RESULTS2019 AND MID-TERM TARGETS...Mar 17, 2020 · 17 March 2020 / results 2019 and mid-term targets / 5 EBIT down by 64.3% EBIT higher in first six months H1 2019: CHF 16.4 million

17 March 2020 / results 2019 and mid-term targets / 1

RESULTS 2019 AND MID-TERM TARGETS

17 March 2020


2019 in brief

Phase of weakness for automotive industryOrder intake, revenues, and EBIT all down sharply

Investment in R&D maintained at a high level 9.9% of revenues directed toward expansion of technological and market leadership Additional unique selling propositions thanks to the launch of numerous new products

Enhanced global customer proximity Acquisition of Artos Engineering and Exmore and founding of Komax Thailand

Move to new production and development facilitiesGermany: Kabatec in Burghaun and Komax SLE in GrafenauHungary: Komax Thonauer, e-mobility competence center in Budakeszi Switzerland: New building at Komax headquarters in Dierikon soon to be completed

Challenges in project businessHigh additional expenses for individual customer-specific pioneer projects


Order intake down by 17.7% 2nd half slightly weaker than the first six

months H1 2019: CHF 206.7 million H2 2019: CHF 202.0 million

General uncertainty due to various geopolitical factors (including the trade conflict between the US and China)

Customers reluctant to invest and postponing projects throughout the year

Sharp decrease in orders

449.7496.7

408.7

0

100

200

300

400

500

600

2017 2018 2019

in CHF million

Order intake

Phase of weakness for automotive industry


Revenues decrease by 12.9% Factors behind development of revenues Organic decline: –13.7% Acquisition-related growth: +2.7% Foreign currency impact: –1.9%

Acquisitions (Artos Engineering and Exmore) contributing to a slight increase in revenues in the 2nd half H1 2019: CHF 203.3 million H2 2019: CHF 214.5 million

Book-to-bill ratio: 0.98 (2018: 1.04)

Revenues well below the record prior-year figure

408.5

479.7

417.8

0

100

200

300

400

500

600

2017 2018 2019

in CHF million

Revenues


EBIT down by 64.3% EBIT higher in first six months H1 2019: CHF 16.4 million H2 2019: CHF 7.6 million

Reasons for disproportionate decrease in EBIT Far smaller number of machines sold in

volume business (crimp-to-crimp machines) Additional expenses in the high single-digit

millions for individual customer-specific pioneer projects

Marked fall in profitability

55.1

67.3

24.0

13.5%

14.0%

5.8%

0%

5%

10%

15%

20%

0

20

40

60

80

2017 2018 2019

in CHF million

EBITEBIT in % of revenues

5.5 million fewer vehicles produced than in 2018


AGENDA

1 2019 financial year: financial performance2 Unchanged strategy – new mid-term targets 3 Priority areas and outlook 20204 Questions


Resources situation in Eastern Europe still tight; build-up of production capacity in North Africa continuing

One factor contributing to revenue growth in North/South America was the acquisition of ArtosEngineering as of 1 April 2019

Growth in North/South America

Revenues by region in 2019

0.3%

-17.5%

-22.5%

5.7%

-13.2%

-12.9%

-30% -20% -10% 0% 10% 20%

Change from previous year

Total

Revenues by region in 2018 Switzerland 2% Europe 43% Asia/Pacific 21% North/South America 21% Africa 13%

2%

41%

19%

25%

13%

SwitzerlandEuropeAsia/PacificNorth/South AmericaAfrica

Switzerland

Africa

Asia/Pacific

North/South America

Europe


R&D expenditure consist of Internal development services of

CHF 34.0 million (2018: CHF 32.3 million) Development services of third parties of

CHF 7.5 million (2018: CHF 8.8 million) Technological shift in automotive industry

(e-mobility, autonomous driving, etc.) creating opportunities for further unique selling propositions

