Preliminary Full Year Results 2014

17 February 2015

1

Recent highlights

• Awarded with a global bulk order for a leading U.S. OEM:

growth secured beyond 2020 and re-entry into the North American market

• First internationalisation milestone of brake discs:

Joint Venture agreement with Shandong Longji for the Asian market signed

• Implementation of 3 year investment and improvement programme in Powder

Metallurgy on track; margin improvement in H2/2015 expected

• Brazilian subsidiary started operations successfully; profitable from scratch

• Group sales 2014: +17.6 percent to € 430 million

• Adjusted EBITDA 2014: + 13.8 percent to € 40.6 million

• Continuous further improvement of working capital ratio (decreased by 154bp y-o-y)

• Management and Supervisory Board intend to propose a dividend of € 1.00 per share

• Good start into 2015: January group sales up by approx. 13 percent y-o-y to € 36.2m

2

Nomination as global pump series supplier secures long-term growth

Nomination as sole pump supplier for global engine platform for a leading U.S. OEM in China, North-America and Europe

Lifetime volume: up to 5 million variable oil pumps

Lifetime value: up to €160 million

Start of production: North America and Europe (2018), China (2019)

Back-up supplier for comparable programme (lifetime value: approx. € 240 million)

40%

60%

Europe

China /North America

3

SHW Longji Brake Discs JV – a capital optimised cooperation

* Amount is based on the RMB/EUR exchange as of 27.01.2015

Chinese OEM market for quality brake discs offers significant growth potential (Light vehicle production 2014 - 2019: increase by 40 percent from 21.3 million to 29.9 million units)

Sino-Foreign Equity Joint Venture: SHW (51 percent) / Shandong Longji (49 percent)

Business focus: Ready-to-install brake discs for passenger cars and light commercial vehicles (OEM/OES)

Total equity: RMB 215.5 million (approx. € 31.9 million*) SHW: cash contribution splitted over two years Shandong Longji: foundry plus associated machinery, equipment and land use rights

JV partner guarantees to fill the existing production capacity with fixed profit margin

Production capacity from existing aftermarket business will be shifted to OE business as required SHW Longji

Brake Disc JV

JV profitable from day one

Capital efficient and profitable milestone of brake discs internationalisation

4

Efficiency measures implemented in Powder Metallurgy

1. Management changes Integration of Powder Metallurgy with lead functions in Bad Schussenried

Chief Operation Officer installed with extended responsibility

Change of plant management

2. Capacity expansion and capex installations Measures on track (see following slide)

3. Optimisation of SHW production system Continuous Total Productive Maintenance (TPM) installed

Significant reduction of setup times by implementation of SMED (Single Minute Exchange of Die)

Output and labour productivity is scheduled to increase by 30 to 40 percent by end of 2015

Margin improvement scheduled to start at the end of Q2/2015

5

Powder Metallurgy – result-improving measures

Specification Commissioningdate Effect Status

Building expansion Q4/2014 Capacity

Sizing press Q1/2015 Capacity

Powder press Q1/2015 Capacity

Machining cell Q2/2015 Capacity / Ratio

Double disc grinding machine Q3/2015 Capacity / Ratio

Palletizing systems Q3/2015 Ratio

High-speed sizing press Q1/2016 Capacity

Large investments 2014 – 2016

6

Strong sales lead to “growth pains”

€m 2014 2013 Change in %

Group sales 430.0 365.6 +17.6%

Incoming orders 452.7 388.8 +16.4%

Adj. EBITDA 40.6 35.7 +13.8%

Depreciation (excl. PPA) 18.1 14.0 +29.1%

Adj. EBIT 22.5 21.7 +3.9%

Adj. Net income for the period* 15.0 14.1 +5.8%

Adj. EPS** (in €) 2.56 2.44 +5.8%

Working Capital Ratio (%) 7.2 8.7

Capex 34.8 32.8 +6.0%

Free cash flow -5.6 0.4

Net Debt -14.4 -2.9

ROCE (%) 17.7% 19.7%

No. of employees (average) 1,167 1,058 +10.2 %

* Reported Net income for the period: € 10.7m / € 13.4m** Reported EPS: 1.83 / 2.29

7

GroupSales by quarter (€m)

