The Future of Vacuum Technology Sustainable Growth Systems in our DKD Certified Laboratory...

The Future of Vacuum TechnologySustainable Growth

Thomas Babacan, CEO Oerlikon Vacuum

Oerlikon Capital Market Days 2008Zurich, September 25-26, 2008

Oerlikon Capital Market Days 2008

Disclaimer

This presentation is based on information currently available tomanagement. The forward-looking statements contained herein could be substantially impacted by risks and influences that are not foreseeable at present, so that actual results may vary materially from those anticipated, expected or projected.


Oerlikon Textile

Oerlikon Drive Systems

Oerlikon Coating

Oerlikon Solar

Oerlikon Components

Oerlikon Vacuum


§ Segment Description§ Technology

§ Market Description

§ Strategy

§ Financials

§ Summary & Outlook

Agenda


Oerlikon Leybold Vacuum Today’s Positioning

We are the leading Total Vacuum Solution Provider with best Application Know How and Service Capabilities

We deliver Premium Quality Products for mid- and high-end Applications

Time Tested products lead to Excellent Brand ImageWe innovate Vacuum Technology

Customer Proximity - We are close to the Customer with our Global Sales & Service Footprint


At a glance

Sales 2007: CHF 458m

Employees: 1,511 as of June 30, 2008

Products: Dry and oil-sealed fore vacuum pumps,roots pumps, pumping systems,turbomolecular pumps,cryo pumps, cryostats,gauges, leak detectors,accessories

Market Segments:

Process IndustryCoating TechnologyAnalytical & MedicalResearch & DevelopmentSemiconductor


Production locations in Germany, France and China

Dresden, Germany Tianjin, China

Valence, France Cologne, Germany

CoC Cryo: Coolvac

CoC Dry (HQ):

Screwline, Ruvac, Turbovac, Solutions

CoC Rotary Vane Pumps:

Sogevac, Trivac NT

Manufacturing Site Asia:

Ruvac, Trivac C, Sogevac, Solutions

Oerlikon Leybold Vacuum Production Sites


§ Segment Description

§ Technology§ Market Description

§ Strategy

§ Financials


Agenda


Importance of vacuum technology

Enabling Technology for many Manufacturing Processes & Analytical Methods

Decorative Coatings

Solar Cell Production

Wear Protection

Process Industry

Space Simulation

Research & Development Analytics & Life Style

Large Area Coatings


We are focusing R&D and operations on four technologies targeted on five application segments

§ Solar Technology § Architectural Glass, Coatings§ Data Storage§ Displays

Coating Technology

Analytical§ Mass Spectrometers § Electron Microscopes § Leak Detectors and

Residual Gas Analyzers

R & D§ R&D Equipment Manufacturers§ Universities & National Labs§ Space & Defense

Process Industry

§ Industrial Furnaces & Metallurgy§ Automotive, Lighting, Refrigeration§ Laser, Energy & Electro§ Chemistry & Pharmacy§ Industrial Machinery

Semiconductor § Manufacturers & End Users of Chip Production Equipment

Dry Fore Vacuum PumpsScrew and Booster Technology

Rotary Vane PumpsOil-Sealed Displacement Pump

Turbomolecular PumpsTurbines at Ultrasonic Speed

System Solutions


Solutions and services complementing our offer

Components Solutions ServicesRotary Vane Vacuum Pumps

Scroll and Piston Vacuum Pumps

Diaphragm Vacuum Pumps

Screw Vacuum Pumps

Roots Pumps

Turbomolecular Pumps

Oil Diffusion Pumps

Cryo Pumps

Turboradial Blowers

Valves und Fittings

Total Pressure Gauges

Worldwide Service Network

After Sales Service

Installation and Training

Maintenance and Repair,on-site or in our Service Centers

Replacement and Back-up Pool

Service Across All Brands

Decontamination

Calibration of Measurement Systems in our DKD Certified Laboratory

CustomizedExperimentation Systems

Customized Vacuum Solutions

Standard Vacuum Pump Systems



§ Technology

§ Market Description§ Strategy

§ Financials


Agenda


Total vacuum pump market 2007 by application

Total Market = CHF 4.6bn

ProcessIndustry

Coating

R&DAnalytics

Solar

Semi

Focus Markets§ Industry Profit Pool§ Accessible with Oerlikon

Vacuum’s Four Core Technologies

§ Differentiation via Application Know-how

Non-Focus Markets:§ Low-Margin Markets

§ Non Oerlikon Vacuum Technologies(Side Channel Blower, Liquid Ring Pump)

