Investing in a global industry leader with profitable growth and a transforming portfolio

Transcription

1 Investing in a global industry leader with profitable growth and a transforming portfolio Investor Presentation April 2018

2 Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Drives Systems Segment 5 Financials 5.1 Group overview 5.2 Latest quarterly results 6 Appendix Page 2

3 Oerlikon s investment proposition A UNIQUE PROPOSITION Oerlikon creates innovative surface solutions, advanced materials and polymer processing, addressing customers challenges and helping them succeed in their industries. Over 1000 engineers are dedicated to continuously develop new solutions, materials and technologies with and for our customers. Oerlikon is a leading global technology and engineering group serving its customers in 37 countries, generating CHF 2.85bn sales (FY 2017) and distributing a sustainable dividend to its shareholders. Oerlikon has a net cash position and an unleveraged balance sheet allowing for organic and inorganic investments WITH TWO ATTRACTIVE INVESTMENT PILLARS PROFITABLE GROWTH PORTFOLIO TRANSFORMATION OPPORTUNITY Page 3

4 Enable organic growth at attractive margins in Surface Solutions PROFITABLE GROWTH 4-6% revenue CAGR with sustainable EBITDA margin profile of 20-22%* Leader with unique competences #1 and #2 market positions Attractive end markets Diversified industry exposure ~2-3% premium to global GDP Presence across entire surface solutions value chain Dedicated business models to match customer needs Aviation, automotive, tooling, power generation, general industry Build on trusted customer relations Technological leadership & innovation Proven and diversified business model with global network > customers >40 R&D sites & >50 global partnerships >60% service revenue 154 sites in 37 countries Global OEMs and tier 1 clients in all end markets Top 10 customers: ~17% of sales Widest ranging portfolio of surface technologies, advanced materials, coating equipment and services Client-facing model offering engineering, coating services and solutions in materials & equipment 1 excl. investments in Additive Manufacturing ADDITIONAL GROWTH OPPORTUNITY: RECOVERY IN LEADING MANMADE FIBERS SEGMENT AND SUCCESSFUL REPOSITIONING OF DRIVE SYSTEMS SEGMENT Page 4

5 Oerlikon s strategic portfolio priorities PORTFOLIO TRANSFORMATION OPPORTUNITY Surface Solutions Segment CHF million World market leader with widest ranging portfolio of surface technologies, advanced materials, coating equipment and services CHF million sales (2017) Manmade Fibers Segment CHF 740 million From melt to yarn, fibers and nonwovens - world market leader for systems / plants used in the production of manmade fibers Drive Systems Segment CHF 730 million Worldwide leading supplier of complete drive systems as well as gear systems and single components for transmissions Creating a global surface solutions and advanced materials powerhouse Organic investments: innovation, markets, applications and technologies Additive Manufacturing M&A Manage market cycle Execution of capacity increase on a variable basis to capture opportunities from recovery Maintain technology and market leadership Repositioning successful and effects visible (growth and profitability) Drive innovation and market share Benefit from end market recovery REDEPLOY CASH AND BALANCE SHEET IN PROFITABLE GROWTH EVALUATE ALL VALUE CREATING OPTIONS Page 5

6 Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Drives Systems Segment 5 Financials 5.1 Group overview 5.2 Latest quarterly results 6 Appendix Page 6

7 Attractive end market exposure Diversified exposure to early and late cycle markets Solving customer problems at center of value proposition

8 Diversified industry exposure Delivering customer value by delivering unique functionality to surfaces CUSTOMER VALUE Oerlikon s surface solutions are used to enhance material and surface properties to serve a diverse array of functions to address industry challenges. Separating form and function and giving a purpose to the surface With Oerlikons capabilities in engineering, material processing and surface solutions we enhance performance of industrial components and empower customers do to things they could not do before Advancing industrial innovation AEROSPACE Key challenge: Increasing turbine efficiency and use lighter weight materials Contribution example 5% overall efficiency increase in engine at improved safety AUTOMOTIVE Key challenge: increase manufacturing productivity & improving fuel efficiency to comply with regulation 2-4% Reduced fuel consumption Contribution example up to 40% Friction reduction TOOLING Key challenges: Improving tool quality, performance and durability at lower service times and reduce costs environmental friendly 2.5x increased drilling speed Contribution example ~67% tool lifetime extension POWER GENERATION Key challenges: Improved gas turbine efficiencies with less service intervals to improve client s cost curve position maintenance free solutions (oil & gas) Contribution example 2% overall efficiency increase at a 530MW gas turbine GENERAL INDUSTRY Hardly any industry where Oerlikon Technologies cannot add value through its dedicated competencies Serving: consumer goods, medical, pulp/paper & print, steel & metal processing, food/packaging, engineering Contribution example Coatings can prolong the service life by a factor of up to 50 Page 8

9 Leading Technologies

10 Oerlikon builds on a leading, wide-ranging portfolio of surface technologies HARDENING NITRIDING Plasma nitriding Gas nitriding ~CHF 0.5bn market Depth: mm THIN-FILM COATING PVD PECVD (PACVD) ~CHF 3bn available market ~CHF 0.6bn insourced Thickness: 0.1µm 50µm THICK-LAYER COATING Thermal spray Laser Cladding ~CHF 8bn available market ~CHF 2bn insourced Thickness: 20µm 10mm Comprehensive surface functionalities Oerlikon offers > 20 different surface properties Page 10 corrosion protection environmental protection strength abrasion protection thermal protection safety hardness chemical stability conduction control permeability control clearance control anti-reflection anti-sticking color flexibility decorative enhancement thermal stability easy cleaning wear resistance antibacterial bio-compatibility magnetism control insulation control erosion protection

