Oerlikon continues strong profitable sales growth Helvea Swiss Equities Conference 2012 Bad Ragaz Dr. Michael Buscher, CEO January 12, 2012
Agenda 1 Business Update 2 Oerlikon Share Page 2
Oerlikon Business Portfolio serves customers in a broad variety of growing markets Innovative technology conglomerate with more than 17,000 employees at over 150 locations in 38 countries High quality businesses with leading market positions in global markets Innovation is at the core of the business model across all Segments Oerlikon Textile Oerlikon Drive Systems Oerlikon Vacuum Oerlikon Solar Oerlikon Coating Oerlikon Advanced Technologies Page 3
Oerlikon Customer Base (Selection) Preferred technology supplier to technology leaders in their respective industries Global customer base and world leading brand names Strong long-term customer relationships Page 4
9M 2011: Continued strong profitable sales growth FY 2011: Announcement on March 5, 2012 in CHF m Sales FX impact Sales Order intake Order backlog 2,476 +24% 3,078 3,078 21 409 Normalized for currency impact: sales up 42% 3,508 3,195-0.2% 3,189 1,583 +7% 1,694 9M 2010 9M 2011 9M 2011 reported Transaction Effects Translation Effects 9M 2011 FX adj. 9M 2010 9M 2011 9M 2010 9M 2011 New guidance on profitability Oerlikon Group posted strong increase in sales and stable order intake Four Segments delivered double-digit sales growth (Textile, Drive, Coating, Solar) Strong focus on Innovation Launch of more than ten new product platforms Asia continued to be the growth engine (up 41 %) Strong focus on operational excellence and discipline Increased FY 2011 EBIT guidance with margin to exceed 9 % Oerlikon benefited from broad portfolio mix, high emerging market penetration, strong innovation pipeline and operational discipline Page 5
Sales split by location and region 9M 2011 Sales by location Sales by market region North America 11% 1% Other Regions 17% Asia/ Pacific Europe 29% North America 15% 8% Other Regions Europe 71% 48% Asia/Pacific Oerlikon benefits from growth opportunities worldwide Asian markets fueled sales up 41 %, Europe up 14 %, North America up 7 %, Other Regions up 16 % Assessment of emerging markets (BRIC) to better balance geographical diversification Page 6
Constant range of R&D investments to secure technological leadership Investments in R&D in the range of 5 7 % in CHF m / in % of sales 300 250 200 150 260 5 274 6 247 5 7 210 239 7 5 159 8 7 6 5 4 100 50 3 2 1 0 2006 2007 2008 2009 2010 9M 2011 0 Page 7
Oerlikon Textile Profitable sales growth continued Competitive situation Market and technology leader in chemical fibers Strong market and technology position for all other textile applications Key Financials CHF m 9M 2010 9M 2011 Change OI 1,787 1,610 10 % OB 1,088 1,212 +11 % Sales 1,111 1,484 +34 % Market 9M Highlights Outlook Man-made fiber market with ongoing high demand due to replacement investments, substitution of natural fiber capacities and investments in hightech solutions especially in China Natural fiber market saw the expected slow down, amongst other due to the volatility of the cotton price Innovation offensive at ITMA trade show in Barcelona, seven new machines with improved efficiency, flexibility and quality Strong sales growth due to strong order book Strengthening of market position in China Strategic sale of Carding product group In H1 2011, Textile at 8 % record EBIT margin Man-made fiber market remains at high level Natural fiber market expected to stabilize on normalized level after slow down Sales expected to increase due to strong order book, profitability to sustain high level New organization and move of Management to Asia as well increase of R&D announced Nov. 22 Page 8
