15/16 HELLA Company Presentation Q1 FY 2016/17 6Unique combination of competence set in advanced electronics and lighting technologies HELLA at a glance – Selected products LIGHTING E EL LE EC CT TR RO ON NIIC CS S Lighting selected HELLA products s se elle ec ct te ed d H HE EL LL LA A p pr ro od du uc ct ts s MARKET TRENDS (selected products ENVIRONMENT / EFFICIENCY ► Fuel System and Energy Management technologies for combustion engines, hybrids and electric vehicles 48V Cooling Battery ► Efficient lighting technologies like Matrix-LED LED DC/DC Valve Management Headlight Rear lamp LED Converter Actuator System SAFTETY ► Light based assistance systems and optimal illumination ► Sensors for detection of the driving HD headlamps systems 24 GHz 77GHz environment Rear radar Front radar (Advanced Front-Lighting) STYLING / COMFORT ► Optical elements for individual styling with LED or OLED lighting technology OLED LED Styling ► Enhanced personalization and Rear lamp Headlight interactions (vehicle to environment) Body Design-driven Control Ambient Remote keys ► Individualized and designed parts Modules Interior Lighting HELLA Company Presentation Q1 FY 2016/17 7Powerful global network to ensure customer proximity as well as cost competitiveness HELLA at a glance – Global footprint ► 33,689 employees are working for HELLA at more than 125 locations in over 35 countries GLOBAL PRODUCTION AND DEVELOPMENT FOOTPRINT NORTH / SOUTH ASIA / PACIFIC / NUMBER OF SITES EUROPE Σ Σ Σ Σ AMERICA ROW P PR RO OD DU UC CT TIIO ON N 7 12 9 28 D DE EV VE EL LO OP PM ME EN NT T 6 20 15 41 13 32 24 69 Σ Σ Σ Σ 4,690 23,034 5,905 E Em mp pllo oy ye ee es s 33,689 14% 68% 18% As of balance sheet date (May 31, 2016) HELLA Company Presentation Q1 FY 2016/17 8Broad automotive portfolio in strong growing areas HELLA at a glance – Business Segment Automotive BUSINESS OVERVIEW KEY FINANCIALS in EUR millions and % of sales Lighting ► 1 market position in LED  Headlamps headlamps Europe  Rear Combination Lamps FY 2014/15 FY 2015/16 Change ► 3-4 global and 1-2 European  Small Lamps  Interior Lighting market position in OE passenger External Sales 4,364 4,804 +10.1%  Lighting Electronics car lighting Adjusted EBIT 354 390 +10.1% Electronics ► 2-3 global and 1-2 European Adjusted EBIT margin 8.1% 8.1% +/-0  Components market position in defined automotive  Energy Management electronic segments  Driver Assistance Systems External Sales Lighting 2,427 2,720 12.1%  Body Electronics  Steering External Sales Electronics 1,937 2,084 7.6% AUTOMOTIVE SALES BY CUSTOMERS AUTOMOTIVE SALES BY REGIONS excluding non-product sales, fiscal year 2015/2016 external sales, fiscal year 2015/2016 European Trucks OEM Germany North &South 2% US OEM America 4% 13% 9% 23% German 41% OEM Tier X 15% €4,8 billion 33% Rest of Asia, Pacfic, 33% Europe 29% RoW Asian OEM & Others ) All figures related to the selected markets and product categories based on HELLA‘s portfolio, as covered in an external market study commissioned by HELLA (2014) HELLA Company Presentation Q1 FY 2016/17 9Competitive advantage through complete aftermarket solutions HELLA at a glance – Business Segment Aftermarket BUSINESS OVERVIEW KEY FINANCIALS Independent Aftermarket (IAM) in EUR millions and % of sales 1  Sale of own and third-party spare parts to FY 2014/15 FY 2015/16 Change IAM wholesalers  Global presence with sales into 100 Sales 1,131 1,197 +5.9% countries EBIT 73,1 80,1 +9.5%  Strong position of sales network and brand presence in European market ( 1-3) +0.2% EBIT margin 6.5% 6.7% points Wholesale Sales IAM 502 519 +3.4% 2  