Vossloh AG

Quarterly Report • Nov 19, 2018

Quarterly statement as of September 30, 2018

Werdohl, October 25, 2018

Driving Innovation. Developing Potential.

Disclaimer

Note:

This presentation contains statements concerning the future business performance of the Vossloh Group that are based on assumptions and estimates from the Company management. If the assumptions that the projections are based on fail to occur, the actual results of the projected statements may differ substantially. Uncertainties include changes in the political, commercial and economic climate, the actions of competitors, legislative reforms, the effects of future case law and fluctuations in exchange rates and interest rates. Vossloh and its Group companies, consultants and representatives assume no responsibility for possible losses associated with the use of this presentation or its contents. Vossloh assumes no obligation to update the forecast statements in this presentation.

The information contained in this presentation does not constitute an offer or an invitation to sell or buy Vossloh AG shares or the shares of other companies.

Vossloh Group: Driving Innovation. Developing Potential.

Guidance confirmed and further detailed, order backlog well above the previous year

Performance of business after 9 months of 2018	 Sales and EBIT below the previous year's figures, as expected, particularly due to project related, temporary sales weakness in the high-margin China business  Guidance for the full year 2018 confirmed – sales and EBIT margin expected to be at the lower end of the communicated range
Order situation	 Orders received in the Vossloh Group above the previous year, book-to-bill at 1.1  Additional significant orders received are expected in the Fastening Systems business unit in China in the fourth quarter
InnoTrans 2018	 Vossloh presents "The Smart Rail Track by Vossloh" at the world's largest trade fair for rail technology in Berlin  Innovative system solutions, such as joint development with Frauscher Sensortechnik GmbH for example in the area of the condition monitoring of rail infrastructure for highest track availability and maximum customer added value
Portfolio changes	 Expected merger control clearance of the acquisition of Austrak in the course of 2018  Status of the sale of Transportation: Sales discussions with several potential buyers continuously intensive; signing of a contract expected in 2018

Sales and EBIT down year-over-year as anticipated

Key group indicators1)		1-9/2017	1-9/2018
Sales revenues	€ mill.	683.2	623.2
EBIT	€ mill.	56.6	35.2
EBIT margin	%	8.3	5.7
Net income	€ mill.	22.0	12.6
Earnings per share	€	0.92	0.57
Return on capital employed (ROCE)	%	9.5	6.0
Value added	€ mill.	12.0	(8.9)
Free cash flow2)	€ mill.	(40.1)	(45.3)
Capital expenditure	€ mill.	21.1	37.2
Depreciation/amortization	€ mill.	22.0	26.6

1) Prior-year figures adjusted due to the treatment of the Locomotives business unit as discontinued operations

2) Includes the effects of discontinued operations; free cash flow comprises the cash flow from operating activities, investments in intangible assets and property, plant and equipment, and cash receipts and payments associated with companies accounted for using the equity method

Notes

Sales revenues in the Core Components division down year-on-year; decline also attributable to negative exchange rate effects

EBIT decrease primarily a result of project-related sales development at Core Components; EBIT in the previous year at CM boosted by reversal of an impairment

• Net income in line with EBIT development, partially offset by an improved result from discontinued operations
• Free cash flow deteriorated slightly; significantly positive free cash flow expected in Q4/2018
• Capital expenditure significantly above the previous year; largest single investment involves the modernization of the production plant for manganese frogs at Customized Modules

Equity ratio unchanged above 40%, net financial debt higher

1) Key group indicators		1-9/2017/ 9/30/2017	1-12/2017/ 12/31/2017	1-9/2018/ 9/30/2018	Notes
Equity	€ mill.	563.2	532.4	520.1
Equity ratio	%	43.6	42.5	42.9
Working capital (Ø)	€ mill.	213.9	211.6	214.3
Working capital intensity (Ø)	%	23.5	23.0	25.8
Working capital (closing date)	€ mill.	219.1	190.0	242.7
Capital employed (Ø)	€ mill.	793.3	788.3	785.0
Capital employed (closing date)	€ mill.	788.2	758.7	825.7
Net financial debt	€ mill.	225.9	207.7	287.4

