Sabaf — Investor Presentation 2023

Nov 14, 2023

www.sabafgroup.com www.sabafgroup.com

BNP Paribas Exane 6 th MidCap CEO Conference

Paris, 15 th November 2023

Table of contents

• I. COMPANY PROFILE
• II. STRATEGIC MOVES
• III. FINANCIAL PERFORMANCE
• IV. SUSTAINABILITY

COMPANY PROFILE

Sabaf Group: product range evolution in 4 Business Units

SINCE 2000, further expansion since 2019 SINCE 2022

HINGES

• Ovens
• Dishwashers
• Washing machines
• Refrigerators
• Special applications
• Small compartments
• Catering appliances

Sabaf Group: evolution

Sabaf Group: leading producer of components for household appliances and company evolution in 4 Business Units

Sabaf Group: industrial footprint

SABAF MEXICO Burners and hinges

• 2021: 10 production plants
• 2023: 15 production plants (6 in Italy and 9 abroad)
• 1,652 employees at 30^h September 2023

OKIDA ELEKTRONIK Electronics for household

SABAF APPLIANCE COMPONENTS (KUNSHAN)

Valves and burners

8

Special burners

Why invest in Sabaf

Strategy for value creation

Sabaf Group Main shareholders

Pietro Iotti, CEO of Sabaf, owns 2.0%

STRATEGIC MOVES

Strategic moves

Sabaf Induction: business strategy

2

3

4

5

1

The Sabaf Group aims to become a key player in the large induction cooking market

Through this strategic investment Sabaf intends to turn out as leader and innovator not only in the mechanical sector, but also in electronics and new technologies

The inclusion of induction technology will lead the Group to be one of the few players able to fully cover all the three cooking surface technologies (gas, radiant and induction)

Sabaf aims to carry on along the sustainable growth path in the respect of the environment

This project will push Sabaf to a further evolution and deep transformation in the next few years

2023

The Sabaf Group enters the

INDUCTION COOKING SECTOR

Sabaf Induction: business strategy

The European market of induction cooking components, estimated at around €500 million

• Steady growth for several years at a rate of over 10%
• Highly concentrated market with few players (Technological complexity)

Investment plan

• About €5 million in R&D in the period 2021 2023
• Setting up of a dedicated project team in Italy

R&D

MARKET

PROJECT

• Sabaf has developed its own project know-how internally by filing proprietary patents, software and hardware
• Creation of innovative products which better meet manufacturers' needs and new consumer trends
• The Group benefits from the expertise gained from the acquisitions of Okida and P.G.A. where part of the induction cooking components will be produced
• Team of more than 60 electronic engineers

The project technological flexibility will enable Sabaf to offer to its clients customised products

Sabaf Induction: business strategy

• 5 product platforms which cover the whole market (high, medium and basic range) with customisation opportunities
• The first prototypes were released in September 2022
• All electronic parts are designed and manufactured inside the Group's factories
• Pre-series production starting in the second half of 2023
• Production will start in the first quarter of 2024
• Sabaf network for sales and distribution
• Positive customer feedback (agreements with some important players)
• Objective: at least 5% of the non-captive European market by 2025, further expansion in the following years

Mansfield acquisition

The company

• Mansfield Engineered Components LLC is based in Mansfield (Ohio)
• Leading North American manufacturer of hinges for household appliances (mainly ovens, washing machines and refrigerators), designed and manufactured to meet the high quality levels and demanding standards required by the US market
• Founded in 1987 by Bruce, Steven and Claudia Cummins who still own 49%

The acquisition

• 51% of the share capital
• Valuation → USD 21 million
• Call option in favor of Sabaf for the remaining 49% of MEC's share capital
• Put option in favor of the minority shareholders (exercisable from 2025 to 2028)
• Bruce and Steven Cummins will manage the acquired company as CEO and Vice Chairman

The strategy

• The Sabaf Group, already present on the market for hinges for household appliances through its subsidiaries C.M.I. s.r.l. and Faringosi Hinges s.r.l., becomes the leading manufacturer of hinges for household appliances in the Western world.
• The Sabaf Group is thus expanding its industrial footprint and optimizing its production location and supply chain in all the main reference markets, allowing further logistics efficiencies
• The direct presence in the United States, together with Sabaf Mexico, which has recently started the production of burners, will allow us to consolidate relations with major American players with which the Sabaf Group has excellent business relations and which are MEC's historical customers.

