Kongsberg Automotive Asa · OSL:KOA
Kongsberg Automotive Asa — Investor Day (2015)
153 slides from Kongsberg Automotive Asa's investor day presentation, 2015
Slide 1: Kongsberg Automotive Capital Markets Day 2015
Kongsberg Automotive Capital Markets Day | 2015 1
Slide 2: Agenda
Agenda 09:00 Strategy and roadmap going forward 09:30 Automotive market outlook 09:45 Efficient powertrains in the Light Vehicle segment 10:15 Efficient powertrains trends in the Commercial Vehicle segment 10:45 Break 11:00 Growing within the Seat Comfort segment 11:30 Advanced Fluid Handling 12:00
Slide 3: Transition towards a more focused KA
Transition towards a more focused KA Hans Peter Havdal, President & CEO Enhancing the driving experience 3
Slide 4: Strategy and roadmap going forward
Strategy and roadmap going forward • Strategic review of all segments and products concluded with decision to focus on 3 key areas Focus on core – Seat Comfort products to build – Efficient Powertrains sustainable growth – Advanced Fluid Handling • Directing R&D spend and investments to high-growth
Slide 5: Transition toward a more focused KA
Transition toward a more focused KA Why ▸ OEM customers demanding more advanced products to meet customer expectations & new legislation ▸ Increased focus on end user experience; safety, comfort, connectivity & sustainability ▸ KA has high share of conventional products with modest growth potential
Slide 6: Our Automotive environment – key trends
Our Automotive environment – key trends KA focus SAFETY EFFICIENCY COMFORT CONNECTIVITY AUTONOMOUS DRIVING ▸ OEMs are putting significant effort in developing more sophisticated vehicles ▸ Vehicle content value is increasing; but projects also getting more complex with more software and electronics
Slide 7: Focusing on growth platforms
Focusing on 3 growth platforms Advanced Fluid Seat Comfort Efficient Powertrains Handling Interior Driveline Driver Control Fluid Transfer 33% of revenues 24% of revenues 22% of revenues 21% of revenues PRODUCTS PRODUCTS PRODUCTS PRODUCTS • Seat climate systems • Shift by Wire systems • AMT systems
Slide 8: Focus on growth platforms to regain momentum
Focus on growth platforms to regain momentum Estimated sales (EURm) ▸ Growth platforms expected to increase in revenue share from 30% to above 40% next 5 years CAGR – R&D spending and capex will be ~10%* focused on growth platforms ▸ Conventional products are still key in next 5 year period CAGR – S
Slide 9: Growth platforms: Seat comfort
Growth platforms Growth platforms: Seat comfort ▸ Increased fitment rate in all segments Estimated sales (EURm) within seat comfort 300 ▸ Comfort value per vehicle is increasing 250 ▸ KA offers unique product range & integration expertise CAGR ~10%* ▸ Wide modular product offering from A- to 200 S-c
Slide 10: Growth platforms: Efficient powertrains
Growth platforms Growth platforms: Efficient powertrains ▸ Strong trend towards electronically Estimated sales (EURm) controlled transmissions in cars & trucks 90 ▸ KA entering AMT segment to match global market expansion 80 ▸ KA bringing innovations in Shift-by-Wire 70 & Power Electronics 60 ▸ Valu
Slide 11: Well positioned to take part in AMT growth
Growth platforms Well positioned to take part in AMT growth Estimated sales in AMT (EURm) ▸ Strong positions with leading 160 European truck producers generating opportunities 140 – High customer credibility provides basis Majority of AMT for taking part of AMT technology growth expected transit 120
Slide 12: Growing importance of Hybrid/EV
Growth platforms Growing importance of Hybrid/EV ▸ The EU’s goal for average CO2 emissions World electrification forecast is 95 grams per kilometer 14% – Electrification is key in order to reach target 12% ▸ Strong growth in world electrification forecasted from 2015 10% ▸ Wide range of vehicles req
Slide 13: Growth platforms: Advanced Fluid Handling
Growth platforms Growth platforms: Advanced Fluid Handling ▸ Engine downsizing & turbo charging Estimated sales (EURm) driving up engine temperatures 250 ▸ KA offering unique high temperature products ▸ KA patented quick connectors reducing 200 weight, complexity & assembly time CAGR ~7%* 150 EURm 1
Slide 14: Strategic review of all conventional products
Conventional products Strategic review of all conventional products ► Conventional products remain important Estimated sales (EURm) in terms of scale and cash flow to fund further growth - Focus on growth opportunities in emerging markets 900 Thousands - Pursue attractive niches 800 CAGR ► Long-term
Slide 15: Divestment of LDC business unit
Conventional products Divestment of LDC business unit LDC customer Base ► KA considers divestment of Light Duty Cable business Selected Auto ─ LDC represents ~10% of group sales with high- OEMs teen margins and about 1 600 employees ─ Highly attractive & diversified blue chip customer base with long
Slide 16: Selective growth opportunities for conventional products will be pursued
Conventional products Selective growth opportunities for conventional products will be pursued Estimated sales of MT products in Emerging Markets(EURm) ► Promote manual transmission (MT) products in emerging markets 90 80 ► Focus on fast growing geographies ─ Capturing opportunities with limited cap
Slide 17: Financial targets and outlook
FINANCIAL TARGETS AND OUTLOOK 17
Slide 18: Update of 2015 Financials