11 Diversified business model serving customer needs Range of ways to market across service, equipment and materials Continued focus on technological leadership to foster market leading positions

12 Business model Matching customer challenges with standard and customized solutions Materials solutions Powders and consumables used in thermal spray Large formula portfolio in specialty & commodity products Equipment solutions Engineered thermal spray & coating systems Spray guns Sales through key accounts and channel partners Service solutions Providing engineering, surface coatings and pre-and posttreatment as a service Global network of 154 centers with 600 machines Spray gun System USP in application know-how of equipment and material Oerlikon s IP sits in the specific process know-how and materials competence Client relations have an R&D to R&D character Long-lasting client relationships due to design-in and certification processes High level of recurring customer demand for materials, equipment and consumables USP in proximity to customers Logistics competence (fast delivery times) Network scaling effects Flexible, low investment to further expand existing sites and network Supporting customers throughout life-cycle Competitors Materials HC Stark, Praxair, Höganäs Competitors Equipment Praxair, Progressive Surface, GTV Competitors Service Ionbond (IHI), Eifeler, Praxair, Chromalloy Page 12

13 Service Equipment Material Business model Leading positions and priorities FY 17 Revenue & market position Revenue CAGR Strategic priorities CHF 0.54bn revenue >30% market share in materials (Aero & Defense) ~20% market share in materials (Power Generation) >40% market share in equipment (Aero & Defense) ~35% market share in equipment (Power Generation) +5% +4% Expand materials portfolio & reduce time to market (Scoperta acquisition) New launch of thermal spray coating system Increase tailored solutions approach in materials and equipment CHF 0.83bn revenue ~30% PVD market share (#1) ~40% friction systems market share (#1) ~15% nitriding market share (#1) +7% Strengthen #1 position by expanding network, application and product range Accelerate service growth / leverage current momentum Page 13

14 Business model Global coating center network 154 SERVICE CENTER FOR GROWTH Diversified regional exposure allows servicing of global and local customers +1.7% +3.1% Ongoing network expansion aligned to customer demand and regional dynamics +2.1% +1.2% +5.4% +15.2% Asset light capacity expansion through both additional on-site capacity and new centers Outperform growth in Asia and Europe GLOBAL NETWORK - DIVERSIFIED SALES Europe 4% North America Asia / Pacific 32% Sales FY 17 46% RoW 18% GDP* OERL Regional GDP growth versus Surface Solutions growth Source: IMF; average Page 14

15 Driving profitable growth Levers of growth in customer alignment, innovation, regional expansion and M&A Additive Manufacturing as adjacent structural growth opportunity

16 Three drivers of profitable growth 1. MID-TERM MARKET GROWTH 2. OERLIKON STRUCTURAL GROWTH 3. M&A OPPORTUNITIES Unlevered balance sheet Net cash position of ~CHF 500m Continued FCF generation End market exposure to cyclical but growing markets Aero +4-5% Automotive +2-3% Tooling ~+3% Power Gen ~+2% Gen. industry ~+3% Oerlikon has the ability to outgrow end market trends Customer alignment Innovation Regional expansion Value chain Additive Manufacturing Supporting structural growth with acquisitions Access new customers & industries New & adjacent tech. & materials Geographical expansion Value chain integration Thermal spray service business Targeted EBITDA margin profile of 20-22%* 1 excl. investments in Additive Manufacturing Page 16

17 AERO AUTO TOOL POWER Structural growth drivers in detail Achievements (Examples) Potentials Customer alignment Leverage existing customer relationships and industry expertise GROUP Building a client facing structure along industries Alignment in sales and management structure Moving to more key account management Identify and address untapped markets and applications Top-Selling CUSTOMER Innovation Leverage leading technological capabilities 2010 introduction special carbides for aero applications 5 year qualification period with leading OEMs 50% increase year-over-year expected for 2017 Innovation pipeline for coating solutions, materials and equipment Regional expansion Expand and leverage network Follow development of new industrial poles (SEA), i.e. Malaysia, Philippines, South Korea Today 36 centers in Asia (24 in 2010 and 12 in 2005) 8 focus countries defined 3-4 new coating centers p.a. Value chain Expand value added offering 1x 10x E 2013 acquisition of Rox regrinding technology - an important backward integration step in recoating tools Today, Rox systems in >15 centers established Grew revenue 10x since acquisition Expansion into additional preand post treatment activities Increasing service value per tool/component Page 17

18 From surface to structure Leveraging Oerlikon s core competencies to scale the entire AM value chain LEVERAGING LEADING CAPABILITIES OF SURFACE SOLUTIONS IN AM OFFERING: 1. AM-specific metal powders including, Ni, Co, Cu, Fe, Ti & Al alloys 2. Application engineering and R&D to support customer s AM development 3. Prototype production metal and plastic 4. Series production of advanced metallic components using AM and state of the art post-processing technologies DELIVERING ADVANCED MATERIALS & COMPONENTS GLOBALLY HELPING OUR CUSTOMERS REALIZE THE VALUE OF ADDITIVE MANUFACTURING Additive Production AM Equipment Inspection & Quality Applications Engineering Testing & Assembly Post-Processing Atomization & Materials Page 18

