SAF-HOLLAND SE

Investor Presentation • Nov 15, 2021

FINANCIAL RESULTS 9M 2021

ALEXANDER GEIS, CEO INKA KOLJONEN, CFO

NOVEMBER 15, 2021

AGENDA

HIGHLIGHTS 9M 2021

Alexander Geis

1

FINANCIAL PERFORMANCE

Inka Koljonen

Alexander Geis

1. Highlights 9M 2021

• Sales: strong double digit percentage growth in all regions
• Very solid aftermarket performance
• Adj. EBIT margin: volume growth and mix effects compensate material cost and freight cost inflation
• Capex ratio: due to timing issues below FY guidance; acceleration expected for Q4
• NWC ratio: ongoing high level due to supply chain tightness
• Operating free cash flow: affected by strong growth and the required NWC build up

ONGOING STRONG ORDER INTAKE LEADS TO HIGH CAPACITY UTILISATION AT LEAST UNTIL SUMMER 2022

GROUP: SUSTAINED POSITIVE SALES AND EARNINGS DEVELOPMENT

MAIN DRIVERS

• Sales strongly above 2020 level
• Market share gains in EMEA
• Americas stabilising at higher Q2 level
• APAC driven by strong OE and AM business
• Sales growth adjusted for FX effects: +33.9 per cent
• Adjusted gross profit margin improved by 10 basis points despite higher material and freight costs
• Adjusted SG&A sales ratio improved from 12.9 per cent to 10.7 per cent due to economies of scale
• Restructuring costs substantially down (9M 2021: € 1.7 mn vs. 9M 2020: € 11.7 mn)

STRONG PERFORMANCE SAFEGUARDS FULL YEAR GUIDANCE

EMEA: CONTINUING STRONG PERFORMANCE

MAIN DRIVERS

• Sales increased by 34.7 per cent to € 545 mn due to strong OE business and very solid AM business 2020 2021
• Sales growth adjusted for FX effects: +36.2 per cent
• Adjusted gross profit margin impacted by higher material and freight costs in Q3 2021
• Adjusted SG&A sales ratio improved from 13.2 per cent to 11.3 per cent due to economies of scale

EMEA REGION WELL POSITIONED TO MEET STRONG CUSTOMER DEMAND

AMERICAS: STABLE MARGIN DEVELOPMENT

MAIN DRIVERS

• Sales increased by 19.8 per cent to € 300 mn due to stronger OE truck business and solid AM business 2020 2021
• Sales increase adjusted for FX effects: +27.1 per cent
• OE trailer business in Q3 2021 accelerated further
• OE truck business in Q3 2021 impacted by order postponements
• Adjusted gross profit margin impacted by higher material and freight costs in Q3 2021
• Adjusted SG&A sales ratio improved from 11.6 per cent to 9.2 per cent due to economies of scale

AMERCIAS REGION PREPARED FOR FURTHER MARKET GROWTH IN 2022

APAC: FURTHER MARGIN IMPROVEMENT

MAIN DRIVERS

• Sales increased by 48.1 per cent driven by strong OE business and growing AM business 2020 2021
• Sales growth adjusted for FX effects: +49.1 per cent
• Strong improvement of adjusted gross profit margin
• Adjusted SG&A sales ratio improved from 16.3 per cent to 11.9 per cent due to economies of scale

APAC REGION HAS LAID THE FOUNDATION FOR FUTURE PROFITABLE GROWTH

2. Financial Performance

INVESTMENTS: DELAYED DUE TO TIMING ISSUES

• Capex ratio of 1.4 per cent after 9M 2021 not representative for the full year
• Focus of investing activities in 9M 2021:
• Efficiency-enhancing measures
  • New friction welding machine in Bessenbach
  • Fully automated stub axle machine in Bessenbach
• Optimisation of the global production footprint
  • New plant in Russia
  • Capacity expansion in the Turkish plant in Düzce
  • New fifth wheel assembly line in Mexico (for AM business North America)

CAPEX RATIO WILL CATCH UP COMPARED TO Q3 2021

CASH CONVERSION RATE: NET WORKING CAPITAL IS THE KEY DRIVER

in EUR thousands	Q3 2020	Q4 2020	Q1 2021	Q2 2021	Q3 2021
EBITDA	21,059	28,606	30,827	33,773	32,674
Change in NWC ***	29,207	24,519	-23,118	-23,043	-20,176
Other Cash and Non-Cash Items ***	6,808	7,964	1,424	1,108	-1,171
Operating cash flow *	57,074	61,089	9,133	11,838	11,327
Cash Conversion Rate in % **	271.0	213.6	29.6	35.1	34.7
Net Capex	-4,073	-8,249	-5,201	-2,940	-3,846
Operating free cash flow *	53,001	52,840	3,932	8,898	7,481

• before income tax paid

** Operating cash flow divided by EBITDA

*** Change in other provisions and pensions has been regrouped into Other Cash and Non-Cash Items. Q2 2020 to Q1 2021 figures retrospectively adjusted according to the new definition.

