Prima Industrie — Investor Presentation 2019

Mar 20, 2019

STAR Conference 2019 Milan, 20 March

Prima Group at a glance

• Founded in 1977, Prima Industrie is a global leader in high technology laser and sheet metal processing systems and electronic components for industrial applications
• Over 13,000 machines installed in more than 80 countries
• ≈1,900 employees worldwide (~50% in Italy)
• Manufacturing sites in Italy, Finland, USA and China.
• Broad direct commercial and after-sales presence in EU, NAFTA, BRIC and other emerging markets.
• 2018 sales were € 467 million, of which approx. 82% outside Italy.
• Strong commitment to innovation (R&D is 5.1% of turnover)
• Listed on Italian Stock Exchange (STAR segment) since 1999

Business sectors: Prima Power

Business sectors: Prima Electro

Business sectors: Prima Additive

Sales & service network: EMEA

Sales & service network: APAC & Americas

2015-2019: STRATEGIC ACTIVITIES

Mar 2015 - New Plant in Suzhou (China)

The plant, which covers a surface equal to 8.000 square meters, hosts manufacturing, sale and after-sale activities for a wide set of metal sheet processing machines. in addition to manufacturing area and HQ offices, the plant hosts a large show room destined to welcome Chinese and Asian customers.

Oct 2015 – Diode Fab for Fiber Lasers (Torino)

The high tech laboratories host research activities focused on the field of high power optoelectronic semiconductors for the latest generation of lasers

Focus on CF fiber laser family

May 2016 - New HQ and Technology Center in Torino

The HQTC it is structured in 5000 square meters of which 2500 are dedicated to the corporate offices and 2500 dedicated to the Demo Room and to the hospitality of the customers. The Demo Room hosts 10-12 Prima Power machines, including a whole production line.

Jun 2018 – Investment in Lead Laser Cangzhou (China)

Prima Industrie, through Prima Power brand, already holds a significant share of the Chinese market of high-end machines (3D laser, systems, panel benders), while it still has a limited presence in the market of 2D laser machines. This investment is aimed at increasing the Group's market share in the Chinese market of 2D laser machines, the largest in the world in terms of size and growth rate.

Jun 2018 – New facility in Munich (Germany)

The new location features a large Show Room and well organized areas dedicated to demonstrations, applications, cycle time studies, training, and conferences.

The new location is in the heart of the D-A-CH area, which is strategic for the Group, as it represents the second most important market in Europe after Italy, with 5% of revenues and an installed base of over 1000 machines.

R&D + Additive Manufacturing facility in Torino – Opening 2019

The facility, structured on approx. 3,300 sqm, represents an extension of the HQTC to host the new Prima Additive division in addition to the R&D employees of laser machines development and relevant labs.

New Additive Manufacturing division

Nov 2018 – Finn-Power Oy new Plant in Seinäjoki (Finland)

Finn-Power OY is constructing a new, modern and more efficient building (factory & offices) in the City of Seinäjoki, replacing current location in Kauhava. The new plant is being builtto-suit by a local municipality finance company and will be rented to Finn-Power. Seinäjoki offers a more convenient location in terms of infrastructures, accommodations and hosts several schools and a university.

A history of growth

Revenues

Growth is slowing down

In 2017, the global industrial economy was in its strongest position for at least three years, supported by buoyant global trade. But growth has now peaked, and rising trade tensions come at a time when global industrial activity is already slowing. Despite the global industry slowdown, economic fundamentals remain solid, and will support some growth even amid the intensifying trade frictions.

The weakening of the internal and external growth consensus is confirmed: uncertainties related to the American commercial policy, slowing of growth in various European economies, progressive increase in interest rates, generalized climate of mistrust of companies and families. The slowdown in Italian exports is more pronounced than in other European countries. This can be attributed to the less positive performance in some specific sectors (automotive, agricultural machinery, ..) and destination markets (China, Japan, Russia).

IPG Photonics announced that it expects revenue for the 3Q18 to be approximately USD355- 356m vs old estimates of USD360-390m. In addition, the company added that it expects FY revenue growth to be below the 7-9% range provided on July 31, 2018. Management mentioned that the tariff and trade-related headwinds were the primary driver of weaker than expected performance for business in China and Europe.

Customers in China were more cautious due to heightened political and macroeconomic uncertainties, while order intake in the Americas continued to grow.

We are monitoring the global economy's development very closely. There are increasing signs that this long phase of recovery could soon be over. We want to be prepared for that. In the current fiscal year, despite the general slowdown of the global economy, TRUMPF expects to generate business with a similar level of profitability.

COMMON FACTORS HIGHLIGHTED

• Slow-down of investments in China / Trade war effects
• Uncertainty scenario in Italy
• Slow-down of investments of automotive sector

RESILIENCE PHASE THANKS TO DIVERSIFICATION IN:

• Geographic markets
• Industries addressed
• Product portfolio

INTERNAL GROWTH ENGINES

• Fiber laser & Diodes investments: boost in profitability expected
• Lead Laser investment: fully exploit the relationship
• Additive Manufacturing: add on to turnover and profitability

Market trends:outlook

Despite a more complex trading environment with some experts seeing a temporary peak in certain countries/markets, the medium-term outlook still looks positive for machine tool producers. Some of the main industry drivers supporting the medium-term prospects are as follows:

• the increasing automation in the manufacturing process worldwide and, more in general, from the modernization of the production facilities;
• the decline in product lifecycles and consequent increase in the variety of products that require more flexible systems;
• the continuous quality improvements also to be obtained through more sophisticated and precise production systems and machines;

Market trends: machine tool & laser machines market

Based on Oxford Economics' forecasts (autumn 2018), global machine tool consumption is expected to grow at a 3% CAGR in 2018-2022, after reaching around USD 78bn in 2017 (of which USD 14bn generated from laser systems for materials processing).

