Annual General Meeting 2010 Management Report

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1 Annual General Meeting 2010 Management Report Munich, May 28, 2010 Dr.-Ing. Georg Sick (CEO and President) 1

2 Overview Innovations Fiscal year 2009 Shares Q1/Fiscal year 2010 Strategy Outlook DF 16 Rebar tier 2

3 Wacker Neuson has set standards worldwide with product strength and innovative drive Strong innovation track record since

4 Rammer: success story stretching back over 80 years 1930: first electric rammer 2010: global market leader 4

5 Innovations Light Equipment ( ) BTS 1140L3 January 2008 CT 24 June 2008 New BFS range September 2008 Lightweight breaker January 2009 DF 16 rebar tier April 2009 Rebar cutters April 2008 New IRFU range June 2008 E 700M Hydronic surface heater November 2008 Light- and mediumweight plates with electric starter March 2009 RD Vibratory roller May

6 bauma 2010 New Light Equipment products (Selection) 6

7 Compact Equipment: Product developments ( ) SSL 901/1101 4/2008 Easy Lock 5/2009 Redesign TD9 6/ /2009 VDS 7/ s POWER 6/2009 Dumper Cab 6/2009 7

8 Compact Equipment: Product developments Compact Telehandler Kramer Allrad 1245 Weidemann T4512 8

9 bauma 2010 New Compact Equipment products (selection) 9

10 Overview Innovations Fiscal year 2009 Shares Q1/Fiscal year 2010 Strategy Outlook Light and Compact Equipment complement each other perfectly on construction sites 10

11 Positive development through organic growth, acquisitions and merger Multi-year comparison Acquisition Ground Heaters Merger Acquisition Weidemann Figures according to IFRS, 2 Included only Q4 Neuson Kramer (start of consolidation: October 1, 2007), 3 Pro forma as if the two companies had been consolidated for the entire year

12 Impact of economic crisis Quarterly comparison Q1 07 Q4 09 (Sales in million) (EBITDA in million) ,8 228,2 244, , ,3 185, ,4 162,5 137,3 156,5 149,0 154, Revenue Light Equipment Compact Equipment Service 0 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09-20 EBITDA 12

13 2009: Year of world economic crisis Fiscal 2009 vs. fiscal 2008 Sales dropped by 31.4 percent to EUR million Asia up Rental sales at all-time high (Central and Eastern Europe) Loss in Q1, operational profit in last three quarters 2009 Impairment of EUR million Adjusted annual loss of EUR 2.9 million Equity ratio up to 81,5 percent Change from low financial debt to net cash position Break-even point lowered to EUR 600 million 13

14 Our core success factors during a crisis Best-in-class product and service quality Proximity to customers Flexible production processes Immediate adjustments of cost structure Ongoing R&D activities Continuing apprenticeship and vocational training Improvement of strong financial position International expansion Enhancement of customer value - gaining market share 14

15 Our cost cutting measures Manpower capacity adjustments Short-time-work from January 2009 onwards in most European production facilities Intensified sales & distribution activities with focus on growth markets Cut of investments Early manpower capacity adjustments (Effects from short-time-work, reduction of time accounts and temporary staff, Lay-offs where unavoidable) 1 100% 94% ca. 75% Securing liquidity: - Reduction of working capital - Funding day-to-day operations with cash flow from operating activities - Total reduction of net financial debt Q3/08 Q4/08 Q4/09 1 Manpower capacity. Percentages do not reflect number of employees. 15

16 Results of cost saving measures Measures Cost-cutting SG&A 1 Reduction in working capital Conversion of net debt to net cash (change) Reduction in investments (fixed assets) Manpower capacity (comp. to Q3 08) Short-time-work (European production facilities) Impact Dec. 31, 09-16% -28.3% EUR m -61% -25% 2 15% of employees 1 adjusted by attributable restructuring costs 2 incl. short labour effects and layoffs (incl. temporary) 16

17 Q2 through Q4: return to the black on EBIT level Sales (yoy) Sales (quarterly 09) % % Q1 Q2 Q3 Q4 EBIT (quarterly 09) Profit for the period (quarterly 09) Q Q Q Q2 Q3 Q Q2 Q Q4: adjusted by Impairment 2 Q4: due to Impairment EUR million Q4: adjusted by Impairment of EUR million, minus deferred taxes of EUR 2.7 million

