1. No category

WE KEEP THE WORLD MOVING
IR Presentation
November 2014
AGENDA
1 Company presentation
2 Update on Q3 2014
3 Margin upside potential
November 2014 | IR Presentation
2
KION AT A GLANCE
A world leader in industrial trucks
#1
6
>1.2
million
1/3
1,200
100
KION is European #1 and Global #2(a)
A well positioned global player with
six unique brands
Installed truck base worldwide
support after sales business
More than every third truck sold in
growth markets4
Over 1,200 sales and/or service
locations
Global presence in more than 100
countries with over 22,000 employees
Current key financials (€m)
2013 revenues by product
20121
2013
4,559.8
4,494.6
Adj. EBITDA2
700.5
721.5
Margin
15.4%
16.1%
Adj. EBIT2
408.3
416.5
Margin
9.0%
9.3%
Revenues
Truck order intake by industry (2013)3
2013 revenues by geography
South America 4%
North America 2%
New
business
56%
Services
44%
RoW 4%
Germany 24%
Other Industries
21%
Asia 10%
Paper & Print 4%
EEU 9%
Construction 5%
France 17%
Rest of WEU 15%
Spain 2% UK 8%
Italy 5%
Beverage 6%
Wholesale 7%
Automotive 9%
Logistics 16%
Food 12%
Metals 11%
Chemicals 9%
1 Adjusted
for the disposal of our Hydraulics business
² Adjusted for non-recurring items and purchase price allocation
3 Calculation based on German customer base only.
4 Based on 2013 order intake
Source: (a) McKinsey market study
November 2014 | IR Presentation
3
KION’S INTEGRATED BUSINESS MODEL
Global capital goods ecosystem of products and services
New truck sales
Financial services
― Technology and
innovation leadership
― Tailor-made solutions
& customer options
― Optimized total cost of
ownership
― Multiple brands for
multiple markets
November 2014 | IR Presentation
― Long-term customer
relationship
PRODUCTS
Most financing
contracts linked to
full service contracts
― Rental offering to
match customers’
capacity needs
SERVICES
― Integrated in industrial
segments Linde and
STILL
After duration of
financing, trucks are
used in rental fleet or
sold as used trucks
― Used truck sales from
lease contracts
― Integrated within
regular sales process
~50% of new truck
sales carry
financing contracts
Ongoing customer
relationship
(e.g. short-term rental)
triggers new truck sales
Rental & used trucks
― Sales support vehicle
benefiting aftermarket
and service activities
Service solutions &
aftersales
― Proximity with global
service network
― Proprietary spare
parts
― Contracted services
― Solutions approach
including fleet
management and
monitoring software
4
INVESTMENT HIGHLIGHTS
1
Attractive market with growth profile above GDP
2
Global leader – strong home base and well positioned in growth markets
3
Technology leadership drives premium positioning and customer value
4
Robust integrated business model with high contribution from services
5
Profitability benchmark – well prepared for future value creation
6
Proven management team with a clear strategy
November 2014 | IR Presentation
5
1 Attractive market with growth profile above GDP benefiting
from global mega trends
Global new truck sales and GDP (CAGR)
Expected growth of
c. 1.6x world GDP
c.1.4x World GDP1
8.3%
5.6%
4.2%
4.1%
3.3%
1980-1990
2.8%
1990-2000
3.0%
3.5%
2000-2010
Global new trucks in k units
Industrialization
2.6%
2.5%
2010-2013
Next 3 Years
(2014E-2017E)
World GDP
Globalization
Increasing fragmentation of
supply chains
1 Calculated based on CAGRs for new truck sales and GDP for 1980-2013.
Sources: WITS/FEM (new trucks 1980-2013), McKinsey market study (new trucks forecast 2014E-2017E), IMF 2013 (World GDP)
November 2014 | IR Presentation
6
1 Momentum from high emerging markets growth and stability
from mature markets replacements cycle
Momentum driven by growth markets
Stability from Western European replacement cycle
Units ordered in k (market)
Units ordered in k (market)4
23%
48%
50%
Truck replacement demand from assumed 10-year average usage5
(c. 92% of 2013 market volume)
615
337
239
262
276
268
257
259
2013
304
303
2012
477
228
183
x%
2011
2010
2009
2008
2007
2017E
Rest of World³
2006
2013E
Eastern Europe²
2005
2003
Rest of Asia¹
2004
China
2003
138
% of global market
¹ Excludes Japan and China.
² Includes Russia.
³ Consists of South and Central America, Australia and Africa.
Source: McKinsey market study
November 2014 | IR Presentation
Western Europe incl. Turkey.
Replacement demand based on historical data. Average usage of new trucks may
exceed 10 years.
Source: WITS
4
5
7
2 Strong position in core markets based on successful multi-
brand strategy
Strong core markets
Successful multi-brand strategy
2013 KION order intake by region (in units)
Other
[#1]¹(b)
26%
[#1],#32
7%
#1
22%
9%
India
4%
Brazil
12%
China
9%
Eastern Europe³
Western
2013 rank
64%
Europe4
2%
#1
35%
Thereof
Germany:
22%
Vast majority of unit order intake in markets where KION is #1
¹ Related to aggregate of E- and WH-trucks in Brazil (WITS/FEM).
2 #1 among international players in China and #3 in terms of overall market position in China.
3 Includes Russia.
4 Includes Turkey.
Sources: (a) Logistik Journal, (b) WITS/FEM, (c) Stratégies Logistique
November 2014 | IR Presentation
– No. 1 non-domestic brand in China
– Leading in intralogistics management tools
– Domestic brand in China
– Emerging markets presence
– No. 1 in France(c)
Regional brands
142,815
2013 market
share(b)
Global brands
– No. 2 worldwide(a)
– A leading player in Italy(b)
– A leading manufacturer in India
8
2 Well positioned to capture growth in Asia and other growth
markets
Full local presence in growth markets
Increasing growth markets contribution
KION Group order intake (in units)
Country/
region
China
20%
Local
Present
since¹
Service
network
Products
Operations
R&D
1993




