Kongsberg Automotive

Investor Presentation • Nov 7, 2018

2018 Capital Markets Day Kongsberg Automotive November 7, 2018 Henning E. Jensen – President & CEO

Kongsberg Automotive Forward-Looking Statements and Non-IFRS Measures

Forward-Looking Statements

This presentation contains certain "forward-looking statements". These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forwardlooking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this presentation include statements addressing our future financial condition and operating results. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation. More detailed information about these and other factors is set forth in the 2017 Kongsberg Automotive Annual Report.

Non-IFRS Measures

Where we have used non-IFRS financial measures, reconciliations to the most comparable IFRS measure are provided, along with a disclosure on the usefulness of the non-IFRS measure, in this presentation.

Executive Summary

• ▸ We are confirming the 2017 CMD and 2018 AGM outlook for 2018 continuing to deliver substantial improvements after the second year of our improvement plan in spite of turbulent markets, world economies and delays in restructuring savings.
• ▸ KA has a robust balance sheet following our recent capital increase and refinancing.
• ▸ New business wins at record levels throughout 2018 secure our top line for the next years
• ▸ We have tripled our adj. EBIT over the last two years. We estimate that the strong adj. EBIT growth will continue in 2019 and beyond.
• ▸ Due mostly to external factors, but to a certain degree also the delays from the restructuring program, our estimated earnings are reduced compared to the 2017 CMD. We see this as a one year delay. Our estimate for 2021 EPS is NOK 1,82. With the share count from the 2017 CMD this translates into an EPS of 2.00.
• ▸ For 2018, we will deliver on an important "show me" year for KA –and we will continue to deliver substantial economic improvements for the benefit of all KA stakeholders.

Agenda

• ▸ Executive Summary
• ▸ An overview of our businesses
• ▸ General Update
• ▸ Markets
• ▸ New Business Wins
• ▸ How well positioned are we for the big automotive trends?
• ▸ Presentation of Couplings and Interior Comfort Systems business units
• ▸ Financials
• ▸ Summary and Conclusion

Kongsberg Automotive at a glance (1/2)

	Overview		Selected KPIs
▸	Headquartered in Zurich, Switzerland and listed on the Oslo stock exchange	Revenue	Adj. EBIT
▸	Top 100 global automotive supplier by sales of original equipment	(2016A / 2017A / 2018 FCST)	(2016A / 2017A / 2018 FCST)
▸	3 segments: Interior, Powertrain & Chassis, Specialty Products
	– Interior: interior comfort systems and light duty cables	€986mm / €1,057mm / €1,128mm	€28mm / €50mm / €75mm
	– Powertrain & Chassis: gearshift systems and vehicle dynamics applications
	– Specialty Products: air couplings, FTS and off-highway applications	Revenue growth / Adj. EBIT growth (2016A-2017A & 2017A-2018 FCST)	Booked business / Revenue (avg. 2016A, 2017A, 2018 FCST)
▸	We estimate that approximately one out of five LDV or HDV contains our products
▸	Limited exposure to ICE for LDV	7% / 76% & 7% / 50%	1.4x
▸	Diverse customer and end-market exposure

		Total revenue breakdown
By geography	By customer	By end-market	By channel
Other South America 2% Asia 2% 11% Europe North 52% America 32%	10% 9% Others 7% 41% 6% 6% 5% 3% 5% 4%4%	Heavy Equipment Other 3% 9% Power Sports 7% LDV 55% HDV 26%	Heavy Equipment Other 3% 8% Power Sports 7% OE LDV Aftermarket 54% 6% Total OE OE HDV 76% 22%
		Total revenue 2017A: €1,057mm

Kongsberg Automotive at a glance (2/2)

Agenda

• ▸ Executive Summary
• ▸ An overview of our businesses
• ▸ General Update
• ▸ Markets
• ▸ New Business Wins
• ▸ How well positioned are we for the big automotive trends?
• ▸ Presentation of Couplings and Interior Comfort Systems business units
• ▸ Financials
• ▸ Summary and Conclusion

General Update (1 of 4) Where are we compared to our Improvement Plan

• Two years ago, we announced a plan for the company that will improve our net results significantly. The plan was ambitious with many components.
• We are ahead on some of our initiatives and behind on others.
• ± We assumed that:
  • The, etc. overall automotive markets would perform at the levels forecasted by major industry analysts. The markets have generally performed at these levels through 2018
  • Various FX rates would remain constant. In 2018, we have been hurt somewhat by changing FX rates
  • Raw Materials would remain constant. Over the past year we have again seen steep price increases for key commodities such as Brass (Copper and Zinc), Steel, Plastic Resin
• We did not foresee "trade war" initiatives mainly between the US and China
  • Although we have been impacted by this, we are less exposed to these effects than most OEMs and other automotive suppliers. In 2019, though, we anticipate that the impact from tariff increases will grow.
• On the Principal Model, we are on schedule to have the model fully implemented by the end of 2019 so that 2020 will see the planned benefits of this structure.
• Our re-organization of our various businesses have been more beneficial than we anticipated
  • Particularly Specialty Products have benefitted from getting more entrepreneurial freedom and access to capital resulting in strong profitable growth
  • We have significantly strengthened our leadership team in the business units, functional areas, and areas of technical expertise. The benefits have started showing and we expect more benefits of this organizational quality improvement over time as not everyone has their feet fully on the ground yet. The teams are solidifying, and we see the positive signs in 2018. This is the key to the future.
• We did not plan for significant technology and operational challenges in the Interior segment due to the introduction and ramping up of a new technology in our Interior Comfort business unit.
  • After going backwards for much of 2017, we started seeing an improvement to the performance of the interior comfort business in Q2, 2018. This has been a huge effort for the entire interior comfort team. There is still some ways to go to get to the desired levels of performance in Q4, 2018. Given our progress in Interior Comfort Systems, we believe the 2019 performance for this business unit will be largely at the level projected in last year's CMD.
• In P&C, we are improving, but at a lower speed than foreseen. This is largely driven by issues described above and related to our restructuring activities.