12.4%18.1%16.9%+23.9%

Q4

108.696.7

Q3

109.492.6

Q2

107.391.8

Q1

104.884.6

20142013365.6

17.6%

430.0

2013 2014

Sales (€m)

Improving profitability and strong growth

Q1

11.111.0

6.0

Q2

8.8 9.47.6

Q3

11.1 11.3

Q4

20142013

Adj. EBITDA (€m) Adj. EBITDA by quarter (€m)*

7.1% 8.4% 12.0% 10.3% 12.0% 10.3% 7.8%

* Readjustment of Q2 / Q3 figures due to non-recurring serial start-up costs

8.7%

2014

40.635.7

9.8%

2013

+13.8%

9.4%

8

Increased sales with leading key accounts

14.7

1.9

14.7

2.2

14.7 17.5

2.3

2.2

14.7 17.5

2.3

ThyssenKrupp 11.1

Ford 11.4

Audi 22.4

BMW 40.1

Daimler 60.3

VW 92.9

19.9Volvo Cars

72.4

PSA

32.6

23.4

12.3

6.2Hilite

Other 71.4

36.0

13.2

83.8

9.7

113.4

11.49.3

Porsche 21.820.5

20132014

Sales by customer (€m)

SHW well positioned with German OEMs

9

Pumps and Engine ComponentsSales by quarter (€m)

+20.4%

72.4

Q4

+22.5%

68.6

Q2

+27.2%

80.669.9

Q3

17.2%

84.8

Q1

63.3

85.682.6

20132014

Sales (€m)

Q1

7.58.8

9.5

4.8

Q2

9.0

7.46.2

Q4

9.3

Q3

20142013

Adj. EBITDA (€m) Adj. EBITDA by quarter (€m)*

2014

33.129.3

10.7%

2013

+12.9%

9.9%

274.2

2013

21.7%

333.6

2014

7.6% 9.3% 12.8% 10.9% 13.6%10.8% 8.6% 8.7%

* Readjustment of Q2 / Q3 figures due to non-recurring serial start-up costs

Outstanding growth profile and improving profitability despite capex programme for Powder Metallurgy

10

Brake DiscsSales by quarter (€m)

23.8 24.3

Q3

22.7

-2.2%

21.224.2

Q1

23.2

Q2

24.7

+4.6%6.5%+14.0%

Q4

23.8

Sales (€m)

Q3

2.22.0

Q2

2.5

1.9

2.7

Q4

1.51.7

Q1

2.6

Adj. EBITDA (€m) Adj. EBITDA by quarter (€m)

20132014

20142013

9.1

2013

7.9

8.7%

9.4%

2014

+14.8%

96.5

5.5%

2014

91.5

2013

7.0% 7.2% 11.1% 10.1% 8.7% 9.1% 7.7%11.3%

EBITDA-margin > 10 percent from 2015 onwards

11

Net Working Capital / Sales (LTM)

Medium-term target: 11%

Q1/2014

11.8%

Q4/2013

8.7%

Q3/2013

16.1%

Q2/2014 Q3/2014

11.7%

10.1%

Q2/2013

15.6%

Q1/2013

16.8%

Q4/2014

7.2%

Sales increased by 17.6 percent in 2014; Working Capital Ratio reduced by 17.2 percent y-o-y to 7.2 percent

12

Capex – Depreciation

14.714.7

Capex by quarter (€m)

Q4

10.1

6.3

Q3

6.7

9.3

Q2

8.89.0

Q1

9.28.2

59.2%-27.4%-2.4%12.1%

20142013

Capex (€m)

31.6%32.3%

Q4

4.0

Q3

4.8

22.5%+30.1%

4.9

3.7

Q2

4.5

3.4

Q1

4.0

3.0

Depreciation (€m) Depreciation by quarter (€m)

20142013

2013

32.8

9.0%

+6.0%

2014

34.8

8.1%

18.3

4.2%

2013

+28.8%

2014

14.2

3.9%

Capex ratio will decrease to around 7 percent in 2015

13

Cash flow

5.(€m) Q4/2014 Q4/2013 12M/2014 12M/2013

Cash flow from operating activities 18.3 22.6 29.9 30.4

Cash flow from investing activities -7.8 -6.4 -35.5 30.0

Free cash flow 10.5 16.2 -5.6 0.4

Other (esp. dividends) 0.0 -0.1 -5.8 -22.9

Change in net cash 10.5 16.1 -11.5 -22.5

Improvement of operating cash flow due to positive development in working capital