19 Additive Manufacturing Executing projects across the entire value chain and various industries Evaluation / Development Test and qualification programs for aerospace/defense Next generation AM platform Materials Differentiated portfolio of print-tested AM powders Installation of VIGA / EIGA 1 equipment to boost quality and capacity Prototyping Ongoing prototyping for one of the largest auto manufacturers in Germany Ongoing prototyping for Tier 1 auto component manufacturers Series Services Major defense customer Major power generation customer 1 Vacuum Induction Gas Atomization (VIGA) / Electrode Induction Gas Atomization (EIGA) Current Status / Examples Boeing strategic partnership GE Additive technical preferred partnership Partner in industrialization consortium (Airbus / Safran) Space launcher company Aerospace customer qualified Ni-based powder European machine manufacturer distributing Oerlikon powders Specialty Ni-based alloy being developed with Scoperta technology for Power Generation industry Prototyping of engine components Various filter housing prototypes made from aluminum Power generation prototypes made from Ni-based super-alloys expected to be implemented in 2018 models Army helicopter program / current program Antenna program for defense / in development Combustion components / current Combustion cover plates / future Assessment / Outlook 5 year program 5 year program 4 year program 2 year program Expected growth of over 30 % Strong growth over 3 years Potential 2 year contracts possible for Ni-alloy in US New car model development in response to diesel crisis and electric cars drives growth Growth in plastics and metal AM for prototyping auto components 5 year program 500+ units / p.a. 8 year program 800+ units / p.a. 5 year program units / p.a. 5 year program 600 units / p.a. Page 19

20 Oerlikon Transformation Streamlining the portfolio and focus on Surface Solutions Divestitures Acquisitions Coating Segment: Rox acquisition Coating Segment: Metco acquisition Surface Solutions Segment: Laser Cladding Services acquisition Manmade Fibers Segment: Trützschler Nonwovens acquisition Surface Solutions Segment: Citim & DMX acquisition Solar Segment: Segment sold Textile Segment: Natural fibers businesses sold Advanced Technologies Segment: Segment sold Vacuum Segment: Segment sold Recentis & Scoperta acquisition Premateria & DiaPac acquisition DIARC Technology Oy & Sucotec AG acquisition 2018 Page 20

21 Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Drives Systems Segment 5 Financials 5.1 Group overview 5.2 Latest quarterly results 6 Appendix Page 21

22 KEY FACTS Manmade Fibers Supplying Industry Solutions from Melt to Yarn, Fibers and Nonwovens #1 IN CONCENTRATED MARKET The polyester chain is quite consolidated on both the customer and competitor front largest competitor is Japanese TMT Machinery 25 companies represent over 60% of global manmade fibers capacity 22 of which are Oerlikon customers UNIQUE CUSTOMER BENEFITS FOR MANMADE FIBER APPLICATIONS Long-term engineering competencies ensure highly reliable processes Compact machine design an efficient use of space including control elements embracing Industry % of FY17 Group revenue Expected growth rate ~2-3% FOCUS ON CYCLE MANAGEMENT Current market improvement driven by market consolidation, performance and technology upgrades ahead of 13th Chinese five-year plan Lean in terms of vertical integration and corporate setup Continuous improvement in energy efficiency achieving energy savings of up to 50% Low production cost (labor, downtime and maintenance cycles) High-quality output Leading technology from melt to yarn, fibers and nonwovens Through cycle target of average: CHF750m to CHF850m sales (peak up to CHF 1bn) Mid-teens EBITDA margin Spinning plants (~45% of sales) POY, FDY, IDY spinning plants produce endless multifilament yarn for textile & technical applications Texturing machines (~15% of sales) DTY texturing machines crimp the pre-oriented yarn (POY) to give a cotton-like touch BCF carpet (~15% of sales) BCF plants produce endless multifilament yarn for home textile & carpet applications Plant engineering (~10% of sales) Plant engineering for continuous polycondensation and staple fiber plants Customer services (~15% of sales) Original parts supply, installation, training, surface and material testing Page 22

23 naphtha CRUDE OIL polyester melt naphtha Oerlikon in the middle of the polyester value chain ENERGY AND UPSTREAM PETROCHEMICALS POLYESTER CHAIN END MARKETS px SPINNING PLANT POLYESTER YARN PTA PLANT MEG PLANT textile processing APPAREL REFINERY HOME TEXTILES polyester melt TECHNICAL TEXTILES AROMATICS PLANT ethylene STEAM CRACKER POLYMER PROCESSING (POLYCONDENSATION) Oerlikon focus POLYESTER CHIPS PET-PACKAGING PX = paraxylene; PTA = purified terephthalic acid; MEG = monoethylene glycol; PET = polyethylene terephthalate. Page 23

24 Customer example Spinning plant DAILY OUTPUT: BOBBINS (15 KG EACH) t/d polycondensation 504 WINGS POY 144 WINGS FDY 648 spinning positions 1 TRAIN WITH 275 WAGONS (TOTAL LENGTH OF 4 KM) Winder Page 24

25 Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Drives Systems Segment 5 Financials 5.1 Group overview 5.2 Latest quarterly results 6 Appendix Page 25