General Update (2 of 4) Where are we compared to our Improvement Plan

• ± We presented a plan to close manufacturing facilities through a restructuring program in order to reduce fixed costs and lower our variable cost basis.
• We have closed five plants in the UK (2), Germany, Norway, and the US. Acknowledging that these closures were not executed perfectly (we have little experience in plant closures and transfers), we have still realized significant savings.
  • Euro 6 million of fixed cost reduction
  • Through labor rate savings, we have achieved a reduction in variable costs of Euro 9 million. This reduction represents a cost reduction of 46% compared to the applicable cost base.
  • We have incurred temporary higher other variable cost in the receiving plants, mainly due to incomplete supply chain transitions.
• We still have not delivered 100% of the savings that we intended to deliver from our completed plant closures. This shortfall amounts to approximately Euro 4 million annually on a run rate basis.
  • On two closure project, we have significantly overspent on restructuring costs. This concerns the Norway to Poland project, and in the second half on 2018 on the Easley to Mexico move. In Mexico, this concerns both both operational and supply chain issues.
• As a result of this, we are delaying further plant closures until we have:
  • Realized all the savings from the closures already completed, and
  • Stabilized the "receiving plants" to a level where these plants are well prepared to receive further transfers from future closures.
• ± Once we have delivered on the planned savings on the already completed closures and readied the receiving plants for further volumes from further closures, we will "restart" our plant closure program.

General Update (3 of 4) Changes to our Capital Structure

• In 2018, we strengthened our capital structure and overall solidity of our balance sheet
• We completed a capital increase of 10% after being offered a share price premium by large shareholders.
• We successfully placed a Euro 275 million 7 year Bond at a fixed rate cost of 5% giving us long term certainty and significantly less restrictive covenants than under our previous bank loans
• The combined effect of these completed actions gives us stable and secure liquidity over a seven year period.
• Although the strengthened capital structure comes at a cost, we feel the benefits from a strong and long term capital structure outweighs the costs.
  • The "costs" associated with the capital increase and the bond financing can broadly be summarized as follows:
  • The 10% capital increase diluted non-participating shareholders and our future EPS figures by more than 9%
    • » Through offering all shareholders with large KOA positions the opportunity to participate at the same terms, we attempted to mitigate this effect. For smaller shareholders, we assumed that the dilution effect could be mitigated through open market transactions.
  • Undertaking the bond, we increased our interest rate compared to the bank loans. In return we received a long term debt financing at fixed interest. Our bank loan was priced at "BOR+". Given the recent increases in interest rates in the US (a significant portion of our bank loan was LIBOR based) and the expected increase also in Euro rates going forward, we would have faced increased interest costs even with an extension of our bank loan.
    • » We feel that the undertaking of a bond issue was the right compromise to enter into for the company considering all the factors.

– Net financial items movements

• As seen in the financials, the net financial expenses are increasing strongly from 2018 to 2019. The main reason for this is the lower expectation we had in 2017 relating to the BOR+ rates which the bank loan was priced in compared to the 5% fixed interest rate for the bond.
• » Also contributing to the increase in interest expense is the higher raw material costs that lead to higher working capital levels.
• If we had extended the bank loans, we would also have faced increased interest expense. We estimate that under the old bank loan structure, our net financial items would have increased by MEUR 2-3 for 2019 compared to our 2017 CMD outlook.

General Update (4 of 4) Increased Raw Material/Tariff Costs

• In 2018 we saw significant increases in the cost of raw materials, particularly in the second half.
• In 2018, the major commodity contributors to these were steel, resin, PTFE, and alloys. Brass increased slightly.
  • Compared to the 2017 CMD assumptions, this set us back in 2018 by almost MEUR 5.
• Due to increases in the second half of 2018, compared to the 2018 run rate, we foresee that based on current knowledge, the 2019 raw material costs will increase significantly compared to the 2018 run rate. Generally, this is driven by the same commodities where we saw price increases in 2018. In addition we see significant increases for electronics and to a lesser extent for brass in 2019.
  • We have calculated a further additional raw material cost for 2019 compared to 2018 of slightly more than MEUR 5.
• In 2018 we saw the introduction of trade barriers through an escalating "trade war", primarily between the US and China. However, also other trading patterns were affected.
• Compared to our 2017 CMD assumptions, this cost us MEUR 5 additionally for 2018. As the tariffs were introduced in three phases in an accelerated fashion, these costs are back loaded for 2018.
  • Compared to the 2017 CMD assumptions, this set us back in 2018 by almost MEUR 1.
• Assuming that the tariff increases will stay in place at the currently announced levels throughout levels throughout 2019, this will add almost MEUR 2 to the 2019 cost base compared to our 2018 cost base.
• For 2018, we estimate the overall negative impact of raw materials and tariffs to be almost MEUR 6 compared to our 2017 CMD assumptions.
• For 2019, we estimate the overall negative impact of raw materials and tariffs to be around MEUR 13 compared to our 2017 CMD assumptions.
• In our financials, we have assumed that we will carry the full burden of these material cost increases in 2019. For 2020, we have assumed that we will be able to recover around one third of the 2019 net impact or around MEUR 4.
• For new contract awards, this will obviously be taken into considerations. For existing contracts, it is difficult to pass on these types of raw material costs.
• With the exception of brass effects for our Couplings business unit, we have very few contracts with raw material "fixers" incorporated.