Building holistic product portfolio from part Sales Wholesale 496 534 +7.7% suppliers and offering to IAM garages Sales Garage Equipment 61 72 +18.0%  Market leader in Denmark, and second largest wholesaler in Poland STRATEGIC FOCUS  Synergies through HELLA wholesale organization “Nordic Forum” Independent Aftermarket (IAM) ► Optimization of product portfolio and customer access Workshop Equipment 3  Premium provider of workshop solutions, Wholesale Distribution diagnostic tools and advanced equipment to ► Expansion of digitalization strategy (e.g. E-commerce, B2B2C) garages ► Inorganic expansion  Offering of professional services, e.g. technical data/hotline, trainings & financial Workshop Equipment services ► Offering of advanced high-tech garage equipment  One of the two largest suppliers in German- (e.g. for E-mobility, autonomous driving) speaking markets ► Systematic use of own data and diagnostic competence HELLA Company Presentation Q1 FY 2016/17 10Diversification of business portfolio based on existing strengths HELLA at a glance – Business Segment Special Applications BUSINESS OVERVIEW KEY FINANCIALS  Development, production and sale of lighting and electronics in EUR millions and % of sales products for special vehicle manufacturers FY 2014/15 FY 2015/16 Change  “Fast follower” of technological innovations in automotive segment along mega-trends LED, energy efficiency and safety Sales 308 315 +2.0%  Application of know-how through own research and EBIT 18,9 5,0 -73.6% development resources and dedicated production footprint -4.5% EBIT margin 6.1% 1.6%  Strong market position in lighting product areas based on points long-standing experience, in particular in Europe NOTE: EBIT decrease in FY 2015/16 mainly due to negative one-off effects in  Focusing on a variety of attractive target groups connection with the sale of the business fields „Industries“ (Street and Industrial Lighting) and „Airport Lighting“ TARGET GROUPS STRATEGIC FOCUS Lighting ► Drive LEDfication O Of ff f- -h hiig gh hw wa ay y ► Customized / semi-customized headlamp solutions with innovative technology Electronics H Hiig gh hw wa ay y & & ► Push technology upgrade growth with E/E off-the-shelf L Le eiis su ur re e V Ve eh hiic clle es s ► Enhance electronic product portfolio Target groups ► Local portfolios for emerging markets P Pr re em miiu um m & & ► Parts of business to be analyzed if competitive size is S Sp pe ec ciia all V Ve eh hiic clle es s achievable HELLA Company Presentation Q1 FY 2016/17 11HELLA – Company Presentation Q1 FY 2016/17 Agenda  HELLA at a Glance  Investment Highlights  Results Q1 FY 2016/17  Outlook HELLA Company Presentation Q1 FY 2016/17 12HELLA equity story is mainly based on four pillars HELLA Investment Highlights – Overview ► Continuous investments in innovative technologies (e.g. LED, Outperformance 1 battery management, radar, camera software) to keep/achieve of the automotive market leading positions along automotive mega trends based on technology ► Powerful global production and development footprint to leadership participate in worldwide growth perspectives ► Unique value chain positioning in the aftermarket (parts, tools, Attractive business 2 services), also offering expansion into new business models model through strong (e.g. e-commerce) aftermarket business ► Increased resilience of business model due to stable cash flow and profit generation by strong aftermarket share Proven operational ► Stable gross profit margin generation based on established 3 continuous improvement culture excellence supporting continuous profitability ► Proven ability on management of SG&A costs to ensure generation competitive cost structure High financial stability 4 ► Conservative financial profile as a stable fundament ensuring long-term ► Good liquidity profile to finance long term growth strategy growth perspective ► High acquisition power HELLA Company Presentation Q1 FY 2016/17 13HELLA’s automotive portfolio strongly outperformed the market HELLA Investment Highlights – Market Outperformance 1 HELLA MARKET OUTPERFORMANCE SOURCES OF GROWTH in Automotive ■ Technology leader in LED with competence set in Light Based +3% Assistance Systems LVP 7% ■ Next development steps in CAGR 6,352 Automotive lighting solutions and LED 5,835 Lighting +10% penetration are strong organic 5,343 growth drivers +13% 4,835 4,637 4,198 4,804 ■ HELLA solutions play key role 4,364 EUR 3,405 3,924 m in automotive progress since 2,940 3,436 3,316 decades 3,029 ■ Well positioned in automotive Automotive 2,476 trends energy efficiency and 2,049 Electronics automated driving 1,548 1,471 1,419 1,399 1,321 1,169 929 891 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 Global Light Vehicle Production; CAGR Automotive segment only (external sales) including FX HELLA Company Presentation Q1 FY 2016/17 14LED headlamps as driver for outperformance HELLA Investment Highlights – LED competence 1 LED to change the automotive market… …with penetration rates of LED to explode ■ More then 1/3 of produced light vehicles equipped LED headlamps with LED headlamps in 2025 in million units +28.9% ■ Driver: 37.2  Need for advanced lighting based assistance systems 6 64 46 6 5 53 37 7  Need for energy efficient lighting system 16.3  Need for designed parts and distinguishable lighting 2.9 CAGR elements 2015 2020 2025 2015-25 Value (USD bn) 1.7 6.3 10.5 20% Penetration (%) 3.3 16.1 33.4 Source: Strategy Analytics HELLA first-to-market applications & penetration into mass models VW Polo LED headlamp BMW 3er Series ■ HELLA offers Volume Full-LED headlamp Audi A3 scalable Segment Full-LED headamps BMW 1er Series wit AFS functions solutions for LED headlamp premium and Audi A6 LED Matrix-Beam Headlamp volume segments Premium Audi A7 LED Matrix-Beam Headlamp Segment Audi A8 Full-LED headlamp MB E-Class with AFS functions st 1 full-AFS headlamp Audi A8 LED Matrix-Beam Headlamp GM Escalade MB E-Class Full-LED headlamp LED MULTIBEAM Headlamp 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 HELLA Company Presentation Q1 FY 2016/17 15Need for energy efficient solutions drives electronic portfolio HELLA Investment Highlights – Energy management competence 1 POWERTRAIN CONCEPTS HELLA POSITIONING MARKET PERSPECTIVE Established competence for combustion worldwide in million vehicles engines ■ Global market leader for 12V DC/DC converters 62.4  2 million units annually 58.7  First to market with voltage stabilizers in 2007 54.1  DC/DC converter for dual battery application in 2010  High power DC/DC converter for start/stop applications 40.3 in 2013 36.1 5.3 6.2 ■ Global market leader for Intelligent Battery Sensors 4.2 24.0  10 million units annually 2.1 1.9  4th generation of IBS in 2009 1.3 1.0 0.3 0.3  5th generation of IBS in 2016 2015 2020 2025 Technologies for future powertrain concepts Combustion engine: Stop/Start Full hybrid ■ New technologies for low cost hybrids Combustion engine Electric vehicles  Start of production for a 3kW 48V high power Mild hybrid DC/DC converter in spring 2017 ■ Battery management systems and products ► Internal combustion engines with start/stop still for hybrids and electric vehicles dominant in