• Q3 2021 shows further improvement driven by better EBITDA (LTM)
• Further sequential deleveraging expected in the upcoming quarters mainly driven by better EBITDA (LTM)
• Strong gross liquidity position totalling € 359 mn (YE 2020: € 371 mn)
• Improved balance sheet structure and financial headroom provide flexibility for future growth

GOOD FINANCIAL PROFILE PROVIDES FLEXIBILITY

EBITDA* 63.2 82.1 87.0 114.3 125.9

3. Outlook

TRUCK AND TRAILER PRODUCTION 2021: WIDELY DIFFERING MARKET DEVELOPMENTS

	AND AND STATE

		EUROPE		NORTH SOUTH CHINA INDIA AMERICA AMERICA*
	Truck	Trailer	Truck	Trailer	Truck	Trailer	Truck	Trailer	Truck	Trailer
Nov 2021	+15%	+20% to +25%	+20%	+25%	+45%	+20%	-5% to -10%	-5% to -10%	+150%	+100%
Aug 2021	+25% to +30%	+20% to +25%	+45%	+45%	+45%	+20%	0% to -5%	-5% to -10%	+115%	+100%

• CHINA WITH LOWER VOLUMES • SIGNIFICANT REBOUND IN INDIA • HIGHER VOLUMES IN EUROPE, NORTH AND SOUTH AMERICA

* mainly Brazil

Financial Results 9M 2021 < 15 >

	FY 2020	FY 2021*
Sales	€ 959.5 mn	€ 1,100 mn to € 1,200 mn
Adj. EBIT margin	6.1 per cent	Around 7.5 per cent
CAPEX	2.5 per cent of sales	Around 2.5 per cent of sales

• The EBIT guidance for FY 2021 is based on the assumption that in the remainder of the year there will be no unexpected impacts from the ongoing COVID-19 pandemic on the production and supply chains.

WE ARE ON TRACK TO ACHIEVE OUR FULL YEAR TARGETS

• 1. Benefiting from the upswing in Europe, North America, Brazil and India based on leading market positions
• 2. Economies of scale safeguard strong operating performance
• 3. Strategic investments in growing markets like Russia, Turkey and Mexico
• 4. Further deleveraging expected
• 5. Overall cost pressure included in full year guidance

DATE		EVENT

23.11.2021 Berenberg – Virtual management roadshow

07.01.2022 ODDO BHF Forum

• 10.01.2022 Berenberg German Corporate Conference USA
• 18.01.2022 Kepler Cheuvreux German Corporate Conference

INVESTOR RELATIONS CONTACT

Petra Müller T: +49 (0) 6095 301 918

Michael Schickling T: +49 (0) 6095 301 617

Alexander Pöschl T: +49 (0) 6095 301 117

Klaus Breitenbach T: + 49 (0) 6095 301 565

www.safholland.com ir@safholland.de

4. Appendix

TRUCK AND TRAILER PRODUCTION 9M 2021: RECOVERY SLOWING DOWN

	$\mathbf{A}$ $\mathbf{Z}$

		EUROPE	NORTH AMERICA			SOUTH AMERICA*		CHINA		INDIA
	Truck	Trailer	Truck	Trailer	Truck	Trailer	Truck	Trailer	Truck	Trailer
9M 2021	+30%	+35%	+33%	+33%	+50%	+45%	0%	-5%	+139%	+129%
H1 2021	+47%	+35%	+60%	+34%	+115%	+68%	+20%	+15%	+168%	+81%

• SIGNIFICANT INCREASE IN INDIA • HIGHER VOLUMES IN EUROPE, NORTH AMERICA, SOUTH AMERICA AND CHINA

NOTE: Market estimates for trucks and trailers based on ACT Research, CLEAR, ANFAVEA and local sources * mainly Brazil