23%
28%
32%
35%
49,900
45,600
Brazil
2001




Russia
2005

-
-
-
India
2011




Eastern
Europe3
1990

-

-
South &
Central
America4
1998




Presence defined as establishment of local legal entity.
Includes Brazil.
3 Includes Russia.
4 Excludes China and Japan.
5 Includes Turkey and Africa.
33,600
34,200
2008
2010
27,800
2006
China
1
South & Central
America2
Eastern
Europe3
2012
2013
Rest of
Asia4
Others5
2
November 2014 | IR Presentation
x%
Share of total KION Group order intake in growth markets
9
3 Technology leadership drives premium positioning and
pricing
Commitment to R&D
Product efficiency supports premium pricing²
R&D spend¹ (€m)
Cost per lorry load cycle
120
101
120
~20%
114
103
Purchase price only ~7% of total costs
Purchase
price
Service
cost
Energy
cost
Operator
cost
2009
2010
2011
2012
2013
Linde IC Truck
Competitor
~7%
~5%
~6%
~80%
Competitive pricing
Sources to
maximize availability
Design to lower
operator and
energy costs
Total operating
cost for
customer³
¹ R&D expenditures (P&L) – amortization expense + capitalized development costs = total R&D spend.
² Application of KION developed methodology to compare the energy consumption and productivity (measured as time required per job) of industrial trucks which has been certified by TÜV
(TÜV Nord certified testing methodology used by KION (2009)). Based on a self-conducted test of a typical 2.5 to 3 ton Linde industrial truck with equivalent trucks of competitors, which was
based on the certified methodology, KION estimates that the total operating performance (comprising energy consumption, purchase cost, maintenance and labour cost) of such a Linde
industrial truck is better than for an equivalent truck of tested competitors.
3 Based on Western Europe according to company estimates.
November 2014 | IR Presentation
10
4 Strong global sales and service network provides unique
access to a global customer base and barrier to entry
694 sales and/or
service locations
North America
177 sales and/or
service locations
326 sales and/or
service locations
153 sales and/or
service locations
2
59 sales and/or
service locations
Europe
579 sales and/or service
locations
Asia
316 sales and/or service
locations
South and Central America
101 sales and/or service
locations
Rest of World
59 sales and/or service
locations
Over 1,200 sales and/or service locations in over 100 countries with approximately 12,900 multi-skilled service staff¹
¹ Includes direct and additional external service staff.
2 Indian market related.
November 2014 | IR Presentation
11
5 Focus on operational excellence and improving margins with
further initiatives in progress
Structural efficiency and consolidation
Reduced fixed costs and increased operational
efficiency
2008 - 2009
– Comprehensive cost
savings program
– Footprint
reorganization
– Short-time work
– Indirect cost reduction
Growth and resilience
Increased revenue growth and
economies of scale
Margin expansion
Increase profitability and efficiency
Started 2011/2012
2010 onwards
Beyond
– Fixed cost reduction
– Growth initiatives and network
expansion in emerging markets
– Integration STILL/OM
– Continuous operating improvements
–2 Effective use of global scale for
production and operations
– Continued footprint
optimization
– Capacity investments: Brazil and India
factories
–3 Leveraging global R&D and product
platform
– Indirect cost reduction
– Weichai partnership
–4 Roll-out of common modules and
product platforms

Implemented
–1 Full impact from footprint measures
In progress
In progress
Adj. EBIT margin
8.3%
7.9%
9.0%1
9.3%
2012
2013
3.9%
2009
2008
(0.9)%
2010
2011
Beyond
1 Excludes Hydraulics Business with a positive effect of 0.3%
November 2014 | IR Presentation
12
5 Margin upside driven by structural changes and not market
growth
3
Leveraging global R&D and product platforms
Full portfolio of
value and
economy trucks
from Chinese
R&D centre
Trucks for
emerging
markets based
on Western
European
platform
Trucks localized
in one emerging
market for other
emerging
markets
November 2014 | IR Presentation
– Next generation of
torque converter
trucks
4
Common modules and platforms: upcoming
module launches
30% of common modules already launched, e.g.:
–
IC-Engine: common IC-range for premium
markets to generate purchasing savings and
R&D savings
–
Torque Converter drive train: common solution
and supplier
– New E-trucks for
Asian markets
– Localization of
former OM trucks for
Voltas and Baoli
70% of common module launches still to come,
e.g.:
–
– Baoli design with
localized
components in Brazil
STILL cabin: common structure kit, doors,
display, multi functional lever and pedals
– Key component
supply from Baoli to
Voltas in India
13
6 KION Strategy 2020: Our aspiration
… at eye level with major
international competitor
Growth
… on par with capital goods
companies and higher margins
Capital
efficiency
Profitability
… most profitable player in the
industry
Resilience
November 2014 | IR Presentation
… resilient enough to profitably cope
with revenue declines as large as in
2009
14
6 KION Strategy 2020 addresses all aspects of the business
Regional growth strategies
Expand strong position in growth markets like
North America and China with suitable
brand strategies, competitive products, distribution models, and
cooperations
Support functions
Realize scale and
synergies when
expanding the organization to capture
further growth
KION GROUP
STRATEGY 2020
Manufacturing setup
Optimising production scale
and scope as well as site utilization,
globally integrate manufacturing footprint
and assemble close to end-markets by
establishing global KION plants
November 2014 | IR Presentation
Aftersales and service business
Increase revenue from aftersales
and services through better use
of potential from globally
growing installed base
of 1.2 million trucks
Multi-brand strategy
With LMH, STILL, and
Baoli, as 3 global
brands with welldefined global roles and
3 local brands Voltas,
Fenwick, OM STILL
Global platform /
module strategy
Further expand global product
portfolio; introduce new products to cover
additional markets and segments; establish
integrated platforms and module concepts
15
AGENDA
1 Company presentation
2 Update on Q3 2014
3 Margin upside potential
November 2014 | IR Presentation
16
Q1-Q3 2014: FINANCIAL HIGHLIGHTS
Continued strong performance in softer macro environment
Order intake continues to grow
– Q3: €1,142m up 9% on previous year
– Q1-Q3: €3,566m up 8% compared to 2013
– In Q3, overall unit growth above market driven
by Western Europe, Eastern Europe and China
– Order book of €806m, up 16% over year-end
2013
In Q3, revenue grows in all business areas
– Q3: €1,139m up 5% on previous year
– Q1-Q3: €3,372m slightly above 2013
– New business and services grow in Q3
– Book-to-bill ratio at 1x in Q3
– Further small adverse FX effects in Q3
Q1-Q3 performance further enhanced
by strong Q3 growth
Adjusted EBIT margin increases significantly
– Q3: €112m and 9.8% margin significantly
above 9.3% margin in Q3 2013
– Q1-Q3: €309m and 9.2% margin slightly above
previous year
5 November 2014 | Q1-Q3 2014 Update Call
Net income improves following refinancing
– Q3: With €58m significantly above 2013
– Q1-Q3: €119m also significantly above 2013
– Sustained interest reduction from refinancing
17
Q1-Q3 2014: KION CAPITAL MARKET HIGHLIGHTS
MDAX inclusion strengthens visibility of KION stock
MDAX member since 22 September 2014
5 November 2014 | Q1-Q3 2014 Update Call
Recent changes and
expected effects

