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SMART STEEL
Investor Presentation
January 2019
1
Agenda
Business model and strategy
Market positioning
Overview financials
Business update by region
Truck and trailer market trends – what‘s next?
Company outlook
Smart Steel innovations driving the company 2020 plus
2
Business model and strategy 3
SAF-Holland Group Update: Zooming in on trailers and the Aftermarket
Total sales by region1 Europe‘s largest listed commercial vehicles supplier
with leading positions worldwide
16%
46%
41 subsidiaries featuring 22 manufacturing sites on six
continents; 4,400 employees
Revenue by Trailer OEM business is approx. 63% of sales
region
38% Strong global presence
EMEA Americas One of the very few globally positioned CV suppliers
APAC/China 87% of sales in Europe and North America
Fast growing APAC/China sales
Total sales by channel1 Almost 25% of sales originate from the resilient service
and aftermarket business, the key asset of the Group
24% Most comprehensive aftermarket spare parts and service
network worldwide featuring 10,000 partners in more
Revenue by than 80 countries
Channel
76% The #1 network in Europe and North America: Key asset
for fleets and major barrier to market entry
OE business Generates generic growth based upon consistently
Aftermarket business increased OE product population in the field
4 1as of September 30, 2018
SAF-HOLLAND: Product portfolio
Trailer axles and Truck and bus Fifth wheels and Landing gear and
suspension systems suspensions kingpins disk breaks
SAF-HOLLAND offers a comprehensive product portfolio for one-stop shopping also covering the
aftermarket.
5
Key OEM customers: Trailer, truck and bus manufacturers
Almost every major truck, trailer and bus OEM is a SAF-HOLLAND customer.
6
End customers: The fleets
SAF-HOLLAND focuses on fleet operators (infrastructure, logistics, specialty, heavy duty, port, etc.).
7
Strategy 2020: Megatrends driving SAF-HOLLAND’s business
development are in full effect
Mega trends Changing
demographics Growing middle Expanding
Strategy 2020 class road network
until 2030
Significantly growing BRIC: Middle class Global road
world population growing by 150% to network:
(+1.1 bn people) 2 bn people +25% in the last
Aging societies Next 11: Middle decade
Increasing class expanding by 2/3 of which built in
urbanization and 116% China and India
concentration in cities Share of global Chinese road
middle class network has tripled
consumption in within a 10-year
China, India, ASEAN time span
region soaring from
30% to 55% until
2030
SAF-HOLLAND
People Trucks/ Roads
key drivers Money Goods
Trailers
8
Strategy 2020: SAF-HOLLAND major beneficiary of soaring “Amazon
E-conomy” driving demand for new trucks and trailers
Persistent growth of online shopping and “E-conomy” infrastructure consistently pushes demand for new
trucks and trailers long-term. Rising number of logistic centers and hubs has transport increase.
9
All regions are delivering on Strategy 2020
EMEA Americas APAC/China
Sales in € mn and adj. EBIT margin in % Sales in € mn and adj. EBIT margin in % Sales in € mn and adj. EBIT margin in %
800 20 600 20 200 20
611.8 500 449.4
568.8 429.4
600 540.0 15 15 15
400 402.3
11.1
10.3 9.7 97.7
400 8.3 10 300 10 100 10
7.4 71.3 70.9 7.6
200
200 5 3.7 5 7.5 3.0 5
100
0 0 0 0 0 0
2015 2016 2017 2015 2016 2017 2015 2016 2017
10 Market positioning 11
SAF-HOLLAND market-leading positions in North America and EMEA in
an oligopolistic set-up
EMEA North America North America
Market-leading
Trailer Fifth Trailer axles + Fifth position in NA in
axles Wheels suspensions Wheels fifth wheels
Already Nr. 2
SAF- SAF- position in trailer
1/2 Jost 1 Hendrickson
HOLLAND HOLLAND axles in NA
EMEA
SAF-
SAF- Leading in
1/2 BPW HOLLAND / 2 Jost
HOLLAND European trailer
V.ORLANDI
axles
Nr. 2 position in
3 Schmitz Fontaine 3 Meritor Fontaine EMEA fifth wheels
strengthened by
acquisition of Nr. 3
V.ORLANDI
12 Source: Roland Berger, own researchAmong the market leaders in China and India
