capital increase and strategy - kuka

Capital Increase and Strategy Dr. Till Reuter - CEO KUKA AG, Automatica 2010

www.kuka.com KUKA Aktiengesellschaft | Seite 2 I 08. Juni 2010

Systems Robotics

Advanced Robotics Industrial Robotics

Strong positions1

#2 Body-in-white Europe #2 Body-in-white USA

Leading position through quality and innovation

Strong reputation among customers

#1 Europe (Automotive and General Industry)

Among Top 3 worldwide

Strategic targets

BRIC Nations: expand market share

Adjust capacity at Augsburg location

Lightweight robot: next development stage - for health care and assembly

Penetrate market for health-care robotics and high-tech operating systems (market size: USD2 3.3 billion by 2014)

Introduce new generation of industrial robots

Safeguard automotive business

Expand general industry business

Strategy Boost shareholder value

1) KUKA and IFR (International federation of robotics) 2) 2009 study by BCC Research


Offering structure

Public offer in Germany International private placement with institutional investors according to Regulation S

A 1 for 6 rights issue of 4,655,441 new no par value bearer shares of KUKA AG Subscription price for new shares amounts to EUR 9.75 per share Gross proceeds total approx. EUR 45.4mn Firm subscription commitments from core shareholders totalling approx. EUR 9.5mn

EUR 7.5mn from Grenzebach Maschinenbau GmbH EUR 2mn from Wyser-Pratte Management Co., Inc

Further backstop commitment from Grenzebach Maschinenbau GmbH of EUR 7.5mn1

Upfront placement of 730k shares valuing EUR 7.1mn not subscribed for by core shareholders Full dividend entitlement for new shares from January 1, 2010

Transaction structure

1) Backstop commitment for the rump placement if the total subscription and placement amount does not exceed EUR23mn

Consortium Joint Bookrunner: UniCredit and Commerzbank

Capital increase Transaction overview (I)


6 months soft lock-up period for the company 6 months soft lock-up period for Grenzebach Maschinenbau GmbH

Lock-up

Timetable

07 June: Announcement of the transaction 09 June: Beginning of subscription period and rights trading 18 June: End of subscription rights trading 22 June: End of subscription period 23 June: Rump placement 25 June: Settlement / start trading of new shares

Strengthening of balance sheet and funding working capital requirements Development and expansion of the newly formed business unit Advanced Robotics Funding further growth in the business segments Robotics and Systems

Use of proceeds

Capital increase Transaction overview (II)


Shareholder structure pre rights issue Shareholder structure post rights issue1

1) Calculation is based on firm subscription commitments of core shareholders

Free float 60.6%

Wyser- Pratte 8.3%

Grenzebach 26.6%

Free float 63.2%

Wyser- Pratte 7.8%

Grenzebach 25.2%

Capital increase Shareholder structure

KUKA 4.5%

KUKA 3.9%


Expand BRIC1 business

Establish Advanced Robotics business unit

Continue comprehensive cost reduction program

New generation of industrial robots to

safeguard market position automotive and expand

general industry

1 2

3 4

Increase valuation of

KUKA

Strategy

Increase value by profitable growth strategy

1) BRIC: Brasil, Russia, India and China


KUKA QUANTEC

KR C4

smartPAD WorkVisual

New generation of industrial robots: QUANTEC New benchmark for customer value

QUANTEC establishes a new industry standard

Significantly lower production costs (e.g. hardware replaced by software)

Strong increase in customer value

Fewer robot types, therefore complexity substantially reduced

Easy to use through “plug & automate”

Increase applications through innovation focus

1


124

1,034 x 8

General Industry Automotive

Secure automotive and expand general industry

Opportunities from shifts in market structure Secure automotive BRIC/ emerging markets: Growth in car sales lead

to expansion of OEMs’ local manufacturing facilities

Europe: investments in new production technologies (e.g. automation in final assembly)

Expand general industry Low Robot density1 in general industry provides

growth opportunities

1) Robots per 10,000 worker; IFR – World Robotics 2009

1


BRIC markets: expand market share

Orders in BRIC more than doubled in Q1/10

1) Forecast for 2010, Germany Trade & Invest 2) Boston Consulting Group, 2010

Russia 2010 GDP growth forecast1: 3% Automotive market to 20142: 15% KUKA: 17 employees

China 2010 GDP growth forecast1: 9% Automotive market to 20142: 5% KUKA: 138 employees

India 2010 GDP growth forecast1: 6% Automotive market to 20142: 9% KUKA: 57 employees

Brazil 2010 GDP growth forecast1: 5% Automotive market to 20142: 3% KUKA: 55 employees

2


Establish Advanced Robotics

Bundling future projects of KUKA 3

Automotive General industry

Lightweight robots Assembly Health care

Development

Industrial robots Established Established

KUKA’s strong market position based on quality and innovation

New products from the Advanced Robotics unit secure KUKA's profitable growth strategy

Target markets health care and assembly are highly profitable


Cost reduction program

Increase of recurring savings in 2010 4

Areas of activity Processes and structures - Reduction of personnel costs/ overhead Lean production - Capacity flexibilization Purchasing Design to cost - e.g. Quantec Indirect costs e.g. external service providers, etc.