▪ The impact of sales in the North American market will account for 27% of the Sabaf Group's turnover, up from 16% in 2022

Capital increase

• In connection with the acquisition, a reserved capital increase - for a total value of € 17.3 million – took place on 20 July 2023
• The capital increase has been fully subscribed by Montinvest s.r.l., a company controlled by Fulvio Montipò (Founder and Chairman of Interpump Group S.p.A.), who is the ideal partner for the Company thanks to his unquestionable entrepreneurial experience.

Widening Industrial Footprint : Sabaf INDIA

SABAF INDIA

• Production: valves and burners for local market and potential export
• Investments: € 5.2 mn in 3 years
• Plot area: 24,000 sqm (built-up area 5,000 sqm)
• Actual capacity: € 6 mn (expandable)
• Sales start: 2Q 2023
• Good outlook for growth in the next 3 years: the rapidly growing Indian market confirms the validity of the investment strategy

Widening Industrial Footprint: Sabaf MEXICO

SABAF MEXICO

• Production: burners for North and Central America markets
• Investments: € 12 mn (plant and machinery) in 3 years
• Plot area: 23,300 sqm (built-up area12,950 sqm)
• Expected capacity: € 9 mn (fully booked and expandable)
• Start of production: 4Q 2023
• Start of sales: 1Q 2024

FINANCIAL PERFORMANCE

Performance data Income statement¹ - IIIQ 2023

			Sequential					YoY
€ x 000	3Q	2023	2Q	2023	% Δ 3Q23 - 2Q23	3Q	2023	3Q	2022	% Δ 3Q23 - 3Q22	12 MONTHS	2022
Revenue	67 944 ,	0% 100	50 899 ,	0% 100	5% 33	67 944 ,	0% 100	55 939 ,	0% 100	5% 21	253 053 ,	0% 100
Start-up sales	(15)		-			(15)		-			-
Hyperinflation - Turkey	(6 603) ,		5 899 ,			(6 603) ,		(1 273) ,			(1 091) ,
Adjusted revenue	61 326 ,	100.0%	56 798 ,	100.0%	+8.0%	61 326 ,	100.0%	54 666 ,	100.0%	+12.2%	251 962 ,	100.0%
EBITDA	10 732 ,	8% 15	4 885 ,	6% 9	7% +119	10 732 ,	8% 15	6 570 ,	7% 11	3% +63	40 092 ,	8% 15
Start-up costs	751		800			751		164			704
Hyperinflation - Turkey	(2 713) ,		2 778 ,			(2 713) ,		(1 546) ,			(4 469) ,
Adjusted EBITDA	8 770 ,	14.3%	8 463 ,	14.9%	+3.6%	8 770 ,	14.3%	188 5 ,	9.5%	+69.0%	36 327 ,	14.4%
EBIT	6 931 ,	10 2%	358	0 7%	+1836 0%	6 931 ,	10 2%	1 979 ,	3 5%	+250 2%	21 887 ,	8 6%
Start-up costs	1 057 ,		983			1 057 ,		188			820
Hyperinflation - Turkey	(1 971) ,		2 897 ,			(1 971) ,		(1 039) ,			(2 838) ,
Adjusted EBIT	6 017 ,	9.8%	4 238 ,	7.5%	+42.0%	6 017 ,	9.8%	1 128 ,	2.1%	+433.4%	19 869 ,	7.9%
result Net	2 787 ,	1% 4	(631)	(1 2%)	7% +341	2 787 ,	1% 4	8 8	2% 0	0% +3067	15 249 ,	0% 6
Start-up costs	1 022 ,		936			1 022 ,		163			756
Hyperinflation - Turkey	1 353 ,		1 517 ,			1 353 ,		3 918 ,			6 077 ,
Adjusted result Net	5 162 ,	8.4%	1 822 ,	3.2%	+183.3%	5 162 ,	8.4%	4 169 ,	7.6%	+23.8%	22 082 ,	8.8%

¹Adjusted income statement: results exclude the impact of the application of IAS 29 (Financial Reporting in Hyperinflationary Economies) and the start-up costs of Sabaf India, Sabaf Mexico and the Induction division. This representation allows a better understanding of the Group's performance and of its comparison with previous periods.