26 KEY FACTS Drive Systems Leading supplier of transmission systems, gears and drive solutions HIGH PERFORMANCE APPLICATIONS Drive Systems is a leading provider of gear, drive and shifting solutions Focus on difficult-to-produce, high-performance products in high-end applications Network of sales, manufacturing, engineering and R&D sites supports local needs of Oerlikon s globally active customers 5 KEY MARKETS The segment is mainly active in Agriculture, Construction, Transportation, Automotive and Energy (mining, oil & gas) end markets Applications with limited exposure to the commoditized gear component market GROWTH OPPORTUNITIES FOLLOWING REALIGNMENT 24% of FY17 Group revenue SELECTED CUSTOMERS Roll out of product portfolio in new end markets Increasing penetration of e-drives market Successful realignment of Drive Systems has shown in margin improvement Streamlining of the product portfolio with focus on key product lines and reduced product depth Implementation of a focused factory concept with clear lead factories for product lines & resizing of workforce Improve order quality and focus on key customers and higher-value-added projects Achievements -3% to >10% EBITDA margin improvement between 2015 and 2017 Page 26

27 Drive Systems Segment Wide range of gear and drive solutions GEAR COMPONENTS broad range of gears, shafts and gear components of all types SHIFTING SOLUTIONS a wide range of synchronizers, clutches and clutch packs PLANETARIES (TORQUE-HUB ) Torque-Hub planetary drives DRIVE ASSEMBLIES on/off-highway drive assemblies AUTOMOTIVE AND E-DRIVES manual, AMT & DCT transmissions, electric & hybrid transaxles, PTU s & differentials, control systems ATV s / UTV s differentials for All Terrain Vehicles and electric axles for golf cars Page 27

28 Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Drives Systems Segment 5 Financials 5.1 Group overview 5.2 Latest quarterly results 6 Appendix Page 28

29 Oerlikon Group Key financial figures in CHF million Key financial figures Order intake Sales EBITDA margin 14.6 % 14.3 % 12.7 % % Cash flow from operations Net working capital R&D Total equity Net cash ROCE 8.2 % 5.7 % % % EPS (reported) Dividend Incl. one-time restructuring cost of CHF 112 million and impairments of CHF 476 million Page 29

30 Oerlikon Segments Key financial figures in CHF million Key financial figures Surface Solutions Order intake Sales EBITDA margin 20.0 % 22.2 % 21.4 % 18.8 % Net operating assets Manmade Fibers Order intake Sales EBITDA margin 7.7 % 3.3 % 10.6 % % Net operating assets Drive Systems Order intake Sales EBITDA margin 10.6 % 8.4 % -3.0 % % Net operating assets Incl. one-time restructuring cost (CHF -43 million) 2 Incl. one-time restructuring cost (CHF -68 million) Page 30

31 IFRS 15 Restated key financial figures (1/2) in CHF million Key financial figures (new standard) Oerlikon Group 2017 restated Q restated Q restated Q restated Q restated Order intake Order backlog Sales (3 rd parties) EBITDA EBITDA margin 14.8 % 14.3 % 13.8 % 15.6 % 15.3 % EBIT EBIT margin 7.8 % 6.5 % 6.6 % 8.8 % 9.0 % Surface Solutions Segment Order intake Order backlog Sales (3 rd parties) EBITDA EBITDA margin 20.1 % 21.1 % 20.7 % 20.4 % 18.2 % EBIT EBIT marge 10.8 % 12.1 % 11.6 % 10.4 % 9.2 % Page 31

32 IFRS 15 Restated key financial figures (2/2) in CHF million Key financial figures (new standard) Manmade Fibers Segment 2017 restated Q restated Q restated Q restated Q restated Order intake Order backlog Sales (3 rd parties) EBITDA EBITDA margin 8.0 % -0.2 % 2.2 % 11.2 % 12.2 % EBIT EBIT margin 4.7 % -5.4% -1.2 % 8.5 % 9.2 % Drive Systems Segment Order intake Order backlog Sales (3 rd parties) EBITDA EBITDA margin 10.7 % 8.4 % 10.8 % 10.8 % 12.3 % EBIT EBIT marge 5.0 % 2.0 % 4.5 % 5.8 % 7.2 % Page 32

33 R&D and CapEx on Segment level R&D expenses FY 2017 CapEx FY 2017 Surface Solutions (6%) 11% Surface Solutions (11%) 1% Manmade Fibers (3%) Drive Systems (2%) (% of Segment sales) 19% CHF 114m 70% Manmade Fibers (2%) Drive Systems (9%) Corporate 29% 8% CHF 237m 62% (% of Segment sales) Depreciation & Amortization FY CapEx / Depr. & Amort. FY Surface Solutions Manmade Fibers Drive Systems Corporate 11% 22% 2% Surface Solutions 1.52 Manmade Fibers CHF 191m Drive Systems % Segments Group average Reported, 2 Excluding amortization of acquired intangible assets Page 33

34 Asset allocation and employees on Segment level Net operating assets FY 2017 Employees (FTE) by Segment FY 2017 Surface Solutions Manmade Fibers Drive Systems 3% 20% -1% CHF 1 949m Surface Solutions (8%) Manmade Fibers (2%) Drive Systems (5%) 35% 1% % Corporate 78% Corporate 17% Operating Assets FY 2017 Employees (FTE) by Region FY 2017 Surface Solutions Manmade Fibers Drive Systems Corporate 21% 21% 1% CHF 3 205m 57% Europe North America Asia / Pacific RoW 37% 13% 2% % Page 34