~65-701

(€ millions)

Cost reduction targets

2010 2009

~70

Recurring cost reduction targets

One-off cost reduction targets 1) Cumulated 2009 and 2010


Summary Capital increase is a key building block to secure financing until March 31, 20121 Strategic road map clearly defined and in execution Long-term: transform from automotive components supplier to a hightech company

Outlook for 2010 Economic recovery and turnaround continuing Recurring cost savings of € 65-702 million planned for 2010 Mid single-digit growth in sales Positive operating EBIT (before special items)

Outlook

Positive operating EBIT in 2010

1) Prerequisite: Capital injection and refinancing of convertible bond by August 31, 2011 2) Cumulative 2009 and 2010

New generation of industrial robots: QUANTEC Manfred Gundel - CEO Robotics


KUKA QUANTEC

KR C4

smartPAD WorkVisual

New generation of industrial robots: QUANTEC Lower production costs and higher customer value

New generation of industrial robots: Lower manufacturing costs and higher customer value

Number of robot types for largest market segment reduced by 50%

Payload and reach extended

More applications and reduction of complexity - plug and automate


New generation of industrial robots: QUANTEC Trendsetting technology New mechanics (QUANTEC) 90-300 kg = one robot series 25% less space 12% lighter 25% shorter cycle time 25% less energy

New software (WorkVisual) Efficient programming Faster startup Plug&Play

New controller (KR C4) Software replaces hardware

Open interfaces & standards Quick integration of new apps

Integrated safety for new human-machine applications Energy consumption cut by up to 90%

New operator interface (smartPAD) One operator interface for several robots Different national standards integrated 6D mouse enables efficient programming


New generation of industrial robots: QUANTEC Robot generations compared

Up to 12% lighter and requires 25% less space - reach and payload unchanged

Lighter materials improve dynamic performance and cut cycle times by up to 25%

Energy consumption cut by up to 25%

Smaller footprint expands application possibilities in manufacturing

QUANTEC enables compact cell concepts in the high payload area


Q KUKA

X Competitor X

Y Competitor Y

New generation of industrial robots: QUANTEC Significant performance advantages

Competitive advantages:

Greatest coverage in the "high payload" range

Only one robot series in the largest market segment

QUANTEC is significantly lighter, yet more compact

Tailor made for various AUTOMOTIVE and GENERAL INDUSTRY requirements


2009 2011 2010 2012

Start delivery to automotive

Start delivery to general industry K 2010 (international plastics industry fair) GIFA 2011 (international foundry industry fair)

AUTOMATICA – world premier

Old generation industrial robots completely replaced

New generation of industrial robots - QUANTEC Steps for the change of product program

Automotive, General Industry and BRIC-Nations Martin Sträb - CMO KUKA AG


Secure automotive and expand general industry

Marketing and sales strategy for profitable growth Growth drivers Automotive: investments in innovative

technologies foremost in Europe General industry: - Increasing cost pressure and low robot

density drive demand - Strong market position supports distribution

of new products in Europe - Focus on 7 core sectors BRIC nations: manufacturing relocations

boost demand for robot-based automation solutions


Automotive industry in transition Robotics: orders received strongly

increased by +87.1% in Q1/10 Production starts for new models1:

247 (2011) and 286 (2012) Number of cars manufactured will grow

4.6% and 9.3% p.a. (2010-2014)2

New materials in fuel-efficient and lighter vehicles require new manufacturing systems (e.g., electric and hybrid vehicles, etc.)

Increased demand for flexible production systems in order to cut costs

Secure automotive

Driver of future growth

1) CSM production forecast 2) J.D.Power


Secure automotive

OEM FACTORIES and KUKA locations OEM-manufacturing facilities and KUKA locations

Americas Europe/ South Africa Asia/ Pacific

Arg

entin

a

Bra

zil

Can

ada

Mex

ico

U.S

.

Bel

gium

Ger

man

y

Fran

ce

UK

Aus

tria

Pol

and

Por

tuga

l

Rum

ania

Rus

sia

Sw

eden

Slo

vaki

a

Spa

in

Sou

th A

frica

Cze

ch R

epub

lic

Turk

ey

Chi

na

Indi

a

Taiw

an

Thai

land

Viet

nam


Expand general industry

High potential due to low robot density KUKA advantages About 60% of all industrial robots were

sold to general industry (2008) Robot density (robots per worker): Automotive (Germany): 1,034/ 10,000 General industry: 124/ 10,000 Robot production facilities in Germany

and in China USP due to joint system solutions by

Robotics and Systems (e.g., solutions including lightweight robots from KUKA)


Expand general industry

Differentiate by industry and region

Action plan

Penetrate new market segments

Systematically expand successful sales matrix (region/sector)

Repeat proven solutions Expand network of

systems integrators

Focus on following core sectors of general industry: Metalworking Machine tools Food Plastics Foundries Aerospace Solar

Mostly targeted countries of core sectors: Germany, China, Italy, Japan, Korea and the U.S.