Update of 2015 Financials KEY FACTORS IMPACTING 2015 ▸ Higher R&D activity to support future growth opportunities ▸ Market head wind in Brazil and China, CV market down 30% ▸ Higher program launch cost within Driveline CMD 2014 LTM Q3-2015 In line with 2014 Revenue 1 011 m€ (979.1 m€) ROCE 13% in 20
Slide 19: Growth is a key element to strengthen ROCE
Growth is a key element to strengthen ROCE ▸ KA has delivered solid operational improvements ▸ Gross Profit improved by 6% since 2010 – Reduction of manufacturing footprint from 41 to 33 plants – Annual continuous improvement/Lean activities in all plants – Purchase cost improvements of about 2% ann
Slide 20: Converting R&D to new business
Converting R&D to new business LTM new business wins R&D spending R&D of sales EURm 24% 8% 80 2014 YTD 2015 7% 70 18% 6% 60 Normalized R&D spending 14% 5% 50 13% 4% 40 8% 3% 30 4% 2% 20 1% 10 ADVANCED SEAT EFFICIENT 0% 0 FLUID COMFORT POWERTRAINS 2011 2012 2013 2014 2015 2016 HANDLING R&D R&D of sal
Slide 21: Securing a robust platform with medium term dividend potential
Securing a robust platform with medium term dividend potential Dividend Policy update: ▸ Kongsberg Automotive shall create good value for its shareholders, employees and society ▸ Returns to shareholders will be a combination of changes in share price and dividends ▸ The Board of Directors’ intentio
Slide 22: Standing by our long term targets
Standing by our long term targets KPI Targets Comments Organic ~10% CAGR (2015-2020) on growth platforms 3 – 5% annually growth ~2% CAGR (2015-2020) on conventional products ROCE > 13% Ambition to deliver above 13 % ROCE • Continue deleveraging to increase financial NIBD/ robustness < 1.5 EBITDA • W
Slide 23: Market Outlook
Market Outlook Philippe Toth, SVP Business Development and Investor Relations 23
Slide 24: Market drivers
Market drivers ▸ Regional demand – Production moving to the regions where the demand is ▸ OEMs platform strategy ▸ Regulations – Efficient powertrain – Electrification and hybridization push ▸ Market requirements and expectations – Consumer focus on comfort and luxury features 24
Slide 25: Group exposure by end-markets & regions
Group exposure by end-markets & regions 60% 50% ▸ CV segment is mainly exposed toward 40% European underlying Asia growth 30% SA NA ▸ LDV segment is fairly 20% EU balanced between North America and 10% Europe 0% Commercial Vehicles Light Duty Vehicles Non Auto Off-Highway/RV ▸ Off-highway and Recrea
Slide 26: GDP growth – in large economies
GDP growth – in large economies 10,0% ▸ World GDP growth stable around 2.5 to 8,0% 2.7% 6,0% ▸ Eurozone steady improvement 4,0% ▸ North America stable, 2,0% some improvement 0,0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ▸ Slow down in China a -2,0% new reality EU US China Source: IMF World
Slide 27: Market outlook - Passenger vehicles
MARKET OUTLOOK - PASSENGER VEHICLES 27
Slide 28: Triad markets LDV production
Triad markets LDV production Units In Millions Stability Recession Recovery Forecast 30 2015 2016 CAGR:15-20 25 6.1% 1.8% 1.2% 20 2.6% 4.0% 1.7% 15 10 -4.2% 0.2% -0.6% 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: IHS Europe North Ame
Slide 29: Emerging markets LDV production
Emerging markets LDV production Units In Millions Stability Recession Recovery Forecast 35 2015 2016 CAGR:15-20 Millions 30 5.3% 1.4% 25 4.1% 20 15 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: IHS China India Brazil Russia ASEAN R
Slide 30: Market outlook – Commercial vehicles
MARKET OUTLOOK – COMMERCIAL VEHICLES 30
Slide 31: Triad markets CV production
Triad markets CV production Units In Thousands 800 Stability Recession Recovery Forecast 2015 2016 CAGR:15-20 700 5.9% 600 5.7% -7% 500 1.7% 10.3% 400 4.3% 4.7% 300 1.3% 4.2% 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 EU 27 North Ame
Slide 32: Emerging markets CV production
Emerging markets CV production Units In Thousands 1.400 Stability Recession Recovery Forecast 2015 2016 CAGR:15-20 1.200 12.2% 1.000 800 12.6% 600 -30% 5.4% 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 South America China India Russia
Slide 33: New business wins
NEW BUSINESS WINS 33
Slide 34: Regional business awards last twelve months
Regional business awards last twelve months 49% 36% 14% 321 MEUR* LTM 1% Global * Expected per annum value ‣ Continue trend toward booking more business in BRIC than current revenue exposure ‣ ~47% new business booked within growth platforms 34
Slide 35: KA Top Customers
ace Uy x“ ‘Gan NY ye ay pe a, x ty i} 44 id Z P te 7. : a’ YW) ja Lu = O pal 2) a) O ou 2) = < %
Slide 36: Average volume per platform rising further
Average volume per platform rising further Source: Roland Berger & IHS KA Global footprint and technology leadership will support OEM platform 36 strategy 36
Slide 37: Regulations
/ AS KONGSBERG = ae bere — = Ls WAV AN AY he a K— REGULATIONS = \\\\\ . i @\
Slide 38: Emissions regulations are tightening world wide
Emissions regulations are tightening world wide Commercial Vehicle ▸ Toxic gas emissions regulated by EURO and EPA standards (CV shown) ▸ VW issues will spur changes in control methods ▸ High engine cost and requirements for low sulphur content is main delay factor for implementing in emerging marke
Slide 39: CO2 emissions fleet reduction targets