Agenda

• ▸ Executive Summary
• ▸ An overview of our businesses
• ▸ General Update
• ▸ Markets
• ▸ New Business Wins
• ▸ How well positioned are we for the big automotive trends?
• ▸ Presentation of Couplings and Interior Comfort Systems business units
• ▸ Financials
• ▸ Summary and Conclusion

Real GDP Forecast

• Growth of all major economies are forecasted to slow down,
• However, the overall world economy is expected to remain stable

Interest rate outlook of major economies

• It is expected that the Euro Area and China will follow the US by increasing interest rates starting 2019

Market

Light vehicle production forecast has been slightly revised, but still forecasted to reach 100 million units by 2021

• Continued robust growth expectations in China, despite rise in inventory index and ongoing tariff dispute with US.
• European production forecast has been reduced in the short term in response to the OEMs' switch to the new emission standards, however, a majority of this set back should be recovered in 2019.

Commercial Vehicle production forecast remains robust despite uncertainties

• After double digit growth in 2018, production in North America is expected to peak in 2019 as expansion cycle is over and OEMs will very likely experience supply chain constrains.
• China has a "special cycle" driven by expectation for future tightened emission regulations.
• Growth expectations in Europe remains solid.

Agenda

• ▸ Executive Summary
• ▸ An overview of our businesses
• ▸ General Update
• ▸ Markets
• ▸ New Business Wins
• ▸ How well positioned are we for the big automotive trends?
• ▸ Presentation of Couplings and Interior Comfort Systems business units
• ▸ Financials
• ▸ Summary and Conclusion

New Business Wins

• ▸ Due to very focused efforts on winning new business, we have achieved very high levels of new business wins in 2018.
• ▸ As a result of the high wins in the previous three quarters, we are forecasting a much smaller "year end effect" than in previous years as both we and the OEMs have less catch up work to do before year end.
• ▸ We are still forecasting significant business wins for Q4 bringing the year end new business wins total to previously unreached levels.

New business wins per quarter (per annum value)

New business wins LTM (per annum value)

New Business Wins

• ▸ Kongsberg Automotive has generated New Business Wins at very high levels over the past 2½ years. As a result of this we are projecting a stronger than market growth over the next 2-3 years which to a large extent is based on already awarded programs.
• ▸ Historically, KA has reported New Business Wins ("NBW") as a function of annualized revenues for the awarded programs.
• As the duration of the awarded programs may vary, the NBW figures may not always be comparable over time.

▸ A more common industry practice is to report lifetime revenues or bookings.

• Many automotive suppliers report their NBWs using this methodology. It provides figures that are easier to understand and put into perspective.
• If a company consistently books x million of lifetime NBW bookings, it will generate this amount of revenues within the program lead- and ramp up- time period, typically within a 2½ to 3½ year period.
• ▸ KA will transition to reporting NBWs measured in lifetime revenues in 2019.

New Business Wins Change in NBW reporting from annualized to lifetime revenues

• ▸ The table below gives an overview over KA's NBWs since 2016 on the basis of both annualized and lifetime revenues. Although the 2016 NBWs were characterized by some longer than average lead time program awards, the message is pretty clear; within the next 3-4 years, assuming the overall automotive markets will perform at the levels currently forecasted by major industry analysts, KA should achieve a top line in the Euro 1.4-1.5 Billion range.
• As a reference point, our projected top-line is Euro 1,271 and 1,357 Million for the years 2019 and 2020, respectively.
• The 2018 figure is an estimate. 2018 YTD, we have annualized new business wins of Euro 286 million annualized and Euro 1,343 million lifetime revenues. The difference between these YTD figures and the FY 2018 estimate is the business we expect to win in Q4, 2018.

