Kongsberg Automotive Fourth quarter 2019 - February 27, 2020 - PowerPoint PPT Presentation

Kongsberg Automotive Fourth quarter 2019 - February 27, 2020

Kongsberg Automotive Forward-Looking Statements and Non-IFRS Measures Forward-Looking Statements This presentation contains certain “forward - looking statements”. These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward- looking and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward -looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this presentation include statements addressing our future financial condition and operating results. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation. More detailed information about these and other factors is set forth in the 2019 Kongsberg Automotive Annual Report and the Kongsberg Automotive Quarterly Reports. Non-IFRS Measures Where we have used non-IFRS financial measures, reconciliations to the most comparable IFRS measure are provided, along with a disclosure on the usefulness of the non-IFRS measure, in this presentation. 2 2

Highlights Q4 2019 ▪ Revenues declined by MEUR 7.5 (-2.6%) YoY to MEUR 280.8. This includes positive FX effects of MEUR 1.8. On a fixed exchange rate basis, our revenues declined by 3.2% YoY. ▪ In Q4 we experienced strongly declining revenues in November and December to a greater degree than the decline in our customers’ production rates. ▪ We continued to gain market share in the passenger car market, mainly driven by strong P&C growth in China. Overall, on a constant currency basis we had virtually flat YoY Sales revenues in the passenger car market in which production output declined by 5% in Q4. ▪ In the truck market, on a constant currency basis, our revenues declined by 10% YoY in line with the reduction in global production volumes. ▪ Revenues generated in other end-markets declined by 3% on a constant currency basis. ▪ We won a significant level of new business despite increasing market uncertainties. We were awarded new business totaling MEUR 89 on an annualized basis, corresponding to MEUR 427 in expected lifetime revenues. ▪ Adj. EBIT amounted to MEUR 15.1 which was MEUR 5.6 lower than in Q4 2018. ▪ The primary reason for the shortfall to our guidance was the lower revenue levels in Q4 and the associated fall-through. Performance ▪ The positive impacts from improved operational performance were partly offset by inefficiencies in the Interior plant in Brzesc, Poland. ▪ In Q4 2019 we had an inventory revaluation loss; in Q4 2018 we benefitted from a revaluation gain. This was driven by operational improvements and raw material pricing. ▪ Total cash flow for the quarter was MEUR +1, mainly driven by working capital improvements. Cash Flow ▪ Our total liquidity reserve at the end of the quarter amounted to MEUR 65.2 of which MEUR 0.8 were restricted cash on hand. ▪ Sequentially, the adjusted gearing ratio deteriorated slightly; from 3.0X to 3.1X. Excluding IFRS Gearing 16 effects, our LTM adjusted gearing ratio (NIBD/Adj. EBITDA) was 2.5X; a YoY increase of 0.6X. 3

Highlights FY 2019 ▪ Group revenues increased by MEUR 38 to MEUR 1,161 including positive FX effects of MEUR 15. ▪ In FY 2019 Kongsberg Automotive revenues grew by 2% YoY at fixed exchange rates, despite declines in our main end markets. ▪ Revenues in the passenger car market grew by 2.5% on a constant currency basis, supported by strong growth in China and in our Interior business. The global light vehicle production volume declined by 6% in 2019. ▪ On a constant currency basis, revenues generated in the truck market increased by 3.5% in Sales 2019. The global truck production volume declined by 3% in 2019. ▪ Revenues generated in the industrial markets in Specialty Products declined by 3% on a constant currency basis. ▪ We were awarded with high levels of new business wins (NBW) in all our segments. In a challenging market environment NBW for FY 2019 totaled MEUR 330 on an annualized basis or MEUR 1,527 in expected life-time revenues. ▪ FY 2019 adjusted EBIT was MEUR 70.9; MEUR 3.8 less than in 2018. ▪ Positive impact from higher volumes (+7) and net operational improvements (+5) ▪ Margin decline due to stronger growth in lower margin segments and other mix effects (-6) ▪ Fixed cost absorption effect due to lower revenues than planned (-5) Performance ▪ Increase in Mexican labor rates, higher raw material prices and tariffs (-6) ▪ Implementation of IFRS 16, FX and other effects (+1) ▪ As we planned for stronger markets and higher volumes with a balanced cash flow, the decline in our end markets translated into significant lower cash from operations. As around 80% of our investments Cash Flow were tied to our NBW, we had little flexibility to adjust. We finished 2019 with a cash flow of MEUR -44. 4

