Leifheit AG

Investor Presentation • Nov 27, 2017

Leifheit AG

Investor Presentation

German Equity Forum November 2017

Disclaimer

This presentation contains forward looking statements which are based on the management's current estimates with regard to future developments. Such statements are subject to risks and uncertainties which are beyond Leifheit's ability to control or estimate precisely, such as statements on the future market environment and economic conditions, the behavior of other market participants and government measures.

If one of these uncertain or unforeseeable factors occurs or the assumptions on which these statements are based prove inaccurate, actual results could differ materially from the results cited explicitly or contained implicitly in these statements. Leifheit neither intends to, nor does it accept any specific obligation to update forward-looking statements to reflect events or developments after the date of this presentation.

Leifheit AG shall not assume any warranty for the information provided in this presentation being up-to-date, accurate, complete or of good quality or for the suitability of the information for specific purposes.

Any liability of Leifheit AG for loss caused by the use or non-use of the information provided or by wrong or incomplete information is excluded.

Agenda

• Introduction to Leifheit
• Summary 2017 and Financial Figures 9M 2017
• Forecast Financial Year 2017
• Strategy "Leifheit 2020" and Key Initiatives 2017
• Investment Highlights

Introduction to Leifheit

"We are your leading experts for solutions that make your everyday life at home more easy and convenient"

Leifheit Group
Brand Business (~ 85% of turnover)	Volume Business (~ 15% of turnover)
 Distribution in international markets  Product categories: Cleaning, Laundry Care, Kitchen goods, Wellbeing
 High-quality branded products with a high degree of consumer benefit, mid to upper price segment  Consistent brand management  Systematic processes for innovation and market launch	 Products in mid-price range  Customer-specific product development  Strong service component
	Project Business

Introduction to Leifheit

Offering products in four categories

Cleaning

Leifheit has an easy and convenient solution for every cleaning demand. Our high quality cleaning products can be flexibly combined.

Kitchen goods

Opening, cooking, cutting or storing – Leifheit's kitchen accessories simplify work and keep hands and kitchen clean.

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Laundry care

Whether it's laundry dryers for the house or rotary dryers for the garden, an ironing board or a steam ironing system – Leifheit ensures fresh, clean and well-kept laundry.

Wellbeing

Soehnle is a leading brand supplier for kitchen and bathroom scales. Air Treatment, medical products and wearables are complementary new assortments for a modern lifestyle.

Summary and Financial Figures 9M 2017

Leifheit will return to sustained profitable growth

Operational performance under pressure from softer foreign markets

• The slow Q1 2017 was compensated in the second quarter, Q3 2017 behind expectations
• Group turnover in 9M slightly down compared to previous year
• Strong turnover increase in Germany and Eastern Europe cannot compensate declines in Central Europe and Overseas
• EBIT below previous year due to one-off effects from restructuring of the sales organization, increased marketing expenses and negative foreign currency effects
• Guidance for Financial Year 2017 adjusted
• Increased dividend for the eighth consecutive year
• Payment of an ordinary dividend of € 2.10 and a special dividend of € 0.80 for business year 2016
• Proposing stable ordinary dividend for business year 2017

Group turnover slightly below previous year, despite good performance in Germany and Eastern Europe

• The slow Q1 2017 was compensated in Q2, Q3 2017 behind expectations
• Germany grew by 3.8 % due to a strong performance of both brand business and volume business
• Continuous significant growth in Eastern European markets by 9.4 %, driven by double-digit growth in the Czech Republic, Poland und the Ukraine
• Central Europe declined by 7.2 %, driven by pressure in France, Italy and Austria, not compensated by strong performance in Belgium

Brand Business at prior year level

		9M 2016	9M 2017	∆	Turnover Brand Business
					9M 2017 / by region*
Turnover	€ m	150.4	149.6	-0.5 %
Gross margin	%	49.9	48.9	-1.0 pps	2.9 % 12.9 %
Segment result
(EBIT)	€ m	12.9	9.0	-30.2 %
Employees	Pers.	862	931	+69	50.2 %

Turnover Brand Business

	High quality products by Leifheit and Soehnle brands,
	center of "Leifheit 2020" growth strategy

• Brand Business represents 84.3 % of total sales (9M 2016: 83.8 %)
• Substantial growth drivers: laundry care and cleaning products
• Declining kitchen and wellbeing categories
• EBIT impacted by non-recurring expenses for the restructuring of sales organization, higher advertising costs and lower than expected turnover
• Increase of employees due to insourcing in Czech Republic and to the restructuring of sales organization

