Carel Industries

Investor Presentation • Sep 7, 2018

CAREL INDUSTRIES S.p.A. 1H Results 2018

This document and all of its contents are property of CAREL. All unauthorised use, reproduction or distribution of this document or the information contained in it, by anyone other than CAREL, is severely forbidden.

7 th September 2018

Disclaimer

This document has been prepared by Carel Industries S.p.A. ("Carel" or the "Company"), for information purposes only, exclusively with the aim of assisting you to understand and assess the activities of Carel. The information contained in this presentation does not purport to be comprehensive and may not have been independently verified by any independent third party.

Statements contained in this presentation, particularly regarding any possible or assumed future performance of the Carel Group, are or may be forward-looking statements based on Carel's current expectations and projections about future events.

Such forward-looking statements are subject to risks and uncertainties, the non-occurrence or occurrence of which could cause the actual results, including the financial condition and profitability of Carel to differ materially from, or be more negative than, those expressed or implied by such forward-looking statements, due to any number of several factors, many of which are beyond the ability of Carel to control or estimate precisely. Consequently, Carel and its management can give no assurance regarding the future accuracy of the estimates of future performance set forth in this document or the actual occurrence of the predicted developments.

The data and information contained in this document are subject to variations and integrations. Although Carel reserves the right to make such variations and integrations when it deems necessary or appropriate, Carel assumes no affirmative disclosure obligation to make such variations and integration, except to the extent required by law.

Carel does not undertake any obligation to publicly release any updates or revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation.

Any reference to past performance of the Carel Group shall not be taken as an indication of future performance.

In addition, this presentation includes certain ''Adjusted'' financial and operating indicators and other measures, which have been adjusted to reflect extraordinary events, nonrecurring transactions and activities which are not directly related to the Group's ordinary business.

Such "Adjusted" information has been included to allow a better comparison of financial information across the periods; however, it should be noted that such information is not recognized as measures of financial performance or liquidity under IFRS and/or do not constitute an indication of the historical performance of the Company or the Group. Therefore, investors should not place undue reliance on such data and information.

This presentation does not constitute a recommendation regarding the securities of the Company.

This document does not constitute or form part of any offer or invitation to purchase or subscribe any shares issued by the Company and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

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By attending this presentation, you agree to be bound by the foregoing terms.

1. Overview Highlights

Leading provider of advanced control solutions for HVAC/R

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Note: 1) avg. 2015A-17A; 2) Value Added Resellers

Note: financial data refer to consolidated accounts of CAREL Industries S.p.a. 2015-2017 IFRS. Comparability might be affected by change in consolidation perimeter

We operate in attractive niches across a wide range of end-markets…

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Source: Company information as of Mar-18

…through a one-stop-shop portfolio of components and platforms

Source: Company information as of Mar-18 Note: 1) developed with partners

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Long track record of profitable organic growth

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Well-articulated strategies to continue the growth track record

• Consolidation of HVAC market leadership
• Growth in Refrigeration driven by technology leadership
• Upselling and cross-selling
• Global penetration
• Connectivity, IoT and AI capabilities already developed
• Advanced monitoring and optimization services to end customers to represent one of CAREL's organic growth drivers
• Maintain innovation leadership
• Deliver strong profitability
• Invest in 2018/19 in capacity globally and in Industry 4.0, with labor efficiency benefits in future years
• Develop talent
• Disciplined bolt-on M&A activity focused on complementing corebusiness in Europe, on expanding in US and APAC and on adjacent capabilities, leveraging on solid balance sheet

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CAREL general strategy for 2018-20 will be oriented to the research for new innovative technological solutions with a major focus on energy saving, widening high-efficiency solutions offer and geographical expansion

Source: Company information as of Mar-18

1H 2018 Results

Main achievements

1H 2018 - Overview

The positive trend in revenue +9.1% (+12.1% net of FX impact), together with an increased adjusted profitability, already reported in the first quarter of the year, continues, consolidating the leadership of the Group in HVAC sector and strengthening its role in refrigeration market.

Carel's footprint expansion project is on track: strong increase in capex (+100%) will continue in the next 18 months. The Group expects to cumulatively invest additional ~20m€ (compared to the historical average) in 2018-2019.

The Group is strengthening its presence in new markets (between June and August Carel opened two new branches in Maghreb and Singapore and acquired 100% of Carel Japan).

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1H 2018 - Continuous growth in performance and efficiency

m€	1H 2017	1H 2018	Δ%
Revenue	127.3	138.8	9.1%
Revenue FX Adj.(1)	127.3	142.7	12.1%
EBITDA	26.4	24.2	-8.4%
EBITDA Adj.(2)	26.4	29.2	10.6%
EBITDA adj./Revenue	20.7%	21.0%
Net Profit	16.9	15.6	-7.6%
Net Profit Adj.(2)	16.9	19.3	14.3%
Capex	3.6	7.2	100.0%

• Revenue +9.1% (+12.1% Adj): The growth in revenue (which would have been +12.1% net of FX impact) derived from both the HVAC and Refrigeration markets, confirming the good balance of Carel's business portfolio.
• EBITDA adj +10.6%: The significant performance reported at EBITDA level (net of IPO Costs/FX) stemmed mainly from organic growth and benefitted also from the consolidation of Alfaco (from June 2017).
• Net Profit adj. +14.3%: The bottom line is positively impacted by the operating results together with a lower tax-rate
• Capex +100%: Strong increase in Capex linked mainly to further plant development in Italy, Croatia, US and China.

