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ElringKlinger Group

ElringKlinger Group

KeplerCheuvreux13th German Corporate Conference

January 21, 2014

It’s all about emissions – Focus on green technologies

� Optimized combustion engineremains dominant mid-term

� Structural growth in core business:

turbo charging, heat shielding, lightweight

� Driver: Hybrids

� Battery-electric + fuel cell

� Value sold in increases

� Almost every engine willrequire exhaust abatement: off-

road, buses, ships, trucks

� Diesel particulate filters & coating,full exhaust abatement systems

Exhaust abatement

Downsizing/ Lightweight

E-Mobility

Minus CO2

Minus particulates

Minus CO, CH, NOX

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ElringKlinger Group: Major divisions (share of sales 2012)

Cylinder-Head

Gaskets (15%)Shielding

Technology (25%)

Housing

Modules (20%)

After-

market (10%)

Engineered

Plastics (8%)

Specialty

Gaskets (16%)

E-Mobility (1%)Exhaust

abatement (3%)

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It’s all about cutting CO2 – Legislation driving business

Source: A.T. Kearney Powertrain Study May 2012; EK research

130

75

~178

102

~160

112

0

40

80

120

160

200

2015 2025 2015 2025 2015 2025

CO2 limit in g/km

EU US China

2012: ~136 g/km 2012: ~232 g/km 2008: 185 g/km

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1 2 3 4 5 6 7 8 9 10 112005 2009200820072006 201320122010 2011 2014 2015

Growth prospects: Emerging markets followingEuro emission standards (CO, HC, NOx, particulate matter)

US

Mexico (Gas)

Brazil (FF)

Brazil (Diesel)

Argentina

Europe

China (Bejing)

China (Nationwide)*

Thailand

S. Korea

India (Capital area)

India (Nationwide)

TII, B8

Tier 1

Tier 1

Euro 3

Euro 2

Euro 4

Euro 2

Euro 2

Euro 2

Euro 3

Euro 3

Euro 2

TII, B5 (LEV)

Euro 4

LEV

Euro 4

Euro 3

Euro 5

Euro 3

Euro 4

Euro 4

Euro 3

Euro 3

Euro 4

Euro 3

TII, B4 TII, B2

Euro 5

ULEV

Euro 5

Euro 6

Euro 5

Euro 4 (Gasoline)

Euro 4

Euro 5

Euro 5

Euro 4

Source: CMS * tbd: alternatively as of 2013/Euro 5 drafted 5

Euro 4 Euro 5 (Diesel)

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ElringKlinger enabling efficiency Cutting fuel consumption by:

27 mpg

Powertrain

improvements/

Downsizing

Body and

accessories

advancements

47 mpg

2011 2020 2030 2040

Lightweight

construction

Hybridization

Source: www.plugincars.com

ElringKlinger enabling Downsizing – Going small in CO2

Trend towards smaller engines: Same output from lower displacement

� up to 30% lower fuel consumption

Direct injection, soaring injection pressure

� Gasketing becomes even moredemanding

Rising temperatures

� Number of thermal shielding partsincreases

Turbo-charging essential

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Turbocharged: Gaskets, V-rings and heat shields for turbochargers

Turbocharging market growing by 75% from 2011-2017 to 39 mn units; Penetration plus units per car increase(CAGR > 10%)

EK provides inlet/outlet gaskets forcold side (compression) andhot side (turbine)

V-ring coupling and sealing component

Thermal shielding module

Potential for the aftermarket

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Lightweight design: Substituting metal by plastic

Weight reduction at a lower cost = lower fuel consumption= less CO2 output

EK designs and produces polyamide housing modules incl. sealing system: cam cover modules, oil pans, gearbox casings, TC air ducts, oil suction pipes

Ramp-up of truck parts liaised to EURO VI introduction

OEM-accepted cost per kg saved: 3 to 10 Euros (ICE) / 5 to 14 Euros (HEV)

Hummel acquisition adds unique tooling competence: New composite materials for additional light weight products

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Total shielding

Shielding package all in one:Engine + underbody + exhaust system

Increasingly complex heat management in downsized engines

Structural growth: Number of heat shields in and around the engine and exhaust system goes up

Trend: Combining thermal shielding withacoustical functions

Added-value: Integration of gasketingand sensors (e.g. TC control sensor)

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Exhaust abatement technology – Every engine needs a Hug US retrofit business on the rise