CO2 emissions fleet reduction targets g/km 240 Legal requirements EU ▸ Green-House-Gas emission regulations 220 under discussions for new test regime that can compare to real life use as Legal requirements China 200 discrepancy between tests methods and real life 180 160 ▸ Discussions have started o
Slide 40: Lowering emissions & increasing automation
Lowering emissions & increasing automation Increased Turbo Fitment (PV) Increased AMT Gearboxes share (CV) 60 % 100% 90% 50 % 80% 70% 40 % 60% 30 % 50% 40% 20 % 30% 20% 10 % 10% 0% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Europe AMT/AT North A
Slide 41: New powertrain solutions will be required
New powertrain solutions will be required ▸ World electrification 14% production estimated to 12% World Electrification forecast grow strongly from 2015 10% ▸ Europe & China will head 8% the growth due to emission 6% and local pollution legislation 4% 2% ▸ Electrification costs will be on-par with I
Slide 42: Market requirements and expectations
Market REQUIREMENTS AND EXPECTATIONS 42
Slide 43: Increasing consumers expectation
Increasing consumers expectation Accumulated growth ▸ Consumers want higher comfort 200% and advanced features 180% 160% – Premium car segment and SUV’s 140% grow more than LV market 120% 100% ▸ Interior Systems is well exposed to 80% the seating comfort segment 60% 40% 20% ▸ Driveline is well expos
Slide 44: Summary: Market outlook
Summary Market outlook 105 Light Duty Vehicles Millions 100 ▸ Growing global production of vehicles 95 90 85 CAGR 15-20: ▸ Legislation push will drive 80 3.2% – Efficient powertrains 75 70 – Further electrification of powertrains 65 60 ▸ OEMs to increase average vehicle per platform 4.500 Thousands
Slide 45: Efficient powertrains in the Light Vehicle Segment
Efficient powertrains in the Light Vehicle Segment Ian van Duijvenboode, VP Sales & Marketing, Driveline 45
Slide 46: Driveline product lines
Driveline product lines KA growth LTM Q3 2015 sales Product lines expectations 3% ▸ By Wire technology is key growth area and key for future efficient 10% Above powertrains & autonomous market driving. ▸ Market growth of 15% CAGR 235 42% MEUR 45% ▸ Automatic shifters will still have significant mark
Slide 47: Efficient powertrains - a growing trend
Efficient powertrains - a growing trend ▸ We see strong future growth opportunities for our products in power electronics and shift by wire ▸ Efficient powertrains are on every OEMs agenda as future mobility will demand more power, less consumption and CO2/NOx emission reduction 47
Slide 48: Transition toward shift by wire actuation
Bringing new technology to the market TRANSITION TOWARD SHIFT BY WIRE ACTUATION 48
Slide 49: From mechanical to by wire actuation
From mechanical to by wire actuation Shift By Wire is a must for Autonomous drive vehicles Car has to go between gears by it self Auto park functions require by wire Innovative shifter designs Crystal in your gear lever Rotate between gears Electric & hybrid cars 49
Slide 50: A true shift by wire system supplier
“A true shift by wire system supplier” Conventional AT system with cable Shift By Wire system ▸ Actuator allows for shift ▸ Mechanical connection to by wire on non electronic transmission transmissions (Traditional) ▸ Design freedom ▸ Used in all markets but ▸ Autonomous cars modest growth 50
Slide 51: Shift By Wire have growth in all major regions
Shift By Wire have growth in all major regions 7 Millions 6 5 4 3 2 1 0 2014 2015 2016 2017 2018 2019 2020 2021 EU NA Asia SA ▸ Success in North America and China is key for growth ▸ EU has highest penetration today – slower growth 51
Slide 52: Shift by wire technology moving down in segment
Shift by wire technology moving down in segment Million units Mid/Entry Premium 14 Millions 12 CAGR 15% 10 8 6 4 2 0 2014 2015 2016 2017 2018 2019 2020 2021 ▸ Shift by was a premium car only technology ▸ Biggest growth comes from mid segment cars ▸ From E&D to C and now B & A segment Source: Company
Slide 53: Shift by wire technology: a pallet of designs
Shift by wire technology ”A pallet of designs to chose from” Steering Technology Joystick Rotary Buttons column Strategic direction to support 3 of 4 technologies 53
Slide 54: Technology differ between OEMs
Technology differ between OEMs ”It´s not one solution – many OEMs use more then one design” KA’s strategic direction to support all 3 technologies 54
Slide 55: Shift By Wire addressable market
Shift By Wire addressable market “Fast growth – dominated by Joystick technology” (Million €) 1000 15% CAGR MILLIONS 900 800 700 600 500 400 300 200 100 0 2014 2015 2016 2017 2018 2019 2020 2021 Joystick Steering Column Rotary Dial Buttons Unknown ▸ SBW expected to grow 15% CAGR ▸ Innovation in thes
Slide 56: How to capture the growth
How to capture the growth We bring innovation to our customers EU SBW Democar 3 exchangeable SBW concepts & Actuator (Full system) SBW Suitcase SBW & Actuator (Full system) Rotary SBW on Tablet Prototype to be in car Feb 2016 SBW Democar China SBW Shifter and actuator (Full system) NA SBW Democar 3
Slide 57: SbW – high growth segment
SbW – high growth segment MEUR 35 30 25 KA CAGR (2015-2020): 20 ~32% 15 10 5 SBW CAGR (2015- 2020): 15% 0 2015 2020 *Kongsberg Automotive estimates 57
Slide 58: Still important future for Manual transmissions
Still important future for Manual transmissions Market 2000 2014 2026 share MT 51% 47% 46% ▸ Manual transmissions remain important for KA – Growth driven from emerging Global Manual Transmissions markets 60 Millions 50 40 ▸ In 2026 over 50 million cars will 30 be produced with manual transmission 20