		NBW Annualized (€m)			NBW Lifetime (€m)			Average lifetime (years)
Segment	FY2016	FY2017	FY2018 FC	FY2016	FY2017	FY2018 FC	FY2016	FY2017	FY2018 FC
Interior	7 2	6 2	7 4	423	321	461	5.9	5.2	6.3
P&C	9 4	107	120	471	519	626	5.0	4.8	5.2
Specialty Products	115	122	158	625	499	504	5.4	4.1	3.2
KA Group	282	291	351	1,520	1,340	1,591	5.4	4.6	4.5

		NBW Lifetime (€m)			Revenue (€m)			NBW / Revenue
Segment	FY2016	FY2017	FY2018 FC	FY2016	FY2017	FY2018 FC	FY2016	FY2017	FY2018 FC
Interior	423	321	461	278	264	288	1.5x	1.2x	1.6x
P&C	471	519	626	350	407	440	1.3x	1.3x	1.4x
Specialty Products	625	499	504	357	385	400	1.7x	1.3x	1.3x
KA Group	1,520	1,340	1,591	986	1,057	1,128	1.5x	1.3x	1.4x

Kongsberg Automotive benefits from a well diversified customer base

¹ Product portfolio of Bombardier Recreational Products (BRP) includes snowmobiles, watercrafts, on-and off-road vehicles and engines for karts, motorcycles and recreational aircrafts ² For Tier 1 customers the products go to a wide variety of OEMs

Status of revenue outlook

Almost all of our 2019 business has been awarded

Growth Rationale

Kongsberg Automotive is positioned to benefit from current market trends and grow above market

Agenda

• ▸ Executive Summary
• ▸ An overview of our businesses
• ▸ General Update
• ▸ Markets
• ▸ New Business Wins
• ▸ How well positioned are we for the big automotive trends?
• ▸ Presentation of Couplings and Interior Comfort Systems business units
• ▸ Financials
• ▸ Summary and Conclusion

How well positioned are we for the big automotive trends? (1 of 2)

▸ Generally speaking, Kongsberg Automotive is not very exposed to the current trends in the automotive market, neither from an upside nor from a downside perspective.

▸ Comfort & Convenience

– Although more of a general trend, rather than an automotive trend, the quest for comfort and convenience is a major driver in the increasing end market for seat comfort products supplied by KA's Interior segment.

▸ Alternative Powertrains

• The two KA units that are dependent on the powertrain of the vehicle are the P&C and Specialty Products Segments (FTS). Interior will also be affected due to anticipated changes in the HVAC system layout of PURE Electric Vehicles (PEV).
• In P&C, our gear-shifter business is partly dependent (for the number and complexity of the actuators) on there being a transmission in the vehicle. For hybrid our alternative fuel powertrains there will still be transmissions in the vehicles.
  • For PEVs, there are no transmissions currently. This may most likely change as one tries to take advantage of the high torque of electric motors at low RPMs unless the pure electric powertrain moves to hub engines. Even with no transmission installed, PEV's do require a shifter to enable the driver to instruct the vehicle to go forwards, backwards, or to park (lock) the vehicle. They also require an actuator to enable the wheels to lock when the vehicle is parked.
• In FTS, the majority of KA's high performance hose and tube products for harsh applications are used for "plumbing" in engine compartments of ICE powertrains.
  • PEV's obviously do not have such "plumbing", however they have some level of battery cooling plumbing which we also supply, albeit at a lower content value per vehicle.
  • Hybrid vehicles and traditional ICE based vehicles are generally downsizing the engine sizes, enhancing the displacement performance through turbocharging and other means, and having smaller engine compartments. This leads to more FTS "friendly" applications as the overall environment gets harsher in the engine compartments.
• For Interior, the PEV's will over time change from traditional fan/blower based heater systems to heated surfaces. This is due to efficiency issues.
  • Heated surfaces generally use similar technologies as the heated seats and consoles KA supplies today. As PEV penetration increases, we expect more heated surfaces in the car that will benefit KA.

How well positioned are we for the big automotive trends? (2 of 2)

▸ Autonomous Vehicles

• Overall, KA is not directly active in the autonomous vehicle field. We are not active in the advanced control electronics or advanced sensor required for autonomous vehicles.Two of our businesses (P&C and Interior) are indirectly affected by this new product category:
• P&C

We are, through our P&C business, supplying shift by wire (SBW) systems that are prerequisites to such autonomous vehicle functionality. As such functionalities increase in popularity this will require SBW in such vehicles. To a large extent this has already taken place as virtually the entire premium segment has implemented SBW solutions by now for reasons other than autonomous functionalities.

– INT

As vehicles become more and more autonomous, this will create additional focus on the interior comfort and flexibility. This will benefit KA's Interior segment as the spending in seat comfort features will increase.

▸ Comfort & Convenience

– Although more of a general trend, rather than an automotive trend, the quest for comfort and convenience is a major driver in the increasing end market for seat comfort products supplied by KA's Interior segment.

▸ Infotainment and Connectivity

• Generally speaking, Kongsberg Automotive (KA) is an automotive supplier in the areas of mechanical products with some degree of actuation/activation through electronics. With regards to Infotainment and Connectivity we have limited exposure both to the downside (obsolete technologies) and some exposure to the upside (new technologies).
• The upside is related to our MRF based configurable rotary "switch". We have shown key customers our prototypes and have been met with great interest, but no contract awards so far.
• We also have some upside in electronics in our Off Highway business unit within the Specialty Products Segment as a complete electronics systems supplier.