CARB (California Air Resources Board)

certification for DPF-retrofit business

Mandatory for on-road vehicles above 6.3

tons in California

Hug market leader in core market

California: Market share ~35%

USP: Hug ceramic substrate &

ElringKlinger precious-metal free catalytic

coating material

First prototypes in development for US and

European truck OEM

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Every engine needs a Hug – low emissions on the high seas

Increasing retrofit business for inland water

vessels and yachts with nauticlean diesel

soot particulate filters (DPF/DeNOx/HC)

Public awareness and expected emission

legislation opens up new opportunities also

in ocean ships

Emissions caused by ocean cruisers

(e.g. per day):

NOx: 5,250 kg = 422,000 cars

Soot: 450 kg = 1,000,000 cars

CO2: 480,000 kg = 84,000 cars

Projects for ocean liners in negotiation

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Every engine needs a Hug – shale gas on the rise

Hug offers filter technology for natural gas

engine-based power plants

First contracts for complete exhaust

abatement systems to be used in power

plants in North America

Currently under development:

Recuperation catalytic converter for large-

scale natural gas engines incl. breaking up

of methane

E-Mobility: Battery Technology for Hybrids/ BEVs and Fuel Cells

High pre-expenses: almost 100 engineers and specialists plus prototyping and general cost

In-series production contracts for 3 European OEMs: EUR 6.6 (4.5) mn sales in 2012

Several development projects with car manufacturers as well as battery producers

Fuel-cell: Auxiliary power units for trucks

Non-automotive fuel-cell applications foruse in material handling equipment

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Hybrids: Combination of combustion engine & electricdrivetrain increasing value sold in

Optimized Combustion Engine

Core business:

� Turbocharger and engine sealing

� Exhaust gaskets

� Thermal shielding parts

� Plastic housing modules

Electric Drivetrain

� Lithium-ion battery components

> Cell contact systems

> Pressure exchange systems> EMR shielding

> Cell casing

� Fuel-cell components,

APUs/ complete stacks

Hybrid

Value sold inmax. Euro 40 to 60

Value sold inEuro 100 to 150

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ElringKlinger Group – A global production network

Mexico

ChinaSouth Korea

Japan (JV)

Indonesia (JV)

Thailand (JV)

India

Great Britain

Germany

Switzerland

ItalyFrance

Spain

Hungary

TurkeyRomania

Brazil

South Africa

CanadaUSA

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Employees ElringKlinger Group worldwide – merger of Hummel-Formen has number of employees in the AG increase

AG2,266 (2,060)

Domestic subsidiaries756 (860)

International subsidiaries3,534 (3,364)

as of September 30, 2013 (py)

Group6,556 (6,284)

+4.3%

Germany3,022 (2,920)

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Group Sales by region Q3 2013 (py) Almost 55% of OE sales in Asia and the Americas

Germany 31.5% (31.1%)

NAFTA17.1% (16.8%)

incl. exports: ~25% of OE sales

South America &Others

5.4% (6.4%)

Rest of Europe 29.4% (28.9%)

Asia and Australia 16.6% (16.8%)

incl. exports: ~24% of OE sales

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Sales revenues driven by long-term organic growth

€ mn

417459 475

528608

6581

579

796

1,033²

1,127

0

200

400

600

800

1000

1200

2003 2004 2005 2006 2007 2008 2009 2010 2011 20121 Incl. acquisitions of SEVEX (~EUR 46mn sales) and Marusan (~EUR 14 mn sales)

² Incl. acquisitions of Flat gaskets business of Freudenberg (~EUR 53 mn sales), Hug Group (~EUR 29 mn sales) and

Hummel-Formen (~EUR 1.6 mn sales)

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Earnings before taxes

50.5

65.270.9

87.6

114.9

60.0

49.4

94.0

113.91

123.8

0

30

60

90

120

150

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

€ mn

1 Excl. one-time gain of EUR 22.7 mn from sale of industrial park

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Normalization of capex towards 8 to 10% of sales

137.9

95.0

134.3121.6

114.3

61.771.2

82.296.8

79.4

0

40

80

120

160

200

2008 2009 2010 2011 2012

Investments in plant, property and equipment, invest. prop. and intangible assets

Depreciation and amortization

€ mn

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Balance sheet structure as at September 30, 2013Solid Equity Ratio at 49.3%, shift to long-term debt

22.625.942.940.9

0

28.123.7

57.159.149.350.4

September 30,

2012

September 30,

2013

September 30,

2012

September 30,

2013

Assets

in %

Non-current liabilities

Current liabilities

Shareholder‘s equityNon-current assets

Current assets

Liabilities and

shareholder’s equity in %

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A though year 2013: Western Europe at 25-years low –Russia, Brazil and India down significantly

