IR Corporate Presentation€¦ · Covid-19 situation as of today and forecast 2020 (2/2) Strengths Strong balance sheet and available financial resources. Global footprint Resilient

1IR Corp. Presentation April 2020

IR Corporate PresentationKSB SE & Co. KGaADr. Matthias Schmitz (CFO)Dieter Pott (Head of Finance and Accounting)


About us

KSB Group is one of the world’s leading manufacturers of pumps and valves for many applications, providing a comprehensive range of service offerings. General industry Chemical / petrochemical

industry Water transport Waste water treatment Energy supply Mining Construction /

Building services


About usOwnership structure & No. of shares outstanding

Key Figures (EUR million) 2018 2019

Order intake 2,303.5 2,453.8 Sales revenue 2,245.9 2,383.2

EBITDA 179.2 195.5 EBITDA margin 8.0 % 8.2 %

EBIT 74.7 113.6 EBIT margin 3.3 % 4.8 %

Equity ratio 38.2 % 37.1 %20%

80%

Preference shares: 864,712

Johannes &Jacob KleinGmbH

Freefloat

84%

16%

Ordinary shares: 886,615

Johannes &Jacob KleinGmbH

Freefloat

Future Perspectives

Global market volume ~ EUR 107 billion in 2019 Average annual growth rate 2 to 4 %


Strategy

Markets, regional presence and economic development

Outlook

Sustainability

Appendix


Our focal points

Focus on Customers in Sales and After Sales worldwide

Agility and Flexibility in Structures and Processes

Profit Orientation based on Key Performance Indicators

High Engineering Competence powered by Innovationand Excitement of Creativity


Our Mission

KSB – We shape the future of Fluid Handling

We strive to achieve greater benefits for our customers. We inspire with our expertise, innovation power and creative drive.This makes us a successful, independent and reliable partner. Since 1871.


Strategic measures

Competitive cost structures

Reducing complexity(companies, products)

Global Footprint includingoptimising Supply Chain

Shared Service Center

Reaching competitive cost structures and striving for profitable growth at the same time

Focussing on profitablegrowth Aftermarket

Expanding business in core markets

ETA-Flagship

Start Additive Manufacturing(Lasercusing) for spare parts

Uniform systems and leanprocesses PACE – Excellence in accounting

and controlling

Global SAP platform

KSBase

Cloud for Service


Strategy


Outlook

Sustainability

Appendix


Pumps, valves and serviceA fragmented addressable market of roughly €107 billion

2019 Market size (€M) by geography

Americas

Europe

MEA

APAC

World

> 4% 2–4% <2%CAGR 2019-2025

P V

18,700

8,000

P V

17,900

8,400

P V

3,3008,700

27,200

P

14,500

V 34,200

P

72,600

V

Source: KSB estimates


Construction

Energy supply

Industry

Mining

Chemical/Petrochemical

Water /Waste Water

Centrifugal pumps in m€ Valves in m€

2,6004,300

9,300

2,400

8,0005,700

25,600

6,900

1,600

19,500

Pumps, valves and serviceSize of targetmarketsMegatrends driving growth in KSB's markets Environmentalism

− Increasing regulation− Energy efficiency

Urbanization and population growth− Need for more infrastructure

Water scarcity− Growing demand for water

reuse, treatment and efficiency Digitization

Source: KSB estimates > 4% 2–4% <2%CAGR 2019-2025

8,000

12,800


Being present in all big markets globally

KSB production sites KSB sales and service sites

Share of regions(as per 31 December 2019)

Order intake Sales

Europe 53 % 54 %

Asia 24 % 23 %

America 16 % 16 %

MEA 7 % 7 %


668.8588.2

Order intake decreased in Q1 2020 in compare with Q1 2019

Q1 2019 Q1 2020

- 12.0 %

Order intake in the first quarter was slightly below expectations as last year’s first quarter was influenced by two major orders.

In the first quarter of 2020 order intake decreased across all segments caused by the corona-virus pandemic.

North Asia and South America are still posting growth in order intake, while all other Regions experienced declines.