* Deviation from 100% due to rounding

Volume Business suffering from French hyper markets development

		9M 2016	9M 2017	∆
Turnover	€ m	29.1	27.9	-4.1 %
Gross margin	%	33.8	31.6	-2.2 pps
Segment result (EBIT)	€ m	2.8	2.3	-16.5 %
Employees	Pers.	188	172	-16

• Focus on profitability, focused on European markets and project business
• Strong sales increase in Germany cannot compensate decline in France and USA
• Volume Business represents 15.7 % (9M 2016: 16.2 %) of group turnover
• Shift of employees from volume to brand business

Financial Figures 9M 2017

Group result impacted by non-recurring expenses and negative foreign currency result

		9M 2016	9M 2017	∆
Group turnover	€ m	179.5	177.5	-1.1 %
Gross margin	%	47.3	46.2	-1.1 pps
Foreign currency result	€ m	-1.2	-1.6	-34.5 %
EBIT	€ m	15.7	11.3	-27.8 %
EBIT margin	%	8.8	6.4	-2.4 pps
Earnings before taxes (EBT)	€ m	14.6	10.5	-28.1 %
Net result for the period	€ m	10.2	7.4	-27.7 %

• Group turnover down slightly year on year
• EBIT declines due to of one-off effects from restructuring sales organization and increased advertising expenditures
• Both measures are investments to further strengthen our strategic Brand Business
• EBIT under further impression of negative foreign currency results

Forecast Financial Year 2017

Forecast Financial Year 2017

2017: Turnover on previous year's level, earnings affected by one-offs and currency effects

Economic environment 2017	Moderate economic growth in our key European markets ► External risks of changed US economic policies as well as a rising ► level of inflation Retail business optimistic for 2017, propensity of customers ► consumption continuously stable
Forecast Group development 2017	Continue to pursue group growth strategy "Leifheit 2020", ► despite current risks in the retail sector Group: Turnover on previous year's level ► Brand Business: Slight turnover growth Volume Business: Turnover below previous year's level EBIT € 2 – 3 m behind previous years level ► due to one-off effects from reorganization of sales and currency effects Investments of about € 7 – 7.5 m (2016: € 7.8 m) ► ROCE of 12 – 13 % (2016: 16.3 %) ► Free cash flow of about € 0 to 2 m ►
Group development until 2020	Sustainable and profitable organic turnover growth ► of 4 to 5 % CAGR1 Target EBIT margin of 8 to 9.5 % ►

1 Compound Annual Growth Rate

Strategy "Leifheit 2020" and Key Initiatives 2017

Leifheit's vision for 2020 Strategy "Leifheit 2020" and Key Initiatives 2017

"We are your leading experts for solutions, that make your everyday life at home more easy and convenient."

Vectors of growth: New products vs existing business

New products (20 – 30 % of annual turnover growth)

• Outcome of the new product pipeline defined until 2020
• Based on the mega trends relevant for Leifheit:
• Fading of traditional gender rolls
• Electrification
• Digitalization & connectivity
• Based on Leifheit consumer segmentation
• Existing and new product segments
• Different innovation streams by grade of technical change / newness of application

Strategy "Leifheit 2020" and Key Initiatives 2017/2018 CleanTenso – hygienically clean without chemicals

Strategy "Leifheit 2020" and Key Initiatives 2017/2018 Wireless, absorbent and always ready to hand

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New digital business segment Soehnle connect

Kitchen scale Page Aqua Proof – 100% waterproof Strategy "Leifheit 2020" and Key Initiatives 2017

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Vectors of growth: New products vs. existing business

Existing business (70 – 80 % of annual turnover growth)

Further expand online business across all geographies

"Win from strength markets" – Europe stationary

• Conversion of existing customer listings in broad distribution by
• Sales effectiveness/efficiency programs
• Marketing/promotion programs
• Closure of listing gaps in existing and new customers

"Win from behind" markets – Europe stationary

• Entry via promotional business into selected customers based on a hunting list
• Conversion of promotions in listings

"Entrepreneurs" – ME/Asia

• Opportunistic realization of growth until 2017
• More focus as of 2018 (Asia)

Harmonized "go-to-market" strategy drives substantial growth in Eastern Europe

• Situation in 2014: Lack of structured market approach to Eastern European (EE) region
• Analysis of each individual EE country and establishment of EE coordination team with clearly defined responsibilities and targets
• Developed a hunting list for each country
• Established unified model for promotions and assortment for EE region
• Build-up of new customer service center for EE countries in Prague, Czech Republic
• Established central logistics center for EE countries in Blatná, Czech Republic