Slide 59: Driveline contract wins in 2014
Driveline contract wins in 2014 Automatic Cables Automatic Shifters ▸ Total business wins in 2014 worth Shift By Wire Manual Shifters annual 93M€ ▸ 69% of new business in automatic ▸ 16% in growth platform SBW 22% 31% 93 MEUR 31% 16% ▸ SBW contract with a global OEM ▸ Recently booked a breakthrough
Slide 60: Summary and key take away
Summary and key take away ▸ Shift By Wire market expected to grow with 15% CAGR – NA & Asia key growth regions – SbW moving down to mid & entry segment cars ▸ Joystick & rotary are the market leaders ▸ Manual shifters still important in emerging markets ▸ 93M€ worth of new business wins in 2014 60
Slide 61: Electrification and hybridization
ELECTRIFICATION AND HYBRIDIZATION 61
Slide 62: External market drivers
External market drivers By 2021, the EU fleet average to be achieved by all new cars is 95 grams of CO2 per kilometer Dieselgate has accelerated the electrification push ICE has reached it´s efficiency peak - electrification is the only way forward Government incentives in several countries 62
Slide 63: Product Focus of ePower
Product Focus of ePower Kongsberg will prioritize On Board Charger development Electric Vehicle Control Module High voltage (240…840 V) On-Board DC/DC Auxiliary Charger Converter Inverter M Battery 12 VDC 3~ system El. Motor Our teams of experts, develop unique knowledge about power electronics for
Slide 64: On Board Charger: a growing addressable market
On Board Charger A growing addressable market 3000 Millions 20%CAGR 2500 2000 1500 1000 500 0 2015 2016 2017 2018 2019 2020 2021 2022 3,5KW 6,6KW 10+KW ▸ On board Charger market dominated by 3,5kW technology ▸ Pure Electric vehicles (6,6 and up) still small but starts to have growth ▸ Market growth
Slide 65: KA product positioning OBC
KA product positioning OBC 3,5 kW 6,6 kW 11-20 kW Long ranger electric Primary plug-in Primary pure passenger car Hybrid vehicles electric vehicles and Truck / Buss 65
Slide 66: On Board Charger products key features
On Board Charger products key features ▸ Best in class package – easiest to fit in hybrid cars ▸ Modular HW customer applications concentrated to few 3,5 kW parts ▸ Modular SW customers and generic SW separated ▸ Scalable customizable power levels for trucks/buses ▸ Modular HW customer applications
Slide 67: Capturing growth: build relation with 3-4 target customers
Capturing growth 3 Volvo 2 VCC Ford Scania Build relation with 3-4 target customers Build relation with Start marketing 3-4 target activities in 2017 customers ▸ Win home market – 2 contracts secured in EU ▸ Expand with selected key customers ▸ Prioritizing OBC development 67
Slide 68: Key business win
Key business win 3,5 kW On Board Charger ▸ European premium OEM for a C segment car ▸ Production start in 2017 ▸ Plug-in hybrid vehicle to be produced in Europe & China ▸ Estimated Lifetime business value 40M€ 68
Slide 69: OBC – above market growth
OBC – above market growth MEUR 14 12 10 KA OBC CAGR (2015- 8 2020): ~580% 6 4 2 OBC market CAGR (2015-2020): 20% 0 2015 2020 *Kongsberg Automotive estimates 69
Slide 70: Summary and key take away
Summary and key take away ▸ Electrification is key to reach CO2 reduction targets ▸ Fast growing market for plug-in hybrids vehicles ▸ KA 3,5 kW sets a new standard in efficiency – KA has secured commercial contracts for passenger cars & busses – Growth activities ongoing to secure next customers 70
Slide 71: Efficient powertrains trends in the Commercial Vehicle segment
Efficient powertrains trends in the Commercial Vehicle segment Espen Moe – VP Driver Control 71
Slide 72: Driver Control Systems
Driver Control Systems COMMERCIAL VEHICLES OFF HIGHWAY VEHICLES Product areas: Product areas: Gear & clutch systems for manual Steering columns transmissions (MT) Electronic Power Steering Automated Manual Transmissions (AMT) Displays & Key pads Vehicle Dynamics Pedals & hand controls Markets: Marke
Slide 73: Overview of Driver Control Systems
Overview of Driver Control Systems KA growth 2015 estimated sales Product lines expectations AMT segment is expected to grow Above above the global CVP growth market 16% 6% AMT MT MT segment will decline as AMT In line 31% 240 penetration rate is increasing globally With MEUR Steering systems Market
Slide 74: Our strategy: Commercial Vehicles
Commercial Vehicles OUR STRATEGY 74
Slide 75: AMT development is a key part of our growth
AMT development is a key part of our growth ▸ AMT development is where we see strong future opportunities for KA ▸ Globally we see a rapid shift from MT to AMT in the commercial vehicle market ▸ KA has a strong position among key OEMs to take part in this growth 75
Slide 76: Technology shift within commercial vehicles
Technology shift within commercial vehicles Trends Market solutions From manual …to automated transmissions… transmissions Fuel efficiency Lower emissions Driver comfort Benefits of automated transmissions ▸ Computer operated clutch and gearing => no clutch pedal Safety ▸ Higher fuel efficiency ▸ In
Slide 77: Technology shift within commercial vehicles
Technology shift within commercial vehicles Global AMT share ▸ EU and NA leaders in 100% AMT technology 90% 80% Europe ▸ Europe and SA to stabilize 70% on high AMT level 60% North America 50% ▸ NA AMT share rapidly increase 40% South America 30% ▸ China will follow, but 20% China still significant M
