Business Area Components Technology. March Developing the future.

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2 Overview Eight Business Units in Three Clusters CHASSIS (~60% of sales) POWERTRAIN (~20% of sales) INDUSTRY (~20% of sales) STEERING DAMPERS CAMSHAFTS BEARINGS Motor Excavator SYSTEMS SPRINGS & STABILIZERS FORGED & MACHINED COMPONENTS UNDERCARRIAGES Note: Sales split as of FY 2012/13 1

3 Leading Positions with Mission Critical Components Light Vehicles Trucks Construction Equipment Wind Power Chassis Industry Powertrain 9 out of 10 premium light vehicles are driven by our components 1 out of 3 heavy vehicle engines are powered by our crankshafts 1 out of 5 produced crawler machines is equipped with our products 9 out of the Top 10 wind turbine manufacturers rely on Components Technology 2

4 Components Technology with Global Production Footprint Europe Bulgaria France Romania UK Liechtenstein Italy Germany Spain Hungary Americas USA Mexico Brazil Bigger Asia China India Japan Chassis Powertrain Industry 3

5 Leading Engineering Competence for Better Solutions Selected Highlights Chassis Powertrain Industry Steering Systems Integration of Active Steering Functions Variability in the Cylinder Head CO 2 -reduction by Integrated Solutions Bearing Technology Increased Durability and Reduced Maintenance by Plastic-Coated Cage Shock Absorbers Infinite Adjustment Possibilities for a better Driving Experience ThermoTecSpring Coil Spring with Weight Reduction between 15 to 20% Crankshaft Competence Excellent Know-how in Rough Forged and Machined Parts Lightweight Con Rods Weight Reduction between 5 to 10% Possible Seamless Rolled Rings Up to 8,000 mm in Diameter and 30,000 kg of Weight for Newest Turbine Generations Track Systems Hardening Competencies with Increased Durability (+30 to 50% lifetime) Engineering expertise for continuous improvement for our customers worldwide 4

6 Turning Fundamental Trends into Business Opportunities Technology Innovation and Business Excellence are a Must for Components Technology Demand Sustainability Functionality o 1.5 bn cars on the road in 2030 (today: ~1.0 bn) o Growth driven by emerging markets o CO 2 -emission: Europe - 95g/km until 2020 (-40% vs. today) o World: >60% EV or Hybrid cars on roads in 2030 o R&D responsibility shift to suppliers o Increasing requirements o Autonomous driving Glocalization o Global and simultaneous launch of new models o Award of high volume platforms o Local footprints Competition o Automotive: Requested yearly savings o Wind Power: Chinese OEMs and suppliers with excess capacity drive price pressure o Constant cost measures Product/ Technology o Product life time decrease o Light weight approach & new (material-mix) products o Technology transfer to lower price segments 5

7 Example Demand : Steady Growth Light Vehicles Trucks Construction Equipment* Wind Power Units produced [mn] Units produced [mn] Units sold [ 000] Connected capacity [GW] +4% +5% +5% +4% o Emission reductions o Lightweight and urban mobility o Connectivity & convenience o Changing competitive situation in China o Technology (Euro VI) and regional shift (e.g. Brazil) expected o Mainly driven by Chinese demand of excavators o Dependency on economic growth o Trend to more powerful turbine-classes o Strong growth in offshore segment * no update/forecast to 2018 available Sources: IHS Global Insight (02/2014), Off-Highway Research (08/2013), MAKE Consulting (Q4/2013) 6 Actual Forecast

8 Driven by Emerging Markets (Expectations 2014 vs. 2013) Automotive Industry Light Vehicles Trucks Construction Equipment* Wind Power Production Production Units sold Connected capacity w/o Germany <-6.0% (very weak) <-1.5% (weak) neutral >1.5% (good) >6.0% (very good) * no update available Sources: IHS Global Insight (02/2014); Off-Highway Research (08/2013); MAKE Consulting (Q4/2013); graded by management estimation Business trend for 2014 vs. 2013: 7

9 Example Sustainability : Suppliers Act as Solution Provider For OEMs Fleet Consumption Must be Reduced by Planned Legislation Changes New WLTP 1 Cycle Grams CO 2 per Kilometer normalized to NEDC 240 today o Change in Cycle Testing Specifications from NEDC 2 to WLPT in ~170 g/km o o Increased distance and higher speed Increased acceleration g/km 95 g/km 117 g/km g/km g/km Natural Gas Vehicles o 25% CO 2 -reduction compared to gasoline engine o CAGR : +24% (to 17.7 m CNG 3 Vehicles worldwide) Pressure on CO 2 -reduction fosters new technologies 1) World-Harmonized Light-Duty Vehicles Test Procedure 2) New European Driving Cycle 3) Compressed Natural Gas 8

10 Example Glocalization : Global Auto Architecture Offers Growth Potential Modular/platform design Future prospects ( ) MQB UKL MFA Average volume per platform Number of platforms to produce 80% output o o o o o Engine and vehicle design on modular or platform solution from nearly every OEM ongoing More choice to the customer, with less complexity for OEMs Introduction of global and flexible solutions Realizing economies of scale with high volume platforms Reduction of supplier base Source: IHS Global Insight CMF1 EMP2 NGA Units produced per platform [mn] Number of platforms [#] 0,0 0,4 0,8 1, Daimler BMW +100% +70% -40% -35% GM +65% -45% PSA Ford VW Hyundai +60% +90% +160% +160% -25% -55% -45% -25% Growth rate