India
China (Premium segment) India Acquisition of Indian
market leader in
Trailer axles Trailer axles trailer axle systems
York
#1 position in trailer
1 BPW 1 SAF-HOLLAND / YORK axles in the fastest
growing TA market
worldwide
2 SAF-HOLLAND 2 Tata Motors China
Organic growth
driven by new
Fuwa H.D. Trailers greenfield operation
3 3
in Yangzhou
Legislation boosting
the premium
segment in China
13 Source: Roland Berger, own researchGlobal presence reduces cyclical risks and provides for regional and
structural growth in new markets
Sales regions: 85% of sales in Europe and North America
22 production sites
Turkey
Italy Germany Duzce-Istanbul
Canada Bessenbach / Keilberg
Flero (Brescia)
Woodstock Bessenbach / Frauengrund
Nave
Singen United Arab Emirates
Dubai
China
Bautou
Xiamen
Qingdao
USA
Cincinnati Singapore
Dumas
Warrenton South
Warrenton North
Wylie
Australia
Melton
India
Brazil Pune
Alvorada
South Africa
Johannesburg Sriperambadur Taluk
14Unique selling model based upon direct access to broad end customer
base that specifies products
Customer feedback as regards technical
and market requirements
High brand
recognition:
Push Pull
Superior product
performance OEM End customer
combined with
aftermarket Sales Sales
excellence
Sales focusing on fleet managers
> 80% of purchasing decisions taken by the fleets
15The most comprehensive aftermarket spare parts and service network
worldwide provides for generic growth and consistent cash flows
The Key Asset: Approx. 10,000 spare parts dealers • “Razor and blade” business model generates growth
and service stations in more than 80 countries based on consistently increased OE product population
guarantee spare parts availability in the field
• # 1 Network in Europe and North America a key asset
for fleet customers and huge barrier to market entry
• Narrows down volatility from OEM industry cycles
• Add-on potential from expanding PDC network and
positioning of GoldLine/ Sauer Quality Parts brands
SAFH axle population in EMEA has more than tripled!
4,000,000
3,000,000
2,000,000
North America RoW 1,000,000
Europe
59% 36% 5%
0
2003 2005 2007 2009 2011 2013 2015 2017
16 Overview financials 17
Group sales and adjusted EBIT by quarter
Sales in € mn Adj. EBIT in € mn. and adj. EBIT margin in %
400 35
14%
345.4 340.6
350 30
26.7 27.1 12%
300.3 26.3
287.3 294.9 25.1
300 277.1 274.2 23.8
273.7 25
259.9 255.8 252.6 22.7
21.6 10%
250 8.9% 20.9 20.3
9.6% 19.8
20 7.5% 18.5 8.0%
8.7% 8%
200 8.7% 8.4% 7.8% 6.7% 6.9% 6.9%
15
6%
150
10 4%
100
50 5 2%
0 0 0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 2017 2018 2016 2017 2018
Q3 2018 top line grew by 22.9% reaching a record third quarter level of € 340.6 (py: 277.1) mn.
Adjusted EBIT margin (incl. extraordinary income of € 4.4mn) rose to 8.0% (py: 7.5%), clean 6.7%
18Sustained above-plan organic sales growth in all regions paving the
way for realizing value in the AM
70% 66.2%*
60%
52.9%
49.2%
50%
40% 38.3%
30%
20% 18.6%
15.1%
11.0%
10% 8.1% 7.6%
5.1% 5.2% 4.1%*
0%
EMEA Americas APAC/China
Q4 17 Q1 18 Q2 18 Q3 18 (Versus py quarter)
(* As compared to Q3 2018 pre. Results, retroactive adjustment of the allotment of the sales in India to the new segment structure)
Positive trend in organic sales growth continued in all reporting regions
Dynamic APAC/China region versus already high prior year comparables; US successfully managed strong
unit sales growth despite ongoing realignment measures within the new US production network
19Strong FCF generation provides for growth and dividend payouts
Free cash flow after taxes, pre-dividend and pre-M&A Dividend payments
in € mn in € per share
80 0.60
70 67.7
0.44 0.45
60
0.40
0.40
50
0.32
40 35.0 0.27
30.8 29.7
30
0.20
20
11.3
10
0 0.00
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Sustained strong cash returns (cash conversion of 81%) providing for 2.5 to 3.2% dividend yields in recent
years; SAF-HOLLAND dividend policy in general is to distribute 40 to 50% of net income.