Inclusion of KION in MDAX
became effective on
22 September 2014

Free float increases through
recent KKR and Goldman
Sachs sell-downs drive
inclusion

Positive effects on capital
market visibility and liquidity
expected
18
Q1-Q3 2014: OPERATIONAL HIGHLIGHTS
Innovations and services support ongoing growth momentum
Above market
growth in Q3
– KION unit growth in Q3 with 10.0% above world market growth of 6.4%
– KION shows double-digit growth in Western Europe, slightly below market
– KION outperforms markets in China and Eastern Europe
Leading in
innovations
– KION introduced WH-trucks with Li-ion battery earlier this year as
a first step towards technology roll-out
– KION has a long track record in fuel cell drive technology
Leading in
services
– Services show continuous growth from after-sales, used trucks and
rental business
– Steady and high-margin service revenue stream increases KION’s resilience
5 November 2014 | Q1-Q3 2014 Update Call
19
MARKET DEVELOPMENT
Global market is making steady progress
Global market order intake and growth
Global market continues steady growth path
Order Intake
(in ´000 units)
– Global orders increase by 6% in Q3 to order
volume of 260,500 units
Growth y-o-y
(in %)
20%
350
+6.4%
300
250
260
245
228
– E- and WH-trucks drive global growth and
expand at fastest pace in Q3
15%
Sustained momentum in Western Europe
200
10%
150
5%
100
– Double-digit growth continues with ongoing
recovery in core markets
– Q3 grows at high pace from previous quarter
0%
50
Diverging dynamics in emerging markets
-5%
0
Q3
Q4 Q1 Q2
2012
Q3 Q4 Q1 Q2 Q3
2013
Growth y-o-y (in %)
2014
Order intake (in ´000 units)
Note: All data is based on industrial trucks order intake in units
Source: WITS/FEM
5 November 2014 | Q1-Q3 2014 Update Call
– China: moderate growth, but at all time high
level
– Eastern Europe negatively affected by Russia,
still positive development in other countries
– South/Central America improves, Brazil with
continued weakness
20
MARKET DEVELOPMENT
Europe and China continue to drive global growth
Order intake unit growth y-o-y (in %)
North America
Eastern Europe
Q1/14
Q2/14
Q3/14
14.2%
2.3%
1.2%
Western Europe
Q1/14
Q2/14
Q3/14
10.3%
14.0%
13.7%
Q1/14
Q2/14
Q3/14
-6.9%
9.5%
5.3%
China
Q1/14
Q2/14
Q3/14
17.7%
12.6%
6.7%
South/Central America
Q1/14
Q2/14
Q3/14
-18.4%
-11.3%
3.3%
WORLD
Note: All data is based on industrial trucks order intake in units
Source: WITS/FEM
5 November 2014 | Q1-Q3 2014 Update Call
Q1/14
Q2/14
Q3/14
9.7%
8.9%
6.4%
21
MARKET DEVELOPMENT – WESTERN EUROPE
Solid upward trend
Country markets pre- and post crisis (status as at 30 Sep 2014)
Positive momentum continues
 Recovery in core markets
progressing
Indexed LTM order units (LTM Jan. 2007=100)
120
Germany
U.K.
 Replacement activity
supports solid demand levels
100
France
Further upward potential
 Germany: steady positive
trend
80
Italy
 UK: healthy demand
Spain
 France: moving sideways
60
 Italy and Spain: highest
levels in over two years,
but still long road to normality
40
20
2007
2008
2009
2010
2011
2012
2013
2014
Note: All data is based on industrial trucks order intake in units
Source: WITS/FEM
5 November 2014 | Q1-Q3 2014 Update Call
22
KION PERFORMANCE
Strong order intake development in Q3
KION global orders
Overall growth above market
(in ´000 units)
– Orders 10% above previous year in Q3
vs. market with growth of 6.4%
50
– High level of 35,300 units in Q3 2014
+10.0%
40
35.3
32.1
31.5
30
– Continued strong development in Europe & China
Positive momentum for KION in Western Europe
– Double digit growth slightly below market
20
– Healthy order activity in WH- and E-trucks
10
Solid development in emerging markets
0
– China continues to grow above market
Q3
Q4
2012
Q1
Q2
Q3
Q4
Q1
2013
Q2
2014
Q3
– Significantly above market trend in Eastern
Europe, despite headwinds from Russia
– South/Central America impacted by continued
Note: All data is based on industrial trucks order intake in units
5 November 2014 | Q1-Q3 2014 Update Call
weakness in Brazil
23
REGIONAL PERSPECTIVE
KION stays ahead of market trend in Eastern Europe and China
Regional development
Western Europe
– Market: Replacements support ongoing growth
Order intake unit growth y-o-y in %
Q1-Q3 2014
Q3 2014
– KION: Continued double digit growth trend
Market
KION
Market
KION
Eastern Europe
Western
Europe
12.6
10.4
13.7
11.5
– Market: Gains in Eastern Europe (ex Russia)
overcompensate Russian market decline
Eastern
Europe
2.4
China
South/
Central
America
– KION: Strong development, better than market
12.2
11.8
14.6
5.3
6.7
16.3
8.9
China
– Market: Moderation due to slower IC demand
– KION: Demand for WH- and E-trucks drives
growth above market
South/Central America
-9.2
-13.8
3.3
-8.3
– Market: Peripheral markets drive regional
improvement; persisting weakness in Brazil
– KION: Brazilian weakness continues to offset
gains in remaining regional markets
Note: All data is based on industrial trucks order intake in units
Source: WITS/FEM
5 November 2014 | Q1-Q3 2014 Update Call
24
LEADING IN INNOVATIONS
KION trucks with innovative drive technologies
Li-ion
Fuel cells
Add picture?