P&L 9M 2021: QUALITY OF EARNINGS SUBSTANTIALLY IMPROVED

in EUR thousands	9M 2021	Total Adjustments	9M 2021 adjusted*	in % of sales	9M 2020	Total Adjustments	9M 2020 adjusted*	in % of sales
Sales	924,762	–	924,762	100.0%	708,698	–	708,698	100.0%
Cost of sales	-759,384	2,185	-757,199	-81.9%	-589,694	8,504	-581,190	-82.0%
Gross profit	165,378	2,185	167,563	18.1%	119,004	8,504	127,508	18.0%
Other income	1,524	–	1,524	0.2%	1,713	-522	1,191	0.2%
Selling expenses	-43,777	5,309	-38,468	-4.2%	-44,324	6,315	-38,009	-5.4%
Administrative expenses	-46,919	655	-46,264	-5.0%	-47,139	5,040	-42,099	-5.9%
Research and development costs	-14,550	469	-14,081	-1.5%	-11,421	256	-11,165	-1.6%
Operating profit	61,656	8,618	70,274	7.6%	17,833	19,593	37,426	5.3%
Share of net profit of investments accounted for using the equity method	1,002	–	1,002	0.1%	1,110	–	1,110	0.2%
EBIT	62,658	8,618	71,276	7.7%	18,943	19,593	38,536	5.4%
Finance income	2,198	–	2,198	0.2%	1,762	–	1,762	0.2%
Finance expenses	-8,795	–	-8,795	-1.0%	-10,483	–	-10,483	-1.5%
Finance result	-6,597	–	-6,597	-0.7%	-8,721	–	-8,721	-1.2%
Result before taxes	56,061	8,618	64,679	7.0%	10,222	19,593	29,815	4.2%
Income taxes	-18,950	1,681	-17,269	-1.9%	-2,270	-5,992	-8,262	-1.2%
Tax rate (%)	33.8%		26.7%		22.2%		27.7%
Result for the period	37,111	10,299	47,410	5.1%	7,952	13,601	21,553	3.0%

GROUP: RECONCILIATION EBIT TO ADJUSTED EBIT

in EUR thousands	9M 2021	9M 2020	Change absolute	Change in %
EBIT	62,658	18,943	43,715	230.8%
EBIT margin in %	6.8%	2.7%
Additional depreciation and amortisation of property, plant and equipment and intangible assets from PPA	6,878	7,876	-998	-12.7%
Restructuring and transactions costs	1,740	11,717	-9,977	-85.1%
Adjusted EBIT	71,276	38,536	32,740	85.0%
Adjusted EBIT margin in %	7.7%	5.4%

EMEA: RECONCILIATION EBIT TO ADJUSTED EBIT

in EUR thousands	9M 2021	9M 2020	Change absolute	Change in %
EBIT	49,535	28,823	20,712	71.9%
EBIT margin in %	9.1%	7.1%
Additional depreciation and amortisation of property, plant and equipment and intangible assets from PPA	3,433	3,478	-45	-1.3%
Restructuring and transactions costs	333	2,809	-2,476	-88.1%
Adjusted EBIT	53,301	35,110	18,191	51.8%
Adjusted EBIT margin in %	9.8%	8.7%

AMERICAS: RECONCILIATION EBIT TO ADJUSTED EBIT

in EUR thousands	9M 2021	9M 2020	Change absolute	Change in %
EBIT	13,733	2,949	10,784	365.7%
EBIT margin in %	4.6%	1.2%
Additional depreciation and amortisation of property, plant and equipment and intangible assets from PPA	1,643	1,794	-151	-8.4%
Restructuring and transactions costs	1,019	4,005	-2,986	-74.6%
Adjusted EBIT	16,395	8,748	7,647	87.4%
Adjusted EBIT margin in %	5.5%	3.5%

APAC: RECONCILIATION EBIT TO ADJUSTED EBIT

in EUR thousands	9M 2021	9M 2020	Change absolute	Change in %
EBIT	-610	-12,829	12,219	–
EBIT margin in %	-0.8%	-23.8%
Additional depreciation and amortisation of property, plant and equipment and intangible assets from PPA	1,802	2,604	-802	-30.8%
Restructuring and transactions costs	388	4,903	-4,515	-92.1%
Adjusted EBIT	1,580	-5,322	6,902	–
Adjusted EBIT margin in %	2.0%	-9.9%

D&A RATIO: FURTHER LEVER TO IMPROVE ADJ. EBIT MARGIN

• Investments in plant, property, equipment and intangible assets reached 1.4 per cent of Group sales in 9M 2021 (FY 2021 guidance: around 2.5 per cent of Group sales)
• Focus of investments: further automation of production processes at the Bessenbach location, set up of new production location in Russia and post-contractual payments for the Yangzhou plant
• Close monitoring of the investment approval process to streamline capital allocation
• Depreciation & Amortisation ratio (excl. PPA, impairment of goodwill and R&D projects) has peaked in Q2 2020

ADJ. EBITDA MARGIN

CURRENT FINANCING STRUCTURE

Product	Amount € mn	Maturity date
Loan RMB	9.0	06/2022
Promissory note loan old (7 years)	5.0	11/2022
Promissory note loan new (3 years)	141.0	03/2023
Promissory note loan new (3.5 years)	20.0	09/2023
Revolving credit facility***	200.0	10/2024
Promissory note loan new (5 years)	69.0	03/2025
Loan	5.0	09/2025
Promissory note loan old (10 years)	9.0	10/2025
Non-current loan	10.0	03/2026
Non-current loan	35.0	06/2026
Promissory note loan new (7 years)	15.0	03/2027
Promissory note loan new (10 years)	5.0	03/2030

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