In 2013 global car sales overall estimated to have grown by approx. 3% thanks to dynamic growth in Asia (China/ASEAN) and the US

Germany

Western Europe

Russia

Brazil

India

-10% -8% -6% -4% -2% 0%

Car registrations 2013 (yoy change in %)

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Preliminary results 2013 marked by one-time effects –negative FX effects burden

Expected one-time gain related to the assumption of control of Japanese JV amounting to EUR 16 to 18 mn

Sales 2013 growing 4.3%, organic growth at 6.1%

EBIT expected in the range of EUR 160 to 162 mn, clean EBIT adjusted for one-offs comes in at approx. EUR 146 mn

Negative FX effects related to strong Euro impact EBIT especially in H2 2013 –operating result coming in higher

One-offs 2013:> EUR 16 to 18 mn expected one-time gain as a result of the assumption of

control of Japanese JV> EUR 1.8 mn restructuring charge at ElringKlinger France> EUR 1.5 mn exceptional expenses associated with market penetration

efforts in the Aftermarket segment> EUR 1.4 mn one-time gain related to full take-over of Korean JV

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Pushing growth in Asia: Assumption of control of JV ElringKlinger Marusan Corporation

ElringKlinger concludes contract with JV partner assuming control of the 50:50 JV ElringKlinger Marusan, Tokyo, as of December 31, 2013

This results in an expected one-time gain in the range of EUR 16 to 18 mn, recognized already in BY 2013; no effect on 2013 sales

Expected impact in 2014: Full consolidation of ElringKlinger Marusan (until 2013: proportionate rate of 50%)> Additional sales revenue contribution of EUR 25 mn> Additional EBT approx. EUR 1.5 mn> PPA approx. EUR 1.5 mn

Key role in the Group’s Asia strategy (ASEAN region)> More than 20% of OE sales (incl. exports) generated in Asia> Strong growth in development projects with Asian customers

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Markets 2014

ElringKlinger expects overall worldwide LV production in 2014 to grow by around 2 to 3%

Signs of stabilization in Western European car sales, but no fast recovery: December car sales e.g. in France +9.4%, Spain +18.2%, Italy +1.4%, but ytd still -5.7% (France) and -7.5% (Italy)

China/ASEAN and North America continue to be the drivers in the short but also medium term

High degree of uncertainty in European truck sales due to pre-buying in H2 2013 related to start of EURO VI> EURO VI demand ramping up stronger as from Q2 2014 > Strong pick-up in US class 8 orders: up 40% yoy in December 2013

Product launches and structural growth in ElringKlinger’s core business unitsenable the Group to outgrow vehicle markets

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Outlook 2014: Financial performance

Based on the development of global vehicle production described, the ElringKlinger Group expects to see organic sales growth of 5 to 7% in 2014

Full consolidation of ElringKlinger Marusan will contribute additional EUR 25 mn in sales

Group EBIT margin should continue to improve slightly in 2014

Overall ElringKlinger is planning a further increase in adjusted EBIT in 2014 –targeting a range of EUR 160 to 165 mn (2013: approx. EUR 146 mn)

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Outlook mid-term: margin drivers

Strong trend at exhaust system specialist Hug to continue

Improving operating performance at Freudenberg France;Restructuring of Freudenberg France completed, signs of slight recovery in French car market (December 2013: +9.4%)

E-Mobility: Sales ramping up against high level of pre-expenses –break-even in 2014/15 depending upon BEV take-up rates at customers

Product ramp-up (PHM) gaining momentum in truck segment liaised to EURO VI as of Q2 2014

Internationalization of Engineered Plastics division in the US and China

Expansion of Aftermarket business in France, Italy and the US

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ElringKlinger Group

Thank you for your attention!

Disclaimer – Forward-looking Statements and PredictionsThis presentation contains statements about the future. These statements are based

on current expectations, market evaluations and predictions by the Management Board,

and on information that is currently available to them. The statements about the futureshould not be interpreted as guarantees of the future developments and results that they

refer to. Whilst the Management Board are convinced that the statements that have

been made, and the convictions and expectations on which they are based, are realistic,

they rely on suppositions that may conceivably prove to be incorrect; future results anddevelopments are dependant on a multitude of factors, they involve various risks and

imponderabilities that can affect whether the ongoing development deviates from the

expectations that have been expressed. These factors include, for example, changes tothe general economic and business situation, variations of exchange rates and interest

rates, poor acceptance of new products and services, and changes to business strategy.

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