KION’s first warehouse trucks featuring Li-ion
batteries in series production
Twice the energy storage capacity of lead acid
batteries, reduction in energy costs and
increasing productivity
Scheduled roll-out throughout entire KION WHand E-truck truck portfolio
5 November 2014 | Q1-Q3 2014 Update Call

First prototypes developed in 2000

Since 2013, fleets equipped in warehouses
(e.g. at BMW, DB Schenker)

No lengthy recharging process, filled in minutes

Sufficient range for driving several hours
25
LEADING IN SERVICES
Service performance strengthens KION’s resilience
KION service revenue growth
Services show continuous growth
(Service revenues in €m and y-o-y growth in %)
7.9%
9.6%
8.5%
511
531
537
– Strong growth in after-sales from service
contracts, ad-hoc service and spare parts
– High growth rates also in used trucks and rental
business, with growing fleet at high utilization
– Increasing importance of services in emerging
markets generates new opportunities
Q1 2014
Q2 2014
Q3 2014
KION share of service revenues
(in % of total Q1-Q3 2014 revenues)
New business 53%
5 November 2014 | Q1-Q3 2014 Update Call
47% Services
– Bolt-on acquisitions driving service business
Service revenues support KION’s resilience
– Services provide continuous revenue streams,
also in uncertain macro environments
– Especially maintenance contracts generate
recurring revenues over several years
– Attractive margins of service business
26
KEY FINANCIALS Q1-Q3 2014
All main KPIs above prior year
Order intake
(in €m)
Adjusted EBIT1 and
margin (in %)
Revenues
+8.2%
+1.7%
FX effect:
€45m
3,566
3,297
9.1%
Net income
9.2%
FX effect:
€40m
3,317
3,372
+2.6%
301
309
+45.9%
119
81
Q1-Q3
2013
Q1-Q3
2014
Q1-Q3
2013
Q1-Q3
2014
Q1-Q3
2013
Q1-Q3
2014
Q1-Q3
2013
Q1-Q3
2014
1 Adjusted for one-off items and purchase price allocation
5 November 2014 | Q1-Q3 2014 Update Call
27
KEY FINANCIALS Q3 2014
Adjusted EBIT margin increases to 9.8%
Order intake
Adjusted EBIT1 and
margin (in %)
Revenues
Net income
(in €m)
+9.2%
9.3%
+5.2%
FX effect:
€6m
1,142
1,046
9.8%
FX effect:
€4m
1,082
1,139
+11.3%
112
101
>100%
58
11
Q3 2013
Q3 2014
Q3 2013
Q3 2014
Q3 2013
Q3 2014
Q3 2013
Q3 2014
1 Adjusted for one-off items and purchase price allocation
5 November 2014 | Q1-Q3 2014 Update Call
28
ORDER INTAKE
Order intake growth driven by Europe and China
KION global order intake1
Comments
(in €m)
+9.2%
1.205
1.052
1.145
1.193
1.105
1.196
1.228
1.046
1.142
– Order intake growth remains
strong in Q3, mainly in
Western Europe, Eastern
Europe and China
– Order backlog is €806m,
16% above year-end 2013
– Order backlog forms basis
for increase in new business
revenues
– Book-to-bill ratio at 1x for
Q3 2014
Q3
Q4
Q1
2012
Q2
Q3
Q4
Q1
2013
Q2
Q3
2014
1 For comparability purposes 2012 figures are adjusted for the disposal of our Hydraulics Business
5 November 2014 | Q1-Q3 2014 Update Call
29
REVENUES
Growth in new business and service revenues in Q3
Q1-Q3 2014: Revenue by product categories
(in €m)
Q3 2014: Revenue by product categories
(in €m)
+1.7%
+5.2%
Services
+8.7%
New business
-3.8%
Services
+8.5%
New business
+2.5%
3,372
1,139
11
38
3,317
31
71
Q1-Q3
2013
12
New
business
19
57
After
sales
5 November 2014 | Q1-Q3 2014 Update Call
Rental
Used &
other
Q1-Q3
2014
1,082
14
Q3 2013
New
business
After
sales
Rental
Used & Q3 2014
other
30
ADJUSTED EBIT AND EBITDA
Adjusted EBIT increase in Q3 driven by improved gross margin
Adjusted EBIT1 and margin (in %)
Comments
(in €m)
9.1%
9.2%
301
309
Q1-Q3 2013
Q1-Q3 2014
9.3%
9.8%
101
112
Q3 2013
Q3 2014
Adjusted EBITDA1 and margin (in %)
(in €m)
15.9%
16.6%
527
561
Q1-Q3 2013
Q1-Q3 2014
16.3%
17.2%
176
196
Q3 2013
Q3 2014
– Gross margin increase driven by
new business product mix and
growth in services
– Increase in fixed costs Q1-Q3
2014 driven by wage inflation,
trade fairs and cost increase
following IPO
– Adjusted EBITDA above 2013
level also driven by effects from
first time consolidation of dealers
1 Adjusted for one-off items and purchase price allocation
5 November 2014 | Q1-Q3 2014 Update Call
31
ADJUSTED EBIT TO NET INCOME
Strong underlying net income growth
1
Q3
2014
Q3
2013
Change
Q1-Q3
2014
Q1-Q3
2013
Change
Adjusted EBIT1
112
101
11.3%
309
301
2.6%
Non-recurring items (NRI)
-37
-5
<-100%
-47
-12
<-100%
KION acquisition items
-5
-7
25.4%
-24
-22
-8.0%
Reported EBIT
69
89
-22.1%
238
267
-10.9%
Net financial expenses
19
-70
>100%
-62
-182
66.1%
EBT
88
18
>100%
176
84
>100%
-30
-7
<-100%
-57
-3
<-100%
58
11
>100%
119
81
45.9%
EPS reported
€0.59
€0.12
€1.19
€1.07
EPS pro forma2
€0.58
€0.12
€1.19
€0.82
(in €m)
Taxes
Net income
Comments
– NRI impacted by
€32m impairment
of 30% stake in
Linde Hydraulics
– Financial result
improved by
€42m in Q3 due
to revaluation of