Oerlikon Textile Organizational changes and R&D focus in 2012 Announcement Nov 22, 2011 Simplify Textile Segment to further increase competitiveness, efficiency and profitability as well as position the Segment closer to largest customers Key elements Simplify organization with consolidation from five Business Units to three Shift of key management to Shanghai, by end of 2012 more than 40 % of senior management positions in Shanghai R&D investments in Germany and China (increase to around CHF 80 million) Organization until end of 2011 New CEO of Oerlikon Textile Clement Woon, 52 CEO as of 01.01.2012 Citizen of Singapore Extensive international experience Organization as of 01.01.2012 Page 9
Oerlikon Drive Systems Return to profitability in H1 2011 Competitive situation Leading provider for gear and transmission components as well as solutions in challenging niche markets Market High demand and growth in all relevant markets: agriculture, energy (oil, gas, mining), construction, high performance cars India and China with high dynamic Key Financials CHF m 9M 2010 9M 2011 Change OI 578 649 +12 % OB 121 176 +45 % Sales 541 605 +12 % 9M Highlights Outlook Significant progress of integration of the Business Units Graziano and Fairfield Sales growth of 12 % driven by off-road, energy, construction and agriculture sectors Growth in North America 20 % and Asia 18 % In H1 2011, Segment returned to profitability with EBIT margin of 4 % Market demand is expected to see stabilizing or slightly declining growth rates, particularly in agriculture, off-highway and construction Good perspectives in mining and energy Sales are expected to remain stable Profitability is expected to increase Page 10
Oerlikon Vacuum Reaching new profitability level in H1 2011 Competitive situation Strong market and technology position with further potential for profitable growth Market Process and coating industries as key drivers for Segment performance Overall market demand started to stabilize on a slightly lower level Solar and lighting market softened Key Financials CHF m 9M 2010 9M 2011 Change OI 332 304 8 % OB 94 75 20 % Sales 298 310 +4 % 9M Highlights Outlook Launch of magnetic-levitated turbo molecular pump MAGiNTEGRA to complete product portfolio Segment one of the Top 100 innovative companies in Germany Expansion of production capabilities in China In H1 2011, record 16 % EBIT margin Market demand expected to further stabilize, i.e. process, analytics and R&D; some markets slight decline, i.e. solar Sales and profitability level sustainable Further introduction of innovations Page 11
Oerlikon Solar Commercial and technological milestone achieved Competitive situation Regain cost and environmental leadership within the Solar industry Market Asia likely to dominate the module manufacturing market in the long term Increased price competition with overcapacity for crystalline solar cells Long lead times and high investment levels Thin film technologies still in the phase of gaining full market acceptance Key Financials CHF m 9M 2010 9M 2011 Change OI 92 193 >100 % OB 232 209 10 % Sales 139 239 +72 % 9M Highlights Outlook Reaching important commercial milestone with first order for a 120 MW ThinFab TM production line Launch of new record module with 154 Wp and 10.8 % efficiency Further cost reduction of below EUR 0,5 Wp due to higher module efficiency and line productivity Successful execution of technology roadmap and identification of additional cost reduction Successfully introduce 2 nd generation of ThinFab TM Continue R&D to further improve own world record of thin film silicon module efficiency Page 12
Oerlikon Solar THINFAB Announcement of 2 nd generation KEY FIGURES 1 st generation 2 nd generation Module Efficiency 10 % (143 Wp) + 8 % 10.8 % (154 Wp) Yield 97 % 97 % Annual Output 120 MWp + 17 % 140 MWp CoO 0.50 EUR/Wp 23 % 0.50 USD/Wp (0.65 USD/Wp) CAPEX 1.00 EUR/Wp 23 % 1.00 USD/Wp (1.30 USD/Wp) Technology Micromorph Micromorph Page 13
