Becoming the leader in intelligent cargo handling Investor - PowerPoint PPT Presentation

Investor presentation, February 2017 Becoming the leader in intelligent cargo handling Investor presentation February 2017 2

Content 1. Cargotec in brief 2. Investment highlights 3. Kalmar 4. Hiab 5. MacGregor 6. Q4 2016 financials 7. Appendix Investor presentation February 2017 3

Cargotec in brief Investor presentation February 2017 4

Today’s leader in cargo handling equipment Cargotec Group Kalmar Hiab MacGregor Sales: EUR 3,514 million Sales: EUR 1,700 million Sales: EUR 1,036 million Sales: EUR 778 million EBIT: 7.1% EBIT: 8.0% EBIT: 13.5% EBIT: 2.3% Services: 25% Services: 26% Services: 22% Services: 26% AMER EMEA AMER EMEA AMER EMEA 36% 42% 41% 48% 7% 34% Geographical Geographical Geographical split of sales split of sales split of sales in 2016 in 2016 in 2016 APAC APAC APAC 22% 11% 59% Figures: 2016 EBIT % excluding restructuring costs Investor presentation February 2017 5

Key competitors Global main competitors Other competitors Investor presentation February 2017 6

Target: From turnaround to leader  10% in intelligent cargo handling with sector leading operating profit profitability margin (EBIT) in each business area over the cycle Turnaround is delivering results in Hiab and Kalmar; MacGregor has improvement plan in place Transformation has started from equipment business to world class services offering and leadership in intelligent cargo handling Investing to ensure a leading position Shaping the portfolio to increase shareholder value

Cargotec’s portfolio Net sales* in 2016 Trend in orders, Profitability: EBIT margin, FY 2016 FY 2016 EUR million ~1,300 ~400 Kalmar software (Navis) Low due to long term and Automation and Projects investments division MacGregor 3,514 -34% 2.3% Hiab ~800 +5% 13.5% ~1,000 Kalmar equipment and service Kalmar MacGregor  equipment (excluding Automation and Low double digit Kalmar APD and Hiab Projects Division & Navis) software * Figures rounded to closest 100 million Investor presentation February 2017 8

Well positioned to become the leader in intelligent cargo handling  Execution capabilities in place and profitability improving  Building on tremendous strengths  Transforming from equipment company to a company that will shape the cargo handling industry  Investing to ensure a leading position  Shaping our portfolio to drive growth and shareholder value

Investment highlights Investor presentation February 2017 10

Investment highlights: Why invest in Cargotec? 1. Technology leader and strong market positions, leading brands in markets with long term growth potential 2. Transforming from equipment provider into a leader in intelligent cargo handling 3. Growing services business and asset light business model are decreasing the impact of cyclicality 4. Capitalizing huge possibility for future automation and software growth 5. On track for profitability improvement and to reach financial targets

1. Technology leader and strong market positions Kalmar Hiab MacGregor Ports, terminals, distribution centers Construction, distribution, forestry, Maritime transportation and offshore End markets defence, waste and recycling industries 1-2# 1-2# 1-2# Market position Global trade growth driven by Construction growth via population Global trade growth driven by Key drivers globalisation and growing middle class growth and urbanisation globalisation and growing middle and supporting class, oil price megatrends Container throughput growth, larger Changing distribution patters and ships require investments in ports, models ports need to increase efficiency via Increasing penetration in developing automation, increasing importance for countries safety Recognized premium brand Hiab one of the two global players Asset light model, technology leader, Competitive with scale closeness to customers (shipyards advantage Leading market position in software and shipowners) globally, industry Diversified product range Full automation solution offering competence (equipment, software and Asset light model, efficient assembly automation, service) operation Asset light business model Investor presentation February 2017 12

2. Transforming from equipment provider into a leader in intelligent cargo handling 2013 2018 2020 Product leadership Service leadership Leader in intelligent gargo handling Good equipment company World-class service offering  Product R&D drives offering  Connected equipment and 40% of the sales from development and higher data analytics building value services and software gross profit on data  More efficient and  Significant software business optimised cargo handling solutions Must-wins World class service offering Lead digitalisation Build word class leadership Investor presentation February 2017 13