14

Sound financial profile

Balance sheet as of 31 December 2014 (€m) Balance sheet as of 31 December, 2013 (€m)

Other short termliabilities(35.8%)

Pensions(13.4%)

Currentassets

(43.0%)

Non-currentassets

(56.8%)

Equity(40.3%)

37.9

209.5m

Equity & Liabilites

75.0

14.67.3

28.1

84.5

Assets

0.3

119.0

90.2

Cash(0.1%)

Other short termliabilities(36.0%)

Pensions(13.1%)

Currentassets

(45.3%)

Non-currentassets

(53.2%)

Equity(44.1%)

37.9

187.3m

Equity & Liabilites

67.4

5.77.2

24.5

82.5

Assets

2.8

99.7

84.8

Other long term liabilities(3.9%)

Cash(1.5%)

Other long term liabilities(3.5%)

Bank debt (7.0%)*Bank debt(3.1%)

Equity ratio above industry average* Net financial debt amounts to € 14.4m in 2014

15

2.9%

2019

19.4

2018

19.3

2017

18.7

2016

17.7

2015

17.6

2014

16.8

Source: PwC Autofacts – January 2015

Positive market environment in all major automotive marketsLight vehicle production (< 6 t) – Europe (m units) Light vehicle production (< 6 t) – North America (m units)

2.9%

2019

19.6

2018

18.8

2017

18.3

2016

17.5

2015

17.2

2014

17.0

7.0%

2019

29.9

2018

29.0

2017

27.4

2016

25.0

2015

23.1

2014

21.3

9.2%

2019

6.1

2018

6.0

2017

5.6

2016

5.1

2015

4.4

2014

4.0

CAGRCAGR

CAGR CAGR

Light vehicle production (< 6 t) – China (m units) Light vehicle production (< 6 t) – South America (m units)

SHW benefits from challenging CO2 regulations in all regions

16

Key focus points of management

Strong focus on diligent execution of fully identified efficiency measures in all plants,

especially Powder Metallurgy

Pumps & Engine Components:

• Further market penetration with new technical solutions for transmission oil pumps

(e.g. two stroke vane pump)

• Start of operation in China in the course of H2/2015

• Evaluation of Best Cost Country (BCC) locations in Eastern Europe for

capacity expansion

• Actively monitoring and evaluating potential M&A opportunities

Brake Discs:

• Further automation of aluminium casting assembly process and

capacity expansion for composite brake discs

• Evaluation of further cooperation potentials in the NAFTA region

17

Profit enhancements to be achieved by

• Doubling of composite brake discs sales

• Additional sales volume of pumps and engine components

• Turnaround of Powder Metallurgy

• Reinforcement of the structural organization in 2014 will yield first positive results in 2015

Economies of scale and productivity improvements

Guidance 2015 2014*

Sales approx. € 460 million € 430 million

Adjusted EBITDA € 46 to € 50 million € 40.6 million

Capex € 30 to € 33 million € 35.4 million

Working Capital Ratio sustainable 11 % of sales 7.2 % of sales

* Preliminary figures 2014

18

Closing remarks

New supplier contract with a leading U.S. OEM for its global engine platform further secures long-term future growth of SHW’s pumps business and re-entry into the North American market

Development of Powder Metallurgy business is on track with positive impact on margin expected in H2 2015

Successful completion of Joint Venture negotiations with Shandong Longji

Significant improvement in Working Capital

CO2 reduction continues to be a key topic in the sector

Continuous improvements of profitability

Sound growth story: fastest organically growing automotive supplier

19

Michael SchicklingHead of Investor Relations & Corporate Communications

SHW AGWilhelmstrasse 6773433 Aalen-Wasseralfingen Telephone: +49 (0) 7361 502-462E-Mail: michael.schickling@shw.de

Anja Kathrin SiehlerSenior Manager Investor Relations & Corporate Communications

SHW AGWilhelmstrasse 6773433 Aalen-Wasseralfingen Telephone: +49 (0) 7361 502-469E-Mail: anja.siehler@shw.de

Our Team

20

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