duerr ir presentation

INVESTOR RELATIONS PRESENTATION

Bietigheim-Bissingen, February 2017

www.durr.com

Dürr Aktiengesellschaft

2 © Dürr AG, CCI, Investor Relations Presentation, Bietigheim-Bissingen, February 2017

DISCLAIMER

This presentation has been prepared independently by Dürr AG (“Dürr”). The presentation contains statements which address such key issues as Dürr’s strategy, future financial results, market positions and product development. Such statements should be carefully considered, and it should be understood that many factors might cause forecast and actual results to differ from these statements. These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw material and personnel costs, physical and environmental risks, legal and legislative issues, fiscal, and other regulatory measures. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies.

3

AGENDA

1. Executive Summary

Our five divisions 2.

Group strategy 3.

Group financials, markets and outlook 4.

© Dürr AG, CCI, Investor Relations Presentation, Bietigheim-Bissingen, February 2017

Worldwide leading supplier of efficient production technologies with outstanding digital expertise. Major customer groups: automotive, furniture and general industry Innovation leader driven by automation, digitization and networked production Highly cash generative; flexible production facilities with pronounced focus on NWC; strong ROCE Expanding service business with healthy margins and further growth potential Group structure with efficient processes; further growth via acquisitions. HOMAG can be seen as a blueprint for further acquisitions

4

1. EXECUTIVE SUMMARY


Market shares between 30 and 60% in different machinery and engineering activities Strong emerging markets presence with 40-50% share of global incoming orders High entry barriers with limited number of competitors Business drivers:

Greenfield: growing markets Brownfield: replacement potential Service: installed base Automation, digitization & networking

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1. EXECUTIVE SUMMARY Dürr: global leader in strong competitive position


Fast facts Customers

6

AGENDA



Group strategy 3.



Paint and Final Assembly Systems

• Incoming orders € 1,094 (1,126) m

• Sales € 1,140 (1,365) m

• EBIT € 77 (100) m

• Operating EBIT € 82 (100) m

• EBIT margin 6.8 (7.3) %

• Operating EBIT margin 7.2 (7.3) %

Application Technology

• Incoming orders € 583 (538) m

• Sales € 561 (600) m

• EBIT € 76 (61) m


• EBIT margin 13.6 (10.1) %


Measuring and Process Systems


• Sales € 624 (604) m

• EBIT € 80 (70) m


• EBIT margin 12.8 (11.6) %


Clean Technology Systems


• Sales € 167 (159) m

• EBIT € 6 (6) m




Woodworking Machinery and Systems

• Incoming orders € 1,165 (1,058) m

• Sales € 1,082 (1,039) m

• EBIT € 45 (37) m




7

2. OUR FIVE DIVISIONS Divisional breakdown 2016 (2015)


Dürr AG

Turn-key paint shops for the automotive industry (OEMs, suppliers) Final assembly systems (e.g. conveyor equipment, control systems) Service and modernization of existing sites

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2. PAINT AND FINAL ASSEMBLY SYSTEMS Paint shops and final assembly systems


1 including extraordinary expenses in connection with the closure of a smaller plant in Austria (€ 4.9 m)

in € m 2015 2016 2017e

Incoming orders 1,126 1,094 1,000-1,150

Sales revenues 1,365 1,140 1,050-1,175

EBIT 100 771 -

EBIT margin 7.3% 6.8%1 6.0-6.5%

ROCE >100% >100% >100%

High-tech systems and software for automated paint application, glueing processes and seam sealing (e.g. robots, atomizers, color change systems, quality assurance) Interior painting automation potential Economic lifetime of paint robots: 10-12 years replacement cycle just beginning Strong service potential (e.g. spare parts) due to increased installed base