Slide 78: KA ambitions in the AMT segment
KA ambitions in the AMT segment Recap from 2014 KA Targets ▸ KA target is to become a significant supplier of AMT actuator solutions to the global CV industry within the next 10 years – 1-2 major AMT business wins per year over the next 3-5 years – Market share above 10% by 2025 Market potential AMT
Slide 79: AMT– above market potential segment
AMT– above market potential segment MEUR 35 30 25 20 KA CAGR (2015-2020): ~36% 15 10 5 AMT CAGR (2015-2020): 11% 0 2015 2020 *Kongsberg Automotive estimates 79
Slide 80: Our customers position in AMT segment
Our customers position in AMT segment Key KA customers ▸ European truck OEMs are AMT leaders High ▸ Transmission OEMs like ZF (EU), Eaton (US) & Fast Gear (China) are KA customers AMT share ▸ Won significant programs in key markets ▸ Average business wins: 27M€ annual, lifetime revenue: 141M€ Low Lo
Slide 81: AMT Business overview
AMT Business overview Gear box actuation Gear shifters Gear Control Unit Lever with knob Electronic Control Unit Stalk shifter Clutch actuation Gear shift and select actuators Concentric External actuator slave cylinder 81 81
Slide 82: Strategic growth enablers AMT
Strategic growth enablers AMT Engineering expertise and strong customer relations Excellence in execution - Improved customer responsiveness - Outperforming competition with our systems Global presence & local support AMT -Utilized global footprint Product engineering expertise actuation -Strengthen
Slide 83: KA AMT achievements
KA AMT achievements ▸ Won 2 AMT projects – Launching new business in NA • Gear actuation unit • AMT Shifter ▸ KA well positioned for EU mid cycle renewal – In development with major OEM for future AMT solutions to launch 2020 ▸ Utilizing existing patents and continuously applying for more 83
Slide 84: Still significant size in the global MT market
Still significant size in the global MT market 5,0 ▸ Initiated AMT journey 4,5 for future growth 4,0 3,5 ▸ MT volumes TOTAL Millions trucks/year 3,0 stabilizing in EU & KA 2,5 to grow in Asia MT 2,0 1,5 AMT ▸ KA to benefit from a 1,0 significant aftermarket 0,5 in MT 0,0 KA will continue to grow in
Slide 85: KA ambitions in the MT segment
KA ambitions in the MT segment Market trends Asia ▸ Increasing premium truck market – Euro5 emission standard 2018-2020 ▸ Increased focus on total cost of ownership KA Targets ▸ Continue to grow within gear shift systems & clutch actuation systems in Asia COMMERCIAL VEHICLES MARKET SIZE ASIA Market
Slide 86: KA MT strategy & achievements
KA MT strategy & achievements ▸ Global presence and strong local competence in strategic markets – Significant supplier of MT gear shift systems in Asia ▸ KA has a strong position with key OEMs to take part in further growth ▸ KA Business wins within the MT segment in Asia 35% of total STRATEGIC OEM
Slide 87: Our strategy: Off Highway vehicles
Off Highway vehicles OUR STRATEGY 87
Slide 88: Market development
Market development Trends Market solutions From mechanical …to electronic controls… controls and Lower systems Emissions Electrification Driver Assistance Benefits of electronic controls and systems ▸ Increase in power & efficiency Safety ▸ Telematics ▸ Safety with vehicle management ▸ Programmable
Slide 89: Development in the Off Highway market
Development in the Off Highway market Global Off-Highway Vehicle Market ▸ US and EU electrification of 9,0 Millions vehicle systems continues 8,0 to grow 7,0 6,0 Vehicles Produced ▸ BRIC seeing a technology 5,0 change due to effect of efficiency regulations 4,0 3,0 2,0 ▸ Increased focus on safety 1,
Slide 90: KA Ambitions in Steering Systems
KA Ambitions in Steering Systems KA Targets ▸ Penetrate all of the Power Sports, Agriculture, and Construction markets with steering systems ▸ 2 - 3 platform wins per year over the next 3 years ▸ Market Share above 35% by 2025 Market Potential Globally STEERING SYSTEMS MARKET VALUE ▸ Estimated marke
Slide 91: Strategic Products, Vehicles, and Customers
Strategic Products, Vehicles, and Customers Steering Column Electronic Power Steering Electronic Power Steering System STRATEGIC OEMs ▸ Electronic Power Steering is becoming a standard on all Power Sports vehicles ▸ Electronic Power Steering is an innovative product for Agriculture with the increase
Slide 92: KA Steering System Achievements
KA Steering System Achievements ▸ Won two projects – Launching Electronic Power Steering on three platforms with a NA Power Sports OEM – Launching a global Steering Column platform with a Agriculture OEM ▸ KA is well positioned to capture the growth in all “Off-Highway” segments ▸ Currently in devel
Slide 93: Summary Driver Control Systems
Summary Driver Control Systems A strong focus on customers, innovation and AMT development Commercial vehicles ▸ AMT: – AMT market segment will grow significantly the next 5-10 years – KA has taken first step with this growth opportunity – KA aims to be a significant supplier of AMT actuation soluti
Slide 94: Thank you for your attention
THANK YOU FOR YOUR ATTENTION 94
Slide 95: Growing with Seat Comfort segment
GROWING WITH SEAT COMFORT SEGMENT Anders Nyström – EVP Interior 95
Slide 96: Interior
Interior KA growth 2015 estimated sales Product lines expectations ▸ Comfort will grow above global light vehicle production on Above segment growth & market share market growth in the seat support 17% segment 33% ▸ Light duty cables for automotive 315 MEUR business will grow in line with In line gl