Revenues and Adjusted EBIT Q4 2019 revenue and adjusted EBIT figures were impacted by lower volumes Revenues Adjusted EBIT MEUR MEUR and percent 2016 2017 2018 2019 2016 2017 2018 2019 1.161 7.0% 7.2% 7.2% 1.123 6.7% 7.0% 1.056 307 6.9% 288 294 5.1% 288 986 288 6.1% 5.4% 5.4% 280 281 279 5.2% 4.7% 5.0% 4.8% 268 267 259 3.2% 257 4.9% 251 3.6% 241 241 3.0% 2.9% 228 74.7 21.5 70.9 20.8 20.7 20.4 20.1 -0.3% 15.2 15.1 49.8 13.9 13.1 13.9 13.0 12.6 9.1 28.3 7.7 7.4 -0.8 Q1 Q2 Q4 Q1 Q2 Q3 Q4 FY Q3 FY Revenues including HRAR EBIT adjusted for restructuring - see details in the quarterly report. 5

EBIT and Net Income Full-year growth is driven by higher revenues & lower restructuring costs Net Income EBIT MEUR MEUR 2016 2017 2018 2019 28.8 62.4 23.8 53.7 20.3 19.2 17.9 15.0 14.8 14.1 13.8 13.0 12.7 11.9 11.0 10.5 9.7 23.8 8.0 21.2 7.7 6.2 5.7 5.7 4.9 4.4 4.2 3.3 2.9 2.1 1.6 1.4 0.3 0.2 -0.2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY -5.0 -7.4 -8.0 -9.9 -11.3 6

New Business Wins

New business wins – KA Group Strong booking quarter in a challenging market environment New business wins per quarter (per annum revenues) New business wins per quarter (lifetime revenues*) MEUR MEUR 140 600 Average: MEUR 82 Average: MEUR 337 120 500 100 400 80 300 561 122 121 537 60 110 463 459 99 427 200 89 40 349 77 339 338 323 71 299 66 65 65 288 62 100 20 36 139 0 0 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 New business wins LTM (lifetime revenues*) New business wins LTM (per annum revenues) MEUR MEUR 450 2,200 Average: MEUR 1,557 Average: MEUR 332 2,000 420 1,800 390 1,600 360 1,400 330 409 1,200 1,880 1,697 1,701 1,681 1,435 1,485 1,429 1,312 1,497 1,607 1,438 1,527 372 364 300 363 1,000 352 330 292 321 318 291 288 281 270 0 0 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 *Lifetime revenue assumptions are based on IHS and LMC production estimates at the time of the booking. 8

New business wins by segment New business wins secure future growth in all segments New business wins per quarter (lifetime revenues*) New business wins per quarter (per annum revenues) MEUR MEUR 130 600 122 561 121 SPP SPP 120 550 537 P&C P&C 110 INT INT 110 500 135 463 459 99 100 148 50 450 28 427 89 62 90 93 400 131 103 36 80 77 124 349 339 350 338 30 71 323 13 70 25 66 65 65 114 299 300 288 62 77 33 10 60 151 237 28 136 250 103 22 30 44 50 185 32 135 210 34 200 123 271 40 39 33 36 50 78 139 23 150 302 11 30 58 29 255 143 62 17 42 157 13 100 41 20 32 151 141 21 138 29 74 118 115 23 50 21 10 20 91 17 16 14 55 57 9 30 4 4 22 0 0 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 9 *Lifetime revenue assumptions are based on IHS and LMC production estimates at the time of the booking.