9

2. APPLICATION TECHNOLOGY Paint application, glueing and sealing technology


1 including extraordinary income of € 17 m

in € m 2015 2016 2017e

Incoming orders 538 583 540-610

Sales revenues 600 561 540-610

EBIT 61 761 -

EBIT margin 10.1% 13.6%1 9.5-11.0%

ROCE 32.3% 40.0%1 27-32%

Falls das Bild von der Auflösung zu schlecht ist, gäbe es noch ein mögliches Ersatzbild

Application products (components) for general industry Complete range of application products for general industry (e.g. plastics, wood, furniture, construction) Sales channels: Distributors, integrators, Dürr web shop & Dürr regional centers Target € 50 m revenue by 2019

10

2. APPLICATION TECHNOLOGY Addressing new markets: industrial products


31%

31%

23%

8% 7%

Nordson

Others

Graco

Finishing Brands

Iwata

Competition1

1 Market size ~ € 3 bn

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2. PAINT BUSINESS1


BUSINESS DRIVERS TYPE

Expansion of capacity in new and existing locations Replacement of old and non-productive plants

Increased quality requirements especially in the emerging markets Efficiency enhancements: cost reductions (e.g. energy, material); cycle times Flexibility: addition of new models/facelifts to existing painting lines Automation: e.g. interior painting of vehicles Environmental regulation: stricter emissions laws

Continuous demand: spare parts, upgrades, training Wear & tear of aging installed base: smaller modernizations and upgrades

Greenfield

Brownfield

Service

1 Divisions Paint and Final Assembly Systems and Application Technology

Incoming orders increased by 75% within 8 years, mostly due to higher demand in brownfield & service business

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2. PAINT BUSINESS1 Brownfield with growing importance


1 Divisions Paint and Final Assembly Systems and Application Technology

61% 15%

24%

44%

26%

30%

Greenfield Brownfield Service

35%

35%

30%

Incoming orders 2008: € 950 m Incoming orders 2016: € 1,677 m Incoming orders 2020e

High market shares in all businesses Positioned globally with a high degree of localization Strong footprint in China with local production, and local R&D etc.

13

2. MEASURING AND PROCESS SYSTEMS Highly profitable machinery niches with global presence


in € m 2015 2016 2017e



EBIT 70 80 -

EBIT margin 11.6% 12.8% 11.5-14.0%1

ROCE 24.6% 24.9% 20-25% 1 Ecoclean business will be sold as of March 31, 2017

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2. MEASURING AND PROCESS SYSTEMS Four strongly performing machinery niche players


1 Exit of this business signed; closing expected in Q1/2017; € 200 m sales, EBIT margin 7% in 2016

Balancing of rotating parts and components for many manufacturing industries, service centers

End of line assembly and testing equipment for the automotive industry

Filling of appliances (refrigerators, air conditioners and others)

Filling automotive – end of line

Balancing

Filling

Cleaning and surface processing for industrial production (production of engines, gearings, metal, etc)

Cleaning machines 1

Assembly & testing

Systems for exhaust air purification, disposal of liquid residues and energy management Drivers: energy prices, regulation, environmental issues Customer split: 25% automotive; 25% chemistry, petrochemistry, pharmacy; 50% other industries Loss making energy efficiency technologies will be streamlined in 2017

15

2. CLEAN TECHNOLOGY SYSTEMS Exhaust air purification systems & energy efficiency systems


in € m 2015 2016 2017e



EBIT 6 6 -

EBIT margin 3.6% 3.7% 4.0-4.5%

ROCE 11.7% 13.6% 15-20%

Product range from stand-alone machines through to complete, automated production lines for efficient woodworking Major customers: Furniture industry, construction supplies and timber home construction Strong need for automation: Batch one production, fully digitized process from order to delivery 31% market share, biggest customer: IKEA (~ 5% of sales)

