SAF Holland : Presentation FY 2020 (1.8 MB)

FINANCIAL RESULTS FY 2020

ALEXANDER GEIS, CEO INKA KOLJONEN, CFO

MARCH 25, 2021

AGENDA

1

HIGHLIGHTS 2020

Alexander Geis

2

STRONG FINANCIAL PERFORMANCE

Inka Koljonen

3

OUTLOOK

Alexander Geis

4

APPENDIX

REVIEW 2020: REVISED GUIDANCE ACHIEVED OR EVEN EXCEEDED

• • Sales in line with guidance influenced by unfavourable market conditions and COVID-19

• • Adj. EBIT margin on par with previous year and above revised guidance of 5 to 6 per cent

• • Capex ratio more efficient than pre-pandemic guidance based on investment discipline

• • NWC ratio significantly improved led by effective net working capital measures

• • Operating free cash flow at record level; excellent cash conversion rate

EXCELLENT MARGIN AND CASH FLOW GENERATION IN A DIFFICULT MARKET ENVIRONMENT

REVIEW 2020: ROBUST PERFORMANCE IN A CHALLENGING ENVIRONMENT

Resilience of business model

•  Strong market position in main regions

•  Higher share of profitable aftermarket business safeguarded profitability in 2020

•  FY 2020 adjusted EBIT margin with 6.1 per cent nearly stable compared with last year's 6.2 per cent

Preserved profitability

•  FORWARD 2.0 restructuring program in Americas and global SG&A cuts delivered targeted cost savings

•  New supplemental collective agreement provided further structural cost savings

•  Salary cuts and short time work

Financial discipline

•  Effective working capital management and investment activities

•  Strong operating free cash flow of more than 100 million

Continued strategy execution

•  Roll-out of SAF- HOLLAND Operational Excellence System

•  Ramp-up of Yangzhou greenfield activities

•  Further footprint optimization in Americas and APAC

•  Strong focus on aftermarket

GROUP: STRUCTURAL MARGIN IMPROVEMENTS ACHIEVED ACROSS ALL REGIONS

MAIN DRIVERS

• • Sales decrease by 25 per cent mainly driven by the Americas region (-38 per cent), while the EMEA region was the most resilient (-12 per cent)

• • After bottoming in Q2 2020, sales have recovered sequentially in all regions, especially in EMEA

• • Streamlining of product portfolio, structural cost reductions and higher share of resilient aftermarket business safeguarded profitability

• • Approx. € 12.0 mn of cost savings are not sustainable

  (short-time work, etc.)

• • Inventory write-downs of € 8.9 mn included in adj.

  EBIT (not adjusted)

• • Overall adjustments down from € 45 mn to € 28 mn demonstrating improved quality of earnings

GEARED TO SALES GROWTH WITH

MARKET REBOUND AT SIGNIFICANTLY

BETTER MARGINS

EMEA: FY 2020 ADJ. EBIT MARGIN ON PAR WITH PREVIOUS YEAR DESPITE COVID-19

MAIN DRIVERS

• • Due to excellent market position and high share of aftermarket business, EMEA most resilient with only 12 per cent sales decrease and still 6 per cent adj. EBIT margin in Q2 2020

• • Supplemental collective agreement and structural cost savings in SG&A helping to lower the break-even point in the OE business

• • Approx. € 6.2 mn of the cost savings are not sustainable (short-time work, etc.)

• • Inventory write-downs of € 3.2 mn included in adj.

  EBIT (not adjusted)

EMEA REGION WELL POSITIONED FOR THE EXPECTED MARKET RECOVERY

AMERICAS: RESTRUCTURING INVESTMENT IS PAYING OFF

MAIN DRIVERS

• • With 38 per cent sales decline and adj. EBIT margin down to 0.6 per cent in Q2, the Americas region was strongly hit by the pandemic

• • FX effects (-2.1 per cent respectively € 11.5 mn)

• • Structural reductions in COGS and SG&A under program FORWARD 2.0 and exiting of lossmaking product lines led to a strong margin improvement from Q3 onwards

• • Approx. € 5.8 mn of cost savings are not sustainable

• • Inventory write-downs of € 4.9 mn included in adj.

  EBIT (not adjusted)

• • Introduction of new ductile fifth wheel will strengthen market position in standard segment

AMERICAS REGION PREPARED FOR PROFITABLE GROWTH

APAC: LOCKDOWN AND DELAYED RAMP-UP WEIGH ON SALES AND PROFITABILITY

MAIN DRIVERS

• • China: Consolidation of production network and cleaning up of the balance sheet completed

• • APAC (excl. China): Positive adj. EBIT margin despite sales drop of 26 per cent

• • Substantially lower SG&A costs in absolute and relative terms

• • Inventory write-downs of € 0.8 mn included in adj.

  EBIT (not adjusted)

• • China ready for the re-start; India ready for the market recovery

APAC REGION HAS LAID THE FOUNDATION FOR ADRESSING PROFITABLE GROWTH

INVESTMENTS: DISCIPLINED INVESTMENT POLICY

* Purchase of PP&E and intangible assets

• • Investment approval process and capital allocation worked very well in 2020

• • Focus of investing activities: further automation of production processes at various locations in the Americas region and Germany.