future  High Voltage Current Sensor in 2015 ► Growing focus on hybrid technology  Li-Ion BMS in 2016 Source: IHS, Strategy Analytics HELLA Company Presentation Q1 FY 2016/17 16Need for driver assistance technologies drives electronic portfolio HELLA Investment Highlights – Radar competence 1 SMALL-RANGE / MID-RANGE RADAR HELLA POSITIONING MARKET PERSPECTIVE Functionalities 24 GHz worldwide sales in million units rear radar Blind Lane change spot detection assist 126 Rear Exit cross Assistant traffic alert ■ World market leader in 24Ghz radar solutions +24% ■ 120 carlines at 12 OEMs ■ 10 million produced sensors ■ Fast chirp modulation principle for high performance ■ Radar 4.0 in 2015 with significant packed size reduction 57 77 GHz Functionalities front radar Front cross Enhanced traffic alter blind spot detection 15 ■ 77Ghz radar solutions developed ■ Cost-efficient solution for front and side applications 2015 2020 2025 ■ Increased performance for near range detection ■ Cost-efficient solution Source: NHTSA, Strategy Analytics, HELLA analysis HELLA Company Presentation Q1 FY 2016/17 17Need for driver assistance technologies drives electronic portfolio HELLA Investment Highlights – Camera software competence 1 CAMERA TECHNOLOGY HELLA POSITIONING MARKET PERSPECTIVE Functionalities Camera worldwide sales in million units Software Lane 223 Detection Traffic Sign Vehicle & Light Lane +17% Recog- Pedestrian Assist Detection nition Detection 132 ■ 10 years of experience in ADAS software ■ Field proven in series projects with major OEMs Integration Competence 46 ■ Flexible and scalable hardware/software bundles ■ Freedom to choose IP components (own, 3rd party) 2015 2020 2025 ■ ADAS testing and integration as a service in development Source: NHTSA, Strategy Analytics, HELLA analysis HELLA Company Presentation Q1 FY 2016/17 18Resilient business model through strong Aftermarket share HELLA Investment Highlights – Resilient business model 2 AUTOMOTIVE AFTERMARKET SALES in million EUR SALES in million EUR EBIT EBIT ► Automotive clearly growth driver ► Stable cash flow and profit generation through ► Volatility depending on cycle ► Steady sales growth ► Innovative business models and unique value chain positioning Sales as reported w/o adjustments for consolidation or accounting changes,incl. sale of Danish subsidiary Holger Christianses A/S HELLA Company Presentation Q1 FY 2016/17 19Innovative business model with unique Aftermarket positioning HELLA Investment Highlights – Workshop competence 2 MARKET TRENDS HELLA POSITIONING Increasing ■ Increasing functionality and Competence for diagnostic tools & services interfaces complexity of repairs ■ E-mobility and autonomous driving HELLA Gutmann empowers independent garages to offer high tech professional repairs Changing ■ Repair decisions done by Strong network and e-commerce offering intermediates customer ■ Bundle workshops under combined market demand ■ Less importance of car and appearance to offer comprehensive network demand for cost efficient repairs ■ Offer comprehensive product and service, ■ New online business channels be a partner of the garage and interfaces ■ Utilize workshops as fulfillment partner for digitalization ■ Big data and comparability of strategy: offering  Ramp-up digital platform for B2C  Develop digitalization strategy for B2B2C (Integrated Services Platform) HELLA Company Presentation Q1 FY 2016/17 20Operational excellence supports continuous profitability generation HELLA Investment Highlights – Operational excellence 3 Stability of the Adj. Gross Profit margin… Adj. Gross Profit 