Agenda

• ▸ Executive Summary
• ▸ An overview of our businesses
• ▸ General Update
• ▸ Markets
• ▸ New Business Wins
• ▸ How well positioned are we for the big automotive trends?
• ▸ Presentation of Couplings and Interior Comfort Systems business units
• ▸ Financials
• ▸ Summary and Conclusion

KONGSBERG AUTOMOTIVE

Specialty Products | Couplings | 2018

Our Product Lines

Sales

• ABC Building Block System
• ABC KArtridge & Manifolds
• ABC Complementary
• Old Brass Range

Product lines	KA growth expectations
▪ High performing coupling system with unlimited flexibility (Lego philosophy) ▪ Integrated safety features and high flexibility.	Above market
▪ High efficiency solutions reducing customer assembly time. ▪ Customized solutions with integrated poke yoke features.	Above market
▪ Complementary products to fulfill individual customer air applications. ▪ Standard and customized solutions.	In line with market
▪ Gradually phase-out being replaced by ABC Product lines.	Below market

Key Features & Benefits

Customer System Cost Reduction

• Market leading CV solution for low leakage and superior fuel economy
• Design Flexibility
• Assembly time reduction
• Full Release of Tube & Coupling
• Integrated Safety
• Flexible assembly sequence
• Customized solutions
• Increased efficiency at EOL

Pre -assembly time reduction

Push -in vs. ABC Push -in

• Up to 65% reduction in assembly time

Fir tree vs. ABC Push -in

• 30 seconds per coupling

Weight reduction

4-6 kilogram reduction per vehicle

A great customer base

Asia 8%

Couplings at a glance

Business

World class supplier of couplings for compressed air systems for commercial vehicles, which provide competitive advantage and profitable growth opportunities above market rates

North & South America 6%

Segments & Products

Truck & Bus, trailer, construction & agriculture Few players in the market

We differentiate by technology, quality and service versus competition

• Push-in Technology with integrated safety features
• Flexible solutions that can be tailored to the customers specific requirements

Europe 86%

• Premium product designed & produced for lifetime usage on the vehicle

Further Growth

• Customer oriented with flexible off-the-shelf solutions that can be tailored to their specific requirements
• By clearly understanding our customer's environment, challenges and needs.
• High-end quality products combined with lightweight materials
• Utilizing our global footprint and serve our customers locally
• Providing customer training and technical support
• Expand of our product portfolio

Global Market Share

Addressable market				2018
Truck & Bus	€	532.542	€	76.165	14%
Trailer	€	80.990	€	23.793	29%
Distribution & IAM		?

Addressable market				2023
Truck & Bus	€	579.433,00	€	112.083	19%
Trailer	€	87.773,00	€	28.857	33%
Distribution & IAM		?

▪ Assumed the same couplings value per vehicles in 2019 and 2023

▪ Assumed the same increase in trailer as in truck/bus from 2019- 2023

Global Foot Print - Transforming from one manufacturing location to a global foot print

"Servicing our worldwide customers locally through our global footprint"

Couplings Summary

• ✓ A technology leader providing state of the art products to the market
• ✓ Provide flexible solutions that can be tailored to the customers specific requirements
• ✓ Multi market approach covering Truck & Bus, trailer, construction & agriculture
• ✓ Our strong growth is a result of primarily market share gains from nonpremium suppliers and our main competitor.
• ✓ We are to further expand on our successful product line & strong market position
• ✓ Become a true global provider servicing our worldwide customer locally through our global footprint

Capital Markets Day 2018

Interior Comfort Systems and Light Duty Cables / Actuators

Interior Comfort Systems & Light Duty Cables/Actuators – Introduction

Business

World class supplier of Interior Comfort Systems and Light Duty Cables/Actuators mainly for passenger car market, which provide competitive advantage and profitable growth opportunities above market rates

Segments and products

• Seat Climate Systems, full system supply of thermal control systems for all markets for now more than 40 years.
• Seat Support Systems,
• Mainly pneumatic systems for adjustment (lumbar/bolsters) and dynamic (massage) features
• Widest offerings on the market provided through integration of design and manufacturing for all key pneumatic components
• Light Duty Cables and Actuators for fragmented market with many players and applications, Best in class high load actuator assemblies.

Interior: a great customer base

Product Overview Light Duty Cables / Actuators

LIGHT DUTY CABLES / ACTUATORS

• Mechanical and electromechanically driven actuation and cabling systems for all aspects of the vehicle where movement or release is a function of the system.
• Areas of use, but not limited to: Seat fold and/or tumble, hood, trunk, fuel, tailgate, Sunroof, door, windows, etc.

Light Duty Cables / Actuators: market trends

[LDC] Market trends
Convenience	▸ Vehicles being equipped with features that allow push button or 'waving' sensors to operate and function in and out of the vehicle
'Downsizing'	▸ Smaller packaging, lightweight, more quite, smaller more powerful EM actuators that don't make noise
Integration	▸ Complexity integrated into one package for and ease of assembly and consumer use.
Commonization or Commoditization	▸ Due to reduced number of seating platforms, common cabling assemblies allowing for unique A-surface parts (handles, buttons) for actuation. ▸ Drives cables to be more commodity and less unique
Globalization	▸ Customers looking for local content and local supply from competent supply base. Not only global suppliers.