• Equity lower than at the end of 2017 partially due to dividend payments
• Average working capital almost unchanged compared to the previous year; significant reduction of closing working capital expected in Q4/2018
• Average capital employed slightly lower; as of September 30, 2018 above the previous year due to higher working capital and higher capital expenditure
• Net financial debt higher than at the end of 2017 primarily due to negative free cash flow as well as dividend and interest payments
• Planned repayment of a Schuldschein loan from 2013 (€50 million) shortly before execution

Orders received increase by 4.8%, order backlog 9.7% higher

Notes

• Orders received increased particularly as a result of significantly higher orders received at Vossloh Fastening Systems (China, Turkey, Italy); orders received at Customized Modules lower than in the previous year primarily for exchange rate and consolidation-related reasons
• Book-to-bill ratio of the Group at 1.1, book-to-bill > 1 in all business units
• Additional significant orders received expected in the fourth quarter at VFS in China
• Higher order backlog in the Core Components division in both the VTT and VFS business units; high order backlog at Customized Modules caused by an increase at the companies in the USA and India

Core Components division (CC)

Sales lower year-on-year for project-related reasons, profitability at 12%

Fastening Systems business unit (VFS)

Weak sales development in Q3, high sales expected in Q4

Tie Technologies business unit (VTT)

Order situation continues to improve, book-to-bill at 1.18

Positive development in orders received in the second quarter further continues

9

9/30/2017: 25.5

(€ mill.)

Customized Modules division (CM)

Sales slightly above the previous year, book-to-bill greater than 1

• Significant adverse impact on sales through currency translation effects and changes in the scope of consolidation; nevertheless slightly higher year-on-year primarily due to good business development in Poland, Italy, Australia and Canada; however, particularly significant lower sales contributions from Morocco
• EBIT in the previous year positively impacted by the reversal of an impairment loss in China; without this effect, profitability higher in 2018; also lower contributions to earnings at the French locations; US business slightly better in a still challenging market environment

ROCE (%)	1-9/2018:	6.3
	1-9/2017:	7.5
Value added	1-9/2018:	(3.8)
(€ mill.)	1-9/2017:	0.2

Lifecycle Solutions division (LS)

Sales slightly higher year-on-year, EBIT margin clearly improved

Notably higher sales in Eastern/Southern Europe, Asia below 2017 as expected

Vossloh Group, 2018 outlook

Guidance for 2018 in general confirmed and further detailed

Sales trend toward the lower end of the range (€875 – 950 million): Attributable in part to negative exchange rate effects; downward trend in the Core Components division due to an anticipated temporary weakening in the performance of Vossloh Fastening Systems in China; higher sales forecast for Customized Modules and Lifecycle Solutions

EBIT margin at the lower end of the range (6.0 – 7.0 %): Core Components division below the high level of the 2017 fiscal year, Customized Modules at the previous year's level, Lifecycle Solutions noticeably better

Financial calendar and contact information How to reach us

Financial calendar
 March 28, 2019	Annual Report 2018
 May 22, 2019	Annual General Meeting
Contact information for investors:	Contact information for the media:
 Dr. Daniel Gavranovic	 Dr. Thomas Triska
 Email: investor.relations@vossloh.com	 Email: presse@vossloh.com
Phone: +49 (0) 23 92 / 52-609	Phone: +49 (0) 23 92 / 52-608

Income statement1)

€ mill.	1-9/2017	1-9/2018
Sales revenues	683.2	623.2
Cost of sales	(522.8)	(481.5)
General administrative and selling expenses	(110.8)	(108.6)
Research and development costs	(7.5)	(8.1)
Other operating result	12.9	8.0
Operating result	55.0	33.0
Income from investments in companies accounted for using the equity method	(0.1)	0.9
Other financial result	1.7	1.3
Earnings before interest and income taxes (EBIT)	56.6	35.2
Interest income	3.0	0.5
Interest expenses	(13.7)	(10.7)
Earnings before income taxes (EBT)	45.9	25.0
Income taxes	(10.8)	(9.5)
Result from continuing operations	35.1	15.5
Result from discontinued operations	(13.1)	(2.9)
Net income	22.0	12.6
thereof attributable to shareholders of Vossloh AG	14.7	9.2
thereof attributable to noncontrolling interests	7.3	3.4
Earnings per share
Basic/diluted earnings per share (in €)	0.92	0.57
thereof attributable to continuing operations	1.74	0.76
thereof attributable to discontinued operations	(0.82)	(0.19)