27.6 27.0 26.6 26.4 25.6 …support continuous profitability generation Adj. GPM 1,715 Adj. EBIT 1,554 1,477 Adj.EBIT Margin 7.5 7.6 7.5 7.5 1,278 +44.2% 1,189 6.3 476 445 399 350 +36.3% 306 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 ■ Based on scales effects, footprint optimization, cost saving measures and supply chain optimization FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 and the ability to manage SG&A costs… 12.3 11.6 11.1 10.9 Adj. SG&A 10.7 ■ Further investments possible without jeopardizing % sales 678 657 636 the EBIT margin 561 +32.2% 513 ■ Future improvement of EBIT margin targeted and expected FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 ■ Continuous improvement of global corporate center network, adjusted for one-off charges for supplier default in FY 15/16; adjusted for efficiency gains and optimized logistics restructuring expenses and one-off charges for supplier default in FY 15/16 HELLA Company Presentation Q1 FY 2016/17 21High financial stability ensuring long-term growth perspective HELLA Investment Highlights – Financial stability 4 Solid capital structure Strategic flexibility Net debt/ HELLA has a stable EBITDA Debt and maturity profile, EUR millions and solid financial Cash & assets fundament which Euro Euro Aflac Aflac forms the basis for 0.3x 1,008 bond I bond II bond I bond II 914 its future strategic 500 plans 0.2x 300  Prudent financial 177 policy throughout 105 70 the cycle 0 0  Financing of May May May May 2015 2016 2017 2020 2032 2033 Other long-term Debt 2015 2016 2015 2016 growth strategy Additional Revolving Credit (2015) (1+1+5) of  Acquisition EUR 450m with 10 core banks as back-up facility firepower  Capital-market-oriented capital structure  Good liquidity profile and consistent liquidity management  EUR 87m dividends (0.77EUR/share) paid September 2015 As of May, 2016; Euro bond I: 1.15%, Euro bond II: 2.375%, Aflac bonds hedged values Mostly short-term HELLA Company Presentation Q1 FY 2016/17 22HELLA – Company Presentation Q1 FY 2016/17 Agenda  HELLA at a Glance  Investment Highlights  Results Q1 FY 2016/17  Outlook HELLA Company Presentation Q1 FY 2016/17 23Positive sales growth and strong EBIT increase in Q1 FY 2016/17 Financial results Q1 FY 2016/17 ■ HELLA Group sales growth adjusted for negative (-1.2%-points) FX effect and negative (-0.2%-points) effect of Industries disposal Sales at 5.2% YoY to 1.6 bill. EUR ■ Adjusted Gross Profit margin at 27.6% (+0.9%-points YoY) Profitability ■ Adjusted EBIT +17 mill. EUR (+17%YoY) to 118 mill. EUR ■ Adjusted EBIT margin at 7.6% (+0.9%-points YoY) ■ Adjusted Operative Cash Flow decreased by 38 mill. EUR (-58%YoY) to 27 mill. EUR due to temporary shifts Liquidity ■ Continuously strong basis for future growth with cash and short term financial assets of 825 mill. EUR Note: Adjustments including restructuring expenses and supplier default in FY 15/16 and restructuring expenses in FY16/17 HELLA Company Presentation Q1 FY 2016/17 24HELLA top line growth with expected development in Q1 FY 16/17 Financial results Q1 FY 2016/17 HELLA group revenues (EUR m) Comment ■ Currency and portfolio adjusted growth HELLA Group at 5.2% ■ HELLA reported Group sales increased by -21 57 mill EUR (+3.8%) to 1,553 mill. EUR: -1.4% 78 +5.2% 3.8% − Automotive + 3.2% to 1,163 mill. EUR. Moderate growth due to project ramp downs and negative FX effect 1,553 1,496 − China continues to be an important growth driver. China entities sales growth at 18% YoY − Aftermarket +7.3% to 313 mill. EUR due to adj. growth FX and Q1 FY Q1 FY disposal positive wholesale