• • Investment into growth and efficiency

• • Investments in R&D stable at around 2 per cent of sales

RETURN TO SUSTAINABLE LONG-TERM INVESTMENT RATIO ENABLES PROFITABLE GROWTH PATH

NET WORKING CAPITAL: SUBSTANTIAL IMPROVEMENTS ACHIEVED

• • Net working capital significantly down both in absolute and relative terms

  • • Inventories down by 24.8 per cent to € 126 mn

  • • Trade receivables down by 24.3 per cent to € 95 mn

  • • Trade payables only down 2.9 per cent to € 107 mn

• • Cash-is-King program supported good performance

EFFICIENT STRUCTURAL BASIS TO MEET CYCLICAL REBOUND IN 2021

* Net working capital ratio (ratio of inventories and trade receivables less trade payables to LTM sales); Ratios for 2016 to 2019 retrospectively adjusted according to the new definition

CASH CONVERSION: RECORD LEVEL OPERATING CASH FLOW *

CASH FLOW (€ MN)

• • Working Capital Management key factor in improving the operating free cash flow before taxes

  *before income tax paid

• • One-time fly-off cash conversion rate of 177 per cent driven by cyclical effects, mitigation measures and structural improvements

CYCLICAL REBOUND OF NWC WILL IMPACT OPERATING CASH FLOW IN 2021

CASH CONVERSION RATE: EXCEPTIONAL RESULT

in EUR thousands

2016

2017

2018

2019

2020

• • before income tax paid ** Operating cash flow divided by EBITDA

NET DEBT/EBITDA*: SIGNIFICANT DELEVERAGING IN CHALLENGING ENVIRONMENT

* Unadjusted EBITDA (LTM)

• • Q2 2020 strongly hit by COVID-19 with substantially lower EBITDA and higher Net Debt

• • Q4 2020 shows strong improvement driven by significantly lower Net Debt and substantially better EBITDA (underlying drivers: lower NWC and investments)

• • Strong gross liquidity position totalling € 371 mn (PY: € 243 mn)

• • Improved balance sheet structure and financial headroom provide flexibility

ROBUST FINANCIAL PROFILE SET TO CONSISTENTLY IMPLEMENT STRATEGY AND UNLOCK ADDITIONAL GROWTH OPPORTUNITIES

STRATEGIC FOCUS 2021: HIGH QUALITY GROWTH IN GLOBAL RECOVERY

• • EMEA: building on excellent market position with increasing market shares

• • Americas: gaining back customer confidence and continuing enhancements

• • APAC: re-starting China and utilizing India and Australia market opportunities

Managing profitable growth	Strengthening individual	Expanding technological	Driving ESG
market positions	advantages	excellence
in uncertain environment

• • Product improvements for total cost of ownership

• • Strong focus on digitisation, electrification and autonomous driving

• • New electric driven axle systems delivered to major key customers

• • New digital business models

TRUCK AND TRAILER PRODUCTION 2021: STRONG UPSWING

EUROPE	NORTH AMERICA	SOUTH AMERICA*	CHINA	INDIA
Truck	Trailer	Truck	Trailer	Truck	Trailer	Truck	Trailer	Truck	Trailer
+15%	+16%	+41%	+32%	+30%	+6%	-15% to -20%	-5% to -10%	+30%	+40%

SIGNIFICANT REBOUND IN	•	HIGHER VOLUMES IN EUROPE	CHINA WITH DECLINING
NORTH AMERICA AND INDIA	AND SOUTH AMERICA	VOLUMES
Financial Results FY 2020

NOTE: Market estimates for trucks and trailers based on ACT Research, CLEAR, Deutsche Bank Research and local sources * mainly Brazil

GUIDANCE 2021*

FY 2020

FY 2021

€ 959,5 mn

6.1 per cent

CAPEX

2.5 per cent of sales

€ 1.050 mn to € 1.150 mn

Around 7 per centAround 2.5 per cent of sales

• • The EBIT guidance for FY 2021 is based on the assumption that in the remainder of the year there will be no unexpected impacts from the ongoing COVID-19 pandemic on the production and supply chains.

WE ARE ON TRACK TO ACHIEVE OUR MID-TERM TARGETS

KEY TAKEAWAYS

• 1. Proven margin and cash flow performance during pandemic environment

• 2. Resilient and high aftermarket share

• 3. Best positioned for recovery with leaner structures and improved product portfolio

• 4. Benefiting from an upswing in Europe, North America, Brazil and India based on leading market positions

• 5. Disciplined approach to manage demand and working capital investments in recovery cycle