Slide 97: Seat comfort at the heart of our corporate strategy
Seat comfort at the heart of our corporate strategy ▸ Seat comfort is one of three main growth platforms where we see strong future growth opportunities for KA. ▸ Our customers are spending ever more on comfort features, and smart and comfortable vehicle interiors are becoming important vehicle diff
Slide 98: Ambition, commitment & execution
Ambition, commitment & execution ▸ In 2014, we said: ▸ Since then, we have: 1. Secured business at record levels last 12 months incl. breakthrough contracts with strategic customers 2. Re-organized to a more customer-focused organization 3. Increased product development & innovation activities 98
Slide 99: Breakthrough contracts
Breakthrough contracts New business wins LTM 3Q15 Strategic Supplier Agreement for seat comfort solutions to a leading 30% Seat heat North American vehicle manufacturer worth an estimated Seat vent 50MEUR 65% 5% Seat support Two contracts for the supply 10-year agreement with a European of seat heat
Slide 100: Customer-focused front end organization
Customer-focused front end organization Creating a more customer- Customer focused & efficient front end with clear ownership of targets and mandate to Lead Program Sales act cross-functionally to drive Engineer Manager Manager business growth. Customer Director 100
Slide 101: Increased investment in R&D for future growth
Increased investment in R&D for future growth Fast track innovation Innovations into new vehicle programs • New generation pumps & valves • New seat ventilation system • Secure flawless project launches • Next generation seat heaters Investing in future growth 101
Slide 102: Trends & customer needs
Driving the growth TRENDS & CUSTOMER NEEDS 102
Slide 103: Seat comfort trends
Seat comfort trends OEM direct sourcing LIGHTER & SMALLER Less noise & less Luxury Down segment power usage trickles down segments Vehicle images used for illustration purposes only 103
Slide 104: Market growth
Market growth Global LV production growth per segment 80 CAGR= Largest growth Millions 2,8% potential for 70 comfort products 60 Premium segment shows highest 50 CAGR 40 CAGR= 2,3% 30 CAGR= 20 3,6% 10 0 Entry Mid Premium 2015 2022 104
Slide 105: Increasing fitment rates of all comfort systems
Increasing fitment rates of all comfort systems ▸ Examples of seat heat fitment rates in premium segment 2015 2020: Front: 80% Front: 90% E-Segment Rear: 40% Rear: 50% D-Segment Front: 60% Front: 70% Rear: 20% Rear: 25% C-Segment 45% 55% B-Segment 40% 50% Vehicle images used for illustration purpo
Slide 106: Increasing content per vehicle
Increasing content per vehicle Example: Multi-contour seat ▸ Premium OEMs strive and drive for high content of contour and dynamic pneumatic seat comfort features ▸ Configuration example includes – adjustable side bolsters – lumbar support – shoulder support – backrest massage and – cushion massage
Slide 107: Seat Comfort – above market potential segment
Seat Comfort – above market potential segment MEUR 300 250 200 KA CAGR (2015-2020): ~10% 150 100 50 PV CAGR (2015-2020): 3.2% 0 2015 2020 *Kongsberg Automotive estimates 107
Slide 108: Well positioned for growth
Our product strategy WELL POSITIONED FOR GROWTH 108
Slide 109: KA offers a wide range of comfort features
KA offers a wide range of comfort features Seat ventilation Massage systems Lumbar support systems Seat heat Bolster systems 109
Slide 110: Key success factors
Key success factors System integration One-stop Scalability shop Modularity 110
Slide 111: A look into the future
A look into the future Electric Vehicles Active seat & driver alert Health and Autonomous medical vehicles benefits Connectivity and upgrade options Body sensors in seat 111
Slide 112: New market segments: Panel heating
New market segments Example: Panel heating Top roll Door panel ▸ Market demand from premium Door handle/armrest OEMs for heated arm rests, door panels, foot rests and even floor mats to offer ultimate comfort ▸ Shows additional growth potential for KA based upon existing product technology. Steering
Slide 113: Being with the right customers
Maximizing the growth potential BEING WITH THE RIGHT CUSTOMERS 113
Slide 114: Premium OEMs
Premium OEMs Est. share of KA 2015 comfort ▸ Premium OEMs deliver high products revenue content & fitment rates for 3% comfort products & have strong and reliable sales. 8% ▸ KA‘s comfort products are 12% well positioned with premium OEMs today 12% ▸ Plan to capitalize further on this 14% 114
Slide 115: Selected growth with volume OEMs
Selected growth with volume OEMs ▸ Increasing seat comfort product penetration to mid & low segments (A, B & C) and vehicle price classes (Mid & Entry) ▸ Modular & scalable products support this growth by offering more standardized options for volume market ▸ KA targeting selected growth with volume
Slide 116: Well-positioned to capture growth in all major regions
Well-positioned to capture growth in all major regions NORTH AMERICA • Comfort is lagging behind EU premium cars • Catch up to achieve best seat comfort driving market demand for KA systems JAPAN • Increasing customer interest in high-end pneumatic systems EUROPE CHINA • High fitment rates & • High
Slide 117: Thank you for your attention – Questions?