3. Growing services business and asset light business model are decreasing the impact of cyclicality Services net sales Asset light business model with flexible cost structure EUR million  Kalmar and Hiab: efficient assembly operation  MacGregor: efficient project management and engineering office: > 85% 1000 of manufacturing and 30% of design and engineering capacity outsourced 900  No in-house component manufacturing 800 Leading product portfolio creates solid platform for services development 700  Growing services will bring stability, better profitability and decrease cyclicality 600 Large installed base – huge potential 500 Actions to increase capture rates of spare parts: 400  Improve sales process 300  Digitalization efforts and connectivity: online services and 200 e-commerce solutions 100  Towards service agreements 0  Distribution centers improving availability 2013 2014 2015 2016 Investor presentation February 2017 14

4. Capitalizing huge possibility for future automation and software growth Digitalisation supports service Huge possibility in port software Change when manual terminal and software growth and vice versa converted into an automated operation  Container value chain is very inefficient: total value of waste and Labour costs 60% less labour costs Industry trends support growth inefficiency estimated at ~EUR 17bn in port automation: Total costs 24% less costs  Container shipping industry has an  Ships are becoming bigger and Profit increase 125% annual IT software spend of approx. the peak loads have become an issue EUR 1.7 billion. The market is  Safety in the terminal yard has expected to grow to EUR 2.8 billion become even more of a focus for by 2020 operators  > 50% of port software market is in-  Customers require decreasing energy house, in long term internal solutions usage and zero emission ports not competitive  Optimum efficiency, space utilization  Navis has leading position in port and reduction of costs are increasingly ERP important  500 software engineers  Shortage and cost of trained and skilled labour pushes terminals to automation Investor presentation February 2017 15

5. Clear plan for profitability improvement and to reach financial targets Sales and operating profit Growth Profitability development Target to grow faster than market Target 10% EBIT for each business area and 15% ROCE on Group  Megatrends and strong market 4,500 6.2% 400 7.1% level over the cycle position supporting organic growth 4.4% 4,000 4.0% 3,729 350 3,514  Cost savings actions: M&A potential 3,358 3,500 3,181 300  2017 EUR 25 million (MacGregor) 3,000 250  2017 Interschalt EUR 2 million 2,500 250 200 231  2018 EUR 13 (Lidhult production 2,000 transfer in Kalmar) 150 1,500 Balance sheet and dividend 149 100 127 Target gearing < 50% and dividend 1,000 Product re-design and improved project 50 30-50% of EPS 500 management  0 Strong cash flow 0 Higher operating profit key driver 2013 2014 2015 2016  Gearing below target, enables for higher ROCE solid dividend payout Net sales Operating Operating profit* profit* margin *excluding restructuring costs Investor presentation February 2017 16

Kalmar Investor presentation February 2017 17

Container throughput still forecasted to grow year on year TEU million 900 Growth from 2012 to 2020 25% 775 800 752 729 +3.0% CAGR 2.8 % +3.2% 707 692 +3.0% 682 121 675 +2.1% 700 118 +1.3% 642 +1.0% 115 +5.1% 622 102 100.1 +3.3% 98.3 107.0 600 95.2 94.1 198 192 186 186 500 183.3 182.2 174.0 173.0 168.7 400 300 464 450 435 418 408.7 200 404.0 398.3 374.8 359.2 100 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 APAC EMEA AMER Source: Drewry: Container forecaster Q4 2016 (Estimates for 2018-2020 from Drewry Container forecaster Q3 2016, latest update available) Investor presentation February 2017 18

Kalmar has strong position in attractive segments Market position Trend Market size Automation & Projects  #1-2 Mobile equipment #1  EUR 7.5 billion Bromma #1  Navis #1  Services #1  EUR 7.6 billion Investor presentation February 2017 19