Performance data Income statement¹ - 9 months 2023

EMARKET SDIR
CERTIFIED

			YoY
€ x 000	9 MESI 2023		9 MESI 2022		Δ % 9M23 -9M22	12 MESI 2022
Revenue	176,906	100.0%	201,623	100.0%	3% -12	253,053	100.0%
Start-up sales	(15)		-			-
Hyperinflation - Turkey	(620)		(2,740)			(1,091)
Adjusted revenue	176,271	100.0%	198,883	100.0%	-11.4%	251,962	100.0%
EBITDA	22,146	12.5%	33,456	16.6%	-33 8%	40,092	15.8%
Start-up costs	1,905		430			704
Hyperinflation - Turkey	316		(3,667)			(4,469)
Adjusted EBITDA	24,367	13.8%	30,219	15.2%	-19.4%	36,327	14.4%
EBIT	8,786	5.0%	20,024	9.9%	-56 1%	21,887	8.6%
Start-up costs	2,523		499			820
Hyperinflation - Turkey	1,824		(2,350)			(2,838)
Adjusted EBIT	13,133	7.5%	18,173	9.1%	-27.7%	19,869	7.9%
Net result	1,365	0.8%	13,096	6.5%	6% -89	15,249	6.0%
Start-up costs	2,395		461			756
Hyperinflation - Turkey	4,639		3,918			6,077
Adjusted Net result	8,399	4.8%	17,475	8.8%	-51.9%	22,082	8.8%

¹Adjusted income statement: results exclude the impact of the application of IAS 29 (Financial Reporting in Hyperinflationary Economies) and the start-up costs of Sabaf India, Sabaf Mexico and the Induction division. This representation allows a better understanding of the Group's performance and of its comparison with previous periods.

Sabaf Group: revenues reported by quarter

Amounts in € mn

Third quarter 2023 highlights

POSITIVE

• Sales and margins of 3Q2023 show a clear upward compared to 3Q2022 (double-digit growth)
• Incoming orders back to normal
• Trend of lower energy and raw material costs
• Strong actions for costs reduction

NET INVESTMENTS

• 3Q 2023: €1.9 million, with the largest share going to the start-up of the Mexican plant scheduled for June
• 9M 2023: €13.1 million
• Planned FY 2023: €15 million (mainly for Mexico, India and Induction)

HEADWINDS

• Household appliances market still weak
• Profitability lower than normal due to lower activity levels, but in recovery on a monthly base
• Inflation: personnel costs increase, especially in Turkey

Performance data Adjusted sales by market

	YoY
x 000 €	3Q 2023	3Q 2022
Europe (excluding Turkey)	16 393 ,	17 268 ,	-5 1%
Turkey	14 221 ,	14 093 ,	9% +0
North America	16 495 ,	8 743 ,	7% +88
South America	8 135 ,	6 134 ,	+32 6%
Africa and Middle East	3 617 ,	5 175 ,	1% -30
Asia and Oceania	2 465 ,	3 253 ,	2% -24
Total	61,326	54,666	+12 2%

Performance data Adjusted sales by product

			YoY
x 000 €	3Q 2023		3Q 2022
Gas	34 351 ,	56%	34 375 ,	62%	-0 1%
Hinges	21 159 ,	35%	15 053 ,	28%	6% +40
Electronics	5 816 ,	9%	5 238 ,	10%	0% +11
Total	61,326	100%	54,666	100%	+12.2%