240 R&D staff; plus 200 engineering staff for customer-specific solutions

Securing the future with innovation

36.741.1 41.5

9.0%8.6%

9.9%

0%

2%

4%

6%

8%

10%

0

10

20

30

40

50

2017 2018 2019

in CHF million

R&DR&D in % of revenues


Sharp decline in EBIT

246.2

–39.0–3.6 –1.5

0.8

EBIT 2018 Gross profit Personnel expenses Depreciation Operating expenses EBIT 2019

24.0Gross profit margin2019: 62.0%(product mix)

Gross profit margin2018: 62.1%

Personnel expensesin % of revenues2019: 38.5%

Personnel expensesin % of revenues2018: 32.8%

- Lower volume- Lower variable

costs

in CHF million

67.3


Foreign currency impact 2019revenues: –1.9 ppts, gross profit margin: –1.2 ppts, EBIT margin: –0.8 ppts

Foreign currency impact 2018revenues: +1.8 ppts, gross profit margin: +0.7 ppts, EBIT margin: +0.2 ppts

Substantial currency fluctuations

85

90

95

100

105

110

115

12.1

6

02.1

7

04.1

7

06.1

7

08.1

7

10.1

7

12.1

7

02.1

8

04.1

8

06.1

8

08.1

8

10.1

8

12.1

8

02.1

9

04.1

9

06.1

9

08.1

9

10.1

9

12.1

9

EUR (Basis: 1.09) USD (Basis: 1.03) CNY (Basis: 0.1484)

46%

21%

10%

11%

12%

EURUSDCNYCHFOthers

Revenues by currency


Group earnings after tax decreases by 74.5% Two factors impacting on Group profit after taxes Negative financial result of CHF –4.9 million

(2018: CHF –5.2 million) High tax rate of 31.1% (2018: 17.0%) due

mainly to non-capitalized tax-loss carryforwards

Tax rate expected over medium term: around 20%

Group earnings after tax (EAT) fall sharply

42.1

51.8

13.2

0

10

20

30

40

50

60

2017 2018 2019

in CHF million

EAT


Free cash flow impacted by high level of investment and acquisition activity

246.2

51.0

13.2

12.8

15.3

–53.5

–24.7

33.4

Cash and cashequivalents01.01.2019

Group profit aftertaxes

Depreciation Change inNWC/other

Investments Acquisitions &others

Financing,currency

differences

Cash and cashequivalents31.12.2019

Free cash flow CHF –36.9 million (2018: CHF –4.3 million)

47.5

DividendsCHF –26.9 millionIncrease in financial liabilitiesCHF 61.9 million

in CHF million

Operating activities

Increase in cash flow from operating activitiesfrom CHF 29.6 million (2018) to CHF 41.3 million (2019)


Very high investment volume

Net investment(excl. acquisition and sale of companies

Net investment (excl. acquisition and sale of companies): CHF 55.7 million (2018: CHF 31.7 million) Tangible assets (CHF 48.3 million) Intangible assets (CHF 5.2 million) Increase in granted loans (CHF 2.2 million)

Investment in Group companies (CHF 22.4 million)

75%

12%

13%

Land, buildings

IT (software,hardware)Tangible assets


CAPEX 2019: CHF 54 million 2020: CHF 22–28 million from 2021: 2%–3% of revenues annually

Conclusion of the largest investment program in Komax’s history

Burghaun

Kabatec

Grafenau

Komax SLE

Budakeszi

Komax Thonauer

To be commissioned in phases (started at the end of 2019)

Dierikon

Headquarters


Loan in the amount of CHF 160 million through a bank syndicate (2018: CHF 160 million)

Increase of the syndicated loan to CHF 190 million in the first quarter of 2020

Term until January 2022(plus option for extension until January 2023)

Further local credit lines for subsidiaries in the amount of CHF 30 million (31.12.2018: CHF 20 million)

Future financing assured by credit limit

160

180190

74

98

156

0

50

100

150

200

31.12.2017 31.12.2018 31.12.2019

in CHF million

Utilized credit linesTotal credit lines


Equity ratio over 50% Net debt of CHF 106.2 million

(2018: CHF 39.4 million) Retained earnings of CHF 223.8 million

(2018: CHF 259.0 million)

