Industrial Power Transmission Tribby WarfieldVice President, Industrial Division Europe

2

Agenda

● The business today

● Exciting growth opportunities

● Summary

3

Diverse Revenue Base2006 Worldwide PT Sales – $1.58bn

Americas45%

Europe32%

Asia23%

By RegionBy Market

Auto OE35%

Auto Replacement35%

Ind. Replacement

18%

Ind. OE12%

4

Strong Position in Industrial Global Markets

#1 Americas #1 Europe #3 Asia

Gates10%

Gates10%

MBL20%

Bando18%

Dong Il6%

Conti5% Others

31%

FennerIndia

5%

NOK5%

Gates33%

Gates33%

Carlisle24%

Goodyear22%

Dayco5%

Jason5%

Others11%

Gates25%

Gates25%

Opti20%Conti

18%

Others22%

Megadyne10%

Hutchinson5%

5

Global Brand Supplying Market LeadersEurope PT Industrial Sales By Market

IR61%IR

61%IOE39%IOE39%

6

Diverse Drive Belt Product Range2006 Sales by Major Product Group

Synchronous Belts44%V-belts

43%

Micro-V7%

Metal6%

Micro-V®

Predator®Quad-Power® IISuper HC®

MN

Polyflex®

JB™Quad-Power® II

PowerBand®

Poly Chain® GT2

PowerGrip®

GT3

PowerGrip®

HTD®

TransMotion™

SynchroPower®

EuroGrip®

7

For a Wide Range of MarketsIndustrial Machinery

& EquipmentTransportation Aggregates

& Mining

Agriculture Food & Beverage Chemical & Petrochemical

8

Solid Performance In EuropeEurope Industrial PT

Strong Sales(€M)

Gross Margin Growth (€M)

€82

€70

€77

2004 2005 2006

€36€33

€30

2004 2005 2006

8.3%CAGR

9.5%CAGR

9

Number 1 in Europe and Growing

Others22%

Hutchinson5%

Megadyne10%

Conti18%

Opti20%

Gates25%

● Sales growth 2004 - 2006– CAGR in IR – 7%– CARG in IOE – 11%

● Market share position– number 1 in Europe and growing

● New facility in Legnica, Poland– strategically located for emerging

economies– competitive cost base

Market Share

10

Agenda

● The business today

● Exciting growth opportunities

● Summary

11

The Industrial World Needs Belt Drive Solutions

Chemical & Petrochemical

Wood, Pulp & Paper

Transportation

Aggregates & Mining

Agriculture

Food & Beverage

12

End Market Opportunities – Industrial Replacement

Chemical & Petrochemical

20.6M€

Food & Beverage15.0M€Transportation

Equipment9.9M€

Mining & Aggregrates

18.7M€

Metal9.9M€

Water Treatment9.0M€

Ag Replacement16.7M€

Others23.9M€

Industrial Machinery & Equipment

24.5M€

Wood, Pulp & Paper19.7M€

Gates Europe Potential IR €168m + IOE €110m

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Driving Innovative Belt Drive Solutions

Chemical & PetrochemicalReduces on going maintenance cost

Wood, Pulp & PaperLong life in high-shock load applications

Industrial Machinery & EquipmentReduces on going maintenance cost

Food & BeverageEliminates lubrication and product contamination

Mining & AggregatesEliminates downtime and production cost

AgricultureOutperforms chain drives

14

Chemical and Petrochemical Opportunity● Poly Chain® GT2 Drive Systems

– specially designed for Air-Cooled Heat Exchanger Systems

– benefits:– light weight – nickel plated sprockets– ease of installation– durability and reliability– reduces on going maintenance costs 16%

Trends

Growth Drivers

Improving efficiency shapes equipment demand

Increased focus on high quality products

15

Wood, Pulp and Paper Opportunity● Predator® PowerBand® V-Belts

– belt construction featuring aramid tensile cord– designed for extreme shock load applications– benefits:

– extraordinary strength– high durability– minimal stretch– reduced downtime– longer life

Trends

Growth Drivers

Increased demand for paper and board products

Process optimization and energy efficiency

22%

16

Industrial Machinery & Equipment Opportunity

● Gates Value Proposition– on-site drive surveys– benefits:

– audit roller chain drives– compute maintenance savings– reduced downtime– reduce energy and

maintenance cost24%

Trends

Growth Drivers

Higher automation of industrial installations

High demand from Asia for European equipment

17

Food & Beverage Opportunity● Poly Chain® GT2 and

stainless steel sprockets systems

– designed to reduce downtime– benefits:

– no lubrication requirements– no adjustment– no wash down setup– no contamination

19%

Trends

Growth Drivers

Resilient to economical conditions

Consolidation driving full service national contracts

18

Mining and Aggregates Opportunity● Poly Chain® GT2 Systems

– designed for low-speed, high torque applications

– benefits vs. chain:– no lubrication– no adjustment– durability

12%

Trends

Growth Drivers

Heightened demand for minerals

Premium products to meet demanding applications

19

Agriculture Replacement Opportunity● New EPDM Ag Adjustable Speed V-Belt

– designed for combine variable speed drives– benefits:

– high power capacity– high durability– outperforms chain– low-cost vs. alternative technology

● Significant Growth Opportunities

Trends

Growth Drivers

Increased focus on bio-fuels in Western Europe

Eastern Europe and emerging markets

20

Growth Through Strategic AcquisitionsGates Mectrol● Leading North American supplier of polyurethane belts● Added new products and access to new markets● Investing to become world’s leader within 5 years

– long-length belts• increasing capacity of Pfungstadt, Germany

– cast belts and flex line• multi-million dollar investment in state-of-the-art

process and equipment in Salem, New Hampshire

● Growth opportunities include:– food and beverage processing– conveyors– motion control and linear actuators– glass manufacturing

21

Growth in New Markets – Eastern Europe● World’s leading domestic appliance

manufacturers located in Poland– BSH Bosch Siemens– Indesit Company– Whirpool– LG– Electrolux– Fagor

● Washing machine production in Poland increased by 60% in first half 2006

● Industrial Machinery and Equipment key growth market for Czech Republic, Hungary and Slovakia

0

2

4

6

2007 2008 2009 2010

Gates Projected GrowthMillions

of Units

22

Growth Opportunities in Asia● White Goods

– Samsung, LG, Daewoo– Molded Micro-V®

● Truck, Bus & Engine Systems– Daewoo Bus– Hyundai Heavy Equipment

– Belts, Idlers and Pulleys

● Industrial Machine Tools– Doosan Infracore

– PowerBand®

● Lift & Handling– Otis Elevator

– LL8MGT Belt & Pulleys

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Agenda

● The business today

● Exciting growth opportunities

● Summary

24

SUMMARY

Industrial PT Has a Strong Global Platform

● Exciting growth opportunities – range of applications– market growth drivers– new markets

● Technology to meet customer needs

● Competitive cost base

● Europe and Asia key growth markets

Industrial Power Transmission Tribby WarfieldVice President, Industrial Division Europe