NACON — Investor Presentation 2010

Oct 27, 2010

VACON
BREVEN BY PREVES

Interim Report

January–September 2010

October 27th, 2010
Vesa Laisi, President and CEO
Eriikka Söderström, CFO
Vacon Plc

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VACON DRIVEN BY DRIVES

Disclaimer

• The content of this presentation contains time-sensitive information that is accurate as of the time hereof.
• A number of forward-looking statements will be made during this presentation. Forward-looking statements are any statements that are not historical facts. These statements are based on current decisions and plans and currently known factors. They involve risks and uncertainties which may cause the actual results to materially differ from the results currently expected by Vacon.
• If any portion of this presentation is rebroadcast, retransmitted or redistributed at a later date, Vacon will not be reviewing or updating the material that is contained herein.

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Outline

• Highlights Q3 and 1-9/2010, Vesa Laisi, President and CEO
• Financial Report, Eriikka Söderström, CFO
• Outlook, Vesa Laisi, President and CEO
• Appendix

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Q3/2010: Back on the Growth Path

• Vacon has come through the economic downturn in good shape
• Orders went up across most segments and regions, short cycle businesses are booming
• Inverter orders to solar applications took off
• Revenues were growing fast but the growth was negatively impacted by industry-wide shortage of certain components.
• EBIT margin improvement was on track, sales growth was on low power side with lower margin than average

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Highlights Q3/2010

MEUR	Q3/2010	Q3/2009	Change
Order intake	110.9	57.1	+94 %
Revenues	89.3	62.1	+44 %
Operating profit	8.3	3.4	+145 %
Operating profit -%	9.3	5.5
Operating cash flow	6.6	10.8	-39 %
EPS, eur	0.31	0.19	+63 %

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Highlights 1-9/2010

MEUR	1-9/2010	1-9/2009	Change
Order intake	275.7	192.5	+43 %
Revenues	234.8	207.8	+13 %
Operating profit	19.5	18.2	+7 %
Operating profit -%	8.3	8.8
Operating cash flow	14.3	25.0	-43 %
EPS, eur	0.76	0.83	-8 %

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Financial Report

Effikka Söderström,
Chief Financial Officer,
Vacon Plc

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Revenues

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Orders and revenues

Order intake	78,2	83,3	77,8	67,2	69,0	66,4	57,1	63,5	72,8	92,1	110,9
Revenues	65,9	78,0	74,2	75,2	70,0	75,7	62,1	64,2	65,3	80,2	89,3

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Order intake and order book

MEUR	Q1/08	Q2/08	Q3/08	Q4/08	Q1/09	Q2/09	Q3/09	Q4/09	Q1/10	Q2/10	Q3/10
Order intake	78,2	83,3	77,8	67,2	69,0	66,4	57,1	63,5	72,8	92,1	110,9
Order book	47,1	52,4	56,0	48,0	47,0	37,7	32,7	32,0	39,4	51,3	72,9

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Order intake by region

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Revenues by region

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Revenues by sales channel

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EBIT

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Revenues and EBIT-%

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Research and development costs

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Operating Cash Flow

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Working capital

MEUR	30.9.2010	31.12.2009	30.9.2009
Inventories	28.2	19.3	20.5
Non-interest bearing receivables	72.2	51.3	54.4
Non-interest bearing liabilities	62.4	39.3	37.7
Net working capital	38.0	31.2	37.2
Net working capital of rolling revenues, %	12.7	11.5	13.1

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Personnel

Average personnel

Personnel at end of period

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Key balance sheet ratios

Equity ratio

Net Debt and Gearing,%

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Outlook

Vesa Laisi, President and CEO

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Strategy

The Goal 2014

Profitable Growth	500 MEUR	EBIT > 14 %	ROE > 30 %

Strategic Choices

100 % focus on AC drives	Product leadership	Multi-channel sales	Global presence and transnational operations

Strategic Competences

AC drives know-how	Common product platform design & product portfolio management	Customer relationship management	Mass customization, demand flow technology and global sourcing	Global ICT infrastructure and applications

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Focus on Future Growth

• We are addressing global megatrends
• We are strengthening our global footprint and expanding our market coverage in rapidly-growing emerging markets
• Enhanced low-cost country sourcing brings profitable growth
• Broad use of common-technology platforms accelerates time to market and reduce costs
• Continued investments in competence, product development and extended sales network creates a solid base for future profitable growth

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Prospects 2010 unchanged

	ACT 2009	FC 2010
Revenues, MEUR	272,0	> 272
EBIT margin, %	8,3 %	~ 8,3 %
EPS, EUR	1.01	> 1,01
ROE, %	20,5 %	~ 20,5 %

• The AC drive market began to pick up in the second quarter of 2010, and this has continued in the third quarter.
• Vacon estimates that revenues in 2010 will increase from 2009. It expects relative profitability to be similar to that in 2009 and earnings per share to improve from 2009.

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Risks and factors causing uncertainty

The uncertainty in general demand	The availability and quality of raw materials and components
Foreign exchange risks	Price competition

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Major shareholders September 30, 2010

Others 24.8 %

Nominee registered 33.0%

Ahlström Capital Group 20.0 %

Ilmarinen Mutual Pension
Insurance Company 4.6 %
Tapiola Mutual Pension
Insurance Company 3.8 %
Vaasa Engineering 2.7 %
Koskinen Jari 2.4 %
Holma Mauri 2.3 %
Ehrnrooth Martti 2.2 %
Tapiola Group Companies 1.6 %
Karppinen Veijo 1.2%
Autio Heikki 1.0 %
Own shares 0.5 %

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Contacts

• Vesa Laisi, CEO
• +358 40 8371 510, e-mail: vesa.laisi@vacon.com
• Eriikka Söderström, CFO
• +358 40 8371 445, e-mail: eriikka.soderstrom@vacon.com
• Johanna Koskinen, IR
• +358 40 8371 528, e-mail: johanna.koskinen@vacon.com

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Every AC motor deserves a Vacon drive