Continued robust financial base

414

463 481

258282

245

62.3% 60.8%

50.8%

0%

15%

30%

45%

60%

75%

0

100

200

300

400

500

31.12.2017 31.12.2018 30.12.2019

in CHF million

Shareholders’ equityEquity ratio in % of total assets

Total assets


RONCE: 8.4% (2018: 25.2%) Robust management of net working capital

(NWC) Ongoing improvement and acceleration of

internal processes Stringent accounts receivable management

Net working capital: receivables + inventory less current liabilities

RONCE declining sharply

248

283 295

168

204189

0

50

100

150

200

250

300

350

31.12.2017 31.12.2018 31.12.2019

in CHF million

Net Working Capital (NWC)Net Capital Employed (NCE)


Payout ratio of 52.3%

2015 2016 2017 2018 2019

Distribution pershare in CHF 6.00 6.50 6.50 7.00 1.80Dividend yieldin % as at 31 Dec. 3.1 2.6 2.0 3.0 0.8

Share price in 2019: +2.8% (2018: –28.0%) Steady expansion of shareholder base 31.12.2019: 7120 shareholders 31.12.2018: 6027 shareholders 31.12.2017: 5048 shareholders

Payout of CHF 1.80 per share proposed Of which CHF 1.60 as dividend and CHF 0.20

as distribution from capital contribution reserves Payout ratio within strategic bandwidth (50%–60%)

in CHF

0

50

100

150

200

250

300

350

2015 2016 2017 2018 2019 2020Komax-Aktie SPI Extra TR

1 Proposal to the Annual General Meeting

1


AGENDA



Focused strategy


Komax offers solutions for every stage of customers’ value chain

20%

25%

28%

9%

9%

9%

Cutting, crimping,block loading, etc.

Pre-assembly, taping

Routing

Attaching clips, etc.

Testing

Packaging

Proportion of time spent per wire harness


Focused strategy


Significant investment in R&DPrepared to meet changing market needs

Strategic target for R&D8%–9% of revenues


Customer-specific projectsKey element in expanding technology leadership

Shared projects with customers focused on the automation of wire processing

Aim: as many repeat orders as possible and integration of developments into serial production machines

In recent years: several pioneering projects due to radical change in the automotive industry

Future: projects with low risk profile

Important: good balance between serial production machines and customer-specific projects, though the project business is much smaller and will remain so


Founded in 1993 Own product portfolio and wealth of experience in

developing innovative applications related to the processing of sensor cables

Headquarters in Beerse, Belgium 60 employees Consolidated as at 1 October 2019

Well positioned in autonomous drivingAcquisition of Exmore


Source: McKinsey / Komax

20000000

40000000

60000000

80000000

100000000

120000000

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Number of produced carsin million120

100

80

60

40

20

Full hybrid (HEV)

Battery electric vehicle (BEV)

Plug-in hybrid (PHEV)

Internal combustion engine (ICE)

Development of e-mobilityCompetence center at Komax Thonauer in Budakeszi (Hungary)


Komax ConnectSigma 688 ST

Q1250

TSK Connect

SMART FACTORY by KOMAXSimpler, more convenient, and safer


Focused strategy


Global localUnique sales, engineering, and service network

Bangkok

Founding ofKomax Thailand

Production / development site

Production / engineering site

Sales / service site

Sales representative


Founded in 1911 Own product portfolio and wealth of experience in

developing innovative applications Headquarters in Brookfield, Wisconsin, USA 50 employees Consolidated as at 1 April 2019

Strengthening of position in North AmericaAcquisition of Artos Engineering


Largest installed base in the worldKomax machines on all continents

~ 20 Crimp to crimp machines~ 20 Other machines

Diversified customer portfolio (including key accounts, small regional companies, all OEMs)


Focused strategy


Rigorous development of non-automotive markets

Data/TelecomAerospace Industrial

Non-automotive markets make a substantial contribution to revenues, accounting for less than 20% Selective and complementary build-up of competencies in non-automotive areas supports success of core business