20Net debt at € 268.6 mn - Equity ratio remains solid at 31.5%
Net debt Equity ratio
in € mn
Σ 105.5* Σ 268.6*
500
400 31.5%
300 30.2%
200 442.6
368.4
100
0
-99.8
-100
-200 -337.1
-300
-400
Dec 31, 2017 Sept 30, 2018 Dec 31, 2017 Sept 30, 2018
Cash Debt
* Net debt (incl. cash and cash equivalents and other short-term investments) in Q3 2018 increased
to € 268.6 mn (Dec. 31,2017: € 105.5 mn); Cash and cash equivalents and other short-term investments
amounted to € 99.8 mn (Dec. 31, 2017: € 337.1 mn). The equity ratio as of Sept 30, 2018 was 31.5%.
21 Business update by region 22
EMEA: Solid organic sales growth enables operational leverage
Sales in € mn In 15 years axle population in EMEA has more than tripled
200 4,000,000
155.5
144.0 3,000,000
150
100 2,000,000
50 1,000,000
0 0
Q3 2017 Q3 2018 2003 2005 2007 2009 2011 2013 2015 2017
Q3 2018 sales growth of 8.0%, on an organic
Adj. EBIT in € mn and margin in %
basis – adj. for forex and acquisition effects –
20 20%
17.5 sales were up +4.0% yoy
14.5 Aftermarket (AM) growth of 6.3% on a high
15 15%
basis
10 10%
11.3% Adj. EBIT rose 20.7% to € 17.5 (py: 14.5) mn
10.1%
5 5%
Despite seasonal sales retraction versus Q2,
adj. EBIT margin holds up at 11.3% (py: 10.1%)
0 0% supported by positive mix effects and
Q3 2017 Q3 2018
operational leverage
23Update US: Add-on operating cost and clean adj. EBIT margin trend
continue to improve successively
Washington Maine Add-on operating Adj. EBIT
Montana
North Vermont
New
costs in € mn margin in %
Dakota
Hampshire
Oregon
South
Minnesota
Wisconsin
Michigan
Rhode
6.3 10%
Idaho Dakota Island
Wyoming PennsylvaniaNew 6.0
Nebraska
Iowa Jersey 4.5% 6%
Illinois
Nevada IndianaOhio West 3.9
Utah Missouri Virginia
Virginia 0.6% 1.6%
California Colorado
Kentucky 4.0 4.0 2%
Kansas North
Arkansas
Tennessee Carolina
South
2.3 2.0 -2%
Oklahoma
Arizona New
Mexico
Carolina
2.0 -0.7%
AlabamaGeorgia
Mississippi - 4.1% -6%
Texas
Louisiana Florida 0.0 -10%
SAF-HOLLAND receiving enlarged production locations Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
Sales in € mn Sales up 17.3% to € 129.0 (py: 110.0) mn, up €
200
6.0 mn versus Q2 2018
Adj. EBIT at € 6.5 (py: 5.0) mn incl. contribution
129.0 from partial settlement of US medical plan of €4.4
110.0 mn; immediate annual cost savings of € 0.4 mn
100 Successive clean adj. EBIT margin improvement
versus Q2 2018 to 1.6% (0.6%)
Add-on operating costs of € 2.0 (Q2: 2.3) mn, due
to continued start-up inefficiencies and
0
Q3 2017 Q3 2018 realignment of the new US production network
24Update China: New legislation prompts structural sales growth through
2019 and 2020
Sales in € mn New regulatory load limits for CVs and manda-
100
tory first fit of disk breaks and air suspensions for
hazardous goods transporters as of 2020 trigger
80
expansion of the premium segment in China
56.1
60
On an organic basis, sales Q3 2018 up 66.2%;
40 York acquisition contributes close to € 20 mn
23.2
20 Focus on organic growth with implementation of
Yangzhou greenfield plant, ramp-up in Q2 2019
0
Q3 2017 Q3 2018 Consistent double-digit organic growth
25Post merger integration running well: York and V.ORLANDI
First-time consolidation as of May 1, 2018
Instantly Nr. 1 in trailer axles in India
Strong brand
Strong position in adjacent Asian markets
Realization of synergies in sourcing and
manufacturing plus intensive expansion plan
for the Aftermarket to grow margin
India highest growth trailer market worldwide
Further expansion of capacities
First-time consolidation as of April 1, 2018
Nr. 2 and Nr. 3 in fifth wheels joined forces
Complementary coupling technologies, i.e.
specialties
State-of the art automated production
SAF-HOLLAND organization provides for
access to new customers
Significant cross-selling potential at Group level
Strong mid-teens EBIT margin profile
26 Truck and trailer market trends
What‘s next?