and strong workshop 15/16 16/17 development − Special Applications -2.4% to 70 mill. EUR after disposal of Industries business HELLA Company Presentation Q1 FY 2016/17 25Improved productivity in Automotive results in Gross Profit increase Financial results Q1 FY 2016/17 EUR millions and % sales Adjusted Gross Profit ■ Adjusted Gross Profit 428 increased by 29 mill EUR (+7%) to 428 mill. EUR +29 399 Adj. Gross Profit Q1 FY 15/16 Q1 FY 16/17 Adjusted Gross Profit margin ■ Adjusted Gross Profit +0.9 27.6 margin improved by 0.9%- points to 27.6% driven by Adj. high capacity utilization in Gross 26.7 the Automotive and positive Profit product mix in the margin Aftermarket segment Q1 FY 15/16 Q1 FY 16/17 HELLA Company Presentation Q1 FY 2016/17 2 26 6High R&D expenses to secure future growth Financial results Q1 FY 2016/17 EUR millions and % sales R&D expenses ■ Absolute R&D expenses 154 3.7% increased by 14 mill. EUR +14 (+10% YoY) to 154 mill. EUR 140 3.4% − Over-proportional increase in acquired projects R&D − Strong investments in new product generations in lighting and electronics − Targeted R&D efficiency not reached Q1 FY 15/16 Q1 FY 16/17 R&D expenses ratio ■ Q1 FY16/17 ratio increased +0.6 9.9 by 0.6pp to 9.9% due to over- proportional increase in 8.1% 9.3 absolute R&D expenses R&D 7.8% ■ Ratio in line with previous ratio quarter after step-up in Q3 FY 15/16 Q1 FY 15/16 Q1 FY 16/17 HELLA Company Presentation Q1 FY 2016/17 27Quite stable development of SG&A costs Financial results Q1 FY 2016/17 EUR millions and % sales Adjusted SG&A expenses ■ Distribution expenses +4 mill. EUR 170 3.7% (+3.1% YoY) to 123 mill. EUR due to 3.7% higher Aftermarket sales +4 166 3.4% 3.4% ■ Adj. other income and expenses Adj. +2 mill. EUR to 7 mill. EUR mainly due to higher government grants and SG&A insurance reimbursements ■ Admin. expenses +2 mill. EUR (+4.7%) to 55 mill. EUR due to Q1 FY 15/16 Q1 FY 16/17 investments in corporate functions 8.1% Adjusted SG&A expenses ratio ■ Distribution cost ratio constant at 7.8% -0.1 7.9% 11.1 ■ Adj. other income and expenses ratio 8.1% 11.0 +0.2%-points to 0.5%. Including Adj. 7.8% charges for supplier case ratio and SG&A restructuring increased by 0.6%- ratio points ■ Admin. costs ratio constant at 3.5% Q1 FY15/16 Q1 FY 16/17 HELLA Company Presentation Q1 FY 2016/17 28Adjusted EBIT above prior-year’s level Financial results Q1 FY 2016/17 EUR millions and % sales Adjusted EBIT ■ Adjusted EBIT increased by 118 17 mill. EUR (+17%) to 118 mill. EUR +17 101 ■ Negative FX development did Adj. not affect EBIT EBIT Q1 FY 15/16 Q1 FY 16/17 Adjusted EBIT margin ■ Adjusted EBIT margin +0.9 7.6 increased by 0.9%-points to 7.6% mainly due to increase 6.8 in GPM by 0.9%-points Adj. EBIT ■ Increase in R&D expenses margin mainly compensated by higher JV income (+0.4%- points) Q1 FY 15/16 Q1 FY 16/17 HELLA Company Presentation Q1 FY 2016/17 2 29 9Quarterly Cash Flow influenced by temporary shifts Financial results Q1 FY 2016/17 EUR millions Adjusted Operative CF ■ Adj. operative CF decreased 65 by 38 mill. EUR to 27 mill. EUR: ■ Higher Working Capital -38 consumption compared to Q1 Adj. 27 15/16, mainly due to payment of OCF trade liabilities after build-up at year-end Q1 FY 15/16 Q1 FY 16/17 Net CAPEX ■ CAPEX lower by 1 mill. EUR to -1 106 106 106 mill. EUR ■ Continuous investments in customer-specific equipment Net ■ Reimbursements increased CAPEX by 3 mill. EUR to 26 mill. EUR depending on project launches Note: Adjusted Operative Cash flow Q1 FY 16/17 excludes cash Q1 FY 15/16 Q1 FY 16/17 restructuring payments (2 mill. EUR,) and