18 Annual loss largely due to structural adjustments and one-off items EBITDA Adjusted earnings figures Income Statement 27.1 Impairment - Restructuring costs Adjusted Income Statement 36.7 EBIT EBT Profit for the period (-2.7) EUR 2.7 deferred taxes 18

19 Impairment: One-off write down on goodwill Merger Book value in K Impairment 2009 Goodwill 36, , , ,016 - Thereof Neuson Kramer subgroup - 293, ,988-89, ,448 Brand (indefinite useful life) 22,000 64,838 64, ,040 - Thereof Neuson Kramer subgroup - 42,838 42,838-10,798 32,040 Impairment Neuson Kramer subgroup Dec. 31, ,338 19

20 Sales distribution: Stronger Asia and service percentage Regions Business segments 1 (as a %) (as a %) Asia 4.7 (3.1) Service 30.4 (21.5) Europe 78.0 (77.7) Compact Equipment 34.1 (40.7) America 17.3 (19.2) Light Equipment 35.5 (37.8) 1 Consolidated sales before discounts 20

21 Segments: Asia sales up, rental sales at all time high (Central and Eastern Europe) Sales Europe Sales Americas Sales Asia % % % Sales Light Equipment Sales Compact Equipment Sales Services % % %

22 Increase in agricultural share of total revenue Construction 09 vs 08 1 Agriculture 09 vs 08 1 Sales split 09 vs % % 82.0 (as a %) Agriculture 13.6 (13.1) Construction Q1-Q4/ Agriculture Q1-Q4/ Q Q Q Q Q1 Q2 Q Q4 Service 30.4 (21.5) Construction 56.0 (65.4) 1 New machines sales only, excluding Service. Construction business contains light and compact equipment sales 22

23 Significant effects from cost-cutting in 2009 Costs of sales Gross profit-margin (as a %) % Gross profit margin gross profit margin pro-forma: 35.4 % SG&A Total costs % EUR m : adjusted by repective restructuring costs (EUR 5.7 million of restructuring costs) : adjusted by restructuring costs. Total cost = Conversion costs and SG&A, without other income/expenses 23

24 Securing liquidity in 2009 Reduction Reduction of working of working capital Q3 capital 08 Q4 09 Working capital and ratio to revenues (as a %) % fiscal Sept. 30/08 Dec. 31/08 Mar. 31/09 Jun. 30/09 Sept. 30/09 Dec. 31/ Working capital Working capital/revenue 0 24

25 Significant cut in Capex Capital expenditure R&D center and Headquarter in Munich (under construction) Expansion of sales and service stations Rental investments in Central and Eastern Europe (where not in competition with our rental customers) * Increasing operative cash flow to EUR 138,3 million, reduction of financial debt Capex Depreciation and amortization Operative cash flow * Depreciation 2009: adjusted by impairment (EUR million) 25

26 R&D center and headquarter in Munich (under construction) 26

27 Improving financial position in 2009 Strong finance and asset position (as a %) Net financial position Equity Equity ratio 27

28 Dividend proposal for fiscal 2009 Dividend history Total payout (in million ) Distribution ratio 2 (in %) Eligible shares (million) Dividend per share (in ) Dividend payment proposed to AGM on May 28, On net earnings before PPA for 2008 and

29 Overview Innovations Fiscal year 2009 Shares Q1/Fiscal year 2010 Strategy Analysts reaction (released figures of fiscal 09, Mar. 26, 2010) An even better financial position as expected. Non-cash impairment was no surprise to the market. Company will not pay dividend as expected. Came out of 2009 crisis financially sound. High investments in the coming years shall provide for an additional growth impulse. Outlook 29

30 Wacker Neuson share: percent in 2009 Share price outperfoming indices in H2/09 Share price in line with peer group ISIN DE000WACK012 WKN WACK01 Reuters WACGn.DE Bloomberg WAC GR Indices SDAX, DAXplus family, CDAX, GEX, Classic All Shares Share Prime All Share Key figures share in EUR High Low Average Book value per share Earnings per share

31 Active IR communication Analysts optimistic Analyst rankings Number of analysts (Numbers of Analysts (previous year)) Sell: 1 (7) Buy: 6 (0) Buy ratings 1 Hold/Neutral: 5 (3) Deutsche Bank Sal. Oppenheim DZ Bank BHF Bank Merrill Lynch Bankhaus Reuschel EUR 14,00 EUR 10,00 EUR 11,50 EUR 12,00 EUR 10,00 EUR 10,00 1 As of May 20,