27A long-term growth industry driven by mega trends: Continued increase
of global trailer axle production until 2025
Global trailer axle production
in thsd.
5,000
4,549
4,349 40
4,153 40
4,000 3,782 3,964 39
3,610 38
3,449 37
3,302 36 2,063
3,167 35
34 1,946
1,833
3,000 33 1,725
1,623
1,528
1,361 1,440
1,292
2,000 1,083
1,028 1,056
974 1,001
922 948
875 898
254 272 291
1,000 206 221 237
169 180 193
859 892 927 963 999 1,035 1,072
798 827
0
2017e 2018f 2019f 2020f 2021f 2022f 2023f 2024f 2025f
North America Latin America Europe APAC MEA
28 Source: Persistence Market Research, Global Trailer Axle Market, December 2017Mildly supportive market environment in 2019
EMEA North America
Truck Shipments1 Trailer Production2 Truck Shipments3 Trailer Production4
2018 +2% +1% 2018 +30% +10%
2019 +3% -8% 2019 +8% -1%
NA Class 8 truck shipments forecast to continue 2018 upturn with +8% growth in 2019. NA trailer production
slightly down from record level in 2019. European truck market posting slow growth only. European trailer
market is expected to decline in 2019.
1 LMC Global Commercial Vehicles Forecast Q2, 2018, medium & heavy trucks
29
2 Clear , Forecast Report, May 2018
3 FTR Truck & Trailer Outlook, November 2018, Class 8
4 FTR Truck & Trailer Outlook, November 2018Financial targets 2018 (refined on Oct. 19 2018) and mid-term planning
2020 confirmed
FY 2018 outlook refined* FY 2018* Strategy 2020
Organic increase of 9 to 10% Organic increase of 5 to 7% Organic: € 1,250 mn
assuming stable FX rates and assuming stable FX rates and
unchanged scope of unchanged scope of
consolidation consolidation
Sales + M&A: Coops, JVs,
+ contribution from V.Orlandi and + contribution from V.Orlandi
York takeovers (~ € 65 to € 70 and York takeovers (~ € 60 mn) acquisitions
mn)
Total: € 1,500 mn
+ potential further M&A + potential further M&A
Rather tending to the lower end of
Adj. EBIT
the 7.0% to 8.0% range (incl. 7.0% to 8.0% ≥ 8%
margin
extraordinary income of € 4.4 mn)
Net working
12% 12% 12%
capital ratio
€ 38 to 40 mn € 38 to 40 mn
incl. high single-digit Euro mn incl. high single-digit Euro mn € 26 mn to € 28 mn p.a.
CAPEX
amount related to new China amount related to new China ~2.5% of sales
plant plant
30 * Projections assume that there is no significant deterioration of the political, economic or industry-specific environment; organic projections do not
include potential sales and earnings contributions from acquisitions or JVs Smart Steel innovations
driving the company 2020 plus
31Content per vehicle opportunity with significant potential from trailer
connectivity and data interpretation excpected
Trailer content per vehicle European trailer components1
in % OEM market:
■ Chassis ■ Structural elements in € bn
- Axles - Body parts 2.0 ~ 13 %
- Brakes - Landing gear 1.5
- Suspensions - Side wings
- Tail 1.0
- Lighting 1.5
1.7
- Interieur 0.5
0.0
2017 2025e
■ Connectivity systems
- Connectivity / telematics
50.0% 48.0% - Sensoring / electronics
- Data interpretation / Predictive
maintenance
- Advanced driver assistent systems
2.0%
Connectivity and data-based applications provides for the
highest growth rates in the trailer components first fit market
32 1Comprising trailer axles, brakes and landing gear only
Source: Roland Berger, own researchSMART STEEL provides for add-on business
opportunities in a digitized transport world
1 2 3 4 5
Upgrade to Digitize New business
Integrate &
Mechanics Electro- Information & models & Digital
Connect
mechanics Data solutions
Predictive Maintenance
RECOLUBE SAFH Connect App Big Data Analytics
SAF-HOLLAND combines mechanics with sensors and electronics.