MID-TERM TARGETS


Global megatrends in the automotive industry


Vehicle production set to increase again from 2021 (CAGR: 1%–2%)

93 95 9489 89 92 94 97 99 102

2025

Production of passenger cars and light commercial vehicles in million vehicles

20242016 2017 2018 2019 2020 2021 2022 2023Source: IHS Markit, November 2019


Increasing in electrical functions


Steady rise in level of automation(CAGR: 2%–3%)

rising wage costs

staff availability miniaturization

traceability

autonomous driving e-mobility

rising number of wires

Numerous reasons


Mid-term targets up to 2023

REVENUES• Primarily organic growth• Increase in number of vehicles produced from 2021 (CAGR: 1%–2%) • Increase in level of automation (CAGR: 2%–3%)

CHF

450–550million

EBIT• EBIT dependent on product mix • EBIT strongly influenced by volume business (crimp-to-crimp)• Low revenues (CHF 450 million) resulting in low EBIT (CHF 50 million)

CHF

50–80million

PAYOUT• Shareholders benefiting from sustained generation of value• Attractive dividend policy• Dividend dependent on business performance; no minimum dividend

50–60%of EAT


AGENDA



Current situation

Coronavirus – too early to predict impact January/February 2020: revenues in China around 40% lower than in 2019 Travel reduced to a minimum Customers cannot perform factory acceptance testing (FAT) at Komax’ sites Service technicians cannot provide support in customers’ plants Salesforce cannot visit customers Constantly changing restrictions

Impact and measures vary from company to company

Coronavirus


Current situation

Review of the structures of the entire Komax GroupReview within the first six months of 2020 First staffing and organizational measures already implemented

Measures for reducing costs Short-time working at several locations Individual redundanciesGeneral reduction of OPEX Investment stop – excluding buildings and urgent replacement investments

Review of the structures / reducing costs


Priority areas 2020

Successfully navigating the challenges presented by the coronavirus

Review of the structures of the Komax Group implementation of organizational and staffing measures

Completion of customer-specific pioneer projects

Integration of Artos Engineering and Exmore

Bringing new production and development building at headquarters on-stream


Outlook

The Komax Group’s medium- and long-term growth outlook remains positive as customers continue to target a significant increase in the level of automation in wire processing going forward. What is more, trends such as autonomous driving and e-mobility will power growth at Komax.

That said, the company will suffer over the short term as the entire automotive industry comes under enormous pressure to adapt its value chain.

Komax expects 2020 to be another challenging year. For this reason, it has already initiated measures to reduce costs over the long term. In addition, Komax is adapting its structures to be even better aligned with momentum in the markets.

Since business development visibility is very low and the implications of the coronavirus outbreak are presently impossible to gauge, a forecast can currently not be made for the 2020 financial year.


Contact / Financial calendar

ContactRoger MüllerIndustriestrasse 66036 DierikonSwitzerlandPhone +41 41 455 06 [email protected]

komaxgroup.com

Financial calendar

Annual General Meeting 21 April 2020

Dividend payment 27 April 2020

Half-year results 2020 18 August 2020

Investor Day 23 October 2020

Preliminary information on 2020 financial year 26 January 2021Annual media and analyst conference on the 2020 financial results 16 March 2021


Disclaimer

This presentation contains forward-looking statements in relation to Komax which are based on current assumptions and expectations. Unforeseeable events and developments could cause actual results to differ materially from those anticipated. Examples include: changes in the economic and legal environment, the outcome of legal disputes, exchange rate fluctuations, unexpected market behavior on the part of our competitors, negative publicity and the departure of members of management. The forward-looking statements are pure assumptions, made on the basis of information that is currently available.


QUESTIONS?

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RESULTS2019 AND MID-TERM TARGETS...Mar 17, 2020 · 17 March 2020 / results 2019 and mid-term targets / 5 EBIT down by 64.3% EBIT higher in first six months H1 2019: CHF 16.4 million