16

2. WOODWORKING MACHINERY AND SYSTEMS World market leader HOMAG Group acquired to capture automation trend in the industry


in € m 2015 2016 2017e

Incoming orders 1,058 1,165 1,125-1,225

Sales revenues 1,039 1,082 1,100-1,150

EBIT 37 45 -

EBIT margin 3.5% 4.1% 6.0-7.0%

ROCE 8.9% 11.3% 13-18%

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2. WOODWORKING MACHINERY AND SYSTEMS FOCUS program progressing well


Growth

Expansion China Expansion US Service initiative Project business Innovation program

Global organization (“ONE HOMAG“) Process improvement ERP roll-outs Modular products Incentive systems

Optimization

Value creation program FOCUS

Revenue: € 1.25 bn

EBIT margin: 8-10%

Lever Initiatives Targets 2020

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2. WOODWORKING MACHINERY AND SYSTEMS FOCUS 2017: Shifting gears from “Fix the house” to “Innovation”

„Fix the house“

2016/2017

Sustainable profitable growth

2018/2019

Optimize portfolio

Standardization

Efficiency improvement in functions and processes

Develop system business

ONE HOMAG

Profitable system business

Launching of the “Software House”

Integration of complementary products

Service excellence (8% growth p.a. expected)

Innovation push

Internationalization

2017/2018

Cross-business-unit innovation program

Global footprint in production and engineering

Localization of sales & service competences


19

AGENDA



Group strategy 3.



20

3. DÜRR STRATEGY 2020


Service

Globalization

Efficiency

Innovation

LEADING IN PRODUCTION EFFICIENCY

20%

8%

28% 3%

41%

Invest Energy Personnel Service Material

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3. STRATEGY Innovation: R&D efforts focused on tangible customer value


Cost per unit in a paint shop

Ø cost per unit in a current paint shop = € 3201

1 Compared to € 420 15 years ago

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

kWh/unit

Reduction of resource consumption/emissions in paint shops of a German OEM

0.0

0.5

1.0

1.5

2.0

m³/unit 0

0.5

1

1.5

2

2.5

3

3.5

kg/unit 0

1

2

3

4

5

6

l/unit

Energy Paint² Water VOC

-67% -71% -73%

-36%

2 In spray booth only

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3. STRATEGY Innovation: digital@DÜRR


Vision: leader in digitization, automation and networking in industrial production using intelligent products and services. Dürr`s MES software suite controls and analyzes the production process Benefitting strongly from the digitization and flexibilization trends in the industry. These trends favor innovative and strong companies, differentiation potential versus competitors, consolidation of competitive environment New product offerings optimizing manufacturing productivity, predictive maintenance and digital services

• e.g. EcoEMOS/iTAC MES system, Human Robot Collaboration (HRC)

• e.g. predictive mainte-nance, documentation/ maintenance via pad, internet, QR code

• e.g. virtual commissioning,

virtual engineering, additive manufacturing

• e.g. on demand energy supply

for ovens, smart pumps with reduced maintenance efforts

Smart Products

Smart Processes

Smart

Factories

Smart Services

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3. STRATEGY Innovation: Goal – Leading in digitization with 4 pillars


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3. STRATEGY Innovation: iTAC.IoT.Suite: new Industry 4.0 platform


Shopfloor Competence

Shopfloor know-how Modular solutions Plant-wide integration Hardware independence Flexible integration into existing systems

IT Competence

Industrial IT know-how State of the art software architecture Release capability Cloud integration Big data

iTAC

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3. STRATEGY Innovation: Industry 4.0/IoT Vendor Benchmark


0% 50% 100%

Port

folio

attr

activ

enes

s

Competitive strength

Product Leader Leader

Follower Market Challenger

Plex

AXOOM FIT

Bosch SI Beckhoff

iTAC

FORCAM

Siemens

Gefasoft

MPDV

Source: Experton Market Insight; Computerwoche, 10/2016

100%

50%

0%

26

3. STRATEGY Globalization: High investments in network of locations – reinforcement of local activities


in € m 2012 2013 2014 2015 2016

Capex 32.5 51.2 54.9 102.3 81.9

Acquisitions 2.9 34.8 242.1 42.0 13.6

Total 35.4 86.0 297.0 144.3 95.5

Extension of global presence: Reinforcement of new markets but also investments in established markets of North America and Germany with good prospects

