Siltronic AG — Investor Presentation 2017

Oct 26, 2017

Siltronic AG Q3/2017 Results

October 26, 2017

© Siltronic AG 2017

MARKET OVERVIEW & CAPEX STRATEGY

……Capabilities, automation and incremental invest to keep stable market share without providing excess capacity to the market …..

Highlights Q3/2017: Financials

Market highlights

Semiconductors

• Semiconductor market continued its strong growth in August
• Units grew +14.8% y-o-y (3MMA)

Silicon wafer demand

Silicon shipment volumes forecast to be 11,448 million square inches in 2017, 8.2% up y-o-y

Price increases

• Price increases for 300 mm wafers continued
• Substantial price increase for 200 mm wafers reached
• Siltronic negotiated additional price increases for Q4

Competition

Wafer suppliers continue to report strong demand for all diameters, with fully utilized 200 mm and 300 mm lines

Source: WSTS up to August 2017, SEMI press release October 16, 2017

Siltronic will incrementally add 70kWfr/month by mid-2019

• 2017/18 only debottlenecking / OEE improvement possible
• Decision taken to add ~70kWfr/month by mid-2019: around 15-18 months lead-time
• Capacity extension supported by LTAs & customer prepayments
• Keep 300mm market share of ~ 15%
• Invest of EUR ~2m need per 1kWfr/month
• Capable cleanroom space and facilities available
• Siltronic will continuously invest to support the market growth and to keep stable market share and to ensure long term prices stay on reinvest level

FINANCIALS Q3/2017

…price increases accelerate continuous improvement …….

Q3 sales development driven by increased prices

• Positive
• Slight volume growth q-o-q, especially in smaller diameters
• Higher wafer prices for 300mm and 200mm in Q3
• ASP up y-o-y and q-o-q
• Further price increases negotiated for Q4

Negative

Some headwind from USD q-on-q

Positive development of EBITDA and EBITDA margin mainly due to higher ASP

Comments

• Positive
• Higher ASP y-o-y and q-o-q
• Successful cost reduction program continued – cost of sales per wafer area decreased

Siltronic AG – Q3/2017 Results October 26, 2017 8 of 19

Positive development of net result due to price increases

Result and income tax, in EUR million

Comments

• Net profit of EUR 75.8m in Q3/2017
• Price increases and lower cost of sales per wafer area had positive effects
• EUR 9.8m effective taxes
• Potential future tax advantages based on tax losses carried forward not capitalized (accounting policies)

Equity ratio of ~50% Net financial assets of EUR 295m

Balance sheet, in EUR million

Assets	Sep 30, 2017	Dec 31, 2016	Comments Sep 30, 2017	Equity and liabilities	Sep 30, 2017	Dec 31, 2016	Comments Sep 30, 2017
Non-current	516.1	554.1		Equity	588.3	425.3
PP&E	481.2	519.8		Siltronic	590.6	431.9
Other fixed	34.9	34.3	24 intangibles (related to SSW) 3 hedging	Other shareholders	-2.3	-6.6	Samsung's 22% in SSW
Current	668.6	502.7		Liabilities	596.4	631.5
Inventories	143.3	140.9		Pension	340.5	395.1	Germany and US
Trade receivables	150.3	118.2		provision Other provisions	65.3	51.1	43 personnel related (e.g. early retirement)
Other current	40.8	28.2	16 hedging	Financial debt	39.4	40.4	Samsung
				Trade liabilities	79.0	81.6
Cash and fixed term deposits	334.2	215.4		Other	72.2	63.3	27 prepayments 38 employee-related 2 hedging
Total	1.184,7	1,056.8		Total	1.184,7	1,056.8

Fluctuations in pension provision due to interest rate movements

Comments

• Changes in interest rates influence evaluation of pension provision
• Change in interest rates directly reflected in equity (OCI)

Siltronic AG – Q3/2017 Results October 26, 2017 11 of 19

Net financial assets nearly doubled since IPO

Net financial assets, in EUR million

Dividend policy introduced in September 2017

• Pay-out ratio of ~40% of net shareholder earnings based on IFRS standards
• Dividend for 2017 payable in 2018
• depending on approval of Annual General Meeting in April 2018
• High cash flow supports dividend payment

Capex will rise to EUR ~200m in 2018

Comments

• Capex of EUR ~140m for 70k wafers/month over 2 years
• Exchange of ingot pullers (capability improvement) in Freiberg to be completed in 2017
• First preparations already needed in 2017 to incrementally increase capacities in following years
• Capex base level to sustain business:
• MOB (maintenance of business)
• Capabilities
• Cost reductions
• Automation

Increasing free cash flow generation

FCF Capex

• Repayment of prepayments:
• EUR ~5m per quarter
• Customer prepayments
• EUR 17.3 m received up to Q3/2017 for product mix optimization
• Expect further prepayments in 2017 and 2018

Capex 2017: EUR ~120m

Siltronic AG – Q3/2017 Results October 26, 2017 14 of 19

OUTLOOK

……a positive outlook in Q4/2017 and beyond…..

Siltronic Outlook 2017 (Update as of October 26, 2017)

EBITDA margin	at least 29% update
ROCE	substantially higher than in 2016, considerably higher than WACC
Free Cash Flow	clearly positive; by far above 2016
Sales	at least EUR 1.16bn update
R&D	approx. 6% of sales update
Cost Position	potential savings of around EUR 15m to EUR 20m
Hedging Expenses	below EUR 10m update
Depreciation	on the level of 2016
Tax rate	below 20% update
Financial Result	roughly EUR 10m interest expense
Earnings per Share	significantly higher than in 2016
CapEx	around EUR 120m due to prepayments in brownfield extensions in 2019 update

Contact and Additional Information

Issuer and Contact Siltronic AG Hanns-Seidel-Platz 4 D-81737 München Investor Relations: Petra Mueller email: petra.mueller@siltronic.com Tel. +49 89 8564-3133 Additional Information ISIN: DE000WAF3001 WKN: WAF300 Deutsche Börse: WAF Listing: Frankfurt Stock Exchange Prime Standard Financial Calendar Full Year 2017 Results March 5, 2018 Annual General Meeting April 19, 2018 Q1 2018 Results April 25, 2018

Q2 2018 Results July 25, 2018

Q3 2018 Results October 25, 2018

Disclaimer

The information contained in this presentation is for background purposes only and is subject to amendment, revision and updating. Certain statements contained in this presentation may be statements of future expectations, future financial performance and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties. In addition to statements which are forward-looking by reason of context, including without limitation, statements referring to risk limitations, operational profitability, financial strength, performance targets, profitable growth opportunities and risk adequate pricing, words such as "may", "will", "should", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "continue", "projects" or "seeks", "potential", "future", or "further" and similar expressions may identify forwardlooking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions which could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These include, among other factors, changing business or other market conditions, currency and interest fluctuations, introduction of competitive products, poor acceptance of new products and services, change of the corporate strategy and the prospects for growth anticipated by the management. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Siltronic AG does not undertake and does not intent to undertake any obligation to update or revise any statements contained in this presentation, whether as a result of new information, future events or otherwise. In particular, you should not place any reliance on forwardlooking statements which speak only as of the date of this presentation.

SILTRONIC AG | Hanns-Seidel-Platz 4

81737 Munich Germany