Decline in Order Intake per segment:

Pumps: - 15.4 %Service: - 6.9 %Valves: - 2.8 %

(EUR million)


Order intake grew in 2019 by EUR 150.2 million

KSB Group Pumps Valves Service

+ 6.5 % + 7.4 % + 1.8 % + 7.3 %

2,453.8

1,617.8361.9

474.1

(EUR million)

Order intake in 2019 grew across all segments particular driven by orders in the project business.

Main segment drivers: + Energy (+ EUR 43.4 million)+ Industry (+ EUR 25.4 million) and+ Water / Waste Water 12(+ EUR 23.3 million)

Regional growth drivers:+ Asia / Pacific (+ EUR 69.5 million)+ America (+ EUR 44.2 million)


Growth of order intake in all regions in 2019

+ 1.0 %

+ 13.6 % + 12.3 %

Europe Asia / Pacific Americas Middle East /Africa

53 %

16 %

24 %

7 %

Middle East / Africa

Asia / Pacific

AmericasEurope

(in EUR + 13.1 million)



(in EUR + 23.4 million) 2019

Total order intake: EUR 2,453.8 million

+ 16.3 %


534.6 517.7

Sales revenue decreased in Q1 2020 in compare with Q1 2019

Q1 2019 Q1 2020

- 3.2 % Most Regions saw a decrease in sales

revenue. In particular, government-ordered closures in Asia and South Africa had a negative impact.

The revenue decrease in the Service segment was negative influenced by the sale of a French service company at the beginning of January 2020.

Increase and decrease in Sales revenue per segment:

Valves: + 2.4 %Service: - 0.2 %Pumps: - 5.1 %

(EUR million)


Sales increased by EUR 137.2 million in 2019

KSB Group Pumps Valves Service

2,383.2

1,562.5364.4

456.4

+ 6.1 % + 6.3 % + 6.9 % + 4.7 %

(EUR million)

As some of the orders are part of long-term projects, sales revenue lags behind order intake

Regional growth driver:+ Asia/Pacific (+ EUR 59.5 million)+ Americas (+ EUR 41.9 million)


Focus on Asia / Pacific and Americas entities in sales in 2019

54%

16%

23 %

7 %

Europe


Asia / Pacific

Americas

+ 3.1 %

+ 12.4 % + 12.1 %

- 1.9 %

Europe Asia / Pacific Americas Middle East /Africa

(in EUR + 38.9 million) 2019

Sales in total: EUR 2,383.2 million



(in EUR - 3.0 million)


(EUR million) 2017 2018 2019

Sales revenue 2,205.0 2,245.9 2,383.2Cost of materials

% of total Sales revenue

-887.8

40.3

-934.5

41.6

-984.8

41.3Staff costs

% of total Sales revenue

-796.7

36.1

-765.5

34.1

-848.3

35.6

Other expenses / income (net) -323.2 -383.8 -338.8

EBIT 116.4* 74.7 113.6

Income Statement

* Retrospective new definition of EBIT as result before financial result and income tax


Capital Expenditure increased by 34.4 % resp. EUR 27.4 million

66.678.9

13.0

12.9 *

2018 2019

79.6

107.0

Property, plantand equipment

Intangible assets

60 %20 %

16 %

4 %

Europe


Asia / Pacific

Americas

2019

(EUR million)

Capex in total:EUR 107.0 million

15.2

Right of use asset *

* First-time adoption of the new IFRS 16 accounting standard.


Reasonable Equity ratio

2,253 2,242 2,327

885.4 856.8 862.6

2017 2018 2019

Equity

Balancesheet total

39,3 % 38,2 %

(EUR million)

37,1 % Equity ratio including non-controlling

interests


Lower Net financial position reflects introduction of IFRS 16 (lease accounting)

364.3333.9 347.3

-76.3 -78.9-101.1

2017 2018 2019

Financialliabilities

Availablefinancial

resources

288.0255.0

(EUR million)

246.3* Lease liabilities of € 47.1 million

were recognized as a result of the first-time adoption of IFRS 16 in 2019 as compared to the fiscal year 2018.

* Adjusted by the lease liabilities the net financial position amounts to € 293.4 million.