35 Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Drives Systems Segment 5 Financials 5.1 Group overview 5.2 Latest quarterly results 6 Appendix Page 35

36 Strong performance in 2017 good prospects for Achieving strong profitable growth Delivering on strategy Group order intake up 24.5 % - Group sales up 22.1 %, driven also by strong recovery in Manmade Fibers and Drive Systems Group s EBITDA margin increased to 14.6 %, after investments in Additive Manufacturing business Strengthened market and technological leadership in Surface Solutions Secured wins in recovering markets in Manmade Fibers Successfully repositioned Drive Systems 3 Raising dividend Proposing raised payout of CHF 0.35 per share due to underlying performance improvement and affordability from balance sheet Subject to approval by AGM in April 10, Sustaining growth and improving profitability in 2018 Group order intake expected to grow up to CHF 3.4 billion (~14 %) and sales to around CHF 3.2 billion (~14.5 %) Group s EBITDA margin to come in at around 15 % Sizeable capital expenditure for future profitable growth Page 36

37 Overall Group performance builds on good performance in all Segments in CHF million FY17 FY16 y-o-y 4Q17 4Q16 y-o-y Order intake 3'005 2' % % Sales (3 rd parties) 2'847 2' % % EBITDA % % In % of sales 14.6% 14.3% 15.0% 15.8% EBIT % % In % of sales 7.7% 6.8% 8.8% 8.6% Surface Solutions Segment with continued strong order and sales growth and sustainable profitability Manmade Fibers strong recovery reflected in orders and sales; profitability starts to follow Drive Systems Segment with improved order and sales sentiment, profitability further improved All Segments and Group with book-to-bill >1 for FY17 Currencies provided minor tailwinds on orders and sales Top-line development at constant FX (y-o-y) Sales growth FY17 vs. FY16 (y-o-y) 4Q17 vs. 3Q17 (q-o-q) 2' % 2'988 2' % 2'829 Reported 22.1% 14.8% Performance 21.3% 12.6% FX translation 0.8% 2.2% Order intake FY 2016 Order intake FY 2017 at constant FX Sales FY 2016 Sales FY 2017 at constant FX Page 37

38 Surface Solutions Segment Delivering strong organic growth and 20.0 % EBITDA margin OPERATIONAL PERFORMANCE MARKET DEVELOPMENT Asia / Pacific Europe North America RoW 18% 31% 4% 46% Sales FY17 32% Profitable growth in orders and sales driven by Tooling, Aviation, Automotive and General Industry FY17 China delivered over 30 % growth year-on-year Acquisitions and material surcharges in total added ~CHF 28 m to top-line in 2017 (4Q17: ~CHF 11 m) Growth in coating services for tooling, precision components, automotive as well as thermal spray materials and equipment Additive Manufacturing contributed according to plan Tooling market with strong demand in all regions, supported by overall economic environment and success of new coating solutions Continued strong momentum in general industries (IP 1 ) Maintaining positive trend in the automotive business (Europe and Asia in particular) Aerospace market with continued growth Power Generation impacted by challenging market environment (i.e. large gas turbines) FY17 EBITDA profitability of 20.0 % at upper-end of guided corridor (Guidance %) Asia (China in particular) and Europe with good growth, North America slightly growing Tooling 6% y-o-y y-o-y in CHF million FY17 FY16 y-o-y 4Q17 4Q16 y-o-y ex FX ex FX Order intake 1'417 1' % 14.3% % 15.0% Automotive Aviation 26% 26% Sales FY17 32% Sales (3 rd parties) 1'377 1' % 10.9% % 11.6% EBITDA % % General Industry Power Generation 13% 23% 23% In % of sales 20.0% 22.2% 18.1% 21.6% EBIT % % In % of sales 10.8% 13.0% 9.2% 12.3% 1 IP = Industrial Production Page 38

39 Manmade Fibers Segment Market recovery further accelerating / Margin improvement OPERATIONAL PERFORMANCE MARKET DEVELOPMENT Asia / Pacific Europe North America RoW 7% 20% 31% 7% Sales FY17 66% Capturing healthy share of market opportunities in the dynamic recovery maintaining leading position Large filament project orders from China, India and Turkey and related texturing activities Good order growth in BCF 1, CP 2 and staple fibers Strong increase in sales as a result of execution of projects and increased capacity Filament equipment market in China with accelerated recovery as Tier 1 customers are aiming for leadership (capacity, technology and efficiency) Texturing equipment market positive as a result of increased filament activities Solid increase in BCF 1 from the US and Turkey Positive market dynamics in staple fibers continues Successful ramp-up in production capacities and efficiency improvements increased profitability Increasing project landscape for integrated Melt-to- Yarn-to-Fibers solutions EBITDA margin of 7.7 % for FY17 slightly above guidance 4Q17 further improved sequentially Strong project pipeline increases lead times already into 2020, while pricing is further improving y-o-y in CHF million FY17 FY16 y-o-y 4Q17 4Q16 y-o-y ex FX y-o-y ex FX Filament spinning/ Texturing 15% Order intake % 39.4% % 20.3% BCF carpet yarn/ Polymer processing Staple fibers/ Nonwovens 22% 26% Sales FY17 23% 63% Sales (3 rd parties) % 52.5% % 79.6% EBITDA >100% 30 8 >100% In % of sales 7.7% 3.3% 11.6% 6.0% EBIT 34-3 >100% 23 3 >100% In % of sales 4.6% -0.6% 8.8% 2.3% 1 Bulked continuous filament (carpet yarn); 2 Continuous Polymerization Page 39