32 Wacker Neuson family owned by almost 70 % Shareholder Structure 1 Free Float 1 (as a %) (in %) USA/rest of world 10.8 Family Germany 53.0 Freefloat incl. Management 32.9 Austria 9.0 Europe (without D+A) As of: May Includes the companies Wacker-Werke GmbH & Co. KG, Wacker Familiengesellschaft mbh & Co. KG and VGC Invest GmbH and Neuson Ecotec GmbH 32

33 Overview Innovations Fiscal year 2009 Shares Q1/Fiscal year 2010 Strategy Outlook Wacker Neuson on bauma fair in April 2010: Visitors were impressed by high product range and innovation power 33

34 Summary Q v-shape recovery in order income and US sales Q1 10 vs. Q1 09 Harsh winter in first 2 months in Europe, strong March business Revenues up by 9.5 percent to EUR million, negative earnings as planned Recovery of economy drives product sales worldwide Significant sales growth in Light Equipment, USA and Asia Increase in order income for Compact Equipment but supplier delivery delays Service sales dependend on weather - > effect on margins High equity ratio of 78,9 percent Q1 10 vs. Q4 09 Recovery continued, bauma in April confirms upswing Low net financial debt Significant reduction of short-time-work Equipment sales exceed Q

35 Light Equipment and USA early in cycle Quarterly/monthly comparison Q3 08 Q1 10 (Sales Light Equipment in million) (Domestic Sales USA in USD) Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Light Equipment Compact Equipment. 03/09 10/09 11/09 12/09 01/10 02/10 03/10 03/09 10/09 11/09 12/09 01/10 02/10 03/10 35

36 Manpower capacity and sales development Figures measuring manpower capacity 120% 100% Increasing manpower capacity due to high order income Short labour reduction 23% 15% 7% 0% 80% Mar.31/09 Dec.31/09 Mar.31/10 May10 60% Number of employees (Jobs) 40% 20% 3,375 3,059 3,090 0% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Sales Manpower capacity* Mar. 31/09. Dec.31/09 Mar.31/10 *Jobs, including short-time-work effects and layoffs (incl. temporary workers) 36

37 Sales and earnings increases in Q1 Sales EBITDA +9.5% Q1/ % Q1/09 Q1/10 100% Q1/10 EBIT Profit for the period +74% +66% Q1/09 Q1/10 Q1/09 Q1/

38 Recovery of economy drives product sales worldwide Sales Europe Sales Americas Sales Asia +2.2% % % Q1/09 Q1/10 Sales Light Equipment Sales Compact Equipment Q1/09 Q1/10 Q1/09 Q1/10 Sales Services % % % Q1/09 Q1/10 Q1/09 Q1/10 Q1/09 Q1/10 38

39 Signs of recovery in both markets Sales split yoy Construction sales % Agricultural sales 1 (as a %) Agriculture 15.2 (19.7) %. Q1/09 Q4/09 Q1/ Q1/09 Q4/09 Q1/10 1 New machines sales only, excluding Service. Construction business contains light and compact equipment sales Service 24.6 (27.5) Construction 60.2 (52.8) 39

40 Recovery triggers investments and working capital increase Investment fixed assets and depreciation Investments fixed assets 23.0 Depreciation Net financial position Mar,31/10 Q1/09 Q1/10 Dec,31/ Free and operative cash flow Working capital Q1/09 Free Cash flow 3.8 Operative Cash flow Q1/ % Dec,31/09 Mar,31/10 40

Not only the laymen but even the experts were amazed by the product portfolio

41 Overview Innovations Fiscal year 2009 Shares Q1/Fiscal year 2010 Strategy the large number of visitors were an immediate sign of a successful trade fair. Not only the laymen but even the experts were amazed by the product portfolio which surely is the basis for the successful merger Journalist quote on bauma Outlook 41

42 Global launch of compact equipment continued May 2010 To be observed Postponed New New 42

43 Gaining markets share: Example compact introduction in North America 14 models introduced under the Wacker Neuson brand Four-wheel drive loaders Articulated wheel loaders Four-wheel dumpers Compact excavators Skid steer loaders Locations: Exclusive dealers +47 % 12/ /2009 With the compact class introduction Wacker Neuson confirms its excellent reputation in the US as a professional highquality company. The compact class products are efficient, powerful and easy to maneuver." Marcus Auerbach, Director Compact Equipment, Wacker Neuson USA 43