Oerlikon Coating Sales growth and breakthrough innovation Competitive situation Market and technology leader Key Financials CHF m 9M 2010 9M 2011 Change OI 304 363 +19 % OB n/a n/a n/a Sales 304 363 +19 % Market 9M Highlights Outlook Continuing high demand of the automotive industry especially in Europe as key growth driver Demand for environmentally friendly solutions and the need to reduce emissions across various industries opens new options for coated precision components 3 new coating centers in China and Poland New innovations launched, i.e. S3p providing significant efficiency improvement in deposition process Successful expansion into additional application areas of coated precision components In H1 2011, 20 % record EBIT margin Further regional expansion and opening of new coating centers Slight sales growth and profitability to remain stable at high level Page 14
Oerlikon Advanced Technologies Significant increase of profitability Competitive situation Highly specialized equipment supplier with unique technology competence in PVD coating Market Cooling of semiconductor equipment market Nanotechnology and solar markets impacted by current market environment Optical storage media solutions continue to trend lower 9M Highlights New HEXAGON packaging system launched, increased productivity and reduced maintenance New SOLARIS production system offers further application opportunities Key Financials CHF m 9M 2010 9M 2011 Change OI 102 70 31 % OB 48 22-54 % Sales 83 77 7 % Outlook Market penetration of HEXAGON system for semiconductor applications (advanced packaging) Further technology development to address i.e. Energy Efficiency Management and Energy Conversion Applications (LED, Power Devices, MEMS) Page 15
Outlook Oerlikon Group 2011 FY 2011: Announcement on March 5, 2012 Guidance FY 2011 based on current currency exchange rates Sales: Overall sales growth of up to 10 % Orders: Decline by around 10 % EBIT: Exceeding 9 % (HY 2011: 8 to 9 %) Increased guidance on profitability Oerlikon is on track to achieve its best margin in recent history Page 16
Focus of Oerlikon Group Continue on the path to a Sustainable Comeback Underlying performance improvement Continuous focus on operational discipline to sustain and further improve profitable growth Breakthrough innovations and leading product portfolio for future growth Ongoing high R&D-investments to secure differentiation against competition Balanced geographical footprint with strong presence in Asia Asia as current growth driver, but all emerging markets under evaluation to identify new opportunities Streamlining of product portfolio Evaluation of product portfolio to secure performance in line with Group financial targets Optimize financial structure Optimize and further strengthen the Balance Sheet structure Evaluation of options to refinance current credit facility Page 17
Agenda 1 Business Update 2 Oerlikon Share Page 18
30.12.10 11.01.11 21.01.11 02.02.11 14.02.11 24.02.11 08.03.11 18.03.11 30.03.11 11.04.11 21.04.11 03.05.11 13.05.11 25.05.11 06.06.11 16.06.11 28.06.11 08.07.11 20.07.11 01.08.11 11.08.11 23.08.11 02.09.11 14.09.11 26.09.11 06.10.11 18.10.11 28.10.11 09.11.11 21.11.11 01.12.11 13.12.11 23.12.11 Oerlikon Share Oerlikon Share Listed at the Swiss Exchange (SIX) since 1975 Securities symbol: OERL Securities number 81 682 ISIN: CH0000816824 # of shares outstanding: 323 124 010 shares Oerlikon Share Price Development Oerlikon Shareholder Structure Free Float 52,02% 0,18% 47,98% Own Shares (part of Free Float) Renova Group As of December 31, 2011, Indexed; 100 percent = Closing price per 31.12.2010 160.0 150.0 140.0 130.0 120.0 110.0 100.0 90.0 80.0 70.0 60.0 Page 19 Oerlikon STOXX 600 SMI
Analyst Consensus Group FY 2011 FY 2011 As of December 31, 2011 HIGH LOW Average Oerlikon Guidance Order Intake 4,148 3,924 4,037 Decline of around 10 % (FY2010: 4,520) Sales 4,081 3,878 4,081 Growth of up to 10 % (FY2010: 3,601) EBIT 383 343 368 EBIT Margin 9.5 % 8.8 % 9.1 % >9 % Page 20
Coverage 4 Buy/Accumulate 3 Hold/Neutral 2 Underweight/Underperform Broker (as of January 09, 2011) Analyst Recommendation Date of last update Target Price AlphaValue Pierre-Yves Gauthier Buy 28.10.2011 8.57 Bank am Bellevue Michael Studer Hold 21.10.2011 4.80 Bank Vontobel Michael Foeth Hold 05.01.2012 7.10 Credit Suisse Patrick Laager Underperform 13.12.2011 4.50 Helvea SA Reto Amstalden Accumulate 09.01.2012 8.10 Kepler CM Christoph Ladner Hold 20.10.2011 7.80 Main First Bank Thomas Baumann Buy 14.11.2011 6.50 UBS Thorsten Wyss Buy 21.10.2011 6.60 Zürcher Kantonalbank Armin Rechberger Underweight 21.10.2011 - CONSENSUS 6.75 Page 21