Questions? THANK YOU FOR YOUR ATTENTION 117
Slide 118: Advanced Fluid Handling
ADVANCED FLUID HANDLING David Redfearn – VP S&M Fluid 118
Slide 119: Advanced Fluid Handling – Our focus & journey
Advanced Fluid Handling – Our focus & journey Business focus ▸ Growth opportunities & competitive advantages as a supplier of air handling & high performance hose products for vehicle & industrial markets Our Journey ▸ Implemented business area focus teams; Introduced advanced manufacturing processe
Slide 120: Fluid Transfer Systems - Product lines
Fluid Transfer Systems - Product lines KA growth LTM Q3 2015 sales Product lines expectations ▸ CV OEMs further adoption of 12% lightweight couplings with safety Above features should yield an above market 35% average global CV growth 211 ▸ Product development allows to MEUR grow for target segment
Slide 121: Breakthrough contracts
Breakthrough contracts New business wins Q4 2014 – Q3 2015 Secured 100% supply award for Industrial 12% 8% European Truck Manufacturer Couplings on ABC coupling range & received first award from China 34% 46% Tube Assemblies High Performance based OEM Tube assemblies €45m Industrial Business awards
Slide 122: Air handling systems - Couplings
AIR HANDLING SYSTEMS - COUPLINGS 122
Slide 123: CV Airbrake Couplings – Growth drivers
CV Airbrake Couplings – Growth drivers CV AIRBRAKE CV AIR BRAKE COUPLINGS COUPLINGS - DRIVERS - GROWTH DRIVERS QUICK SAFETY CONNECTIONS, FEATURES REDUCING ASSEMBLY TIME BUILT IN MODULAR, REDUCING COMPLEXITY GLOBAL LIGHTER LEGISLATION SAVING CO2 INCREASED DURABILITY, REDUCING EMISSIONS 123
Slide 124: Airbrake Couplings - within a high potential segment
Airbrake Couplings - within a high potential segment ▸ EU dominance continues ▸ USA product launch ~74E MEUR 68MEUR Sales ▸ Asia fitment increases Sales ▸ Increased air actuation in Truck & Bus area 2014 2015 2020 Europe South America Asia *Kongsberg Automotive estimates Well positioned to enter USA
Slide 125: Airbrake Couplings
Airbrake Couplings EU dominance, USA launch, Asia fitment rate increases 0% 9% 55% 63% 0% 5% CAGR (2015-2020): 9 % CV CAGR (2015-2020): 7.5 % 15% 21% 2015 market share 2020 market share 125
Slide 126: High performance tube assemblies
HIGH PERFORMANCE TUBE ASSEMBLIES 126
Slide 127: Fluoro-Comp
A KONGSBERG AUTOMOTIVE Fluoro-Comn A KONGSBERG AUTOMOTIVE PRODUCT 127
Slide 128: Tube Assemblies CV+PV Powertrain – Growth Drivers
Tube Assemblies CV+PV Powertrain – Growth Drivers TUBE ASSEMBLIES CV + PV POWERTRAIN - GROWTH DRIVERS BIO FUELS SAFETY ENGINE FIRE RESISTANCE DOWNSIZING CRASH RESISTANCE GLOBAL FUEL REDUCTION LEGISLATION WASTE HEAT TAILPIPE EMISSIONS VEHICLE EMISSIONS RECOVERY 128
Slide 129: Tube Assemblies Powertrain for CV & PV
Tube Assemblies Powertrain for CV & PV ▸ Fluoro-Comp global growth ~73E 69MEUR MEUR Sales Sales ▸ Increased fitment in Asia ▸ Downsizing & safety driving growth ▸ Globalization opportunity 2014 2015 2020 Fuel/Bio Fuel Turbo EGR Airbreak bulk Coolant Others *Kongsberg Automotive estimates Focus on hi
Slide 130: High Performance Tube Assemblies CV + PV
High Performance Tube Assemblies CV + PV Downsizing & Emission drives fuel line growth 8% 8% 5% 5% 0% 1% CAGR (2015-2020): 5 % CV CAGR (2015-2020): 7.5% PV CAGR (2015-2020: 3.2% 0% 0% 2015 market share 2020 market share 130
Slide 131: Industrial
& KONGSBERG AUTOMOTIVE
Slide 132: Industrial – Growth Drivers
Industrial – Growth Drivers CV AIR BRAKE INDUSTRAL COUPLINGS DRIVERS - DRIVERS - GROWTH DRIVERS PRODUCT SUPPLY CHAIN DEVELOPMENT MANAGEMENT CUSTOMER MODULAR, EXPERIENCE REDUCING COMPLEXITY LEVERAGE AUTOMOTIVE TOOLS TRAINING CUSTOMERS GLOBAL STATE OF ART EQUIPMENT FOOTPRINT 132
Slide 133: Industrial: Attractive niche growth segment
Industrial Attractive niche growth segment ▸ One Stop shop for PTFE hose ~30E MEUR 26MEUR Sales ▸ Wide segment base Sales ▸ Increased product range ▸ Globalization opportunity 2014 2015 2020 Catalogue/General Bikes, motorbikes Construction, hydralic Medical, pharma, cosmetic Food, beverages Breathin
Slide 134: Industrial
