KONTRON RESULTS PRESENTATION Q3/2016 October 27, 2016 Dr. Thomas Riegler - CFO
01 INTRODUCTION Q3/2016 � The financial result in Q3/2016 remained weak, as expected. � Restructuring program will commence. � Strategic direction of the company to be announced by end of FY2016. � New strategic investor: S&T AG currently holds a 5.1% stake in Kontron and purchased in total 29.9% based on condition precedent. // 2
02 FINANCIAL OVERVIEW Q3/2016 Q3/2015 Q3/2016 In € m and % / rounded figures / *excl. OTEs, restructuring costs / *2 OPEX includes One time effects Revenue Gross Margin (rep.) Gross Profit (rep.) 113.4 30.3 26.7% -23.9 -11.8 -6.1 PPT (-21.1%) (-38.9%) 89.5 18.5 20.6% OPEX* 2 Order Intake 26.2 111.2 +1.7 -32.2 (+6.5 %) (-29.0%) 27.9 79.0 EBIT (adj.)* EBIT (rep.) 3.5 5.1 - 11.8 -10.2 -6.7 -6.7 // 3
03 KEY FINANCIALS FOR GLOBAL BUSINESS UNITS Q3/2016 In € m and % / rounded figures Order Intake Q3/2016 Q3/2015 Δ Industrial 43.0 45.2 -4.9% Communication 20.5 40.3 - 49.1% Avionics/ Transportation/ 15.5 25.7 -39.7% Defense Total 79.0 111.2 -29.0% Revenues Q3/2016 Q3/2015 Δ Industrial 45.5 54.3 -16.2% Communication 23.1 27.0 -14.4% Avionics/ Transportation/ 20.9 32.1 -34.9% Defense Total 89.5 113.4 -21.1% // 4
04 PROFIT & LOSS STATEMENT Q3/2016 In € m and % / rounded figures Q3/2016 Q3/2015 Δ Order Intake 79.0 111.2 -29.0% Order Backlog 261.7 320.7 -18.4% Revenues 89.5 113.4 -21.1% Gross Profit 18.5 30.3 -38.9% in % 20.6 26.7 -6.1 PPT OPEX 27.9 26.2 +6.5% EBIT (adjusted) -6.7 5.1 -11.8 in % -7.5 4.5 -12.0 PPT OTE/ Restructuring costs -0.1 1.6 -1.7 EBIT (reported) -6.7 3.5 -10.2 in % -7.5 3.1 -10.6 PPT Net Income (reported) -7.4 2.1 -9.5 // 5
05 CASH FLOW STATEMENT Q3/2016 In € m Q3/2016 Q3/2015 Δ Cash Flow from operating activities 7.5 -1.2 +8.7 Cash Flow from investing activities -7.0 -6.4 -0.6 Net cash (Net debt) 9.7 (40.0) +49.7 // 6
06 ECT MARKET OVERVIEW KONTRON NEEDS TO GAIN BACK MARKET SHARE � KONTRON HAS LOST PART OF ITS MARKET � THE ECT MARKET SHOWS STEADY AND SHARE: CONTINUOUS GROWTH OF ~9% PER YEAR: � Overall estimated ECT market � Modules & boards (~7%) volume in 2016: EUR 5.1 bn � Systems & platforms (~10%) � Kontron still 2nd largest player in the � High-end modular systems (~12%) ECT market // 7
07 SIMPLIFIED ECT VALUE CHAIN OPPORTUNITIES Software Providers ECT Providers OEMs Basic Component Suppliers Contract Systems Integrators Manufacturers Main � Integrated circuits � Design � Assembly � Design of end � Integration Processes design device services for � Validation and operators (e.g., � Chip production � Assembly of Verification production lines) components & subsystems � New business opportunities and market potential going forward � Kontron will be able to cover a larger part of the value chain in the future // 8
08 KONTRON'S CAPABILITIES NEED TO EXPAND ON CAPABILITIES Kontron has several key strengths ... ... that will help to differentiate and therefore need to be focused: Established client relationships & international presence Beside the strong OEM relationships, further strengthen Tier 2 clients Market High barriers to entry access Expand channel activities Vertical-specific expertise & brand Product Enhance modular building blocks & Standard product platforms application readiness portfolio Ability to customize Customization projects at a premium R&D One of the largest R&D departments in the industry Market-oriented technology roadmap Reputation of quality & reliability Focus on platform strategy to use Economies of scale Size economies of scale // 9
09 GENERAL UPDATES Q3/2016 � ENNOCONN / VOLUME TRANSFER IS ONGOING � MANAGEMENT BOARD UPDATE: � Frank Gumbinger has for personal reasons decided not to take up the position in the Management Board of Kontron AG. � Dr. Thomas Riegler, who has been heading the Finance department at Kontron since March 2016 and who was appointed Member of the Management Board on July 25, 2016, will continue in his position. // 10
10 FISCAL YEAR 2016 OUTLOOK � The guidance for 2016 was withdrawn on July 15, 2016. � No quantitative guidance for the rest of the year. � Revenues in H2 are expected to be similar to H1. � Adjusted EBIT and gross margin in H2 are expected to be lower than in H1. // 11
DISCLAIMER This document contains certain statements that related to future business and financial performance and future events or developments in relation to Kontron AG that may constitute forward-looking statements and expectations. Such statements are based on the current expectations and certain assumptions of the management of Kontron AG, and are, therefore, subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Kontron AG’s ability to control or estimate precisely, such as future market and economic conditions, the behavior of other market participants, the ability to successfully integrate acquired businesses and achieve anticipated synergies and the actions of government regulators. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. Kontron AG does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation. Kontron AG neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated. Information about risks and uncertainties affecting Kontron AG is included throughout our most recent annual and quarterly reports which are available on the website: www.kontron.com. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. // 12
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