15 production, test and engineering centers: extended, modernized or newly built

Campus concept transferred to key locations: more efficient processes, open communication and sustainable energy concept

Capex spending in 2017: around € 80 m New Dürr Campus in Shanghai, China

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3. STRATEGY Service: Long-term target 30% of sales


2008 … 2014 2015 2016

Sales revenues (in € m) 395.9 … 634.1 884.9 981.9

In % of group sales 24.7 … 24.6 23.5 27.5

Strengthening service business and capacities in emerging markets (e.g. China, India, Mexico) with disproportionately high

potential

Service pricing, dedicated offerings, complaint management system, decentralized ware-housing, delivery speed

2016: Service sales +11%, reaching 27.5% of total sales – despite group sales down 5%

North/Central America; 28%

Germany; 15%

Other European countries; 31%

Rest of world; 9%

Non-auto China; 7%

Brownfield/ Service China;

3%

Greenfield China; 7%

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3. STRATEGY Global footprint offers multiple growth opportunities


China Greenfield only 7%

Dürr‘s China brownfield/ service business accounts for only 21% of total Chinese incoming orders ( Dürr Group 56%)

Incoming orders Dürr group 2016: € 3.7 bn

42%

41%

17%

Modifications and upgrades

Spare parts and repairs

Maintenance, assessments, seminars

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3. STRATEGY


Service type in % of revenues

0

2,000

4,000

6,000

8,000

10,000

12,000 Number of paint robots sold (cumulative figure)

Further globalization of Dürr processes Global processes with full utilization of SAP/CAX/CRM/SharePoint Global IT platforms, integrated systems, one single database, continuous capex spending Expansion of sourcing offices and manufacturing in China, India, Mexico, Brazil

Rigorous localization of Dürr products in the emerging markets Supplemental product portfolio with low-cost/low-end solutions; local added value Reduction of specifications

Consistent portfolio optimization to improve profitability

Aircraft technology systems sold in 2014 French production facility sold in 2014 Cleaning machinery: sale closing in Q1 2017 likely Austrian workshop closed in 2016 Small German HOMAG site closed in 2016

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3. STRATEGY Efficiency: Global processes, localization & portfolio optimization


31

AGENDA



Group strategy 3.



32

4. EARNINGS ON THE RISE Net income strongly increased


in € m 2014 2015 2016 ∆ in %

Incoming orders 2,793.0 3,467.5 3,701.7 6.8

Sales 2,574.9 3,767.1 3,573.5 -5.1

Orders on hand (end of period) 2,725.3 2,465.7 2,568.4 4.2

Gross profit on sales 591.1 828.0 858.3 3.7

Gross margin (%) 23.0 22.0 24.0 2.0 ppts

EBIT 220.9 267.8 271.4 1.3

EBIT margin (%) 8.6 7.1 7.6 0.5 ppts

Net income 150.3 166.6 187.8 12.8

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4. STRONG CASH FLOW TO BE EXPECTED Free cash flow doubled in 2016


in € m 2013 2014 2015 2016

EBT 184.6 204.7 244.5 258.1

Other aggregated items of cash flow 21.9 12.3 66.3 2.9

Net working capital changes 122.6 74.3 -137.8 -33.6

Cash flow from operating activities 329.1 291.2 173.0 227.4

Interest -16.2 -16.6 -10.4 -15.8

Capex -51.0 -53.6 -99.8 -81.6

Free cash flow 261.9 221.1 62.8 129.9

NWC increase due to a slightly changed payment pattern of customers and normalization in prepayments