Industrial Strong growth with a broad segment portfolio & globalization 17% 25% 7% 12% 1% 8% CAGR (2015-2020): 12 % - - 2015 market share 2020 market share 134
Slide 135: Being with the right customers
BEING WITH THE RIGHT CUSTOMERS MAXIMIZING THE VALUE POTENTIAL 135
Slide 136: Selected customers
Selected customers Selected Selected Industrial customers CV customers PV Unparalleled Customer Relationships 136
Slide 137: The Right partners
Est. share of KA 2015 revenue within CV+PV The Right partners 19% 9% 8% • CV customers leading the market in USA & EU with partnerships in Asia 6% 5% • Customers value drivers such as safety 4% & durability match those of KA FTS 3% 3% • Largest Auto customer is the global 2% leader in SUV segment &
Slide 138: Thank you for your attention – Questions?
Questions? THANK YOU FOR YOUR ATTENTION 138
Slide 139: Financials – Trond Stabekk, EVP & CFO
Financials TROND STABEKK, EVP & CFO 139
Slide 140: Revenue growth still on the soft side
Revenue growth still on the soft side Revenues EUR Million ▸ Trend influenced by 981 979 993 1.005 1.011 exchange rates ▸ Underlying revenue down approx 2.5 % Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 140
Slide 141: Slightly reduced run rate on Group EBIT
Slightly reduced run rate on Group EBIT EBIT and EBIT Margin EUR Million and percent ▸ Positive improvements from productivity and reduced purchase prices 52.5 63.2 57.8 57.9 57.6 ▸ Higher cost in R&D accross the group 5,9% 5,6% 5,4% 5,0% 4,8% ▸ Some operational issues in Driveline related to Q3 14
Slide 142: EBIT improvement levers over last 4 years
EBIT improvement levers over last 4 years • Yearly contractual price • Improved gross margins through reductions • Improved productivity and • Inflation material cost • Increased R&D and project • Reduced plant fixed cost resources 142
Slide 143: Significant increase in R&D to address future growth
Significant increase in R&D to address future growth 143
Slide 144: Financial targets
FINANCIAL TARGETS AS oF 1
Slide 145: Ambition still above 13% Return on capital employed
Ambition still above 13 % Return on capital employed Return on Capital Employed (ROCE) Multiple levers for improvement Percent Revenue growth has been slower than expected – key lever to deliver improvement Improved margins in Driveline has been slower - increase in R&D has been higher than expected
Slide 146: Focus to continue reduction in gearing towards target
Focus to continue reduction in gearing towards target Need to improve cash flow through NIBD/EBITDA Times ▸ Growth in top line ▸ Improved margin ▸ Continue to manage capital side Target 146
Slide 147: Treasury
A KONGSBERG ee aa Sr
Slide 148: Current funding structure
Current funding structure ▸ Loan agreement with DnB, Danske Bank and BNP Paribas ▸ Maturity 2018 with possible extension with 1 + 1 year gives ultimate maturity 2020 ▸ Tranches in EUR (162 MEUR) and USD (172 MUSD) 148
Slide 149: Significantly reduced interest expenses
Significantly reduced interest expenses Interest expenses (LTM) 25 ▸ Interest expenses 20 reduced by 50 % over last 4 years through a MEUR 15 combination of 10 reduction in debt 5 and improved terms 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 149
Slide 150: Summary
Summary Revenue EBIT Capital employed • Need to • Continue to improve • Need to continue continue with margins in Driveline to optimize high level of • Continuous improvement usage of asset business wins & in cost base base & working launch orders • Operational gearing of capital ratio and booked ov
Slide 151: Summary: Transition towards a more focused KA
Hans Peter Havdal, President & CEO SUMMARY: TRANSITION TOWARDS A MORE FOCUSED KA 151
Slide 152: Key takeaways
Key takeaways • Strategic review of all segments and products concluded with decision to focus on 3 growth platforms Focused strategy – Seat Comfort – Efficient Powertrains – Advanced Fluid Handling • Directing R&D spend and investments to high-growth segments with unique offering Enhancing growth •
Slide 153: Thank you for your attention – Questions & Answers
THANK YOU FOR YOUR ATTENTION QUESTIONS & ANSWERS 153