Within the machine tool industry laser-based systems are increasingly gaining share inside the material processing segment given the greater precision, processing speeds and flexibility enabled by this technology. Moreover, because laser energy can be delivered remotely with greater precision and power, the trends towards automated production and increasing product complexity and flexibility are helping drive adoption of laser technology.

Economic trends

Net financial position trend

161,6 150,1 141,3 136,4 126,3 100,0 92,1 101,7 84,2 69,6 74,6 0 20 40 60 80 100 120 140 160 180 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 NFP 2,15 2,31 1,85 1,70 2,00 2,50 Debt/Equity

€/mio

M/L term debt refinancing on main operations

Type	Counterparty	Amount (M€)	Interest rate %	Maturity	Timing for reimbursement	Type	Counterparty	Amount (M€)	Interest rate %	Maturity
	INSTITUTIONAL						INSTITUTIONAL
BOND	INVESTOR 1	40	5,875	2022	March 2018	BOND	INVESTOR 2	25	3,50	2025
TERM LOAN	IT BANKS CLUB DEAL	23	3,03	2021	March 2018	TERM LOAN	BANK 1	25	2,08	2022
TERM LOAN	FINN BANKS CLUB DEAL	20	Euribor +2,50	2020	December 2017	TERM LOAN	BANK 2	20	1,75	2022
TERM LOANS	SEVERAL BANKS INSTALMENTS	25	Euribor +1,75 average	2018/19	2018/2019	TERM LOANS	SEVERAL BANKS	45	1,50	2022/2023
TOTAL		108	3,70	2018/2022			TOTAL	115	2,10	2022/2025

Banks involved:

Quarterly order intake since 2011

Quarterly backlog since Dec. 2015

		2019			2020
	B. IMI	Mediobanca	B. Akros	Consensus	B. IMI	Mediobanca	B. Akros	Consensus
	29,0	26,0	28,5		29,0	26,0	28,5
	BUY	NEUTRAL	BUY		BUY	NEUTRAL	BUY
REVENUES	480,9	474,4	474	476,4	495,4	476,8	482	484,7
EBITDA	55,8	54	56	55,3	59,4	54,4	59	57,6
EBIT	38,8	36,7	38	37,8	42,4	36,9	41	40,1
NET RESULT	26,6	25,4	25	25,7	29,4	25	27	27,1
NFP	-63,7	-52,2	-59	-58,3	-50,5	-33,7	-37	-40,4

Released March 4, 2019

Released March 12, 2019

Released March 11, 2019

Regional Highlights (2018)

AMER	23%
USA	20,0%
CANADA	2,1%
APAC	15%
CHINA	9,6%
SOUTH KOREA	1,6%
INDIA	1,0%
EMEA	62%
ITALY	18,4%
SPAIN	5,1%
FINLAND	4,8%
GERMANY	4,6%
FRANCE	3,6%
POLAND	2,9%
RUSSIA	2,9%

Machine revenues by industry (2018)

Prima Industrie solutions can be found in virtually every industry. Our comprehensive product portfolio offers flexible solutions for efficient, reliable and sustainable manufacturing processes used by diversified end markets.

Our customers are also very diversified as company size, ranging from small familyowned companies through big multinational groups.

We serve both Original Equipment Manufacturers (OEMs), which require high or mass production solutions, and industrial subcontractors, which require maximum flexibility for their diversified production mix.

Revenues by technology (2018)

A selection from our 2,000 customers ww

A selection from our 2,000 customers ww

Prima Power Solutions for Industry 4.0 and Smart Manufacturing

Ready for today's production needs… and for tomorrow

Intelligent machines and automated factories collecting real-time and historical data through sensors and cameras

Prima Power software comprehensive portfolio of modular software-based systems

INTELLIGENT MACHINES & FACTORIES SMART SOFTWARE REMOTE DIAGNOSTICS & MAINTENANCE

Data-driven machine diagnostics and predictive maintenance services. Production performance analysis, monitoring of machines status and condition.

Highlights from financial statements as at Dec.31, 2018

Values in €/thousand	ACT 31.12.18	ACT 31.12.17	Change	Change %
Order Intake	471.245	480.640	(9.395)	-2,0%
Backlog	169.367	169.865	(498)	-0,3%
Revenues	466.932	449.503	17.429	3,9%
EBITDA	45.059	43.178	1.881	4,4%
EBITDA%	9,7%	9,6%	0,1%	-
EBIT	28.041	26.296	1.745	6,6%
EBIT%	6,0%	5,9%	0,1%	-
Net Result	24.058	18.668	5.390	28,9%
FCF	(8.802)	21.878	(30.680)	-140,2%
Net Financial Position	(74.639)	(69.632)	(5.007)	-7,2%
Headcount	1.871	1.781	90	5,1%

( % calculated over the revenues)

(headcount in units)

Values in €/thousand	ACT 31.12.18	ACT 31.12.17	Change	Change %
Revenues constant FX	476.553	449.503	27.050	6,0%
EBITDA adj	47.904	45.063	2.841	6,3%
EBITDA adj %	10,3%	10,0%	0,3%	-
EBIT adj	32.212	28.205	4.007	14,2%
EBIT adj %	6,9%	6,3%	0,6%	-

( % calculated over the revenues)

• Revenues up +6,0% at constant exchange rates
• Prima Electro recovery in revenues and margins
• EBIT Adj at 6,9% slightly better than Dec 2017
• Net Profit growth thanks to EPS gain but negatively affected by non recurring costs and refinancing expenses

Shareholding structure

Source: company info + official communications to Consob