§ Differentiation via Price

Non-FocusMarket

CAGR 2008 – 2011: 4-5%

Pick & Place

Print & Paper

Wood


High growth potential in Asia and Americas

Europe27%

Americas23%

Asia50%

Addressed Market = CHF 3.6bn Oerlikon Vacuum Sales = ~ CHF 500m

Europe59%

Americas17%

Asia24%

CAGR 2008 – 2011: ~ 4-5% Grow double market


Solar, PI, and analytical most attractive marketsbasic growth drivers very healthy

Process Industry Analytical Instruments / R&DSolar / Coating

Key IndustryDrivers

CHF ~ 930mCHF ~ 530mMarket 2007

Key Attractions

~ + 5-6%~ + 13%

Analytical Driven by Rising Demand for Health Care, Life Style Products and Environmental Control

R&D Market Based on Government Funding

Technology Driven with High Entry Barriers in Analytical

Stable Growth Rate

Few Players in Analytical Broad Customer Base in R&D

Overall Medium Price Sensitivity

Strong Growth in Renewable Energies, Solar biggest Opportunity

Key Players inside Oerlikon Group (Solar and Wear Protection)

Few Customers with Global Footprint

CHF ~ 1,400m

~ + 3-4%CAGR (08-11)

Source: Frost & Sullivan; VDMA; Gartner; Oerlikon; Bain Analysis

High Oil & Gas Prices

Global Warming

Need to Save Energy due to Limited Fossil Energy Resources

Global Government Incentives

Growth of Producing Industries in Asia, Eastern Europe

Largest Market, Solid Growth

Lower Price Pressure due to Broad Customer Base

Premium Price Level in Chemical


Main industry trends coincide with Oerlikon vacuum strengths

§ Industry Entry Barriers intact due to Advanced Technology, Global Distribution & Service Network and High Qualification Cost in OEM Business

§ No Disruptive Replacement Technology for Vacuum Equipment in Sight

§ Importance of Cost of Ownership will Increase in Line with our Product Roadmap> More Request for Dry Technology> Trend to Small / Mid-Size MAG Technology in Coating Applications

§ Increased Demand for Complete Vacuum Solutions fits to our Core Competence

§ Price Pressure to be addressed by Expansion of China Factory which is also a Hub for Low Cost Country Sourcing

§ Overcapacities in Semi Down cycles give Opportunities to Drive Industry Consolidation


Source: Oerlikon, Company and analyst reports, Bain analysis

SEMI

OthersOLV

Busch

Adixen

Brooks / CTI / GP

Ebara

Shimadzu

EdwardsEdwards

OLV

Busch

Ulvac

Others

Solar

Oerlikon vacuum on track to become #2 in growth markets

Market Share by Addressed Market Segments 2007

Busch

OLV

Pfeiffer VacuumVarian

Edwards

PI

Others

Pfeiffer

OLV

Adixen

Busch

Shimadzu

Others

COA

Pfeiffer

Varian

OLV

Edwards

Others

R&D

Adixen

Edwards

Pfeiffer

OLV

Varian

ANA

Others

OLV: Oerlikon Leybold Vacuum



§ Technology


§ Strategy§ Financials


Agenda


Focused organic growth drives scale and profitability Based on Innovative Products & Cost Competitiveness

EBIT Growth by Almost 100%

Focusing on Product Innovations and Core Market Segments

§ Product Innovations

§ Become No. 1 in Solar

§ Gain Market Share in PI, R&D and ANA

§ Positioning as Total Solutions Provider

§ Screening for Industry Consolidation

Simplification Drives Cost Reduction

§ Platform Based Cost Reduced Product Portfolio

§ Supply Chain Management (Supplier & Logistics)

§ Extend China Production Site

§ Streamlined Overhead Structure

Ü CAGR = 2 x Market Growth Ü Substantial Cost Reductions


Innovation at the edge of physics:the vacuum systems of the CMS detector at CERN

Challenges for the Pumping System:

§ Operation in a magnetic field of 4T(50,000 times stronger than natural field of earth)

§ extremely complicated installation behind a 7mthick wall of concrete for radiation protection.