(1)Net of FX impact (2)Net of IPO non-recurring costs

1H 2018 – Revenue breakdowns

• Net of FX impact, revenue grew in all the geographic areas, excluding South APAC, thanks mainly to cross-selling and up-selling for the pursuit of energy efficiency and sustainability.

• HVAC sector +10.6%*: Confirming Carel's leading role in its reference business niches;
• Refrigeration market +18.7%*: Pushing on innovation and focusing on end customers to exploit a fast growing market. 13

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(*)Net of FX impact

From EBITDA to Net Profit

K€	1H '17	1H '18	Δ%
EBITDA	26,377	24,165	-8.4%
D&A	-3,894	-4,080
Impairment	-9	-96
EBIT	22,475	19,990	-11.1%
Financial (charges)/income	227	66
FX gains/losses	-185	-418
Companies cons with e.m.	-117	15
EBT	22,400	19,653	-12.3%
Taxes	-5,484	-4,030
Minorities	-26	-27
Group net profit	16,889	15,596	-7.7%

• Higher D&A mainly linked to the Carel's footprint expansion project (Croatia, Italy, US)
• Financial income affected by the disinvestment in life insurance for approximately 35m€.
• Increase in value of an equity stake held by Alfaco
• Lower tax-rate (approx. 20%) due to lower US tax-rate, Italian tax incentive effects and absence of dividend paid by Chinese subsidiary.

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1H 2018 – (NFP)/Cash Bridge

• Positive FCF generation: thanks to operating results, easily covering NWC increase and a significant growth in capex.

• NWC +8.5m€ due to higher inventory level, linked mainly to Carel's purchase policy (aiming at coping with current global shortage in electronic material) and to footprint expansion project.

• Strong increase in Capex (+100%) compared to last year, devoted to footprint expansion project.

• 30m€ extraordinary dividend. (*Rolling last 12 months 15

Closing Remarks

We expect the growth experienced in revenue in the first half of the year to be maintained also in the second half.

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Annexes

Shareholding structure and Corporate Governance

Free float

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The controlling Shareholders own approximately 60% of Carel Share Capital (36,17% Luigi Rossi Luciani S.a.p.a and 23.58% Luigni Nalini S.a.p.a.) with a lock-up period of 180 days from the IPO.

40.25% of Carel Share Capital is owned by other Shareholders.

Two Shareholders' agreements exists:

• One among the Shareholders of Luigi Rossi Luciani S.a.p.a
• Shareholders' Agreement - One between Luigi Rossi Luciani S.a.p.a and Luigni Nalini S.a.p.a., expiring June 2021, governing the appointment of Carel's BoDs and Board of statutory auditors.

LSS

A loyalty Shareholders scheme were introduced concomitantly with the IPO.

Loyalty Shares Scheme

Following this scheme, the controlling Shareholders already owns double-voting shares.

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Income statement and Balance Sheet

Income statement Balance sheet

K€	1H_2017	1H_2018	var %
Revenues	127,267	138,793	9.1%
Other Revenues	637	766	20.3%
Opex	(101,528)	(115,395)	13.7%
Opex Adj	(101,528)	(110,375)	8.7%
EBITDA	26,377	24,165	-8.4%
EBITDA ADJ	26,377	29,185	10.6%
D&A	(3,902)	(4,175)	7.0%
EBIT	22,475	19,990	-11.1%
EBT	22,400	19,653	-12.3%
Taxes	(5,485)	(4,030)	-26.5%
Net Profit	16,915	15,623	-7.6%

K€	FY_2017	1H_2018	var %
FIXED ASSETS	37,411	40,646	8.6%
WORKING CAPITAL	46,353	53,471	15.4%
TFR	(5,687)	(5,610)	-1.4%
NET CAPITAL INVESTED	78,077	88,507	13.4%
EQUITY	118,316	103,737	-12.3%
NET FINANCIAL POSITION	(40,239)	(15,229)	-62.2%
TOTAL	78,077	88,507	13.4%

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"Performance shares" plan

On the 7th of September the CAREL's Shareholders meeting approved an incentive plan called "Performance shares" plan

Mechanism

• A certain amount of CAREL's shares will be distributed to the beneficiaries upon the achievement of pre-set targets (EBITDAAdjusted and Cash Conversion Rate)

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• Three vesting period 2018-2020, 2019-2021, 2020-2022.