Balance sheet1)

Assets (in € mill.)	9/30/2017	12/31/2017	9/30/2018	Equity and liabilities (in € mill.)	9/30/2017	12/31/2017	9/30/2018
Intangible assets	297.4	280.4	280.8	Capital stock	45.3	45.3	45.3
Property, plant and equipment	212.2	212.5	224.9	Additional paid-in capital	146.5	146.5	146.7
Investment properties	2.8	2.8	2.5	Retained earnings and net income	344.3	321.7	308.6
Investments in companies accounted for using the equity method	43.4	64.2	65.8	Accumulated other comprehensive income	3.3	3.9	1.4
Other noncurrent financial instruments	13.7	8.9	9.3	Equity excluding noncontrolling interests	539.4	517.4	502.0
Other noncurrent assets	3.2	3.5	3.7	Noncontrolling interests	23.8	15.0	18.1
Deferred tax assets	36.9	23.7	20.0	Equity	563.2	532.4	520.1
Noncurrent assets	609.6	596.0	607.0	Pension provisions	24.9	22.4	22.8
Inventories	172.5	154.3	182.6	Other noncurrent provisions	23.8	23.9	20.2
Trade receivables	215.8	210.3	207.5	Noncurrent financial liabilities	299.4	248.8	252.2
Contract assets	12.4	6.6	9.0	Other noncurrent liabilities	3.8	4.6	2.0
Income tax assets	6.4	7.8	5.3	Deferred tax liabilities	16.7	12.8	4.4
Other current assets	49.7	43.2	37.3	Noncurrent liabilities	368.6	312.5	301.6
Short-term securities	0.7	0.5	0.5	Other current provisions	48.3	44.4	39.0
Cash and cash equivalents	85.5	96.3	52.8	Current financial liabilities	12.6	55.7	88.5
Current assets	543.0	519.0	495.0	Current trade payables	137.4	141.9	119.4
Assets held for sale	138.0	137.9	111.4	Current income tax liabilities	9.9	6.3	5.5
				Other current liabilities	79.2	72.7	80.2
				Current liabilities	287.4	321.0	332.6
				Liabilities held for sale	71.4	87.0	59.1
Assets	1,290.6	1,252.9	1,213.4	Equity and liabilities	1,290.6	1,252.9	1,213.4

Assets (in € mill.)	9/30/2017	12/31/2017	9/30/2018	Equity and liabilities (in € mill.)	9/30/2017	12/31/2017	9/30/2018
Intangible assets	297.4	280.4	280.8	Capital stock	45.3	45.3	45.3
Property, plant and equipment	212.2	212.5	224.9	Additional paid-in capital	146.5	146.5	146.7
Investment properties	2.8	2.8	2.5	Retained earnings and net income	344.3	321.7	308.6
Investments in companies accounted for using the equity method	43.4	64.2	65.8	Accumulated other comprehensive income	3.3	3.9	1.4
Other noncurrent financial instruments	13.7	8.9	9.3	Equity excluding noncontrolling interests	539.4	517.4	502.0
Other noncurrent assets	3.2	3.5	3.7	Noncontrolling interests	23.8	15.0	18.1
Deferred tax assets	36.9	23.7	20.0	Equity	563.2	532.4	520.1
Noncurrent assets	609.6	596.0	607.0	Pension provisions	24.9	22.4	22.8
Inventories	172.5	154.3	182.6	Other noncurrent provisions	23.8	23.9	20.2
Trade receivables	215.8	210.3	207.5	Noncurrent financial liabilities	299.4	248.8	252.2
Contract assets	12.4	6.6	9.0	Other noncurrent liabilities	3.8	4.6	2.0
Income tax assets	6.4	7.8	5.3	Deferred tax liabilities	16.7	12.8	4.4
Other current assets	49.7	43.2	37.3	Noncurrent liabilities	368.6	312.5	301.6
Short-term securities	0.7	0.5	0.5	Other current provisions	48.3	44.4	39.0
Cash and cash equivalents	85.5	96.3	52.8	Current financial liabilities	12.6	55.7	88.5
Current assets	543.0	519.0	495.0	Current trade payables	137.4	141.9	119.4
Assets held for sale	138.0	137.9	111.4	Current income tax liabilities	9.9	6.3	5.5
				Other current liabilities	79.2	72.7	80.2
				Current liabilities	287.4	321.0	332.6
				Liabilities held for sale	71.4	87.0	59.1
Assets	1,290.6	1,252.9	1,213.4	Equity and liabilities	1,290.6	1,252.9	1,213.4

