Annual General Meeting 2014 CEO statement May 2014 2 Sanitec Home - PowerPoint PPT Presentation

Annual General Meeting 2014 CEO statement May 2014

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Sanitec — Home of the Bathroom Selection of products Leading markets positions in the stronger economics of Europe Bathroom ceramics Ceramics complementary products Mature and consolidated industry with high barriers to entry Unique portfolio of leading and longstanding brands with a loyal customer base One Sanitec — fundamentally improved industrial platform Sales split 2013 By product area By geography Other Strong cash flows and solid financial position 28% Ceramics complem entary Central Bathroo products m & North East Europe 24% ceramics Europe Industry with significant cyclical upside 56% 76% 16% Key financials Strategy founded on organic growth and incremental efficiency improvement ( € m) 2010 2011 2012 2013 Net sales 777 771 753 702 Adj. EBITDA 77 106 108 103 Highly experienced management with proven track record % margin 9.9 13.7 14.3 14.6 Cash conversion (%) 53 78 88 82

Leading positions in the stronger economies of Europe Excellent geographical footprint North Europe (25%) Market size: € 0.7bn East Europe (16%) GDP growth: 1.9% Market size: € 1.2bn GDP growth: 2.3% UK & Ireland (7%) Market size: € 1.2bn GDP growth: 2.6% South Europe (17%) Market size: € 2.3bn Central Europe (31%) GDP growth: 1.2% Market size: € 2.7bn GDP growth: 1.5% Sanitec market position within Clear no. 1 No. 1 or 2 No. 3 or 4 bathroom ceramics (by volume) Source: BRG Consult ("BRG"), IMF WEO April 2014, Region East Europe figures from 2013

Unique portfolio of leading and longstanding brands Strength of brands and customer relationships evidenced by sticky market shares Sanitec‘s national jewels Sanitec bathroom ceramics market share in core markets by value (%) 67 61 36 32 27 21 18 17 17 17 North Central UK and South East Ireland (Sweden, Finland, (Germany, the (UK) (France, Italy) (Poland, Ukraine, Norway, Denmark) Netherlands, Russia) Belgium) Source: Management estimates based on BRG market values

Industry with significant cyclical upside European bathroom fixtures market has a total market value of € 8.1 billion with demand driven primarily by more resilient RMI activity Residential construction ( € bn) 3 Comments  Sanitec’s main market, bathroom ceramics, represents c. 20 % ( € bn) Forecast ( € 1.6 billion) of the total € 8.1 billion bathroom fixtures market 350 300  Long-term driver via construction market with Renovation, Maintenance and Improvement (“RMI”) being more resilient and cyclicality coming 250 from new build 200 150 2000 2003 2006 2009 2012 2015E New build RMI Non-residential construction ( € bn) 3 European bathroom fixtures Bathroom fixtures market by product Sanitec‘s new build vs. RMI (2012) 1 demand exposure 2 Forecast ( € bn) Bathroom Shower ceramics 240 17% New build ~30 – 40% Baths 210 Pre-wall 7% 5% 180 Furniture Taps & RMI 20% 150 Mixers ~60 – 70% 2000 2003 2006 2009 2012 2015E 31% New build RMI Source: BRG, Euroconstruct June 2013 Notes: 1 Sanitec’s core markets by value,,Management estimate 3 Sweden, Finland, Norway, Denmark, Germany, the Netherlands, Belgium, UK, France, Italy, Poland

Organic growth and incremental efficiency improvement Well articulated strategic priorities Sanitec’s strategy Key highlights 4  1 Drive value growth through innovation, 1 3 renewal and streamlining of core Drive value through innovation Grow Bathroom ceramics product portfolio opportunities and product leadership Eastern Europe Exploit  Capture growth opportunities in the 2 Product areas fragmented CCP market by using existing ceramics platform and locally proven bundling concepts 2 Grow ceramics complementary  Continued expansion in higher-growth 3 CCP products Eastern European markets, based on our existing Eastern European footprint and a select number of national jewel brands Eastern Rest of Western Europe Europe world  4 Continue to execute One Sanitec efficiency Markets improvement initiatives