Advantages of KUKA Long time strong customer

contact and local facilities Strong growth with

German OEMs Excellent position in

different business segments

Focus Expanding local partnering Expanding number of local

locations (customer focus & proximity)

BRIC Nations: expand market share

Strong starting position in growth markets

1) (S) stands for Systems and (R) for Robotics 2) As of Dec. 31, 2009 3) Examples only, information not final

Founded1 1

India

Russia

Brazil

China

GI: Nestlé, J&J Automotive: VW, Ford Focus: BIW, metal

G: RSM, CTS Automotive: AvtoVAZ Focus: Metal, food

GI: Indo Rama, BHEL Automotive: VW, Tata, Mahindra & Mahindra Focus: BIW

GI: Huaheng, Brimet Automotive: VW, Chery, JEE Focus : BIW, tabbaco, metal

Founding details: 1997 Headquarters: Sao Paolo

Founding details: 2007 Headquarters: Moscow, Togliatti

Founding details: 2006 Headquarters: Gurgaon, Pune

Founding details: 2000 Headquarters: Shanghai

Employees total: 55 Locations total: 2

Employees total:17 Locations total: 2

Employees: 57 Locations total: 3

Employees total: 138 Locations total: 10

Expanded2 2 Growth3 3

Advanced Robotics Bernd Liepert - CTO KUKA AG


Advanced Robotics

Innovation drives growth and profitability

Established (e.g. welding)

Demanding (e.g., handling)

Sensitive (e.g., final assembly)

Market segments

App

licat

ions

/ ser

vice

s

Collaborative (e.g. health care)

Automotive General industry New segments and other industries

Health care systems

Small, medium-sized companies

Assembly/manufacturing areas (automotive and non-automotive)

KUKA is a market leader in automotive (mechanical and plant engineering/robots)


Assembly systems Robots used in many areas

Rear axle and front axle pre-assembly

Chassis and drive component assembly

Manufacturing applications: engine, transmission, steering, brakes, roof module, seats, etc.

Assembly of: - Doors - Hoods/ hatches - Fenders - Protective cladding Seam sealing Gluing of hybrid materials (aluminum/ CFRP/ steel)

Power train assembly Assembly: painting and car body

Final assembly

Joining chassis modul in car body

Door attachment Cockpit installation Windshield preparation

and installation Sunroof and glass roof

installation Seat installation Gas tank installation Wheel installation Roof liner installation


Industrial robot cell Robot-based assembly

Manual labor

Fixed automation

Assembly systems Assembly focus: today tomorrow

Moderately flexible and large footprint

Significant engineering and programming expense

Little flexibility Expensive customized

solutions Extensive engineering

Very flexible High labor costs

Small footprint No protection necessary New application possibilities due to expanded

performance capabilities Integrated software simplifies programming and

startup


Revenue potential of robot cells

Service

Robot Robot

Service

Engineering and

application Doubling

possible

KUKA: robot technology and systems integration under one roof

Assembly systems:

KUKA can bundle robots and systems integration into one package for automotive

Robots without systems integration

Robots with systems integration

Assembly systems Higher share of wallet


Diagnostics

Surgeries

Therapeutics

Others

Health care

Applications for strong growing health care market

Angiographics & cardiac catheters,

imaging, etc.

General surgery, cardiology, gynecology and urology, etc.

Radiation therapy, new therapies, etc.

Rehabilitation, sports medicine, hospital automation, etc.

Strong growth with high margin

potential


Pickup and delivery services

Automated laboratories (24/7) Home

assisted care

Support invasive OP

Navigation-supported positioning

Patient positioning

ultrasound

Fully automated patient positing

Flexible x-ray C-arm

Reha-robot

Robots helps nurses

Patient lifting

Equipment and room disinfection Appli-

cations

Document access/ PACS

Future applications Existing products

Health care Increasing range of applications

Diagnostic Procedural Rehabilitation Nursing care Support Admin.


This presentation contains forward-looking statements based on assumptions and estimates made by the management of KUKA Aktiengesellschaft. Although management is of the opinion that these assumptions and estimates are accurate, future actual developments and future actual results could deviate significantly from these assumptions and estimates due to a variety of different factors. Some of these factors could, for example, include a change in the overall economic climate, exchange rates and interest rates, as well as changed conditions in the markets themselves. KUKA Aktiengesellschaft makes no guarantees that future developments and actual future results will align with the assumptions and estimates in this presentation, nor does it accept any liability for same. © Copyright 2010 – KUKA Aktiengesellschaft – All rights reserved.

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