Oerlikon Focus on surface solutions and additive manufacturing Dr. Roland Fischer, CEO 18 th Kepler Cheuvreux Swiss Seminar Zurich, March 28, 2017
Agenda 1 Oerlikon Group - Strategic Priorities 2 Surface Solutions and Additive Manufacturing 3 Outlook and Key Takeaways Page 2
Oerlikon s strategic priorities confirmed focus on execution / operational performance Surface Solutions Manmade Fibers Drive Systems Creating a global surface solutions and advanced materials powerhouse Organic investments: innovation, markets and technologies Additive Manufacturing M&A Manage market cycle Execution of structural adoptions concluded Readiness for posttrough period Group 2017: Enlarge platform for mid-term growth Repositioning to allow for valuecreating options Remaining end market challenges Drive innovation and market share Strengthen technological leadership (Innovation, expansion, collaboration) Grow existing business (Penetration, new markets/applications, service) Identify and develop new opportunities organic and inorganic Further develop organization (Structure, capabilities, capacity, footprint) Page 3
Agenda 1 Oerlikon Group - Strategic Priorities 2 Surface Solutions and Additive Manufacturing 3 Outlook and Key Takeaways Page 4
Megatrends are changing our world at a breakneck pace. Page 5
Technology can help provide solutions to key questions How can we become more efficient in energy generation? How can we reduce our environmental footprint? How can we improve the efficiency of transportation? How can we improve the performance of a product and its production? Page 6
Modifying the surface is a solution Physical Vapor Deposition (PVD) Increasing demands on systems are imposing higher demands on tools and components Coatings add or augment a specific functionality or property to a substrate friction and wear resistance Coatings are up to ten times thinner than a human hair Coatings are the most effective way to improve the operational performance A broad range of different coating technologies and processes are possible to achieve different functionalities incl. decorative enhancements Human Hair 0.05 mm 50 x PVD-layer 0.001 mm - 0.005 mm - Only a few thousandths of millimetre thin - Harder than steel Human hair: 0.05 mm BALINIT : 0.003 mm PVD = Physical Vapour Deposition Page 7
Modifying the surface is a solution Thermal Spray (TS) Increasing demands on thermal resistance and corrosion / erosion protection require high end coating materials Wide range of patented materials and equipment and constantly developing new materials Coating thickness between 0.4 3mm Application knowledge to select coating materials, coating process and coating characteristics to improve the operational performance New cascade plasma gun portfolio can increase productivity by up to 300 % High productivity customer specific systems and services Page 8
Surface solutions are supporting and improving everywhere Page 9
Coated parts in a car have increased from 15 to 100 since the 1990th Page 10
Surface solutions result in saving of 1 million liters of aviation fuel every hour Page 11
We are only scratching the surface so far Big growth potential in all areas Combining leading surface technologies Broad portfolio of Materials & Technologies Leading Service Solutions close to customer TS Agglomerated & sintered Agglomerated & HOSP Agglomerated & densified Nitriding PVD Fused & crushed Water atomized Gas atomized Chemically clad Mechanically clad Filled & drawn, swaged or rolled Page 12
Expanding from the surface into the structure Coating Technology Equipment, integrated systems and spare parts (Thermal Spray and PVD) Coating Service 1 Customer Need Nitriding PVD TS Add. Manufacturing of components 2 (Design &) App. Engineering 3 Industrial operation Materials Technology Metal & Ceramic powders for thermal spray Braze and weld overlay materials Matrix materials & Suspensions Metals for Powder Bed Additive Manufacturing 4 highperformance part Oerlikon as production technology partner for high-performance parts Page 13
AM A transformational technology On-demand manufacturing Digital parts inventory Complex geometries Mass customization Distributed manufacturing AM New materials Weight reduction & resource efficiency Short setup times Page 14
AM Value Proposition: Helping our customers to realize the full potential of AM AM Materials Materials that work Broad AM materials portfolio, fully AM-qualified Tailored and fast alloy development and qualification Material recycling and handling Oerlikon AM AM Production & Post Processing Integrated Advanced Component Manufacturing Industrializing AM for Reliability Productivity Performance Applications Engineering & Design Deep vertical and domain knowledge for optimal customer solutions Independent global-scale partner In-house capability for all relevant processing technologies Deep surface engineering knowledge Applications specific process parameters Single-site production for increased speed and IP sensitive components Page 15 State-of-the-art AM design software and optimization methods Agile development and fast turnaround times Optimized surface performance Well-characterized design allowable Vertical market knowledge (qualifcations, design standards & methodolgies)
AM Investment Case AM Investments Strategic AM investments in an attractive growth market of ~2 billion by 2021 Industrialize AM become an integrated service player and a leading materials manufacturer: Expand in high volume manufacturing of specialized powders/alloys (CapEx & M&A) Enlarge service market shares gaining economies of scale and scope (CapEx & M&A) Increase applications engineering & design (Organic & M&A) Sales (incl. M&A) CHF M ~300 CapEx CHF M ~300 cum. EBITDA margin In % Deliver >100 ~170 cum. >20% 70-75 <10 2016 ~20 2017E 2019E 2021E 3 2016 2017E 2019E 2021E 2016 2017 2018 2019 2020 2021 Invest Page 16
Agenda 1 Oerlikon Group - Strategic Priorities 2 Surface Solutions and Additive Manufacturing 3 Outlook and Key Takeaways Page 17
2017 Group outlook Organic growth and investments in Additive Manufacturing Order intake Sales 2,413 3.0 4.0% around 2,500 2016 2017E 2,331 2016 6.5 7.5% around 2,500 2017E Underlying Group/Segment assumptions Oerlikon Group Economic and political environment to remain volatile Around 6% organic sales growth EBITDA margin around prior year level excluding the investment expenses in AM business reported ~13% Smaller acquisitions included in guidance Surface Solutions Segment ~ 3 % organic sales and order growth Maintaining EBITDA margin in corridor of 20 22% excluding AM investments (reported 18 20% ) Investment expenses in Additive Manufacturing to impact Segment EBITDA margin by up to 200bps Manmade Fibers Segment CapEX 144 2016 200 250 1 2017E Recovering from trough level seen in 2016 Securing bigger orders increasing orders and sales to around CHF 600m in 2017 Gaining market share in staple fibers in 2017 Margin impacted by competitive environment EBITDA margin 14.3 % Around 13% 2 2016 2017E Drive Systems Segment Order intake to slightly increase due to new business wins and potential recovery of end markets in H2 2017 Sales around prior years level EBITDA margin slightly improving as result of continued execution of repositioning initiatives 1 Including CHF 70-75m related to additive manufacturing (AM); 2 Including full absorption of all related investment expenses in AM Page 18
Summary: Surface Solutions and AM => profitable growth opportunities Key Takeaways 1. Oerlikon strategy to become a powerhouse in surface solutions and advanced materials clear priorities for all Segments 2. AM is a logic development for Oerlikon leveraging its strong position in the Surface Solutions business (materials, service, surface treatment) 3. Oerlikon to invest organically and in-organically to build and expand the position in attractive long-term profitable growth markets 4. 2017 attractive top-line growth Group margin at around 13 % impacted by investment expenses in Additive Manufacturing Page 19
Thank you. Page 20