Best-in-class profitability among Ceramics peers EBITDA margin full year 2013 EBITDA margin (%) 30 25,9 25 19,7 20 14,6 11,4 15 9,9 7,4 10 3,1 5 0 1 3 1 4 2 Rovese 3 Ceramics peers Bathroom peers Notes: 1 Adjusted EBITDA margin 2 Reported EBITDA margin for the Bathroom and Wellness division only 3 Reported EBITDA margin, FIGURES FOR 2012 4 Adjusted EBITDA margin, pro forma adjusted for the Joyou acquisition Source: Competitor reports

Key developments during Q1 Q1 Net sales 10% Recovery in the European economy in Germany y-o-y 1 Q1 2014 5.4% Organic growth in 4 of 5 regions during Q1 Net sales y-o-y 10.6% Q1 2014 One Sanitec delivers EBIT-margin +2.9 p.p. y-o-y Q1 cash Exceeding financial cash conversion target 88% conversion On track to deliver on all long-term financial targets 1) Change calculated in constant currency and comparable legal structure i.e. organic change

Quarterly sales and profitability development Quarterly sales 1 and profitability Comments  Clear improvement in relative performance (EUR million) (%) 250 18 quarter over quarter since beginning of 2013 16 200 14  Continued successful “One Sanitec” 11.1 12.1 12 11.0 10.7 10.6 implementation 10.0 150 8.5 8.9 10  Revenue synergies 8 100  Improved sourcing 190 184 181 182 177 175 168 168 6  Rightsizing benefits 4 50  Manufacturing efficiency 2 0 0 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Organic sales Adj. EBIT margin Note: 1 Net sales with comparable legal structure after the divestment of Leda in October 2012, i.e. organic change

Sales split by geography Recovery driven by strong performance in Central Europe Net sales by regions¹ Comments  Strong performance in Central Europe driven ( € m) by Germany 225 Q1 Y-o-Y growth 200 5.9 4.9 10% 5.4 175 4.4  Strong performance in the Nordic Region 13.5 6.1 13.6 11.9 12.8 5.1 6.5 13.2 4% 12.1 13.8 26.1 150 28.1 36 26.5 31.3 29.5 5% 27.9 125 32.1  Stabilisation in South Europe 32.2 32.3 34.2 27.8 (1)% 26.7 25.4 100 47.6 50.4 44.9 39.8 75 42.2 9% 45.1 43.3  Political turmoil in East Europe 50 59.4 57.2 54.8 55.9 54.2 25 50.6 49.4 6%  UK leading the recovery 0 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q1 2014 Central North South East UK and Ireland RoW Note: 1 Reported net sales, not adjusted for sale of Leda in October 2012

Update on our long – term financial targets Strong financial performance — on track to deliver on our long-term financial targets (%) 5,4  Relative growth 1.4 (10,9) +2 p.p. Growth above 0 improvement market (3.9) (5,4) (10) quarter by quarter Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 (%) 20 12,1 11.0 10.7 ≥12% 10.6 8.5  Continued improved 10 Operating margin margins y-o-y 0 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 (%) 88 88 82 100 78 >70%  Continued strong 80 53 Cash conversion 60 cash conversion 40 2010 2011 2012 2013 Q1 14  Comfortable (x) 2.1 3 <2.5x 1.8 headroom to our 1.6 Net debt/ 1.5 2 EBITDA maximum 0 leverage target Q2 2013 Q3 2013 Q4 2013 Q1 2014 The Board of Directors proposes to the AGM that no dividend be distributed from the Dividend and c. 50% result for the year nor from retained earnings, and that EUR 22,000,000, i.e. EUR 0.22 per distribution of share, is paid as refund of capital from the reserve for invested unrestricted funds policy equity equals 52% of profit for the period. Notes: Change calculated vs. prior period in constant currency and comparable legal structure after e.g. divestments, i.e. organic change

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