options relating to
Linde Hydraulics
– Sustainable
interest reduction
after IPO and
refinancing
1 Adjusted for one-off items and purchase price allocation
2 EPS for 2013 based on 98.9m no-par-value shares
5 November 2014 | Q1-Q3 2014 Update Call
32
FREE CASH FLOW
Cash flow from operations shows strong improvement
Q1-Q3
2014
Q1-Q3
2013
Change
445
467
-4.8%
-138
-124
-11.8%
Taxes paid
-41
-40
-4.9%
Pension payments
-16
-18
13.3%
Other
34
-35
>100%
Leasing cash flow
10
-8
>100%
CF from operating activities
294
244
20.6%
Operating capex
-87
-79
-10.3%
-123
-107
-14.7%
0
-4
>100%
14
10
43.4%
-196
-180
-8.7%
98
63
54.5%
(in €m)
EBITDA (excl. FS segment)
Change of TWC
Rental capex (net)
Acquisitions
Other
CF from investing activities
Free cash flow
Comments
– EBITDA 2014 includes negative €32m noncash effect from LHY impairment, which is
reversed in the line “Other”
– FCF improvement is driven by increase of
EBITDA from operations
– Working capital kept at tight levels with
comparable seasonal pattern
– Gradual increase in operating capex as
expected
– Increase in net rental capex driven mainly by
fleet replacements in Q1
Note: Cash flow 2013 adjusted due to reclassifications
5 November 2014 | Q1-Q3 2014 Update Call
33
NET DEBT
Leverage improves compared to previous quarter
Net debt and leverage as at 30 September 2014
Net debt development
(in €m)
1.3x1
3.0x2
700
2.038
– Group net financial debt decreases by
€56m from Q2 due to cash generation
– Leverage thereby improves compared
to previous quarter
– Increase in pension liabilities due to
interest rate changes
474
1.009
16
-161
864
Net
Procure- FS net Industrial Internal
Net
Industrial
financial
ment
financial
net
rental fleet pension net debt
debt
leases
debt
financial funding by liabilities
debt
FS
End customer leasing
– Total assets for end customer leasing
of €775m increase by €25m compared
to previous quarter (€751m)
– Funding through SALB increases
similarly by €25m to €668m compared
to previous quarter (€643m)
1 Based on LTM adjusted EBITDA of €755m
2 Industrial leverage based on €675m of LTM adjusted industrial EBITDA (excluding €80m of LTM EBITDA for FS)
5 November 2014 | Q1-Q3 2014 Update Call
34
OUTLOOK CONFIRMED
Profitable growth in 2014
Market
Global market volumes are expected to
moderately increase
– Further stabilisation in Europe
– A sustained uptrend in North America
– Growth in Asian and Eastern European markets
– Average global unit growth rate of about 4%
over the next few years
– No significant changes in the proportion of total
revenue generated by each product segment
KION
Unlock the full potential of the Western
European and emerging markets in 2014
– Slight increase in order intake and
consolidated revenue compared with 2013
– Significant year-on-year rise in adjusted EBIT
reflecting top line growth and efficiency gains
– Adjusted EBIT margin continues to increase in
line with medium term margin expansion
– Strong net income growth from higher EBIT
and reduced financial expenses, but no positive
tax one-offs
– Free cash flow to be considerably higher due
to increased EBIT and lack of one-off effects
– Higher capital expenditure than in 2013
Note: Please see disclaimer on last page regarding forward-looking statements
5 November 2014 | Q1-Q3 2014 Update Call
– Continue reduction of net debt using operating
cash flow and optimising capital structure
35
AGENDA
1 Company presentation
2 Update on Q3 2014
3 Margin upside potential
November 2014 | IR Presentation
36
FOCUS ON MARGIN IMPROVEMENT
Measures in place to drive profitability
EBIT Margins 2012 – Peer Comparison (in %)
Margin uplift 2013 and beyond
25%
Margin differentiators:
20%
– Scale and synergy benefits of KION
vs. competitors
– Local sourcing and production in
Emerging Markets
15%
KION with best in class
EBIT margin
Key margin drivers:
14.3
10%
9.01
6.2
5%
0%
Industrial
Trucks
6.2
Material
Handling
5.6
Strategic focus on
margin expansion
German Eng. European
Mid-Cap Capital Goods
KION
1
Full impact from footprint measures
2
Effective use of global scale for
production and operations
3
Leveraging global R&D and product
platform
4
Roll-out of common modules and
product platforms
Baseline of 2012
x.x
Margin Average
Margin Range
1 Figure is adjusted for the disposal of our Hydraulics Business
November 2014 | IR Presentation
KION
Source: Morgan Stanley, KION
37
1 Full impact from footprint measures
KION achieved streamlined production footprint to reduce fixed
costs and increase flexibility
Completed Consolidation of plants in Western Europe
Footprint 2013
Counterbalance
trucks
(predominantly)
–
–
–
–
–
–
–
Warehouse trucks –
–
Measures
Aschaffenburg
Hamburg
Summerville
Xiamen
Jingjiang
Indiatuba
Pune
–
–
Châtellerault
Luzzara