Lower Net financial position reflects introduction of IFRS 16 (lease accounting)

(EUR million)

- 54.3- 30.1

- 56.8

- 22.0- 48.8

2017 2018 2019

Long-termdebt

Short-termdebt

- 76.3 - 78.9

Financial liabilities

- 101.1 The increase in the financial liabilities of € 22.2 million are mainly attributable to the first-time adoption of IFRS 16 in 2019, mitigated by the repayment of a borrowers note.

The short-term debt of € 44.3 million is affected by € 15.0 million and the long-term debt of € 56.8 million is affected by € 32.0 million due to the capitalization of rights of use to leased assets under IFRS 16.

-44.3


5.501 5.501

7.501

3.002

8.501

2015 2016 2017 2018 2019

Dividend of EUR 8.50 per share for 2019

1 EUR / Preference shares: + 0.26 EUR2 EUR / Preference shares: + 0.38 EUR

24.7 % 35.5 % 47.9 % Pay out ratio Group:

Dividend per share / EPS

29.4 % 34.7 %


Strategy


Outlook

+ Forecast

+ Climb 21 Strategy Project

Sustainability

Appendix


Covid-19 situation as of today and forecast 2020 (1/2)

Current Situation and Management priorities

Interdisciplinary steering committee HR, procurement, production, sales & service and communication is established.

Top priority is the responsibility towards our employees, our company, our customers and our suppliers.

Ensure business continuity and strong focus on cash.

Full transparency and daily monitoring of suppliers base.

Global supply chains are moderately stressed

Challenges

Production may be restricted or interrupted at individual suppliers.

Restrictions in production and individual customers cannot be supplied on time.

Reduced transport capacities, delays in shipment may occur.

Authority and travel restrictions.


Covid-19 situation as of today and forecast 2020 (2/2)

Strengths

Strong balance sheet and available financial resources.

Global footprint

Resilient and diversified business portfolio

Outlook for financial year 2020

The scale and duration of any adverse effect on production as well as on KSB’s procurement and sales markets are not predictable and therefore cannot be quantified. KSB assumes that the spread of the coronavirus will have a negative impact on the Group.


Industry

Further slowdown ofindustrialproduction in particular ofmechanicalengineering

Weakerdemand andcontinuingconsolidation, contraction in investments

Share in KSB COI (2019)

Outlook 2020e – economic downturn and decline in manufacturingwith high degree of uncertainty

Energy supplyPetro-/Chemical MiningWater/Wastewater

Contraction in countries witheconomicrecession

Worldwide extension andrenewal of waterand wastewaterinfrastructures in particular in APAC and Africa

Slow down in investments in power plants andrenewals

Construction

Reduction in production, capital spending and global fuel demand


Efficiency and effectiveness by

adapting the organi-sational structure

Profitable growththrough focusing on

markets

Climb 21Strategy Project


Cornerstones of Company Development

Efficiency / Cost savings / Liquidity

Profitable growthStructural measures

Potential through external growth

Long-term measures

Medium-term measures

Short-term measures

OCT2018 202120202019

Q1 Q2 Q3 Q4NOV DEC

Focusing on markets Imple-mentation

Improvement of the income statement

Improvement of the balance sheet

Focused acquisitions

Development of a new organisational structure and functions

Climb 21

Climb 2129


Core Phases of the ProgrammeClimb 21

today

Market analysis(Three lenses)

Targeted organisational

structure

Design of strategies for market segments

2019 2020

Prioritising of initiatives and

measuresImplementation for go-live

second half of year

Standardisation of overall business plan

30

New KSB organisational structureClimb 21

Regions

Headquarter

Mining Energy Petro-/Chemical Water General Industry Construction

Pumps Valves ServiceCentral

ServicesKSB Valves KSB SupremeServ


Strategy


Outlook

Sustainability

Appendix


For a Better World

KSB joined the UN Global Compact in 2010.