Financial Calendar 2012 March 5, 2012 FY Results 2011 and publication of Annual Report 2011 - Analyst Conference, Zurich April 12, 2012 April 30, 2012 Annual General Meeting of Shareholders - Luzern Q1 trading update - Analyst Conference Call August 3, 2012 HY Results 2012 and publication of Interim Report 2012 - Analyst Conference, Zurich October 30, 2012 9M trading update - Analyst Conference Call Page 22
Oerlikon Investment Case Leading Position in attractive growth markets Global player/ strong international footprint Sustainable improved EBIT Margin Technological Leadership / Innovation Solide Balance Sheet / Low Debt Underlying Performance Improvement Limited Swiss Franc Exposure Strong Cash Flow Page 23
Investor Relations Contact OC Oerlikon Management AG Churerstrasse 120 CH-8808 Pfäffikon SZ Switzerland Andreas Schwarzwälder Head of Investor Relations Phone: +41 58 360 9622 Mobile: +41 79 810 8211 email: ir@oerlikon.com Page 24
Further Questions? Oerlikon Textile Oerlikon Drive Systems THANK YOU! Oerlikon Vacuum Oerlikon Solar Oerlikon Coating Oerlikon Advanced Technologies Page 25
BACK-UP Page 26
Oerlikon s renewed Identity Tagline Vision Mission Page 27
Sales bridge by Segment Sales by Segment in CHF m Growth rate +24% +34% +12% +4% +72% +19% -7% 59 6 64 12 100 2.476 373 3.078 9M 2010 Textile Drive Vacuum Solar Coating Adv. Tech. 9M 2011 Page 28
Order bridge by Segment Order intake by Segments in CHF m Order backlog in CHF m 3.195 Growth rate -0,2% -10% +12% -8% >100% +19% -31% 177 59 32 71 28 101 3.189 1 583 +7% 1 694 9M 2010 Textile Drive Vacuum Solar Coating Adv. Tech. 9M 2011 9M 2010 9M 2011 Page 29
Key figures Oerlikon Group HY 2011 in CHF m HY 2011 HY 2010 Δ Order intake 2,344 2,101 +243 Order backlog 1,912 1,430 +482 Sales 2,033 1,573 +460 EBITDA % of sales 276 14% 71 5% +205 EBIT % of sales 187 9% -31-2% +218 Cash flow from operating activities before changes in current assets 250 130 +120 Cash flow from operating activities 137 86 +51 Net Operating Assets (incl. goodwill) 2,162 2,628-466 Page 30
FX impact on Sales, EBIT and EBIT Margin Oerlikon Group Sales HY 2011 in CHF m +13% Oerlikon Group EBIT HY 2011 in CHF m +20% +2,304 +224 +2,033 +12 +259 +187 +11 +26 9,2 9,6 EBIT margin in % HY 2011 reported Transaction Translation HY 2011 Effects Effects FX impact adj. 46% growth normalized for currency impact compared to HY 2010 (CHF 1,573 million) HY 2011 reported Transaction Effects Translation Effects Only minor impact on EBIT margin HY 2011 FX impact adj. Page 31
Key figures by Segment HY 2011 in CHF m Textile Drive Vacuum Solar Coating Adv.Tech. Order intake 1,195 452 219 185 243 50 Order backlog 1,339 154 87 307-25 Sales Δ to 2010 978 42% 416 13% 209 8% 133 80% 243 21% 54 6% EBITDA 97 42 40-70 7 EBIT % of sales 76 8% 18 4% Net Operating 715 878 168-6 297 Assets Employees 6,450 5,394 1,449 659 2,863 33 16% -12 n/a 49 20% 6 11% 84 200 Page 32
Segment operating margins 1) improved 1HY 2009 Operational EBIT 1 1HY 2010 Operational EBIT 1 1HY 2011 Operational EBIT 1 Historical performance EBIT Range Sales Range in CHF m Reference Years Textile -26% -1% +8% 4-6% 1,800-2,900 2003-05 Drive Systems -4% -1% +4% 5-8% 900-1,200 2006-08 Vacuum +1% +7% +16% 10-12% 400-500 2006-08 Solar +3% -81% -9% Coating -1% +12% +20% 15-20% 450-550 2006-08 Advanced Technologies -32% +6% +11% 1 EBIT before restructuring and goodwill impairment Page 33
Strong improvement of Return on Net Assets (RONA) EBIT and Net Operating Assets in CHF m RONA in percent 3.498 2.821 2.196 2.162 2,3% 51 187-1,7% -59-589 -20,9% 2008 2009 2010 2011 HY After turn around in 2010, strong improvement of EBIT and RONA, whereas Net Operating Assets are slightly decreasing Despite strong recovery, under proportional growth of net operating assets in first half 2011 2008 2009 2010 Stringent asset management and improved profitability led to improved RONA 2011 expected Page 34