Performance data Balance Sheet

EMARKET SDIR
CERTIFIED

€ 000 x	30/09/2023	30/06/2023	31/03/2023	31/12/2022
Fixed assets	180 274 ,	166 788 ,	176 217 ,	171 276 ,
Inventories	67 394 ,	59 524 ,	65 826 ,	64 426 ,
Trade receivables	63 814 ,	52 801 ,	62 799 ,	59 159 ,
Tax receivables	9 459 ,	8 994 ,	7 166 ,	8 214 ,
Other receivables current	3 631 ,	2 937 ,	3 546 ,	2 910 ,
Trade payables	(40 257) ,	(45 766) ,	(43 932) ,	(39 628) ,
Tax payables	(3 690) ,	(3 036) ,	(2 823) ,	(2 545) ,
Other payables	(14 794) ,	(15 008) ,	(13 326) ,	(13 156) ,
working capital Net	85 557 ,	60 446 ,	79 256 ,	79 380 ,
Provisions for risks and severance indemnity	(9 612) ,	(9 087) ,	(9 478) ,	(10 128) ,
Capital Employed	256 219 ,	218 147 ,	245 995 ,	240 528 ,
Equity Net debt	172 548 , 83 671 ,	144 316 , 73 831 ,	159 643 , 86 352 ,	156 162 , 84 366 ,
Sources of finance	256 219 ,	218 147 ,	245 995 ,	240 528 ,

Performance data Cash flow statement

EMARKET SDIR
CERTIFIED

27

€ x 000	MONTHS 9 2023	MONTHS 12 2022	MONTHS 9 2022
Cash the beginning of the period at	20 923 ,	43 649 ,	43 649 ,
Net profit Depreciation Other income adjustments statement	1 701 , 14 847 , 5 532 ,	15 249 , 18 267 , 1 885 ,	13 096 , 13 674 , 5 263 ,
Change in working capital net - Change in inventories - Change in receivables - Change in payables	1 720 , 107 (16) 1 811 ,	3 890 , 10 312 , (17 156) , (2 954) ,	(2 313) , 3 152 , (10 999) , (10 160) ,
Other changes in operating items	(1 986) ,	(8 154) ,	(8 225) ,
Operating cash flow	21 905 ,	24 293 ,	13 648 ,
of disposals Investments , net Free Cash Flow	(13 064) , 8 841 ,	(20 856) , 3 437 ,	(16 103) , (2 455) ,
Cash flow from financial activity Own shares buyback Dividends Share capital increase Mansfield aquisition PGA acquisition Deconsolidation ARC Handan Forex	(12 452) , (462) - 17 312 , (8 324) , (783) - 521	(8 334) , (1 862) , (6 690) , - - (4 948) , (97) (4 232) ,	2 322 , (1 774) , (6 690) , - - - (97) (439)
Net financial flow	4 653 ,	(22 726) ,	(9 133) ,
Cash the end of the period at	25 576 ,	20 923 ,	34 516 ,

2023 Outlook

In a context in which visibility remains very limited, based on October sales and the order backlog of the following months, the Group expects an increase in revenues for the fourth quarter on a like-for-like basis, both compared to the third quarter of 2023, and compared to the fourth quarter of 2022

SUSTAINABILITY

Sabaf: a sustainable business Sustainability in the Business plan 2021 - 2023

Sabaf's strategy and governance model are aimed towards ensuring long-term sustainable growth. For Sabaf, sustainability is primarily based on sharing values with its stakeholders; compliance with common values increases mutual trust and encourages knowledge development " "

Sabaf: a sustainable business

KPI measurement

	KPI	Unit of measurement	2023 Target vs. 2020	2020 ACTUAL	2021 TARGET	2021 ACTUAL	2022 TARGET	12M 2022 ACTUAL	2023 TARGET	9M 2023 ACTUAL
1	CO 2 emissions/Reven ue	tCO / million 2eq of Euro	-14%	132	<128	111	<120	91	<114	105
2	Hours of training per capita	h	+40%	13.9	>11.0	20.4	>13	25.7	>15	17.3
3	Summary indicator of injuries	-	-44%	177	<140	327	<120	106.8	<100	113.10