–
–
–
Closure of 2 sites
Transfer of Basingstoke
to Aschaffenburg
Transfer Bari to Hamburg
–
Closure of 3 sites
Transfer of Montataire to Luzzara
Transfer of Basingstoke
to Aschaffenburg, Châtellerault and
Hamburg
Transfer of Reutlingen to Hamburg
Very-narrowaisle trucks
–
Reutlingen
–
Re-arrange from 2 sites to 1 site
Components
–
–
–
–
Kahl
Cesky Krumlov
Weilbach
Geisa
–
Partial transfer of components from
Kahl to Cesky Krumlov
–
Xiamen
–
–
Heavy trucks
November 2014 | IR Presentation
Highlights
– Closure of 7 sites completed
– Remaining footprint with clear
product focus supported by
dedicated on-site R&D-teams
– Increased use of sites across
brands, especially for components
– EBIT impact of all footprint
measures  €90m
– Remaining EBIT impact relative
to 2012:
2013: ca. €12m
2014: ca. €12m
Closure of 1 site
Transfer of Merthyr Tydfill
to Xiamen and contract manufacturer
in Czech Republic
38
2 Effective use of global scale
Cost savings from global production and operations
Châtellerault, France
Products: WH
2012 Units¹: 38,114
Kahl, Germany
Products: Components
Cesky Krumlov,
Czech Republic
Products: Components
Aschaffenburg, Germany
Products: IC, E, WH
2012 Units¹: 38,145
Weilbach, Germany
Products: Components
(Foundry)
Jingjiang, China
Since: 2009
Products: IC, E, WH
2012 Units¹: 5,406
Summerville, US
Products: IC, E, WH
2012 Units¹: 869
Xiamen, China
Since: 1996
Products: IC, E, WH,
heavy IC, components
2012 Units¹:14,537
Global footprint
– KION presence in
more than 100
countries
– 14 production plants
– Integrated global
production footprint
after site closures
– Many multi-brand
plants
– Reduction of vertical
integration
Indaiatuba, Brazil
Since: 2012
Products: IC, WH
2012 Units¹: 3,506
Reutlingen, Germany
Products: VNA
warehouse trucks
2012 Units¹: 1,801
Multi-brand
Hamburg, Germany
Products: IC, E, WH,
Components3
2012 Units¹: 23,227
Geisa, Germany
Products: Components
Single-brand
R&D Sites
1 Production volume 2012 (in units).
2 Closed sites Bari and Montataire produced c. 600 and c. 7,000 units in 2012, respectively.
3 Multi-brand supplier for components.
Note: Highlighted countries with KION presence.
November 2014 | IR Presentation
Luzzara, Italy
Products: WH
2012 Units¹: 11,112
Pune, India
Since: 2011
Products: IC, E, WH
2012 Units¹: 1,857
– No capacity increase
in Western Europe
– Further expansion in
emerging markets
39
2 Effective use of global scale
European Investment Program includes a new plant in CZ
KION plant locations
Increase efficiency in core plants

Plan to invest €83m by 2021 into core plants in
Aschaffenburg (LMH) and Hamburg (STILL)

Focus is on increasing cost efficiency in
production processes and internal logistics
STILL
Hamburg
Invest in new plant in Czech Republic
LMH
Aschaffenburg
Existing core plants
New plant
Pilsen

Around €12m will be invested in setting up a low
capital intensive facility in Pilsen

Production is scheduled to start 2016, initially of
existing warehouse products

Plant will also build trucks in the value and
economy segments to supply markets in
Eastern and Southern Europe in particular
Planned operations
Note: Map shows only selected European operations of the KION Group
November 2014 | IR Presentation
40
3 Leveraging global R&D and product platform
Technology leadership and customer value
Focus of KION’s product platform
Western
Europe
Emerging
markets
Technology
leadership to
maintain market
leadership
Leverage
existing
products and
platforms
Key benefits
Leading edge
technologies
(Lithium-ion
powered trucks,
Systems &
Software)
Design to lower
total cost of
operation
(TCO)
Expand product
portfolio for
value and
economy
segments
Design to lower
production
costs

R&D: Develop once, use globally

Developed technology adapted
to local market requirements

Local sourcing, production
and R&D with lower cost base

Reduced time to market

More efficient R&D
Continuous R&D commitment combining scale of entire KION Group with local competence
November 2014 | IR Presentation
41
3 Leveraging global R&D and product platform
Continued localization and expansion of our product portfolio
Western European platform for emerging markets
– Localization of former OM WH trucks
for Voltas and Baoli
Developing our portfolio for growth markets
– Next generation of torque converter trucks
OM CLX
(Europa)
Baoli truck
(China)
Voltas CTX
(India)
IC-trucks for Brazil and India based on Baoli platform
Linde 1218
Linde 1219
STILL RC40 Asia
– New E-trucks for Asian markets
– Baoli design with localized components
in Brazil
– Key component supply from Baoli to
Voltas in India
Baoli truck
(China)
Linde 1276
Voltas truck
(India)
November 2014 | IR Presentation
Linde 1275
STILL CLX
(Brazil)
42
4 Roll-out of common modules and product platforms
Product development and launch strategy
C
A  Complete re-design of core
Module and Platform strategy
Premium
products (e.g. EVO trucks)

Expansion of technology leadership

AB and HH as key production plants
Value/Economy
B  Enhanced market penetration
A
Market and
technology
leadership
in emerging markets through local
products (e.g. China Linde truck,
2.5t STILL truck for Brazil)
B
Expansion
of addressable
markets

Key production plants in China,
Brazil and India
C  Expansion of common modules
and platforms
November 2014 | IR Presentation
43
APPENDIX
November 2014 | IR Presentation
44
Linde product launches in 2013/2014
EVO: Redesign of core IC products




Major facelift for leading
IC truck series
New engines for latest
emissions standards
Enhanced ergonomics
and safety
Reduced fuel
consumption and 40%
less emissions
New next generation reach truck




November 2014 | IR Presentation
Fundamental redesign
with module strategy
86% common parts of
cassis with STILL model
Improved performance
and cost of operations
Leading edge
ergonomics
New E-truck product line up


Last steps in relaunch
of E-truck product line
since 2012
Market leader in Etrucks
12xx series trucks to enter value segment



New product family
developed in China for
emerging markets
globally
Expanding addressable
market in value segment
Full range of IC and Etrucks
45
STILL product launches in 2013/2014
Next generation large IC trucks