Oerlikon increased net profitability in CHF m HY 2011 HY 2010 Δ Result before interests and taxes (EBIT) in % of sales 187 +9% -31 n/a +218 Financial result in % of sales -57 n/a -1 n/a -56 Result before taxes (EBT) in % of sales 130 6% -32 n/a +162 Income taxes in % of EBT -47 n/a -18 n/a -29 Net profit / loss in % of sales 83 4% -50 n/a +133 Page 35
Financial Result in CHF m 187 2 2 36 9 8 8 130 EBIT HY 2011 Interest income Other financial income Interest on financial debt Interest on provisions for postemployment benefit plans Other financial expenses Foreign currency loss, net EBT HY 2011 Financial income +4 Financial expense -61 Page 36
Tax Result in CHF m 130 33 14 83 Current income tax due to profitability contribution of many subsidiaries Deferred tax expenses mainly due to utilization of tax loss carry forwards Targeted tax rate of around 30% EBT HY 2011 Current income tax expense Deferred tax expenses Net Profit HY 2011 Page 37
Solid balance sheet restored in CHF m Cash and cash equivalents Trade receivables Inventories Property, plant and equipment Goodwill and intangibles Total other assets Total assets Trade payables Current customer advances Current and non-current loans and borrowings Non-current post-empl. benefit provisions Total other liabilities Total liabilities Total Equity Equity ratio Net debt Gearing 1) HY 2011 676 626 582 874 1,230 387 4,375 411 408 983 443 685 2,930 1,445 33% 262 18% FY 2010 751 588 468 942 1,293 433 4,475 419 335 1,078 499 690 3,021 1,454 32% 274 19% 1) Net debt / Equity Page 38
Net Working Capital 1) Net Working Capital 1) 2007-HY 2011 in % and CHF m 14% 18% 17% 8% 10% 5.000 4.500 4.000 3.500 3.000 2.500 Net working capital increased due to higher sales and influenced by increased customer advances 772 837 499 302 389 2.000 1.500 1.000 500 Net Working Capital in HY 2011 at 10 % of 12 month rolling sales 2007 2) 2008 2009 2010 HY 2011 0 1) Trade receivables + inventories trade payables current customer advances 2) 2007 Restated Page 39
Capex nearing depreciation levels Capex in CHF m Depreciation & amortization in CHF m Capex/depreciation & amortization ratio 1) 53 +13% 60 102-12% 90 2.26 1.58 1.39 Mid-term target corridor 1.20 1.00 0.63 0.77 0.67 HY 2010 HY 2011 HY 2010 HY 2011 2006 2007 2008 2) 2009 2010 HY 2011 1) Excluding impairment 2) Restated Page 40
Consolidated Cash Flow Statement HY 2011 in CHF m -78 756 250 113 Receivables -60 Inventories -152 Payables/liabilities -2 Customer advances +103 Hedge accounting -2 Total 113 65 129 Interest paid -49 Net change debt -76 Others -4 Total 129 21 678 CapEx PP&E -47 CapEx intangibles -13 Proceeds, interest and Others -5 Total -65 72 Operating Free Cash Flow Cash and cash equivalents at the beginning of the year Operating activities before changes in net current assets Changes in net current assets Investing activities Financing activities Conversion adjustments to cash and cash equivalents Cash and Cash equivalent at the end of the year Page 41
Disclaimer Oerlikon has made great efforts to include accurate and up-to-date information in this document. However, we make no representation or warranties, expressed or implied, as to the accuracy or completeness of the information provided in this document and we disclaim any liability whatsoever for the use of it. This presentation is based on information currently available to management. The forwardlooking statements contained herein could be substantially impacted by risks and influences that are not foreseeable at present, so that actual results may vary materially from those anticipated, expected or projected. Oerlikon is under no obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. All information provided in this document is not intended nor may be construed as an offer or solicitation for the purchase or disposal, trading or any transaction in any Oerlikon securities. Investors must not rely on this information for investment decisions. Page 42