Based on our experience with the Large HadronCollider and the ATLAS detector, Oerlikon Leybold Vacuum mastered this challenge and obtained the CMS Gold Award 2008 for the successful design and installation of the requested vacuum system


Product innovations Enhancement of four Core Technologies in order to meet Future Market Needs

30 - 40% Complexity and up to 50% Cost Reduction with

new Product Platforms

§ System Solutions

§ Dry Fore Vacuum Pumps § Turbomolecular Pumps

§ Rotary Vane Pumps

- TRIVAC NT

- Generic platforms for sizes

- Customer Benefit throughdesign and applicationKnow-How

- SOLAR Systems

- Mechanical Turbopumps

- MAG Pump series

- Generic platforms for sizes

- Customizing requirementsfor vacuum processes

- Optimizing capacities


Vacuum - key technology for solar

Production of Silicon Ingots & Wafers Production

Coating of Wafers

Production of Modules incl. Lamination

Installation of Modules

Generation of TCO & Photo Electric Layers

Cleaning of Glass

Crystalline Silicon

Thin Film Technology

Vacuum required


Vacuum – systems for sustainability

§ All solar modules require vacuum processing at multiple stages of production

§ Oerlikon Leybold Vacuum has specially engineered products that are helping to make solar modules more affordable by reducing equipment downtime and improving process performance

§ Our industry experience and vacuum innovations have enabled us to make design decisions, large and small, that directly address the needs of the solar power market

Enabling Customers in Seeking Grid ParityVacuum Solutions Meeting Demands Fast and Efficiently


Strengthening customer proximity / customer interfaces

Grow Double than MarketGain Share

in PI and R&D, Market Leader

in Solar§ Increasing Customer

Proximity and Loyalty by enhanced Sales Support

- Increase local engineering and application Know-how

- Roll-Out of worldwide customer training program (Vacuum Academy)

§ Solutions

- Build up hubs in the regions

- Establish global processes and workflows to secure cost and quality

- Roll out engineering know-how and synergies to strengthen the customer interface

§ Further Market Penetration in Process Industry, R&D and Solar

- Additional direct sales force esp. in Asia (+50%) and USA (+30%)

- Expansion of distributor networkand E-Shop implementation

§ Services

- Increase of services & repair facilities and local customer approach

- Increase of market share in spare parts business with new pricing strategy


Realizing sales growth with lower breakeven and costs

Realizing Sales Growth

with a Simplified

Supply Chain

§ Locations

- Factory Expansion China in order to Double Volume by 2011

- Reduction of Manufacturing Depth by 10 %

§ Sourcing

- Enhancement of LCC Sourcing from 7% to 20%

- Reduction of Supplier Baseby 30%

§ Key Investments

- Solar Growth

- Facility Expansion China

§ Optimized Worldwide Logistics Concept

- Establishment of a worldwide Logistic Concept focussing on:> Freight Cost Reduction> Delivery Performance> Complexity Reduction


Buildings extension in Tianjin (CN) for local production

2,400 square meters

10,200 square meters under roof



§ Technology


§ Strategy

§ Financials § Summary & Outlook

Agenda


Strategic target - accelerate organic growth

250

464434

387389

265547

-5

6

2004 2005 2006 2007 1HY 2008

Total SalesEBIT

+6%

1,5%

-1,3%

10,8%11,8%

10.3%

EBIT Margin [%]

(in CHF m)


Operational target – improve working capital (WC)

WC Management Initiatives started mid 2007

• Project “Inventories” ww (lifetime project)

• Achievements YTD 2008• DIO - 11%

• DPO + 27%

• DSO +2 % vs. Sales +7%

DIO

2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 a c t

DPO

20 0 5 20 0 6 2 0 07 2 0 08 ac t

DSO

20 0 5 20 0 6 2 0 07 2 0 08 ac t



§ Technology


§ Strategy

§ Financials


Agenda


Executive summary – key take aways

Increase profitability to 16% EBIT

Oerlikon Vacuum Sustainable Strategic Position Strengthened with New Products in Dynamic Markets

Top Line Growth at Twice the MarketMainly Driven by Solar and Enforced Market Penetration in Fragmented Markets like Process Industry and R&D

Expansion of China Factory (100% Output Increase by 2011)

Complexity Reduction by New Product Platforms

Sustainable Level of Double Digit Profitability

The Future of Vacuum Technology Sustainable Growth Systems in our DKD Certified Laboratory...

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