New product for heavy
loads up to 8ton
Improved performance
and fuel efficiency
Compact agile design
Wide engine range
(diesel, hybrid, LPG)
Next generation reach truck


November 2014 | IR Presentation
Based on same chassis
design as similar Linde
product
Operator area / interface
defines STILL brand
characteristics
New line of torque converter trucks



Completion of IC truck
portfolio
Product for emerging
markets
Based on Chinese
platform for Linde 12xx
series
Ongoing launches for Warehouse equipment



New compact double
stacker
Next generation highlevel order picker
Modular VNA truck with
12m picking height
46
GLOBAL ECONOMY PLATFORM
Strong performance in China, leveraging in other growth markets
New products launched in China
– New 3.5t model
– Introduction of “D-one”, D-series with manual
transmission and 3m simplex mast
Increased market coverage in China
– Over 20 new dealers joined Baoli in Q1 2014
– Successful conversion of competitor dealers to
Baoli
Use for global platform
– Baoli and Voltas share modular platform of
D-series:
 Baoli with special engines to attend emission
regulations in specific markets
 Voltas with local engine for Indian market
and fluid coupling version
– D-series available in 3 different sub-models to
address local demand also in other growth
markets
Image: Baoli D-one model
November 2014 | IR Presentation
47
KION OWNERSHIP STRUCTURE
Supportive private equity shareholders and strategic partner
Weichai
Current ownership structure
Free
float
Weichai partnership
– Total investment of €1.16bn in KION and for Linde
Hydraulics KG
Treasury
shares
33.3%
0.3%
26.9%¹
KION
investment
39.5%2
– Strategic anchor shareholder in German Corporate
Governance structure – 5 of 16 Supervisory Board
seats
– Technical consolidation trigger under Chinese GAAP
– Partner and strategic supplier for hydraulic
components
Linde
Hydraulics
– Captive demand
– Put/call options for 20% Linde Hydraulics KG3
– Implied value of €116m for 30% stake
30.0%
– Range of initiatives targeted for near and mid term
70.0%
Co-operation
Linde Hydraulics KG
– Cross-supply of components (e.g. engines)
– Joint purchasing
– Shared distribution network
Increased free float after recent placement positions KION as prime candidate to enter M-DAX
1
Held through Superlift Holding S.à r.l
shares that are still held for the Board Members by KION Management Beteiligungs GmbH & Co. KG, but are no longer subject to a lock-up period and can therefore be sold
or transferred to their private accounts
3 Weichai Power Call Option: Within three months after IPO or between 27-Dec-2017 and 27-Jun-2018. LMH Put Option: Between 27-Dec-2016 and 27-Jun-2017 or between 2nd anniversary
of the completion of IPO and three months thereafter. Valuation: Valuation as per initial investment: ~€77m for 20% plus amendments.
2 Includes
November 2014 | IR Presentation
48
GLOBAL PURE PLAY MARKET LEADER FOR INDUSTRIAL
TRUCKS BENEFITING FROM ECONOMIES OF SCALE
Global pure play market leader
Scale benefits across brands and regions
2013 revenues (€m)
~2x
R&D
5,849 1
Top 5
4,495
Smaller Players
Toyota, JPN
#1
KION, GER
#2
2,290
2,008 2
Common components
Jungheinrich, GER
#3
Hyster-Yale, US
#4
Common product platforms
#
Company
Country
5
Crown
USA
6
Mitsubishi3
Japan
7
UniCarriers4
Japan
8
Kalmar
Sweden
9
Manitou
France
10
Heli
China
11
Hangcha
China
12
Komatsu
Japan
¹ Fiscal year 2013 (April-March). Conversion rate of 129.66 EUR/JPY
² Conversion rate of 1.3281 EUR/USD
Source: Company publications and Logistik Journal
November 2014 | IR Presentation
Production
• Fragmented
landscape
• Regional or
product niche
• Potential for
consolidation
3
Purchasing
IT
Adjusted for combination of Mitsubishi and Nichiyu forklift business.
of Nissan and TCM.
4 Combination
49
INTEGRATED BUSINESS MODEL WITH HIGH SERVICE
CONTRIBUTION
2013 revenue split
KION business model
New trucks 56%
Comprehensive
product
portfolio
Services 44%
Products
E-trucks
IC-trucks
WH-trucks
Heavy trucks
Very narrow
aisle trucks
2013 revenues: €4,494.6m
Service
Broad
service
offering
Systems
Finance
Repair /
maintenance
Spare parts
Stock
management
systems
Transport
and truck
control
system
Purchase
Used trucks
Automation
Fleet
management
Direct leasing
Full service
packages
Racking
systems
Short-term
rental
Used
trucks
12%
Other
7%
RFID
systems
3rd party leasing
Rental
business
22%
After
sales
59%
2013 revenues: €1,975.0m
November 2014 | IR Presentation
50
FINANCIAL SERVICES SEGMENT (1/2)
2013 sales by financing
KION’s role in rental and financing
Direct sale
51%
Indirect leasing
24%
Direct sale
–
No lease financing (unconsolidated dealers not included)
–
KION trucks financed by third party leasing provider based on framework
agreements (off-balance sheet)
–
Usually combined with full service contract by KION
–
Remarketing agreements support KION used truck business
–
For a small portion (9% of indirect leases)1 KION provides residual value
and/or default guarantees
–
KION provides sales financing to customers (on-balance sheet)
–
KION Leasing
–
(Financial Services)
–
16%
9%
–
KION short-term
rental
Usually combined with full service contract
Higher customer retention due to long-term leasing relationship
Drives used-truck business
–
Leasing activities bundled in new Financial Services Segment
–
KION short-term rental fleet for customer peak needs
–
Part of KION’s industrial segments Linde and STILL
–
Financial Services segment provides intragroup financing for trucks
–
Predominantly on-balance sheet
– KION’s Financial Services segment provides sales financing for KION’s customers and bundles financing for KION’s
short-term rental fleet
1
Unit based.
November 2014 | IR Presentation
51
FINANCIAL SERVICES SEGMENT (2/2)
Overview
End customer
long-term
leasing
LMH / STILL
short-term rental
Comments
Financing of longterm leasing
Refinancing
(single steps)
(external)
Financing of shortterm rental fleet
Financial
Services
(SALB¹ leases)
Third
Party
47%
Total units: 149,801 (Dec-2013)
Leasing
partner
– Financing short-term rental fleet
– 47% of portfolio relates to direct long-term
leasing business with third parties and
typical contract duration of 4 to 5 years
– High share of SALB-subleases reduce
capital employed in leasing business
Key leasing partners
Leasing partner
Internal
53%
– 2 key activities
– Providing sales financing to customers
Financing
(internal)
Portfolio by customers’ counterparty