40 Drive Systems Segment Successful repositioning and recovering end markets drive top-line and profitability OPERATIONAL PERFORMANCE MARKET DEVELOPMENT Asia / Pacific Europe North America RoW 32% 31% 3% Sales FY17 21% 44% Attractive new projects and innovation in the agriculture, transportation, automotive and construction markets Sales growth driven by transportation (public transport in China), automotive (including e-mobility), construction and agriculture (South America). All regions contributing to sales growth (FY17 / 4Q17) FY17 with double-digit EBITDA margin; 4Q17 further improved higher volumes and reshaping measure Continued global improvement in agriculture; exception still a decline in 100+ HPT 1 in the US Construction market strong in the US, China and India (infrastructure projects); Europe stable at high levels Transportation market Public transport positive; CV 2 strong in the US, China and India; moderate increase in Europe; rail weak in the US Automotive / e-vehicles positive market sentiment Energy and mining market maintain at low level; increasing activities expected for 2018 Agriculture Construction Transportation Automotive Energy / Mining 18% 26% 21% 4% Sales FY17 23% 24% 33% in CHF million FY17 FY16 y-o-y y-o-y y-o-y 4Q17 4Q16 y-o-y ex FX ex FX Order intake % 28.4% % 41.9% Sales (3 rd parties) % 18.0% % 30.0% EBITDA % % In % of sales 10.6% 8.4% 12.2% 13.6% EBIT >100% % In % of sales 4.9% 2.0% 7.1% 8.3% 1 HPT = horsepower tractors; 2 CV = Commercial Vehicles Page 40

41 Business split Improvement in Manmade Fibers / Drive Systems reflected in Group split Segment sales split Segment EBITDA split FY % 27% 26% FY % 14% 19% 1% FY % 21% 26% FY % 83% 5% 15% in % of sales in % of EBITDA Surface Solutions Drive Systems Surface Solutions Drive Systems Manmade Fibers Manmade Fibers Other Regional sales split Service business FY % 39% 19% 5% FY % 66% FY % in % of sales 42% 21% 5% FY % in % of sales 63% APAC North America Service & Spare Parts Europe RoW Goods, Equipment & Components Page 41

42 FX impact on Orders, Sales and EBITDA in FY 2017 Order intake FY 2017 Sales FY 2017 EBITDA FY 2017 In CHF million In CHF million In CHF million 0.6% 0.6% 0.2% 3' '988 2' ' Margin in % FY 2017 reported Transaction effects Translation effects FY 2017 FX impact adj. FY 2017 reported Transaction effects Translation effects FY 2017 FX impact adj. FY 2017 reported Transaction effects Translation effects FY 2017 FX impact adj. Top-line impact mainly related to currency translation as a result of reporting currency CHF Appreciation of EUR & INR against CHF vs. devaluation of CNY against CHF Impact on EBITDA margin insignificant Page 42

43 EBITDA to EBIT bridge for Oerlikon Group EBITDA to EBIT bridge FY 2017 EBITDA to EBIT bridge FY 2016 In CHF million In CHF million EBITDA Depr. & Imp. EBITA Amor.of acqu. intangibles Other Amor. EBIT EBITDA Depr. & Imp. EBITA Amor.of acqu. intangibles Other Amor. EBIT Amortization of identified acquired intangible assets mainly attributable to Metco transaction Page 43

44 EBITDA to EBIT bridge per Segment FY 2017 Oerlikon Group Surface Solutions Segment EBITDA Depr. & Imp. EBITA Amor. of acqu. intangibles Other Amor. EBIT EBITDA Depr. & Imp. EBITA Amor. of acqu. intangibles Other Amor. EBIT Manmade Fibers Segment Drive Systems Segment EBITDA Depr. & Imp. EBITA Amor. of acqu. intangibles Other Amor. EBIT EBITDA Depr. & Imp. EBITA Amor. of acqu. intangibles Other Amor. EBIT Page 44

45 Sales Order intake 2018 Group outlook Strong top-line growth and defending an attractive profitability level Underlying Group / Segment assumptions EBITDA margin ~14 % CapEX 1 3'005 2'984 FY 2017 reported FY 2017 restated 2'847 2'794 FY 2017 reported FY 2017 restated ~14.5 % up to FY 2018E around FY 2018E around 300 FY 2017 reported FY 2017 restated FY 2018E around 15 % 2 Oerlikon Group Guidance based on restated results 2017 (IFRS 15) applicable in 2018 Top-line growth of ~14 % in order intake and ~14.5 % in sales Sizeable CapEx for further growth EBITDA margin improving to ~15 % 2 Smaller acquisitions included in guidance Surface Solutions Segment ~5 % order growth ~6 % sales growth driven by an overall positive regional and end-market environment Additive Manufacturing business and smaller acquisitions included Maintaining EBITDA margin in corridor of % excluding AM investments (reported % corridor) Manmade Fibers Segment Order intake to increase to up to CHF 1.1 bn, due to orders announced in January and strong project pipeline Sales up to CHF 1.0 bn dependent on capacity ramp-up and project progress (POC) EBITDA margin at around 11.5 % operating leverage / improvements, partly offset by projects from early recovery, higher cost (ramp-up) Drive Systems Segment Order intake to increase to around CHF 800 m due to further recovery of end markets Sales to grow up to CHF 800 m Further improvement in EBITDA margin by up to 100 basis points as a result of continued execution of repositioning initiatives and increased volume FY 2017 FY 2017 FY 2018E reported restated 1 Including around CHF 32 m (2017) and CHF 33m (2018) related to Additive Manufacturing (AM); 2 Including full absorption of all related investment expenses in AM Page 45