Summary of Light Duty Cables

Product Overview Interior Comfort Systems

Interior Comfort Systems: Market trends

ICS Market trends
EV	▸ Shift from central HVAC to heated surfaces and passenger microclimates
Downsizing	▸ Small size - low weight - low energy consumption
Bundling SH & More variants	▸ Bundled seat heat and vent package. For some OEMs, steering wheel heating is also bundled. ▸ Scalable seat support products are a must to be able to serve all variants
Growth in Comfort Products	▸ Seat comfort products gaining popularity in mass market vehicles
Platform sourcing	▸ High volume platform programs being sourced as one package ▸ Long sourcing cycles
Commoditization of Seat Heat products	▸ Given that the right technology is available, seat heat programs are solely awarded based on the best price ▸ Price erosion in seat heat market, leading to a significant price decreases between old and new seat heat programs	45

Summary of Interior Comfort Systems

2018 Sales FC by Product Line	Product Line	KA growth expectations
PV	• High performing systems with low weight • Large range of products fitting all customer needs • Competitive pricing thanks to high vertical integration	Above market
CV 2018 Sales FC by OEM	• Globally identical products available • Competitive pricing thanks to high vertical integration	Above market
	• Customer specific fans • Deep understanding of their efficient integration into the seat combined with seat-heat and seat-support	In line with market

2018 Interior Highlights

▸ Systematic operational improvement Program

• initiated at our biggest Interior plants in Poland (Pruszkow, started Q2) and Mexico (Reynosa, started Q4)
• Measures: process design improvements, scrap reduction, headcount and overtime reduction, output improvement, increase degree of automation, tackle design issues
• Improvement overall plant financial performance
• Improvements started to show results in Q2/2018

▸ New Interior Comfort System plant

– New Plant opened and ramped up in Brzesc, Poland with focus on Seat Heaters

▸ New Business Wins

• New business wins forecasted MEUR 80 for 2018 secure our top line for the next years
• ▸ New products & technologies
• Progress in developing key technologies and next generation such as valves, seat cooling systems and seat massage systems
• Successful product launch of new actuator substituting light duty cable.
• ▸ Quality Award
• GM Supplier of the Year Award for Reynosa, Mexico for overall Quality performance for 2018 Model Year product supplied.

Interior - Summary

• ✓ A technology leader providing high-end products with excellent quality to the market
• ✓ Only supplier who offers complete range of Seat Support, Seat Heat and Seat Cooling and can offer fully integrated solutions with clear customer advantages
• ✓ Enter Commercial Vehicle business foundation of CV Business Segment
• ✓ Our strong growth as a result of market share gains and market growth of Interior
• ✓ Our improved operative performance generates solid basis for further growth

Growing top line profitably to competitive levels

Agenda

• ▸ Executive Summary
• ▸ An overview of our businesses
• ▸ General Update
• ▸ Markets
• ▸ New Business Wins
• ▸ How well positioned are we for the big automotive trends?
• ▸ Presentation of Couplings and Interior Comfort Systems business units
• ▸ Financials
• ▸ Summary and Conclusion

Assumptions for the financials

▸ 2018 and beyond assumptions:

• Raw Material prices, tariffs, and FX rates will remain at the levels forecasted as of July 2018 throughout the plan period
• No "hard Brexit" will take place
• The overall automotive markets will perform at the levels currently forecasted by major industry analysts
• No further plant closures
• ▸ All the financials presented in this package are based on «pre IFRS 16 accounting standards». This means that no considerations have been made for IFRS 16 implications. There is one summary slide included in this package that lays out the estimated effects from the mandatory implementation of IFRS 16 as of January 1, 2019.

Financial overview – 2018 Progress Quarterly

▸ Consistent improvement in performance for 7 straight quarters:

• Negative factors (primarily raw materials and tariffs) have been partly offset by volumes and performance improvements
• Interior is slowly but securely improving
• We are forecasting that Q4 2018 will continue to show year over year ("YoY") improvement
• 8 consecutive quarters of improvements including our Q4, 2018 implied guidance

Financial overview – 2018 Progress Annually

			2018 CMD
In Mill. Euro	2016	2017	2018	2019	2020
	ACT	ACT	ACT/FCST	Plan	Plan
Sales adj. EBIT % of sales	986 28 2,9%	1.057 50 4,7%	1.128 75 6,6%	1.271 97 7,6%	1.357 114 8,4%
Restructuring & One Off cost	-10	-26	-20	-7	-1
EBIT % of sales	18 1,8%	24 2,2%	55 4,9%	90 7,1%	113 8,3%
Financial Items	1	-17	-14	-15	-15
Profits Before Taxes	19	6	42	75	98
Taxes % of PBT	-18 -92,7%	-14 -225,0%	-17 -42,0%	-20 -26,5%	-25 -25,0%
Net Income	1	-8	24	55	74
EPS (NOK)	0,03	-0,19	0,51	1,17	1,56

• ▸ Strong adjusted EBIT improvements over the last two years
• Adjusted EBIT almost tripled in absolute Euro terms over the past two years
• The projected Adjusted EBIT % for 2018 is higher than since more than 10 years for Kongsberg Automotive.
• ▸ The financial items line has huge fluctuations for «actual» reporting due primarily to FX driven fluctuation in the valuation of internal loans.
• 2019 onwards financial items will increase due to increased interest cost
• ▸ Tax rate starting to come down
• 2017 special effect from US tax reform was a one time event

Barring any unexpected market or FX movements, 2018 will be a year where we will have fall through to the Net Income line.