reduction of factoring program (70 mill. EUR). Adj. Operative CF Q1 FY 15/16 excludes cash restructuring payments (3 mill. EUR) HELLA Company Presentation Q1 FY 2016/17 30Automotive main growth and profitability driver Financial results Q1 FY 2016/17 +3.2% Automotive External Sales 1,163 1,127 ■ Sales growth driven by LED 4.1% lighting and energy management 646 537 515 Sales 495 products Electronics 2.6% Sales ■ Moderate growth due to project Lighting ramp-downs, negative FX effects 648 632 and weaker business development of Chinese customers Q1 FY 15/16 Q1 FY 16/17 Automotive Profitability +25.8% ■ Strong increase of adj. EBIT 98 margin to 8.4%, mainly due to Adj. EBIT 78 − increased adj. GPM due to high 8.4 Adj. EBIT 6.9 Margin level of utilization and less complex project ramp-ups − Higher JV contribution, after a weak comparable basis in Q1 FY Q1 FY 15/16 Q1 FY 16/17 15/16 External sales, Q1 FY 15/16 residual of -10.9 mill EUR allocated proportionally to Electronics and Lighting HELLA Company Presentation Q1 FY 2016/17 31Non Automotive segments with positive FY 16/17 contribution Financial results Q1 FY 2016/17 +7.3% Aftermarket +17.0% ■ Strong wholesale business 313 292 ■ Positive demand for workshop 19.7 16.8 products 6.3 5.8 646 537 ■ Higher EBIT margin due to positive product mix and increasing sales Q1 Q1 Q1 Q1 FY15/16 FY16/17 FY15/16 FY16/17 Special Applications -2.4% +2.6% ■ Negative top-line growth after sale Adjusted for -66.5% 72 70 Industries of Industries business, portfolio disposal 5.4 adjusted growth at +2.6% 7.6 1.8 ■ Special OE with positive sales 646 537 2.6 development but Agricultural sector still difficult Q1 Q1 Q1 Q1 FY15/16 FY16/17 ■ Special OE with solid EBIT margin FY15/16 FY16/17 EBIT ■ Follow-on costs of Industries disposal External Sales EBIT Margin (%) affect margin negatively HELLA Company Presentation Q1 FY 2016/17 32HELLA – Company Presentation Q1 FY 2016/17 Agenda  HELLA at a Glance  Investment Highlights  Results Q1 FY 2016/17  Outlook HELLA Company Presentation Q1 FY 2016/17 33Positive growth outlook 2016 in key regions according to VDA Outlook Expected Automotive Region Comment Sales (in m pieces) +5% Western ■ Continuing growth in 2016 expected after strong Europe 13.8 2015, potential negative implications from BREXIT incl. not included Germany 2016 -2% ■ After peak of US market in 2015, slight decline in USA 17.1 2016 expected 2016 +10% ■ Positive expectation for 2016 revised upwards to China 10%. Partly advanced demand from 2017 due to 22.1 government program. Slow down 2017 expected 2016 ■ Overall growing expectations in key markets for ∼ ∼3% ∼ ∼ TOTAL 2016. For 2017 overall slowdown of growth ∼ ∼ ∼ ∼80 CY 2016 expected Source: VDA (as of September 2016), HELLA Company Presentation Q1 FY 2016/17 3 34 4Company specific development for FY 16/17 generally confirmed Outlook Current outlook is fundamentally in line with the forecasts given in the Annual Report FY 2015/16 Guidance Growth in a mid-single digit percentage Sales Growth range Growth in a mid-single digit percentage Adj. EBIT Growth range More or less remain at the Adj. EBIT margin prior year’s level Order intake in the last two years Mid-term growth excepted to result in acceleration of prospects growth dynamic beyond FY 16/17 HELLA Company Presentation Q1 FY 2016/17 3 35 5Thanks for your attention Dr. Kerstin Dodel, CFA Head of Investor Relations Office phone +49 2941 38 - 1349 Facsimile +49 2941 38 - 471349 Mobile phone +49 174 3343454 E-Mail kerstin.dodelhella.com Internet www.hella.com
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