I 33Sustainability


2019 Facts & Figures

34Sustainability

Greenhouse gases

- 2,292 t

Reduction in CO2 emissions year on year in 2019

Renewable energy

34.4 %

Share of renewable energy in the Group’s power consumption

Social activities

116Charitable initiatives and projects supported

Employee motivation

58 %

2017: 46 %Target for 2025: 80 %


New Binding Goals until 2025

1. CO2 emissions: - 30 %

2. KSB water pumps: Annual savings of 850,000 tonnes of CO2

3. Ecological product rating: Recyclability

4. Employee satisfaction index: 80 %

5. At least 20 % of management positions: Women

6. Reduction of days lost due to occupational accidents: < 0.3 days per employee / year

7. Professional development: At least 30 hours per employee / year

8. Sustainability performance assessment of key suppliers

9. Global commitment: 25 social projects / year

35Sustainability


Strategy


Outlook

Sustainability

Appendix

+ Executive Board

+ Legal form

+ Financial Statements

+ Financial Calendar 2020


Dr Stephan Timmermann

Ralf Kannefass

Dr Stephan Bross Dr Matthias Schmitz

Executive Board of KSB SE & Co. KGaA


Mechanical engineeron the board since 13 November 2017appointed until 30 November 2023.

2015 – 2017 Consultant2005 – 2015 Member of the Board of MAN Diesel & Turbo SE2002 – 2005 Managing Director Schwäbische Hüttenwerke GmbH1999 – 2002 CEO MAN Logistics GmbH

Integrated engineering/business administration degreeon the board since 1 June 2017appointed until 31 May 2023

2014 – 2016 CFO H.C. Starck GmbH, Munich2007 – 2013 CFO Linde Material Handling GmbH (Kion Group)2002 – 2007 Head Controlling Mahle GmbH, Division Pistons1993 – 2002 KSB AG, last position: Head Controlling KSB Group

Dr Stephan Timmermann

Dr Matthias Schmitz

Members of the Executive Board


Ralf Kannefass

Members of the Executive Board

Mechanical engineer and degree in businesson the board since 1 July 2017appointed until 30 June 2023

2014 – 2017 Industrial consultancy Stieler Kannefass2013 – 2014 Board Member of Cassidian / EADS

(today Airbus Defence & Space)1994 – 2013 Siemens AG, last position: CEO of Siemens

Energy, Oil & Gas Turbo Equipment

Dr Stephan Bross

Mechanical engineer, Dr-Ing.on the board since 15 September 2017appointed until 14 September 2022

At KSB for 24 years, earlier positions:Head of Corporate Units Pumps and ValvesHead of ServiceHead of Product Management and Development Engineered PumpsMember of the Supervisory Board from 2010 to 2017


Legal FormKGaA, Kommanditgesellschaft auf Aktien / limited partnershipby sharesKSB Foundation

Johannes und Jacob Klein GmbH

(majority shareholder)

Annual General Meeting

Other Shareholders(free float)

SupervisoryBoard

Klein, Schanzlin & Becker GmbH

KSB Management SE with Administrative Board

KSB SE & Co. KGaA

Kühborth-Stiftungs GmbH

99.4 % 99.4 % 0.6 %0.6 %

Structure

KSB SE & Co. KGaA managed by the generalpartner KSB Management SE (with Non-executivesand Executive Directors)


(EUR million) 2017 2018 2019

Sales revenue 2,205.0 2,245.9 2,383.2

Total output of operations 2,210.5 2,275.8 2,381.2Other income 69.2 33.1 33.4

Cost of materials -887.8 -934.5 -984.8

Staff costs -796.7 -765.5 -848.2

Depreciation and amortization expense -70.6 -104.5 -81.9

Other expenses -392.4 -416.9 -372.2

Other taxes -15.8 -12.8 -13.9

EBIT 116.4 74.7 113.6Financial income / expense (net) -13.7 -11.6 -11.4

Income from / expense to investments accounted for using the equity method 1.5 2.5 1.2

EBT 104.2 65.6 103.4Taxes on income -52.1 -41.6 -44.9

Net profit 52.1 23.9 58.5

Income Statement


(EUR million) 2017 2018 2019

Cash flows from operating activities 120.7 61.4 144.9

Cash flows from investing activities -8.2 -90.5 -74.0

Cash flows from financing activities -106.0 -9.4 -46.4

Changes in cash and cash equivalents 6.5 -38.5 24.5Effects of exchange rate changes on cash and cash equivalents -6.8 4.6 -0.4