FINANCIAL CALENDAR & IR CONTACT

DATE

25.03.2021

30.03.2021

31.03.2021

14.04.2021

12.05.2021

02.06.2021

03.06.2021

10.06.2021

12.08.2021

01.09.2021

15.11.2021

Publication of the Annual Report 2020

EVENT

Jefferies Pan-European Mid-Cap Virtual Conference

Virtual Management Roadshow

Publication of the Quarterly Statement Q1 2021

ODDO BHF Next Cap Forum

Annual General Meeting

Publication of the Half-Year Financial Report 2021

Commerzbank Corporate Conference

Publication of the Quarterly Statement Q3 2021

APPENDIX

TRUCK AND TRAILER PRODUCTION 2020: STRONGLY INFLUENCED BY COVID-19

EUROPE	NORTH AMERICA	SOUTH AMERICA**	CHINA	INDIA
Truck*	Trailer	Truck	Trailer	Truck	Trailer	Truck	Trailer	Truck	Trailer
-27%	-23%	-38%	-39%	-20%	+6%	+50%	-5%	-60%	-60%

NOTE: Market estimates for trucks and trailers based on ACT Research, CLEAR, ACEA and local sources

* Registrations, ** mainly Brazil

P&L FY 2020: EXTRAORDINARY ITEMS

in EUR thousands

Sales

Cost of sales Gross profit Other income Other expenses Impairment of goodwill Selling expenses Administrative expenses Research and development costs Operating profit

Share of net profit of investments accounted for using the equity method

EBIT

Finance income Finance expenses Finance result Result before taxes Income taxes

Tax rate (%)

Result for the period

FY 2020

959,519 -790,673 168,846 2,632 -2,489 - -56,119 -63,246 -19,468 30,156

946

31,102 2,275 -14,047 -11,772 19,330 -5,154 26.7% 14,176

TotalAdjustmentsFY 2020 adjusted*

-

9,985 9.985 -641 2,489 - 7.549 7,979 336 27,697

-

27,697 - - - 27,697 -7,379

20,318

959,519 -780,688 178,831 1,991 - - -48,570 -55,267 -19,132 57,853

946

58,799 2,275 -14,047 -11,772 47,027 -12,533 26.7%

34,494

in % of sales

100.0% -81.4% 18.6% 0.2% - - -5.1% -5.8% -2.0% 6.0%

0.1%

6.1% 0.2% -1.5% -1.2% 4.9% -1.3%

3.6%FY 2019

1,284,155 -1,082,414 201,741

4,010

-2,971

-6,692

-70,754

-71,289

-20,794 33,251

1,948

35,199 2,099 -13,087 -10,988 24,211 -13,914 57.5%

10,297

* Adjusted earnings correspond to the management perspective. The adjustments essentially include restructuring and transactions costs, write-off of goodwill, depreciation and amortization arising from purchase price allocations, expenses arising from the step-up of inventories arising from purchase price allocations and remeasurement effects related to call and put options.

Total AdjustmentsFY 2019 adjusted*in % of sales

1,284,155 100.0%

15,857 15,857

-2,167

2,971

6,692

7,688

13,086

490 44,617

-

44,617 - - - 44,617 -5,158

39,459

-1,066,557 -83.1%

217,598 16.9%

1,843 0.1%

- -

- -

-63,066 -4.9%

-58,203 -4.5%

-20,304 -1.6%

77,868 6.1%

1,948 0.2%

79,816 6.2%

2,099 0.2%

-13,087 -1.0%

-10,988 -0.9%

68,828 5.4%

-19,072 -1.5% 27.7%

49,756 3.9%

GROUP: RECONCILIATION EBIT TO ADJUSTED EBIT

in EUR thousands

FY 2020

FY 2019

Change absolute

Change in %

EMEA: RECONCILIATION EBIT TO ADJUSTED EBIT

in EUR thousands

FY 2020

FY 2019

Change absolute

Change in %

AMERICAS: RECONCILIATION EBIT TO ADJUSTED EBIT

in EUR thousands

FY 2020

FY 2019

Change absolute

Change in %

APAC: RECONCILIATION EBIT TO ADJUSTED EBIT

in EUR thousands

FY 2020

FY 2019

Change absolute

Change in %

D&A RATIO: AT PEAK LEVEL

• • Investments in plant, property, equipment and intangible assets reached 2.5 per cent of Group sales (FY 2020 guidance: around 2.5 per cent of Group sales)

• • Operating cash flow with € 137.9

  mn (168 per cent of EBITDA) covers investments by far

• • Focus of investments: Rationalisation investments in the US and Germany

• • Close monitoring of the investment approval process to streamline capital allocation

• • Depreciation and Amortization ratio (excl. PPA, impairment of goodwill and R&D projects) increased due to higher investments in recent years and significantly lower sales

GROUPEMEA

AMERICASAPAC

CURRENT FINANCING STRUCTURE

• • RCF mostly undrawn ** option for an additional € 100 mn *** additional one year extension possible

Product

Loan RMB

Promissory note loan old (7 years) Promissory note loan new (3 years) Promissory note loan new (3.5 years) Revolving credit facility*** Promissory note loan new (5 years) Loan

Promissory note loan old (10 years) Non-current loan

Promissory note loan new (7 years) Promissory note loan new (10 years)

Amount € mnMaturity date

9.0 06/2022

5.0 11/2022

141.0 03/2023

20.0 09/2023

200.0 10/2024

69 03/2025

5 09/2025

9 10/2025

45.0 06/2026

15 03/2027

5 03/2030

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