11 Future Customer Challenges Create Business Opportunities Leveraging Technology Base and Global Presence Future Challenges Strategic Actions Components Technology Realign Footprint Explore market opportunities: Strong global presence, with ongoing actions to optimize footprint Global footprint to ensure proximity to customers Increase Performance Differentiate Focus on process efficiency, highest quality standards and customer service Close cooperation leveraging entire group BA- and group-wide programs accelerate learning curve in all BA CT business units Cost efficiency and restructuring Support environmental targets: Ongoing innovations for less weight and CO 2 -reduction (e.g. cylinder head module) Strong R&D pipeline within our three business segments (e.g. InCarplus for automotive innovations) 10

12 Components Technology Already with Global Presence Sales per Region and Customers FY 2012/13 Realign Footprint Sales per Region Sales per Customer incl. export Only automotive industry 14% 1% Others 8% 31% VW 26% 21% Fiat Cummins Ford Germany South Amercia Daimler BMW Rest of EU Asia NAFTA Others 11

13 Ongoing Efforts to Optimize Global Footprint Glocalization together with our Customers Realign Footprint Americas Europe Asia CHASSIS, Mexico Cold Forging SOP 2012 POWERTRAIN, Germany Cylinder Head Module SOP 2013/14 CHASSIS, Hungary Axle Assembly Audi SOP 2013 CHASSIS, China Coil Springs SOP 2013 POWERTRAIN, China Cylinder Head Module SOP 2014 POWERTRAIN, Brazil Cylinder Head Module SOP 2015 POWERTRAIN, China Crankshafts rough and machined SOP 2013 CHASSIS, China Cold forging, Steering, Damper SOP 2013/14 ~25 Locations in Americas ~40 Locations in Europe ~20 Locations in Asia 12

14 Sustainable Efficiency Gains to Support EBIT Target FY 2013/14 and Mid-Term Upside for ThyssenKrupp Group Increase Performance million Ramp-up Efficiency Gains 2015 ~ FY 2012/13 achieved Q1: ~ FY 2013/ FY 2014/15 2, Efficiency Gains Industrial Solutions Components Technology Corporate ~15% ~14% Energy & Other Personnel ~20% ~10% Operations ~20% ~6% 2015 by Business Area ~27% Steel Europe ~13% Elevator Technology ~14% Steel Americas ~12% Efficiency Gains Materials Services 2015 by Categories ~50% (Procurement) 50% contribution to efficiency target from synergize+ especially by tapping unaddressed bundling potentials and pulling cross-functional levers 13

15 Primary activities Support activities 2015 and BA Programs Set up to Boost Profitability Process Program Increase Realign Performance Footprint Organization HR Technology Purchasing Procurement IT-infrastructure Inbound Logistics Operations Outbound Logistics Marketing and Sales Service Operational excellence Plant improvement process ONE production system Performance culture BA programs initiated to push internal performance and to fulfill ambitious impact 2015 plan m 14

16 Group-wide R&D Projects Deliver Solutions for Future Market Needs Differentiate R&D expenses TK Group E.g. InCar plus Project EFFICIENCY Order related R&D cost Amortization of capitalized development cost R&D cost LIGHTWEIGHT COST-COMPETITIVE GREEN HIGH-PERFORMING 30 projects with more than 40 individual solutions for Body, Powertrain, Chassis Chassis DampTronic X Powertrain POSS Body LITECOR 10/11 11/12 12/13 13/14E R&D and innovation characterized by ambition for sustainable technological differentiation Note: Group w/o Inoxum increased R&D expenses by 20 m or 3.2% Start: Oct 2011 End: Sep 2014 Roadshow starting Oct

17 Distinguished Products Setting Benchmarks in 2013 Differentiate Chassis Camshafts Crankshafts DampTronic sky + EPAS Presta² HD Crankshafts High-end adjustable damping system and electromechanical steering system leading to benchmark in comfort Serving high-volume engine platforms with cylinder head modules Cost Emissions Weight Outstanding reputation for performance 16

18 Approaching Emerging Markets with Latest Technology Differentiate Presta 2 C-EPS Launch of Presta 2 (cylinder head module) Launch of C-EPS 17

19 Good Start into Fiscal Year 2013/14 Sales (million ) EBIT adjusted, EBIT adjusted margin (million, %) 5.3 1,345 1,360 1,517 1,490 1, Q1 Q4 Q1 2012/ /14 Q1 Q4 Q1 2012/ /14 Current trading conditions: Qoq seasonally weaker order intake and sales: Light vehicles: continuing high demand from the US and China; first signs of recovery in European markets Trucks: heavy truck market still at low level Industrial components: improving business activity for wind turbines especially in China; construction equipment market still challenging Adjusted EBIT margin increased to 4.5% supported by benefits from restructuring and efficiency measures 18

20 Measures Are Strongest Performance Lever Sales (million ) EBIT adjusted, EBIT adjusted margin (million, %) measures 7-8 5,724 6,908 7,011 5, Market upside / /13 Mid-term target 2009/ /13 Mid-term target Key perspectives FY 2013/14 vs. FY 2012/13 Light vehicles: USA and China with continuing strong demand; Western European markets stabilizing on a low level with slight upside potential Heavy trucks: stabilizing markets with slightly improving demand in Europe Industrial components: ongoing weak demand in construction equipment market; improved market conditions in the wind energy sector EBIT continues to include ramp-up related costs for new plants and products 19

21 Passion Powers Precision and Performance Nm 20