Effects of changes in consolidated Group 0.9 - 1.2

Cash and cash equivalents at beginning of period 288.9 289.5 255.6

Cash and cash equivalents at end of period 289.5 255.6 280.9

Statement of Cash flows


Balance sheet: Assets(EUR million) 2017 2018 2019

Non-current assets 734.3 696.7 782.6Intangible assets 108.1 91.1 97.1

Right-of-use assets - - 50.1

Property, plant and equipment 506.2 496.6 511.3

Non-current financial assets 6.1 1.8 2.0

Other non-financial assets - 2.9 2.8

Investments accounted for using the equity method 22.2 23.9 24.2

Deferred tax assets 91.7 80.4 95.1

Current assets 1,519.1 1,545.5 1,544.4Inventories 461.9 544.4 544.7

Contract assets - 74.5 76.4

Trade receivables and PoC 613.3 518.1 504.1

Other financial assets 117.0 103.4 90.9

Other non-financial assets 37.4 49.5 39.6

Cash and cash equivalents 289.5 255.6 280.9

Assets held for sales - - 7.8

Total 2,253.4 2,242.2 2,327.0


Balance sheet: Equity and Liabilities(EUR million) 2017 2018 2019Equity 885.4 856.8 862.5Non-current liabilities 677.3 620.4 715.6Deferred tax liabilities 14.7 10.3 11.1

Provisions for employee benefits 606.9 578.6 646.3

Other provisions 1.4 1.4 1.4

Financial liabilities 54.3 30.1 56.8

Current liabilities 690.7 765.0 748.9Provisions for employee benefits 8.0 9.3 12.2

Other provisions 68.8 83.5 68.4

Financial liabilities 22.0 48.8 44.3

Contract liabilities - 157.4 165.5

Trade payables 241.6 270.2 252.7

Other financial liabilities 81.5 32.8 31.2

Other non-financial liabilities 263.6 154.7 161.5

Income tax liabilities 5.2 8.3 9.1

Liabilities held for sales - - 4.0

Total 2,253.4 2,242.2 2,327.0* As of 1 January 2019, lease liabilities of € 50,187 thousand were recognised as a result of the first-time adoption of IFRS 16


30 April 2020 Interim report January – March 2020

13 May 2020 Annual General Meeting, Frankenthal

13 August 2020 Half-year financial report January – Juni 2020

12 November 2020 Interim report January – September 2020

28 January 2021 Preliminary report on financial year 2020

Financial Calendar 2020 / 2021


Dieter Pott

Head of Finance and Accounting

Phone: +49 (0) 6233 86-2614

eMail: [email protected]

Investor Relations


Disclaimer

This investor presentation contains forward-looking statements that are based on current estimates, forecasts and assumptions made by KSB management to the best of its knowledge and other information currently available to KSB.

By their very nature, the forward-looking statements of this presentation are subject to various known and unknown risks, uncertainties and other factors, the non-occurrence or occurrence of which could cause material differences in future results ofoperations, financial situation, development or performance of KSB. Factors that could cause such differences include but are not limited to changes in political, business, economic and competitive environment, effects of future legal and legislative issues,fiscal, and other regulatory measures, foreign exchange rate fluctuations, interest rates, developments in raw material and personnel costs, launches of competing products or services, poor acceptance of new products or services, and changes in business strategy.

KSB does not intend and does not assume any liability whatsoever to publicly update or revise any forward-looking statements or other information contained in this presentation as a result of new information, future events or otherwise. No representation or warranty, express or implied, is made by KSB and/or its management with respect to the completeness, fairness, correctness, reasonableness or accuracy of any information, facts, expectations or opinions contained herein. Neither KSB nor any of its affiliates or representatives shall have any liability whatsoever (in negligence or otherwise) for any losses or damages arising from any use of this presentation or its content or otherwise arising in connection with the statements given herein. This presentationincludes percentage and number rounding.

Documents

IR Corporate Presentation€¦ · Covid-19 situation as of today and forecast 2020 (2/2) Strengths Strong balance sheet and available financial resources. Global footprint Resilient