Company profile

Leading provider of advanced energy efficient control solutions

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¹ High-tech leader in attractive niches of the HVAC/R industry

Source: Company information as of Mar-18, BSRIA (Mar-17)

Note: 1) 2016 market shares calculated on # of units based on BSRIA market data and management elaborations; 2) close control units for data centers in US, UK and Italy; 3) tested by third-party laboratory compared to Topten EU benchmarks; 4) compared to average semi-hermetic

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² Attractive market growth supported by secular trends

Note: 1) Based on management elaboration on BSRIA data on Rooftop, Chillers, AHU and Datacenters applications, based on report dated Mar-2018; 2) Based on management elaboration on PlanetRetail data on Food Retail and Food Service segments

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Growth is driven by market trends and focused strategic actions… 2

wallet

digitalisation and environmental focus

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…and favoured by up-selling and cross-selling… 2

FROM PRODUCT PLATFORMS TO INTEGRATED ELECTRONIC SOLUTIONS…

…IN THE HVAC AND REFRIGERATION MARKETS

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…with High Efficiency applications driving demand 2

"... keeping global warming within 2 °C means HALVING EMISSIONS BY 2050, yet energy consumption is expected to grow 50% over the same period, meaning ENERGY EFFICIENCY MUST TRIPLE" 3

ENERGY COSTS SAVINGS IN DATACENTERS

C.40%⁴ OF DATACENTER TCO operating expense component is REPRESENTED BY ELECTRICITY

ENERGY COST SAVINGS

Refrigeration and lighting account FOR OVER 50 PERCENT OF TOTAL ENERGY USE in the average supermarket⁵

END-USERS INCREASINGLY AWARE BUT ROOM TO TAP THE MARKET

Global corporates, such as Coca-Cola and Carrefour, made CLIMATE PROTECTION A KEY COMPONENT OF THEIR BUSINESS STRATEGY, but 56% OF STORAGE REFRIGERATION MODELS NOT COMPLIANT yet ⁶

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High efficiency products are growing faster in CAREL product portfolio

Source: Company information, audited IFRS consolidated financial statements as of Dec-2017

Note: 1) Based on management elaboration on BSRIA data on Rooftop, Chillers, AHU and Datacenters applications, based on report dated Mar-2018; 2) Based on management elaboration on PlanetRetail data on Food Retail and Food Service segments; 3) Public academic research paper, 2017; 4) Public Industry White Papers, 2011; 5) Energy Star; 6) Public research from topten.eu, data as of 2017

Positioning and innovation capability hard to replicate 3

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Leadership position in HVAC OEM premium niches… 3

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Source: Management elaborations based on BSRIA data for the year 2016 (based on report dated Mar-17) Note: 1) Total other minor proprietary c.13%; 2) Total other minor proprietary c.8%

…and leading in innovation in the refrigeration market 3

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Source: Company info; Management elaborations

4 Highly efficient global operations serving locally…

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4 …diversified blue-chip customers

Well-established relationships oriented to preserve and enhance the CUSTOMER LIFE-TIME VALUE

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Source: Company information as of Mar-18; audited IFRS consolidated financials as of Dec-17

Note: 1) as % of 2017 revenue; 2) as % of 2017 revenue for each market; 3) Top 60 customers accounting for approx. 50% of total revenue for each market

⁵ Track record of profitable organic growth

Resulting in a solid balance sheet and strong value creation to shareholders

Source: Company information as of Mar-18

Note: 2015-2017 IFRS

Note: 1) Operating cash calculated as cash flow from operations - Capex; 2) Cash conversion calculated as operating cash/Adj. EBITDA

⁵ Organic growth with strong profitability

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Note: 1) R&D capitalized expenses have positive impact on Adjusted EBITDA and Operating Income calculations

Source: Company information as of Mar-18

Note: 2015-2017 IFRS

5 Focus on cash generation

In the coming years the Group foresees to double its investments in tangible assets to support its production footprint expansion, while investments in intangibles will be mainly related to R&D

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Source: Company information as of Mar-18 Note: 2015-2017 IFRS Note: 1) Related to the business growth

Global expansion, innovation and services 6 A

Pursuing additional opportunities improving services offer with IoT and advanced monitoring solutions

Cross-selling and upselling exploiting high-efficiency trends

Consolidation of leadership positions in HVAC Growth in Refrigeration

Geographical expansion through the introduction of innovative solutions in new geographies

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Pursuing external growth through disciplined bolt-on M&A 6 C

CAREL has performed detailed analyses and scouting of potential targets, thus promoting an opportunistic approach with a focus on 3 MAIN EXPANSION AREAS:

COMPLEMENTING CORE-BUSINESS

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through the acquisition of complementary products / services, competences and niche markets, and increasing its presence in European markets

GEOGRAPHICAL EXPANSION ABROAD, mainly US and APAC B

Potential selected acquisitions in NEW APPLICATIONS (e.g. industrial refrigeration, building automation, etc.)

C

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