44 Gaining markets share: Example compact introduction in South Africa 14 models introduced under the Wacker Neuson brand Four-wheel drive loaders Articulated wheel loaders Four-wheel dumpers Compact excavators Skid steer loaders "I like the compact excavator because it is light and can be operated with a high degree of precision. It is also powerful and extremely well made. I'm looking forward to many years of reliable service." Jan van der Walt, Lonerock Construction, Johannesburg, South Africa 44

"Wacker Neuson's extensive portfolio makes us the only full-line supplier of compact

45 Gaining markets share: Example compact introduction Australia Eight models introduced under the Wacker Neuson and Weidemann brands Compact excavators Skid steer loaders Wheel loaders "Wacker Neuson's extensive portfolio makes us the only full-line supplier of compact equipment on the Australian market." Andy Evans, managing director, Wacker Neuson Melbourne, Australia 45

Plan for capacity increase in Linz (Austria) Purchase of a site to be used for a new manufacturing plant Today: Linz-Leonding (Austria) Future: Hörsching (Austria) Mini excavators Skid

46 Plan for capacity increase in Linz (Austria) Purchase of a site to be used for a new manufacturing plant Today: Linz-Leonding (Austria) Future: Hörsching (Austria) Mini excavators Skid steers Track dumper Capacity limit reached before financial crisis Capacity will be doubled Mini excavators Skid steers Track dumper and wheel dumper Begin of construction not before

47 Keynote Farm-Mobility-Concept: Agricultural challenges and answers from Weidemann 30% field work 30% field work Silo work Shifting earth Distributing Cleaning Reaping Snow and ice clearance Skid steer loaders Dumpers Skid steer loaders Telescopic handlers All-wheel loaders Articulated wheel loaders Telescopic handlers All-wheel loaders Articulated wheel loaders 70% stable/barn and yard work Feeding Bedding Mucking out Loading Stacking 47

48 Broader product portfolio for the agricultural industry (II) Today 2010 onwards Attachments + 48

49 Attachments with intelligent features are gaining importance Examples 49

50 Overview Innovations Fiscal year 2009 Shares Q1/Fiscal year 2010 Strategy Outlook Kramer Allrad Teleskopic handler

51 Long-term outlook for construction and agricultural industries positive Global opportunities for construction Global opportunities for agriculture Infrastructure projects in Eastern Europe, Asia, US Consequences of climate change and growing importance of environmental protection Expansion of telecom networks (e.g. broadband access) Expansion and modernization of road and rail networks Changing accommodation needs as a result of urbanization for example Reconstruction projects (including renovation and modernization) Utility enhancements (e.g. water, energy efficiencies) Many economic action plans worldwide currently focused on infrastructure Rising global demand for food and fodder Trend towards 2G bio fuels and other renewable resources Structural shift towards fewer but larger holdings (especially in Europe) with a greater need for machinery Growing industrialization of the agricultural industry 51

52 Outlook bauma in April 2010 confirmed turnaround (units) Order backlog compact equipment +235% yoy Market dynamics more visible Bauma order volume: > +25% to 2007 Increasing construction activity worldwide Positive effects from infrastructure programs Forecast revenue confirmed: > 5% for 2010, double-digit growth 2011 with positive earning trend Focus on maintaining strong asset and financial position 03/09 04/09 05/09 06/09 07/09 08/09 09/09 10/09 11/09 12/09 01/10 02/10 03/10 Continuous investigation of acquisition targets and alliances 52

53 The strenghts of the Wacker Neuson SE Financial strength Corporate culture of a family-owned company Clearly defined business model International sales and service network Strong growth strategy Experienced and highly committed employees Highest product and service quality 53

54 Annual General Meeting 2010 Munich, May 28,

Results Q May 12, Dr.-Ing. Georg Sick (CEO and President) - Mag. Günther C. Binder (CFO) Reference (apr02)

Results Q May 12, Dr.-Ing. Georg Sick (CEO and President) - Mag. Günther C. Binder (CFO) Reference (apr02) Results Q1 2010 May 12, 2010 Dr.-Ing. Georg Sick (CEO and President) - Mag. Günther C. Binder (CFO) 1 Overview Summary Q1 2010 Financials Q1 Outlook Wacker Neuson on bauma fair in April: visitors were