Financials – 2017 CMD plan vs. 2018 Update

(excluding further plant closures)

		2017 CMD 2016 Actual , 2017-2019 Outlook
In Mill. Euro		2016 ACT	2017 ACT/FCST	2018 Plan	2019 Plan
	Sales	350	407	438	466
Powertrain	Adj. EBIT	-3	4	20	29
	% of sales	-0,9%	1,0%	4,6%	6,2%
	Sales	236	261	290	329
Interior	Adj. EBIT	12	13	21	25
	% of sales	5,2%	5,0%	7,2%	7,6%
	Sales	358	381	404	442
Specialty Products	Adj. EBIT	36	49	61	75
	% of sales	10,1%	12,9%	15,2%	17,0%
Corp	Adj. EBIT	-17	-18	-20	-21
	Sales	944	1.049	1.132	1.237
KA continued	Adj. EBIT	28	48	82	108
Operations	% of sales	3,0%	4,6%	7,3%	8,7%

			2018 CMD
			2016-2017 Actual , 2018-2019 Outlook
In Mill. Euro		2016	2017*	2018	2019
		ACT	ACT	ACT/FCST	Plan
	Sales	350	407	440	501
Powertrain	Adj. EBIT	-3	2	12	22
	% of sales	-0,9%	0,4%	2,7%	4,4%
	Sales	236	264	288	336
Interior	Adj. EBIT	12	10	16	23
	% of sales	5,2%	3,8%	5,6%	6,9%
	Sales	358	385	400	434
Specialty Products	Adj. EBIT	36	51	64	71
	% of sales	10,1%	13,3%	16,1%	16,4%
Corp	Adj. EBIT	-17	-13	-18	-19
	Sales	944	1.057	1.128	1.271
KA continued	Adj. EBIT	28	50	75	97
Operations	% of sales	3,0%	4,7%	6,7%	7,7%

* Figures include divested (Q1, 2017) NA HR/AR business

▸ The FY 2018 adjusted EBIT variances to the 2017 CMD figures presented are mainly due to:

• Volume <0.8 million> and Segment Mix <0.4 million>
• FX headwind of <2.2 million>
• Raw material cost increases <4.8 million>
• Increased tariffs <0.9 million>
• Other and Performance +2 million

▸ The FY 2019 adjusted EBIT variances to the 2017 CMD figures presented are mainly due to:

• Volume +6.0 million and Segment Mix <1.0 million>
• FX headwind <3.0 million>
• Raw material cost increases <9.5 million>
• Tariffs <3.5 million>

Financial overview How does 2018 CMD look compared to 2017 CMD?

	2017 CMD
In Mill. Euro	2017	2018	2019	2020
Sales EBIT adj. % of sales	1.049 48 4,6%	1.132 82 7,3%	1.237 108 8,7%	1.316 122 9,3%
Restructuring & One Off cost	-24	-21	-7	-2
EBIT % of sales	25 2,3%	62 5,5%	101 8,2%	120 9,1%
Financial Items	-10	-9	-8	-7
Profits Before Taxes	15	53	93	113
Taxes % of PBT	-11 -73,0%	-22 -42,5%	-25 -26,5%	-28 -25,0%
Net Income	4	30	68	85
EPS (NOK)	0,09	0,71	1,60	1,98

2018 variances to the 2017 CMD below
the Adj. EBIT line presented are mainly
due to:

• ▸ The Adjusted EBIT from the previous slide <7.0>
• ▸ Restructuring +1 (keep in mind that we have overspent on one project and not spent money on a planned project)
• ▸ Higher interest expense partly through our bond financing process <5.0>
• ▸ Although the tax rate remains constant, the absolute tax amount is reduced due to a lower PBT base +5
• ▸ The EPS figure is reduced due to lower NI <0.15>and higher share count (capital increase) <0.05>

2019 variances to the 2017 CMD below the Adj. EBIT line figures are mainly due to:

• ▸ The Adjusted EBIT from the previous slide <11.0>
• ▸ Higher interest expense through our bond financing <6.0>. Note that the interest expense would have gone up by about MEUR 3 compared to the 2017 CMD assumptions because of the increase in the LIBOR rate and the raw material price increase impact on working capital.

In Mill. Euro 2017 2018 2019 2020 Sales 1.057 1.128 1.271 1.357 EBIT adj. 50 75 97 114 % of sales 4,7% 6,6% 7,6% 8,4% Restructuring & One Off cost -26 -20 -7 -1 EBIT 24 55 90 113 % of sales 2,2% 4,9% 7,1% 8,3% Financial Items -17 -14 -15 -15 Profits Before Taxes 6 42 75 98 Taxes -14 -17 -20 -25 % of PBT -225,0% -42,0% -26,5% -25,0% Net Income -8 24 55 74 EPS (NOK) -0,19 0,51 1,17 1,56

2018 CMD

• ▸ Taxes on a lower base +2.0
• ▸ Due to the higher share count (10% capital increase), the EPS figures are down by 9.1%.
• The EPS reduction from 2017 to 2018 CMD for 2019 can be broken down as follows (all figures in NOK):
  • Volume and Mix +0.08
  • FX <0.05>
  • Increase in tariff & Raw Material price levels <0.22>
  • Increase in Interest <0.10>
  • Capital Increase <0.15>

IFRS 16 Estimated impact for Kongsberg Automotive

First time adoption of IFRS 16 is mandatory by January 1st, 2019

• ▸ IFRS 16 requires lease contracts to be recognized as lease liabilities with corresponding right of use assets. Therefore, KA has calculated the present value of its lease obligations using a discount rate equal to KA's incremental borrowing rate initially assumed to be 5% (the bond rate). The right of use assets are depreciated on a straight line basis over the respective lease periods. Compared to 2018 and previous years, this results in:
• A reduction in lease expenses, an increase in depreciation, and an increase in interest (other financial items),
• IFRS 16 has no impact on taxes paid.
• KA has elected to implement IFRS 16 without restating prior periods. As such, there is no impact on Shareholders' Equity as of January 1, 2019, however, in a short term view the expenses are higher compared to if KA had elected to retrospectively adopt and restate. Over the terms of the leases, the net income statement effect of IFRS 16 will be zero. Based on the lease contracts currently in place the estimated "breakeven year" will be around 2025.