2017 cash flow should reach 2016 level

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4. SOLID FINANCIAL RATIOS


12/31/2013 12/31/2014 12/31/2015 12/31/2016

Equity in € m 511.4 725.8 714.4 831.0

Equity ratio in % 25.7 24.4 23.9 24.8

Net financial status in € m 280.5 167.8 129.4 176.5

Net working capital in € m -33.1 87.6 236.8 194.4

DWC (days working capital) -4.9 12.2 22.9 27.2

ROCE in % 76.2 38.7 45.3 41.1

Equity increased by 16% in 2016; equity ratio of 30% as long-term goal

Net financial status expected to reach € 300 - 380 m at year end 2017

ROCE for FY 2017 should stay in our target range of 30-40%

35

Chinese production outlook raised slightly; now expected to reach nearly 34 m by 2021

20.4 20.8 23.1

21.9 22.3 24.4

21.2 22.4 25.2

27.0 27.7

33.9 2.2 2.3

3.1

0

20

40

60

80

100

120

2016 2017 2021

Others China Asia (w/o China) Europe America

1 Light vehicles production Source: PwC, Autofacts

Last update: January 2017

Ʃ 92.7 Ʃ 95.5

Ʃ 109.7

+5%

+3%

+6%

+2%

+2% +3%

+8%

+5%

+3%

+2%

+4% +3%

CAGR

4. FURTHER GROWTH IN THE CAR MARKET


in m units1

36

4. WOODWORKING MACHINERY MARKETS Global automation trends might favor a higher growth for the HOMAG Group


315 326 338 351

2014 2015 2016 2017

+3.7% p.a.

1.3 1.3 1.4 1.4 1.5 1.5

2014 2015 2016 2017 2018 2019

+3.3% p.a.

210 215 222 229 235

2016 2017 2018 2019 2020

+2.9% p.a.

Furniture (83%)

Global furniture production (CSIL)

Construction elements (14%)

European construction market

Wooden houses (3%)

Timber construction (source: Holzbauverband)

in € bn

37

4. DÜRR GROUP OUTLOOK 2017 Stable outlook despite Ecoclean deconsolidation

0

5

10

15

20

25

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2009 2010 2011 2012 2013 2014 2015 2016 2017e

Sales

Incoming orders

Gross margin (in %)

EBIT margin (in %)


in € m

1) Including book gain Ecoclean sale, without book gain: 6.80 - 7.55%

3,400- 3,600

3,300- 3,700

7.51 -

8.25

03/17/2017 Publication annual report 2016 03/21/2017 BoAML Global Industrials & EU Autos Conference, London 03/30/2017 MainFirst Corporate Conference, Copenhagen 04/05/2017 dbAccess Small & Mid Cap Corporate Day, London 05/05/2017 Annual General Meeting, Bietigheim-Bissingen 05/11/2017 Interim statement for the first quarter of 2017 08/03/2017 Interim financial report for the first half of 2017 11/08/2017 Interim statement for the first nine months of 2017

38

4. FINANCIAL CALENDAR


Günter Dielmann [email protected] +49 7142 78-1785

Stefan Tobias Burkhardt [email protected] +49 7142 78-3558

Mathias Christen [email protected] +49 7142 78-1381

Dürr Corporate Communications & Investor Relations Contact

40

TRADITIONAL OEMS WITH HIGH INVESTMENTS1 IN 2017 AND 2018 Capex mix could shift towards e-mobility, self-driving, connected cars


in € bn 2012 2013 2014 2015 2016e 2017e 2018e

BMW 5.0 6.6 6.0 5.8 5.6 6.3 6.7

Daimler 6.4 6.7 6.1 6.8 7.7 9.0 9.0

FCA 5.4 5.5 5.9 6.7 6.0 7.0 6.7

Ford 4.2 5.1 5.7 6.2 6.4 7.0 7.0

GM 6.2 6.2 5.4 6.7 8.2 8.1 8.2

Renault 1.9 2.5 2.4 2.7 1.9 2.8 3.2

PSA 1.9 2.2 2.2 2.8 2.6 3.4 3.6

VW 12.9 15.1 16.1 17.8 17.5 17.9 17.3

Total 43.9 49.9 49.8 55.5 55.9 61.5 61.7

1 Capex spending incl. capitalized R&D, Source: Deutsche Bank

Dürr acquired 55.9% of HOMAG Group AG for € 228.1 m in cash

Pool agreement secures 77.9% of voting rights, family/foundation remains shareholder with 22.1%