46 Agenda 1 Investment Proposition 2 Surface Solutions Segment 2.1 Attractive End Markets 2.2 Leading Technologies 2.3 Diversified Business Models 2.4 Profitable Growth Drivers 3 Manmade Fibers Segment 4 Drives Systems Segment 5 Financials 5.1 Group overview 5.2 Latest quarterly results 6 Appendix Page 46

47 KEY FACTS Aerospace Making aerospace safer, more powerful and more efficient INDUSTRY CHALLENGES Focus on turbine efficiency: both cost and 2020 emission reduction goals drive the reduction of the specific fuel consumption Engine trends: Lighter weight materials have to withstand erosion, corrosion and extreme temperatures (>1500 C) Enhanced gas path sealing to increase safety and efficiency with less emissions Stringent process and material certification to ensure safety SOLUTIONS Customized solution of materials and equipment for better performance, greater efficiency and absolute reliability for our customers Thermal spray and thin film coatings extend part lifetime and improve efficiency and safety of jet engines Thermal barrier coatings on blades and vanes allow for higher temperature in the turbine Abradable coatings are used in engines to seal the gas path and improve performance and efficiency PVD coatings for wear protection in structure parts and landing gears 13% of FY17 Surface Solutions revenue Expected growth rate 4-5% Oerlikon covers all coating needs of the industry - from powder development and application engineering to equipment and process know-how Decorative coatings for cockpit and interior components Client needed to increase turbine efficiency while at the same time reducing their service intensity Using a combination of thermal spray and thin film coating improves performance Oerlikon delivered materials and equipment for thermal spray and provided coating services Achievements Fan Turbine 5% Combustion chamber Compressor overall efficiency increase in engine at improved safety Page 47

48 KEY FACTS Automotive Advancing productivity, sustainability and profitability in the industry INDUSTRY CHALLENGES Focus on increasing manufacturing productivity and operating efficiency of cars & reduce environmental impact Reduce fuel consumption, emissions and weight SOLUTIONS Delivering solutions and equipment for thin film and thick layer coatings to the whole automotive value chain Coatings lead to better performance and durability due to wear protection and reduced corrosion and friction 23% of FY17 Surface Solutions revenue Expected growth rate ~2-3% Engine downsizing (e.g. using less cylinders under higher pressure) causes higher stress on smaller parts More corrosion issues from exhaust gas recycling, start-stop systems, turbo-chargers Higher torque transmissions with more gears (therefore more synchronizer rings) Reducing friction, wear and mechanical losses Demand for ecofriendly cars and environmentally friendly solutions (e.g. replacing hexavalent chromium) Oerlikon technologies permit the use of new and lighter material that reduce weight or friction losses in the engine Coatings support the development of new and suitable design parts the number of car parts coated by Oerlikon increased by a factor of 10 since 2008 Coatings increase reliability and quality of material such as brake disc coatings to support manufacturers in their effort to increase car safety further while significantly reducing fine dust and fuel consumption Innovative custom designed solutions and global presence enable reliable operational performance to address our customers needs Client needed to increase fuel efficiency of engines due to emission regulation Using a combination of thermal spray and thin film coating to improve performance Oerlikon delivered PVD solutions for piston pins and TS SUMEBORE coating for cylinder walls DLC, 2 µm Support layer Substrate 2-4% Reduced fuel consumption Achievements up to 40% Friction reduction Page 48

49 KEY FACTS Tooling Enabling sharper, stronger and more durable tools INDUSTRY CHALLENGES Focus on quality, cost and overall factory output of any product Productivity: increasing tool throughput and solving production bottlenecks Durability: reduced service cycles, enhanced corrosion and adhesion protection Performance: better production reliability, higher temperatures, higher speed and quality of output Environmental challenges i.e. dry machining, REACH compliance SOLUTIONS Delivering over 35 different thin film coatings extend service life, lower manufacturing costs and increase production reliability of tools at enhanced corrosion and adhesion protection Joint solution development with customers special coatings to withstand extremely high temperatures, erosion, oxidation and other harmful effects or to lower friction and wear Productivity gains by achieving extremely fast cutting speeds at high temperatures Lower tool costs due to significantly prolonged tool service life 32% of FY17 Surface Solutions revenue Expected growth rate ~3% Technological and market leadership with global availability of solutions enable unique full service performance in terms of quality, process stability, delivery time and consistency Client needed to increase tool efficiency while at the same time extend replacement cycle Using a thin film coating to improve performance reduce friction and wear, increase removal rates Oerlikon provided coating services by a global network for leading tool manufacturers Achievements 4mm 2.5x ~67% increased drilling speed tool lifetime extension Page 49