	2018 CMD excl. IFRS 16		IFRS 16 adjustments		2018 CMD incl. IFRS 16		The estimated P&L effects of implementing IFRS are shown in the table
In Mill. Euro	2019	2020	2019	2020	2019	2020	on the left. The figures below refer to the 2019 effects.
Sales EBIT adj. % of sales	1.271 97 7,6%	1.357 114 8,4%	0 3	0 3	1.271 100 7,9%	1.357 117 8,7%	Balance Sheet – Increase in size of balance sheet: + 83,6m P&L – The lease expense related to those is going to be split up in depreciation and implied interest impacting the various P&L line items as follows for 2019:
Restructuring	-7	-1	0	0	-7	-1
EBIT % of sales	90 7,1%	113 8,3%	3	3	93 7,3%	116 8,6%	– Change in EBIT: +3,4 – Change in EBITDA +16,1 – Change in Interest expense: +4,5
Financial Items	-15	-15	-5	-4	-20	-19	– Change in PBT and NI: <1.1>
Profits Before Taxes	75	98	-1	-1	74	97	Ratios:
Taxes % of PBT	-20 -26,5%	-25 -25,0%	0	0	-20 -26,9%	-25 -25,3%	– Change in tax rate: slightly higher – Change in Equity Ratio: approximately <3 percentage points>
Net Income	55	74	-1	-1	54	73	The changes related to the implementation of IFRS 16 do not influence the cash flow. For tax purposes, the implied interest expense is not tax deductible and neither are the
EPS (NOK)	1,17	1,56	-0,03	-0,02	1,14	1,54	depreciation expenses. Lease payments, however, are tax deductible.

We have not considered the IFRS16 effects in any of the financials in this capital markets day presentation. The figures on this sheet are preliminary estimates that may change.

Agenda

• ▸ Executive Summary
• ▸ An overview of our businesses
• ▸ General Update
• ▸ Markets
• ▸ New Business Wins
• ▸ How well positioned are we for the big automotive trends?
• ▸ Presentation of Couplings and Interior Comfort Systems business units
• ▸ Financials
• ▸ Summary and Conclusion

Summary & Conclusion

• ▸ We are confirming the 2017 CMD and 2018 AGM outlook for 2018 continuing to deliver substantial improvements after the second year of our improvement plan in spite of turbulent markets, world economies and delays in restructuring savings.
• ▸ KA has a robust balance sheet following our recent capital increase and refinancing.
• ▸ New business wins at record levels throughout 2018 secure our top line for the next years
• ▸ We have tripled our adj. EBIT over the last two years. We estimate that the strong adj. EBIT growth will continue in 2019 and beyond.
• ▸ Due mostly to external factors, but to a certain degree also the delays from the restructuring program, our estimated earnings are reduced compared to the 2017 CMD. We see this as a one year delay. Our estimate for 2021 EPS is NOK 1,82. With the share count from the 2017 CMD this translates into an EPS of 2.00.
• ▸ For 2018, we will deliver on an important "show me" year for KA –and we will continue to deliver substantial economic improvements for the benefit

improvement plan in spite of turbulent markets, world economies and delays in restructuring		2018 CMD
savings.	In Mill. Euro	2016	2017	2018	2019	2020
KA has a robust balance sheet following our recent capital increase and refinancing.		ACT	ACT	ACT/FCST	FCST	FCST
New business wins at record levels throughout 2018 secure our top line for the next years	Sales adjusted EBIT % of sales	986 28 2,9%	1.057 50 4,7%	1.128 75 6,6%	1.271 97 7,6%	1.357 114 8,4%
We have tripled our adj. EBIT over the last two years.	Restructuring	-10	-26	-20	-7	-1
We estimate that the strong adj. EBIT growth will continue in 2019 and beyond.	EBIT % of sales	18 1,8%	24 2,2%	55 4,9%	90 7,1%	113 8,3%
Due mostly to external factors, but to a certain	Financial Items	1	-17	-14	-15	-15
degree also the delays from the restructuring program, our estimated earnings are reduced	Profits Before Taxes	19	6	42	75	98
compared to the 2017 CMD. We see this as a one year delay. Our estimate for 2021 EPS is NOK 1,82.	Taxes % of PBT	-18 -92,7%	-14 -225,0%	-17 -42,0%	-20 -26,5%	-25 -25,0%
With the share count from the 2017 CMD this	Net Income	1	-8	24	55	74
translates into an EPS of 2.00.	EPS (NOK)	0,03	-0,19	0,51	1,17	1,56
For 2018, we will deliver on an important "show me" year for KA –and we will continue to deliver substantial economic improvements for the benefit of all KA stakeholders.