New management team on board; Dürr executives on HOMAG group supervisory board

Domination and profit & loss transfer agreement since March 2015, guarantee dividend of € 1,01/share

Acquisition criteria:

Target areas: mechanical and plant engineering, automation technology, measuring systems, environmental

World market leadership, innovation leadership

Market niches without major players & no major Chinese players

No restructuring cases but acquisition targets with earnings improvement potential

Globalization/localization in emerging markets, making use of Dürr‘s excellent positioning

Operational improvements (e.g. processes, best practice, tools) and synergies

41

TAKEOVER OF HOMAG GROUP Takeover details and criteria – blueprint for further major acquisition


42

NEW MANAGEMENT BOARD STRUCTURE


Dr. Jochen Weyrauch Member of the Board Measuring and Process

Systems Clean Technology Systems Information Technology Corporate Development

(including M&A)

Carlo Crosetto CFO from March 1, 2017 Finance / Controlling Investor Relations Risk Management Legal Affairs / Patents Global Sourcing Corporate Social

Responsibility

Ralf W. Dieter CEO Paint and Final Assembly

Systems Woodworking Machinery and

Systems Application Technology Public Relations Human Resources Research and Development Quality Internal Auditing Corporate Compliance

Ralph Heuwing Member of the Board until May 14, 2017

25.3%

3.5%

71.2%

Heinz u. Heide Dürr Stiftung

43

SHAREHOLDER STRUCTURE/DIVIDEND POLICY


Free float at 71.2%1 Dividend policy: 30-40% payout ratio

Institutional and private investors • Thereof Deutsche Bank: 4.7%2

• Thereof Morgan Stanley: 4.0%2

• Thereof Alecta Pensionsförsäkring: 3.2%2

• Thereof Dürr Board of Management: 0.4%2

Heinz Dürr GmbH 1 Free float calculated according to Deutsche Börse AG 2 According to the German Securities Trading Act (WpHG)

0.35 €

0.00 € 0.15 €

0.60 €

1.13 €

1.45 €

1.65 €

1.85 €

2008 2009 2010 2011 2012 2013 2014 2015

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MARKET SHARE DÜRR/COMPETITORS1


Dürr 50%, Eisenmann 10-15%, Taikisha/Geico 20% local competitors: AE, Giffin, Gallagher Kaiser, Trinity (Toyota) Paint and Final Assembly Systems

Dürr ~50%, ABB ~20%, Fanuc ~15%, Yaskawa ~10%; local competitor: Doolim Application Technology

Dürr 40-50%3, John Zink/KEU 20%, CTP 10% Clean Technology Systems

Dürr 31%, Biesse 12%, scm group 11%, Schelling/IMA 7%; local competitors: Nanxing, KTD Woodworking Machinery and Systems

Balancing Dürr 46%, CEMB 16%, Kokusai 8% Filling Dürr 48%, Fives 16%, SAT 8% Testing Dürr 50%, Burke Porter Group 21%, Fori 10% Cleaning Dürr 40%2, Valiant 20%, ABB 8%, Elwema 6%, Markert 4%, Sugino 4%

Measuring and Process Systems

1 own estimates, average of last 3 years 2 market share relating to automotive business

3 market share relating to business with exhaust-gas purification systems for automotive paint shops

INVESTOR RELATIONS PRESENTATION

Bietigheim-Bissingen, February 2017

www.durr.com

Dürr Aktiengesellschaft