50 KEY FACTS Power Generation Empowering the way to effectively generate energy INDUSTRY CHALLENGES Focus on increased efficiency to improve client s cost curve position Maintenance interval reduction in gas turbines, hydropower and oil & gas Oil & gas applications in challenging environments require maintenance free solutions Corrosion and erosion cause efficiency losses SOLUTIONS Delivering highly productive and reliable customized solution of coatings, materials and equipment for gas and steam, hydro and wind turbines and oil & gas applications With Oerlikon products that reduce distortion and wear, turbines last longer and perform more efficiently and reliably Thin film and thick layer solutions protect against abrasive wear, erosion, corrosion, fatigue, high fluid pressure, vibrations, jar impact loads, extreme torque and many more 6% of FY17 Surface Solutions revenue Expected growth rate ~2% Oerlikon offers all required coating solutions and is the strongest European manufacturer of cooling paths in blades and vanes Client needed to increase turbine efficiency while increase time between overhaul & reduce emission Using thermal barrier coatings (hot section) and thin film coatings (erosion) Oerlikon delivered materials and equipment for thermal spray and provided coating services Achievements 2% overall efficiency increase at a 530MW gas turbine Page 50

51 KEY FACTS General Industry Enable industries to build more powerful, complex and efficient products INDUSTRY CHALLENGES Consumer Goods: Providing design, reliability and scratch-resistance for product differentiation. Coatings of watches to washing machines, of consumer electronics to sanitary fittings improve their performance, quality and service and make their production more efficient Medical: Medical coatings include antimicrobial functionality to ensure fast wound healing, biocompatibility to support the integration of an implant into the bone or non-reflection of surgical instruments Pulp/Paper & Print: Coatings applied to anilox rolls or corrugating rolls for the paper industry significantly extend the useful life of the rolls Steel & Metal processing: Components used in the production and processing of steel/metals need to resist the high temperature and corrosive effects of molten and hot metals. Clients need abrasion- and scratch-resistance to housing and to enhance the look of exterior parts Food/packaging: hygiene, productivity and reliability are critical for FMCG clients. Coatings help maintain hygiene, reduce wear, extend the service life or improve manufacturing process for food processing, plastic film and foils, labelling, bottling, paper production and more Engineering: Coatings minimize friction, wear corrosion and enhance the reliability of instrument panels, air vents, batteries, semiconductors, agricultural machinery, construction equipment to printing industry The growth potential for Oerlikon s technologies is broad and diverse as there is hardly any industry where Oerlikon technologies can not add value Using amorphous carbon coatings protect the watch parts from wear and corrosion and adding colors in-fashion Oerlikon provided coating services throughout a global network for leading watch manufacturers 26% of FY17 Surface Solutions revenue Dedicated competences to define customized surface solutions via a global network Achievements Coatings can prolong the service life by a factor of up to 50 Page 51

52 Oerlikon shares Oerlikon shares Oerlikon shareholder structure 1 Listed on Swiss Exchange (SIX) since 1973 Securities symbol: OERL Securities number ISIN: CH Number of shares outstanding: shares Re-entry to Swiss SMIM (April 17, 2012) Addition to STOXX Europe 600 (June 18, 2012) Renova Group Baillie Gifford & Co. Black Creek IM Others (incl %treasury shares) 50.03% 43.03% 2.93% 4.01% as of March 31, 2018 as of March 30, 2018, indexed; 100 percent = closing price per December 29, 2017 Oerlikon share price development Oerlikon SMI SMIM STOXX Europe 600 STOXX Europe 600 Industrial Based on latest notification by Renova (as of November 13, 2017 of shares), Black Creek (as of January 20, 2018 of voting rights) and Baillie Gifford (as of July 25, 2017, of voting rights) Page 52

53 Coverage 6 Buy / Add 7 Hold / Neutral 0 Sell / Underperform Broker Analyst Recommendation Date of last update Target price AlphaValue Heinz Steffen Add Baader Helvea Reto Amstalden Buy Berenberg Bank Sebastian Künne Hold Credit Suisse Patrick Laager Neutral Jefferies Graham Phillips Hold Kepler Cheuvreux Torsten Sauter Hold MainFirst Sven-Erik Schipanski Neutral Mirabaud N.N. Hold Octavian Alessandro Foletti Buy RBC Capital Markets Wasi Rizvi Outperform Societe Generale Christophe Quarante Hold UBS Fabian Haecki Buy Vontobel Michael Foeth Buy ZKB Armin Rechberger Marketweight Consensus Page 53

54 Financial Calendar 2018 April 10, 2018 May 2, 2018 Annual General Meeting of Shareholders & Oerlikon Innovation Day - KKL Lucerne, Switzerland Q results - Media & Analyst Conference Call August 7, 2018 Q2 / HY 2018 results and publication of Interim Report Media & Analyst Conference Call October 30, 2018 Q3 / 9M 2018 results - Media & Analyst Conference Call Page 54

55 Investor Relations Contact OC Oerlikon Management AG, Pfäffikon Churerstrasse 120 CH 8808 Pfäffikon SZ Switzerland Andreas Schwarzwälder Head of Investor Relations Senior Vice President Phone: Mobile: Page 55