Financial debt
– Financial Services segment established in
2012 to centralize all leasing activities
Leasing facility (€m)
SocGen
223
IKB
190
DLL
215
Deutsche Leasing
146
– Over 40 leasing partners provide financing
for SALB-subleases with available leasing
facilities of over.€1bn
– Stable used trucks margin through the
cycle
– Low customer default rates across
Financial Services portfolio
– Refinancing costs expected to be lower in
the mid-term due to separation of Financial
Services and improved KION credit profile
providing better access to capital markets
– Financial Services segment supports sales of industrial business and centrally
manages leasing exposure
1
SALB stands for “sale and lease back”.
November 2014 | IR Presentation
52
KEY FINANCIAL FIGURES BY QUARTER
Order intake1
Revenue1
(in €m)
1.0521.046
Q3 Q3
2012 2013
(in €m)
1.2051.193
1.145 1.196
1.228
1.105
1.046 1.142
1.0891.082
Q4 Q4
2012 2013
Q1 Q1
2013 2014
Q2 Q2
2013 2014
Q3 Q3
2013 2014
Q3 Q3
2012 2013
9.4% 9.6%
9.3% 9.8%
107,6109,5
111,8
100,5
Q2 Q2
2013 2014
Q3 Q3
2013 2014
1.2521.178
Q4 Q4
2012 2013
1.085 1.089
1.149 1.144
1.0821.139
Q1 Q1
2013 2014
Q2 Q2
2013 2014
Q3 Q3
2013 2014
Adjusted EBIT1,2 and margin (in %)
(in €m)
9.1% 9.3%
99,7 100,5
Q3 Q3
2012 2013
9.3% 9.8%
116,4115,6
Q4 Q4
2012 2013
8.5% 8.0%
92,8 87,4
Q1 Q1
2013 2014
1 For comparability purposes 2012 figures are adjusted for the disposal of our Hydraulics Business
2 Adjusted for one-off items and purchase price allocation
5 November 2014 | Q1-Q3 2014 Update Call
53
FINANCIAL CALENDAR
Date
Event
2 December 2014
Capital Markets Day
12 February 2015
Publication of preliminary results on the fiscal year 2014 (FY 2014)
19 March 2015
Financial statements press conference
Publication of 2014 annual report (FY 2014)
7 May 2015
Interim report for the period ended 31 March 2015 (Q1 2015)
12 May 2015
Annual General Meeting
6 August 2015
Interim report for the period ended 30 June 2015 (Q2 2015)
5 November 2015
Interim report for the period ended 30 September 2015 (Q3 2015)
Subject to change without notice
5 November 2014 | Q1-Q3 2014 Update Call
54
DISCLAIMER
This document has been prepared by KION GROUP AG (the “Company”) solely for informational purposes. For the purposes of this notice, the presentation that follows
shall mean and include the slides that follow, the oral presentation of the slides by the Company or any person on behalf of the Company, any question-and-answer
session that follows the oral presentation, hard copies of this document and any materials distributed at, or in connection with the presentation (collectively, the
“Presentation”). By attending the conference call at which the Presentation is made, or by reading the Presentation, you will be deemed to have (i) agreed to all of the
following restrictions and made the following undertakings, and (ii) acknowledged that you understand the legal and regulatory sanctions attached to the misuse,
disclosure or improper circulation of the Presentation.
The Presentation is private and confidential and may not be reproduced, redistributed or disclosed in any way in whole or in part to any other person without the prior
written consent of the Company.
None of the Company, the companies in the Company’s group or any of their respective directors, officers, employees, agents or any other person shall have any
liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of the Presentation or its contents or otherwise arising in connection with
the Presentation. The information and opinions contained in this Presentation do not purport to be comprehensive, are provided as at the date of the document and are
subject to change without notice. The Company is not under any obligation to update or keep current the information contained in the Presentation.
The Presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue, or the solicitation of an offer to purchase, subscribe to or
acquire, securities of the Company, its affiliates or KION Finance S.A. or an inducement to enter into investment activity in the United States. No part of this
Presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.
To the extent available, the industry, market and competitive position data contained in this Presentation come from official or third party sources. Third party industry
publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee
of the accuracy or completeness of such data. While the Company believes that each of these publications, studies and surveys has been prepared by a reputable
source, the Company has not independently verified the data contained therein. In addition, certain of the industry, market and competitive position data contained in
this Presentation come from the Company's own internal research and estimates based on the knowledge and experience of the Company's management in the market
in which the Company operates. While the Company believes that such research and estimates are reasonable and reliable, they, and their underlying methodology
and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change without notice. Accordingly, undue
reliance should not be placed on any of the industry, market or competitive position data contained in this Presentation.
Statements in the Presentation, including those regarding the possible or assumed future or other performance of the Company or its group or its industry or other trend
projections, constitute forward-looking statements. These statements reflect the Company’s current knowledge and its expectations and projections about future events
and may be identified by the context of such statements or words such as “anticipate”, “believe”, “expect”, “intend”, “project” and “target”. By their nature, forwardlooking statements involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will
occur in the future whether or not outside the control of the Company. Such factors may cause actual results, performance or developments to differ materially from
those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will prove to have been
correct. They speak only as at the date of the Presentation and the Company undertakes no obligation to update these forward-looking statements.
In general prior year figures are adjusted according to IAS 19R. The addition of the totals presented may result in rounding differences.
November 2014 | IR Presentation
55