Strategy "Leifheit 2020" and Key Initiatives 2017

More contemporary positioning of Leifheit brand

Strategy "Leifheit 2020" and Key Initiatives 2017

More contemporary positioning of Leifheit brand

TV-advertisement

Q1 2017: CLEAN TWIST System Q1 2017: Window vacuum Q3 2017: Air Board Q1 2018: Linoprotect

Investment Highlights

We drive from strength Investment Highlights

Strong brands	Well known, high consumer confidence ► Leading positions: Germany and many European countries ► High-quality supplier, middle and upper price range ►
Sustainable earnings	Non-cyclical business: Leifheit brands are used every day ► Well prepared to exploit e-commerce potential ► Efficient cost structure, sustainable margins, high cash flow, solid financial position ►
Attractive dividend	Distribution of approx. 75% of max (free cash flow, net income) targeted ► and backed by solid cash flow Distribution of surplus cash to shareholders via special dividend ►
Significant growth potential	Offline/online conversion of well suited assortment ► Strategy "Leifheit 2020" to reach higher levels of profitable growth ► Organic growth through focus on core categories, innovation, digital, efficiency  External growth options (focus on core categories) 

Leifheit is more than just household products

Annex

Long-term financial overview

		2012	2013	2014	2015	2016
Turnover	€ m	224.2	220.9	220.7	231.8	237.1
Group adjusted1 	€ m	217.4	219.5	220.7	231.8	237.1
 Brand Business1	€ m	170.9	172.8	180.4	188.1	195.8
 Volume Business	%	46.5	46.7	40.3	43.7	41.3
Profitability
 Gross margin	%	43.6	44.9	47.7	46.7	47.5
 Cash flow from operating activities	€ m	8.2	22.9	24.5	20.8	21.8
 Free cash flow	€ m	-1.4	19.5	18.4	14.1	14.3
 EBIT EBIT adjusted2 	€ m € m	14.2 13.0	14.9 16.9	21.5 16.4	21.7 19.2	22.1 21.8
 EBIT margin	%	5.8	6.8	9.8	9.3	9.3
 EBT	€ m	12.2	13.3	19.8	20.2	20.6
 Net result for the period	-1 € m	9.4	10.2	14.1	14.3	14.5
 ROCE	%	10.2	12.6	20.3	18.1	16.3

1 turnover 2012 to 2013 adjusted for discontinued business with Dr. Oetker Bakeware

2 EBIT 2012 adjusted by one-off effects from sales of assets relating to termination of a license agreement EBIT 2013 to 2016 adjusted by from foreign currency results

Annex

Long-term financial overview

		2012	2013	2014	2015	2016
Per Share1
Net result for the period2	€	1.97	2.16	2.97	3.02	3.06
Free cash flow1	€	-0.28	4.11	3.88	2.96	3.01
Dividend Special dividend	€ €	1.50 --	1.65 --	1.80 --	2.00 0.75	2.10 0.80
Investments in tangible assets	€ m	9.3	3.3	5.2	6.1	6.6
Depreciation in tangible assets	€ m	5.3	5.5	5.3	5.0	5.6
		31/12/12	31/12/13	31/12/14	31/12/15	31/12/16
Employees
Group	No.	1,049	1,049	1,068	1,074	1,093
Brand Business	No.	757	757	792	865	913
Volume Business	No.	292	295	276	209	180
Balance sheet total2	€ m	205.9	203.8	223.3	237.9	239.4
Equity	€ m	92.8	94.7	94.8	106.7	104.6

2 not including repurchased treasury shares

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Financial calendar, share data, contact Annex

Dates 2017

November 2017 German Equity Forum, Frankfurt/Main

Dates 2018

27 March 2018 Annual Financial Reports 2017 Analyst's meeting, Frankfurt/Main, Germany

15 May 2018 Quarterly statement Q1

30 May 2018 Annual General Meeting Frankfurt/Main, Germany

14 August 2018 Financial report for the period ending 30 June 2018

14 November2018 Quarterly statement Q3

Share data

Trading segment: Prime Standard Share capital: € 30,000,000.-

Stock market launch: 3 October 1984

ISIN: DE0006464506 Ticker: LEI:GR, LEIG.DE

Number of shares: 10,000,000 no-par value ordinary bearer shares Designated Sponsor: Oddo Seydler Bank AG Landesbank Baden-Württemberg (LBBW)

Contact

Petra Dombrowsky

Corporate Communications / Investor Relations

Phone: +49 2604 977-218 Email: ir@leifheit.com

www.leifheit-group.com

Aktiengesellschaft

Postfach 11 65 56371 Nassau/Lahn www.leifheit -group.com