Vossloh Group Key figures (1/2)

		Core Components		Fastening Systems		Tie Technologies
		1-9/2017	1-9/2018	1-9/2017	1-9/2018	1-9/2017	1-9/2018
Sales revenues	€ mill.	268.1	203.3	208.9	155.0	60.3	50.1
EBIT	€ mill.	39.9	24.9
EBIT margin	%	14.9	12.2
Working capital (Ø)	€ mill.	65.9	68.7
Working capital intensity (Ø)	%	18.4	25.3
Capital employed (Ø)	€ mill.	225.7	218.4
ROCE	%	23.6	15.2
Value added	€ mill.	27.2	12.6	31.0	17.5	(3.9)	(4.9)
Orders received	€ mill.	199.2	249.9	149.2	192.3	51.0	59.3
Order backlog (closing date 9/30)	€ mill.	148.7	183.2	123.2	137.6	25.5	45.5
Capital expenditure	€ mill.	7.9	8.2	6.0	4.0	1.9	4.2
Depreciation/amortization (before write-ups)	€ mill.	12.5	11.9	5.9	5.1	6.6	6.8

17

Vossloh Group Key figures (2/2)

		Customized Modules		Lifecycle Solutions
		1-9/2017	1-9/2018	1-9/2017	1-9/2018
Sales revenues	€ mill.	353.2	356.0	67.7	69.7
EBIT	€ mill.	24.2	20.4	4.0	4.9
EBIT margin	%	6.9	5.7	5.9	7.1
Working capital (Ø)	€ mill.	141.5	136.5	12.1	12.4
Working capital intensity (Ø)	%	30.0	28.8	13.4	13.4
Capital employed (Ø)	€ mill.	427.4	430.0	135.3	137.6
ROCE	%	7.5	6.3	3.9	4.8
Value added	€ mill.	0.2	(3.8)	(3.6)	(2.8)
Orders received	€ mill.	391.4	366.7	67.8	72.6
Order backlog (closing date 9/30)	€ mill.	317.7	337.4	29.4	25.0
Capital expenditure	€ mill.	9.1	17.5	3.6	11.2
Depreciation/amortization (before write-ups)	€ mill.	10.1	9.8	5.0	4.5

Cash flow statement1)

€ mill.	1-9/2017	1-9/2018
Earnings before interest and taxes (EBIT)	56.6	35.2
EBIT from discontinued operations	(10.7)	(2.9)
Amortization/depreciation/impairment losses of noncurrent assets (less write-ups)	24.8	28.0
Change in noncurrent provisions	0.5	(1.4)
Gross cash flow	71.2	58.9
Income taxes paid	(23.2)	(11.4)
Change in working capital	(78.9)	(47.6)
Other changes	16.2	(10.0)
Cash flow from operating activities	(14.7)	(10.1)
Investments in intangible assets and property, plant and equipment	(22.6)	(35.3)
Investments in companies accounted for using the equity method	(3.3)	0.0
Cash-effective dividends from companies accounted for using the equity method	0.5	0.1
Free cash flow	(40.1)	(45.3)

Employees

	Closing date		Average
Employees	9/30/2017	9/30/2018	1-9/2017	1-9/2018
Core Components	849	789	856	782
Customized Modules	2,573	2,409	2,535	2,403
Lifecycle Solutions	478	517	468	500
Vossloh AG	65	64	62	63
Total	3,965	3,779	3,921	3,748

Price performance, share information and shareholder structure

Information on the Vossloh share
ISIN	DE0007667107
Trading locations	Xetra, Düsseldorf, Frankfurt, Berlin, Hamburg, Hanover, Stuttgart, Munich
Index	SDAX
Number of outstanding shares on 9/30/2018	15,967,437
Share price (9/30/2018)	€44.85
High price/low price January to September 2018	€50.40/€36.55
Market capitalization (9/30/2018)	€716.1 million
Reuters code	VOSG.DE
Bloomberg symbol	VOS GR

Shareholder structure in %

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Driving Innovation. Developing Potential.