The Company‘s integration and data interpretation know-how enables smart/autonomous drive systems.
33Acquisition of Axscend provides for
complementary data-based business model
Start-up innovation power … … meets market leading
position
Trailer Master turns trailers into
„smarties“ Scalable at SAF-HOLLAND
Connectivity and data interpretation Group level
Succesfully established license- License-based model to be rolled
based business model out to more than 20.000 SAF-
Already a couple of thousand HOLLAND fleet customers
licenses in the UK alone SAF-HOLLAND achieved a
significant time gain
Succesful data- and license-based business model offers a scalable platform for a roll out at the group level.
34Disclaimer
Not for general release, publication or distribution in the United States, Australia, Canada or Japan.
By attending this presentation you agree to be bound by the following limitations:
This presentation has been prepared by SAF-HOLLAND S.A. (“SAF-HOLLAND”) and comprises written materials concerning SAF-HOLLAND. It is furnished to you solely
for your information and may not be reproduced or redistributed, in whole or in part, to any other person. It contains summary information only and does not purport to be
comprehensive and is not intended to be (and should not be used as) the sole basis of any analysis or other evaluation. No representation or warranty, express or implied,
is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information, including projections, estimates, targets and
opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither SAF-HOLLAND
nor any of its directors, officers, employees or advisors nor any other person shall have any responsibility or liability whatsoever (for negligence or otherwise) arising,
directly or indirectly, from the use of this presentation, or its contents or otherwise in connection with this presentation.
This presentation contains certain statements related to our future business and financial performance and future events or developments involving SAF-HOLLAND and/or
the industry in which SAF-HOLLAND operates that may constitute forward-looking statements. These statements may be identified by words such as “believes,” “expects,”
“predicts,” “intends,” “projects,” “plans,” “estimates,” “aims,” “foresees,” “anticipates,” “targets,” and similar expressions. Forward-looking statements are not historical facts,
but solely opinions, views and forecasts which are based on current expectations and certain assumptions of SAF-HOLLAND’s management or cited from third party
sources which are uncertain and subject to risks. Actual events may differ significantly from the anticipated developments due to a number of factors, including without
limitation, changes in general economic conditions, changes affecting the fair values of the assets held by SAF-HOLLAND and its subsidiaries, changes affecting interest
rate levels, changes in competition levels, changes in laws and regulations, environmental damages, the potential impact of legal proceedings and actions and the Group’s
ability to achieve operational synergies from past or future acquisitions. Should any of these risks or uncertainties materialize, or should underlying expectations not occur
or assumptions prove to be incorrect, actual results, performance or achievements of SAF-HOLLAND may (negatively or positively) vary materially from those described,
explicitly or implicitly, in the relevant forward-looking statement.
The information contained in this presentation, including any forward-looking statements expressed herein, speaks only as of the date hereof and reflects current legislation
and the business and financial affairs of the SAF-HOLLAND which are subject to change and audit. Neither the delivery of this presentation nor any further discussions of
SAF-HOLLAND with any of the recipients thereof shall, under any circumstances, create any implication that there has been no change in the affairs of SAF-HOLLAND
since such date. Consequently, SAF-HOLLAND neither accepts any responsibility for the future accuracy of the information contained in this presentation, including any
forward-looking statements expressed herein, nor assumes any obligation, to update or revise this information to reflect subsequent events or developments which differ
from those anticipated.
This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any state, country or other
jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such
jurisdiction. This presentation is for information purposes only and does neither constitute an offer to sell securities, nor any recommendation of, or solicitation of an offer to
buy, any securities of SAF-HOLLAND in the United States, Germany or any other jurisdiction. In the United States, any securities may not be offered or sold absent
registration or an exemption from registration under the U.S. Securities Act of 1933.
35IR Contact
SAF-HOLLAND GmbH
Hauptstraße 26
63856 Bessenbach
Germany
www.safholland.com
Klaus Breitenbach
Senior Manager Investor Relations / Corporate Communications
Klaus.breitenbach@safholland.de
Phone: +49 - 6095 301-565
Alexander Pöschl
Senior Manager Investor Relations / Corporate Communications
alexander.poeschl@safholland.de
Phone: +49 - 6095 301-117
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