NOTES

• KPI 1 CO2 emissions/Revenue = CO² emissions scope 1 + scope 2 market-based / Revenue
• KPI 3 Summary indicator of injuries = injury rate x injury lost day rate x 100
  • injury rate = number of injuries x 1,000,000/total hour worked
  • injury lost day rate = days of absence x 1,000/hours worked

ESG Performance - Corporate Governance

32

32

Remuneration policy

CO² Emissions for the production of electric power (2019 energy mix)

	EMISSIONS ENERCY SOURCE
	g CO /kWh 2eq	Renewable	Fossil	Nuclear
Italy	315	33%	67%	-
France	56	19%	11%	70%
Europe	298	29%	50%	21%
US	374	16%	64%	20%
China	609	26%	70%	4%
India	684	18%	79%	3%
World	521	24%	65%	11%

CO² Emissions of gas hobs vs. induction hobs in Italy (from Journal of Cleaner production)

Source: https://www.sciencedirect.com/science/article/abs/pii/S0959652618308011 Journal of Cleaner production

Article «Comparative life cycle assessment of cooking appliances in Italian kitchens»

Claudio Favi ^a , Michele Germani ^b , Daniele Landi ^b , Marco Mengarelli ^c , Marta Rossi ^{b a} Università degli Studi di Parma ^b Università Politecnica delle Marche ^c Energy Research Institute, Nanyang Technological University

CO² Emissions of gas hobs vs. electric induction hobs

• Gas hob emission 1,050 / induction hob emission 1,590 = 1.51
• CO² emissions Break-Even Point Gas vs. Induction is:

315 / 1.51 = 208 g CO2eq /kWh → equivalent to ~70% of electric power generated by renewable energy sources

A necessary condition for an induction hob to generate lower CO² emissions than a gas hob is that the electricity is produced with a % of renewable sources (or nuclear energy) greater than 70%.

Countries that have less than 70% renewable energy pollute more if they use electric induction hobs than gas.

High efficiency burners

ESG Performance - Environment Hydrogen: project Hy4Heat

The Hy4Heat project aims to establish whether it is technically possible, safe and convenient to replace natural gas (methane) with 100% hydrogen in residential and commercial buildings and gas appliances. The Hy4Heat project is financed by BEIS, (the UK governments Department for Business, Energy, and Industrial Strategy) and involves ten separate work packages

The SABAF Group, through its subsidiary ARC, is involved in Work Package 4, which covers cooking and heating appliances. ARC has developed and produced the burners that have now been specified on the world's first UKCA Certified ranges of 100% hydrogen hobs and cookers. These have been installed on the cooking appliances Glen Dimpex at HyHome, two purpose built houses demonstrating hydrogen appliances in a 'real life' scenario at Low Thornley, near Gateshead in the North of England

Immediately following the Hy4Heat project, cooking appliances incorporating ARC burners will be specified for the Community Trial involving 300 homes commencing in 2022. Beyond the Community Trial, the UK Government intends to commission a 'Village Trial' with around 2,500 homes in 2025 and a 'Town Trial' (10,000 homes) in the latter part of the decade prior to potentially converting the whole UK gas grid to hydrogen over future years

ARC is involved also in Work Package 5B (Commercial hydrogen gas appliance development) which , includes commercial catering equipment where ARC has developed commercial hob burners for Falcon Foodservice Equipment Ltd

DISCLAIMER

Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.

The Company's business is in the domestic appliance industry, with special reference to the gas cooking sector, and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting this business. Forwardlooking statements with regard to the Group's business involve a number of important factors that are subject to change, including: the many interrelated factors that affect consumer confidence and worldwide demand for durable goods; general economic conditions in the Group's markets; actions of competitors; commodity prices; interest rates and currency exchange rates; political and civil unrest; and other risks and uncertainties.

Pursuant to Article 154/2, paragraph 2 of the Italian Consolidated Finance Act (Testo Unico della Finanza), the company's Financial Reporting Officer Gianluca Beschi declares that the financial disclosure contained in this financial presentation corresponds to the company's records, books and accounting entries.

For further information, please contact

Gianluca Beschi - +39.030.6843236 gianluca.beschi@sabaf.it