OC Oerlikon : Earnings Presentation Q1 2024

Q1 2024 Financial Results

7 May 2024

Overview Q1

Q1 with improved sequential orders in Polymer Processing Solutions and robust profitability in both divisions

Orders

• Order intake +1.0% YoY at constant FX, including +4.8% from M&A 1)
• Polymer Processing Solutions up +38% vs. Q4'23; down 9% YoY FX adj. due to cyclical filament downturn as expected
• Surface Solutions stable despite soft PMIs

				-5.6%
				FX adj.: +1.0%
	681
		642

Q1'23

Q1'24

Sales

• Sales -19.9% at constant FX, including +3.6% from M&A 1); in-line with company expectations
• Driven by Polymer Processing Solutions: delayed investment decisions in filament and delayed shipments due to tensions in the Red Sea
• Surface Solutions with stable sales despite soft PMIs

-25.1%

FX adj.: -19.9%

735

550

Q1'23

Q1'24

Profit

• Robust operational EBITDA despite negative operating leverage
• Proactive cost actions supporting double-digit margin in Polymer Processing Solutions
• Surface Solutions with 122bps improved operational EBITDA margin YoY

Operational EBITDA

				-28.8%
	121				86
	16.5%		Margin	15.7%
	Q1'23				Q1'24

Numbers in financial charts of this presentation are in CHF m except when stated otherwise; discontinued Teknoweb, AM and OBA Automation activities are excluded in 2023 operational figures; 1) Riri consolidated as of March 1, 2023

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1) Source LMC as per March; 2) Source IATA

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mobility applications, e.g.

contraction in Euro Area

▪ Manufacturing PMIs in

Soft industrial activity

28% of 2023 Group sales

e-gearingand battery shielding

▪ Successful launch of new

coating generation 'BALINIT ▪ Successfully entering ALCRONA EVO' in Tooling

▪ Seeing customers selectively refocusing on combustion engine technology

and at neutral levels in the US and China; some early signs of positive momentum sequentially in Q1

production growth expected in 2024 1

▪ +1% light vehicles

Stable

14%

Automotive

Surface Solutions

General Ind. & Tooling

Soft end markets but some early signs of improving momentum

Polymer Processing Solutions

e-

Luxury

6%

Wait-and-see mode of customers

• Oerlikon Q1 sequentially supported as Q4 destocking stopped; continued soft end markets due to subdued demand in China
• Swiss watch exports -6% in Q1; continued recovery of tax-free shopping
• Expect high single-digit growth rates in mid-term

Aviation

8%

Continued recovery

• Recovery driven by MRO with increased flying hours; Q1 impacted by seasonality for equipment sales
• New plane production supported by passenger growth and energy efficiency
• +19% passenger growth in Feb YTD; +10% passenger growth expected in 2024 2

Filament

26%

1st sequential improvement since 2022

• Filament orders supported by sequential improvement
• Some initial signs of revitalization in small and mid-sized orders
• Underlying need for filament equipment intact; equipment market CAGR 01-22 of +4%

Non-Filament

18%

Soft PMIs; car launches reaccelerated

• Soft PMIs impacting broadly diversified geographies and end markets
• Some customers delaying investments, e.g. in nonwoven, staple fiber and industrial yarns applications
• Flow Control benefiting from reacceleration of car launches towards end of Q1

PMIs still soft but gaining momentum sequentially in Q1		Filament orders supported by
	sequential improvement

Surface Solutions with solid sales despite soft PMIs and improved profitability

Markets	Orders		Sales

Operational EBITDA

• Continued cautious customer purchasing behavior due to macro environment
• Soft industrial activity with PMIs in Europe in contraction zone while US and China at neutral levels; sequential momentum in Q1

• Increased +9.1% FX adjusted, including 8.6% from Riri and 0.6% organic
• Book-to-billratio of 1.05

• Increased +7.2% FX adjusted including +7.2% from Riri acquisition
• Flat organic development despite soft
  PMIs and difficult base as Q1'23 benefited from higher equipment sales in tooling and aviation
• Expect H2 sales to benefit from PMIs gaining momentum

• Improved supported by efficiency, innovation and continued pricing; despite higher input costs (e.g. labor) and FX
• Sequentially down as Q4 benefited from profitable YE equipment deliveries

Q1'24 sales split by markets

Order intake

								+2.3%
								FX adj.: +9.1%
	Energy	Tooling	Americas	APAC	382	391
Luxury
	14%	20%		23%	26%
	5%
General	23%		25%
Industry	13%	Auto-		52%
	Aviation	motive		Europe	Q1'23	Q1'24

Sales

(3rd party)

+0.6%

FX adj.: +7.2%

369	371
Q1'23	Q1'24

Operational EBITDA 1)

	+7.8%
61	65
16.3%	17.6%
	Margin
Q1'23	Q1'24

1) Margin based on unrounded figures and total sales, including intercompany sales; 2023 was restated at year end 2023 mainly for discontinued activities from the Additive Manufacturing business outside of the US

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Surface Solutions margins of 20%+ continue to be a key management focus

2019-21:	2022-23:	2024 - Mid-term:
Efficiency gains despite	Unprecedented input cost	Drive innovation,
lower sales during	pressure, not yet fully	operating leverage and
COVID ->18.3%	compensated	efficiency
margin in 2021

Clear path to 20%+ margin:

		20%+
Operational EBITDA margin:		▪ Continued pricing supported by
	17.5-18.0%		new dedicated pricing team and
16.9%		technology
		▪	Accelerating innovation &
			digitalization (SAP implemented
			by YE'23; digital twin rollout in
			2024 to digitize the coating
▪ Hyper-	▪ Structural		process)
▪	Operational excellence incl.
inflation	cost-out,
(specifically	efficiency,		continued footprint optimization
labor)	digitalization	▪	Overhead efficiency incl.
▪ CHF	▪ Initial pricing
	continued streamlining of
strength	▪ Portfolio
	organization
	optimization
2019	2024 guidance	Mid-term

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Polymer Processing Solutions orders improving sequentially; proactive cost control enabling robust margin

Markets	Orders		Sales		Operational EBITDA

• Filament market with sequential momentum following customers having postponed orders in 2023
• Non-Filament with lower demand, e.g. in nonwoven, staple fiber and industrial yarns, as some customers are preserving cash; Flow Control benefiting from reacceleration of car launches towards end of Q1

Q1'24 sales split by markets

Flow Control	Americas
Europe
	21%	13%
Nonwoven &	9%	55%	20%
Plant
					67%
Engineering	15%
Industrial &	Filament				APAC
Interiors

• Improving orders compared to second half year 2023
• Some initial signs of revitalization in small and mid-sized orders

Order intake

-15.8%

FX adj.: -9.3%

298

251

Q1'22

Q1'23

Q1'24

• Decreased -47% FX adjusted, reflecting low H2'23 order intake as customers postponed orders; furthermore, delayed shipments due to tensions in the Red Sea, shifting sales into the remainder of 2024
• Non-Filamentaffected by soft PMIs

Sales

(3rd party)

-51.0%

FX adj.: -47.4%

366
	179
Q1'23	Q1'24

• Robust margin despite cyclically low sales volume, supported by proactive cost actions implemented since Q3'22
• Counteracting operating leverage, FX and limited pass-through of higher input costs (e.g. labor, energy) to maintain volume

Operational EBITDA 1)

-67.8%
58
16.0%	19
10.5%
Margin
Q1'23	Q1'24

1) Margin based on unrounded figures and total sales, including intercompany sales; 2023 was restated at year end 2023 mainly for discontinued activities from Teknoweb and OBA Automation

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Q1 conclusion

Surface

Solutions

Polymer

Processing

Solutions

Pure Play transformation

Executing operationally and strategically

		Upside in EBITDA margin:
▪ Stable sales despite soft PMIs;		17.5-18.0%	20%+
	launched new coating	17%
	generation in Tooling
▪	Improved profitability by
	122bps YoY
		2019	2024	Mid-
			guidance	term

			Improving price-cost spreads of filament
▪	Improved orders	customers 1:
		sequentially						FDY
▪ Robust margin supported by	0					POY
		proactive cost control
			2014	2016	2022	2024

• On-track with plans to separate Polymer Processing Solutions
• Evaluating options with the aim of value creation for all stakeholders

	Confirming
	2024
	guidance
Sales	High single-digit
growth	% decrease
	Organic, constant FX
Operational	15.0-15.5%
EBITDA
margin

1) Chart representing average annual selling price of polyester products minus raw material cost minus conversion cost

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Q&A

Appendix

Q1 reconciliation of profitability measures

EBITDA to EBIT bridge

	Group
	Q1' 24	Q1' 23
EBITDA	85	114
Depreciation	-29	-31
Impairments	0	0
EBITA	56	83
Amortization of Acquired Intangibles	-11	-12
Other Amortization	-11	-10
Impairments	0	-1
EBIT	34	60

Operational profitability reconciliation

Surface Solutions

Q1' 24

Q1' 23

6458

-22-24

00

4234

-8-8

-5-5

0-1

2921

Polymer Processing Solutions

Q1' 24

Q1' 23

1955

-6-7

-00

1348

-3-4

-2-3

00

741

Operational EBITDA

Restructuring expenses Discontinued activities Acquisition and Integration costs

EBITDA

Operational EBIT

Restructuring expenses Impairments related to restructuring Discontinued activities Acquisition and Integration costs

EBIT

Group
Q1' 24	Q1' 23
86	121
-0	0
-1	-6
-0	-1
85	114
Group
Q1' 24	Q1' 23
36	71
-0	0
0	0
-2	-10
-0	-1
34	60

Surface Solutions
Q1' 24	Q1' 23
65	61
-0	0
-1	-3
-0	-0
64	58
Surface Solutions
Q1' 24	Q1' 23
31	26
-0	0
0	0
-2	-5
-0	-0
29	21

Polymer Processing Solutions

Q1' 24Q1' 23

1958

00

-0-3

0-0

1955

Polymer Processing Solutions

Q1' 24Q1' 23

846

00

00

-0-5

0-0

741

2023 operational EBIT and operational EBITDA are restated for discontinued activities

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