Oerlikon Textile -focused and flexible for volatile markets...Himson/Alidhra Chonglee Hongyuan TMT Oerlikon Barmag Yuejian Haiyuan Guidici Jwell Jingwei Market Growth 2006-2010: +

Oerlikon Textile - focused and flexible for volatile markets

Dr. Carsten Voigtländer, CEO Oerlikon Textile

Oerlikon Capital Market Days 2008Zurich, September 25-26, 2008

Page 2 Oerlikon Capital Market Days 2008

Disclaimer

This presentation is based on information currently available tomanagement. The forward-looking statements contained herein could be substantially impacted by risks and influences that are not foreseeable at present, so that actual results may vary materially from those anticipated, expected or projected.


Oerlikon Drive Systems

Oerlikon Coating

Oerlikon Vacuum

Oerlikon Components

Oerlikon Solar

Oerlikon Textile

Oerlikon Textile


§ Introduction

§ Business Units

§ Textile Trends 2015

§ Strategy

§ Summary

Agenda


Oerlikon Textile – Total solutions provider

PlantsProcesses

Machines

Components


Oerlikon Textile - Main locations

China Mid range products for Chinese markets

IndiaMid range productsfor Indian markets

SingaporeMid range components

EuropeHigh end machinesand components

OTX Common Sales & Service

OTX Production


Oerlikon Textile 5 strong brands

Oerlikon Textile Strongest textile engineering company

Oerlikon Textile First choice for customers

Oerlikon Textile More than 7,000 high skilled employees

Oerlikon Textile Success in Asia

Oerlikon Textile High innovation power

Oerlikon Textile – Who we are:


Average sales split:

14% 26% 38% 12% 10%



Oerlikon Textile Strongest textile engineering company

§ From feasibility study to guarantee out of one hand

Planning Realization

Start up Production


Fibers

Nonwoven

Filament

Staple Yarn

Twisting

Embroidery

Textile Components

Reifenhäuser

Zimmer

TMT

CTMTC

Savio

Lässer

Rieter

Swisstex

NSC

Hongyuan

Rieter

Rifa

Others

Others

Competence Leader Follower Others

Oerlikon Textile First choice for customers


Oerlikon Textile More than 7,000 high skilled employees

§ 600 Researchers create new products

§ 650 Sales engineers consult our customers

§ 300 Experts for Textile Plant Engineering

§ 4200 Skilled employees produce our machines

§ 800 Service engineers are the helping hands

§ 600 Supporters let everything run


°°

°

°

°

°°°

°°

°

°°

°

°

°°

°

°

°

°

°°

°

°

°

°

30%

17% 14%

35%

20%14%

Americas Europe Asia

Oerlikon Textile Success in Asia is the key

95 95 9502 02 0206 06 06

72%

63%

35%


Oerlikon Textile High innovation power

§ 4,000 Active patents

§ 250 New patents 2007

§ 600 Researchers

§ CHF 100 m R&D Budget


Oerlikon Textile Financials at a glanceSales

0

500

1.000

1.500

2.000

2.500

3.000

2004 2005 2006 (proforma) 2007

in M

io C

HF

EBIT

0

50

100

150

200

250

2004 2005 2006 (proforma) 2007

in 2006 excl. impairment

in M

io C

HF

• OTX is constantly exceeding market growth rates

• Consecutive years of solid profitability

EBITDA

0

50

100

150

200

250

300

2004 2005 2006 (proforma) 2007

in M

io C

HF


§ Introduction

§ Business Units


§ Strategy

§ Summary

Agenda


Oerlikon Textile – Business Units


Oerlikon Neumag – Final products

Staple Fiber

Carpet Fiber

Nonwoven


74%

17%

9%

Nonwoven Fibers BCF

Oerlikon Neumag – Market leader, No.2 in Nonwoven

0

20

40

60

80

100%

Others

NSCDilo

RieterZhenzhou

Trützler/Fleissner

Reicofil

OerlikonNeumag

CelliDanwebTrützschler

§Nonwoven: New applications and technological innovations

§BCF: few large US & European customers dominate market; smaller customers in different regions

§Fibers: Governmental interventions, utilization levels, timing of projects

Influencing factors

Market Growth 2006-2010:

+ 8%

Average Market Volume: CHF 1,050m

Oerlikon NeumagAverage Market Share: 25%


Oerlikon Neumag – Executive summary

§ Full Nonwoven product portfolio § Covering most growing technologies§ Strong to very strong market position in Fibers and BCF§ Pilot Plants for all processes§ Well positioned in China§ Growth in nonwoven, especially spunlaid§ Strong growth in high-margin service § Continued strong growth in Asia




Oerlikon Barmag – Final products

4POY/DTY products: apparel, hosiery, intimates, home textiles, seat covers

4FDY products: sports-wear, apparel, home textiles, seat covers

4Industrial yarn products: air-bags, ropes, seat belts, tires, tarpaulins


68%

7%

25%

Textile yarn Industrial yarn Texturing

Oerlikon Barmag – As creative as the market

Influencing factors

§ Technology:Markets are very much driven by new breakthrough technologies

§ Governmental interventions (e.g. subsidies, tax exemptions)

§ POY/FDY: utilization levels, timing of projects

§ raw materialprices and supply outlook

0

20

40

60

80

100%Other

Himson/Alidhra

Chonglee

Hongyuan

TMT

OerlikonBarmag

YuejianHaiyuan

GuidiciJwellJingwei


+ 3%


Oerlikon BarmagAverage Market Share: 48%


Oerlikon Barmag – Executive summary

§ Technological and innovation leader§ High Brand recognition in the market§ Strong footprint in Asia (China)§ High customer intimacy§ Developed from machine to engineering business § Success of new products (game changer)§ Recovery in the FDY market




4Yarns for business and casual wear, fashion fabrics, sports wear, home textiles and technical textiles

4Comfort stretch forSuiting fabrics trousers

Oerlikon Schlafhorst – Final products


26%

38%

10%

26%

Prespinning Ring Rotor Winding

Oerlikon Schlafhorst – Overall market to decrease by 4% p.a.

Influencing factors

§ Total SolutionCustomers are looking for overall competencies for final yarn quality

§ Utilization levels§ Governmental

interventionsTax and financing guidelines in China / India and Turkey

§ Cotton prices (weather/cotton crop)

0

20

40

60

80

100%

SavioMarzoli Dongtai

Trützschler

Lakshmi

Murata

Rieter

Jingwei/Quingdao

OerlikonSchlafhorst

Other

RifaToyoda

Erfangji


- 4%


Oerlikon SchlafhorstAverage Market Share: 16%


Oerlikon Schlafhorst – Executive summary

§ Brand recognition in the market§ Excellent market position in OE and Winding§ Strong on Ring spinning for coarse yarn§ Overall technology leader with Rieter§ Large installed base§ Local service, global coverage of sales and after sales§ Mid-range product for India / China§ Production sites in China and India§ Strong innovations in Rotor / Winding§ Cooperation with Peass for cone-to-cone winding




4Tire cord & Industrialyarns

4Lingerie and women’supper wear

4Home textiles

4Colorful applications

4Twisted materials forcarpet, knitwear, fabrics

Oerlikon Saurer – Final products


27%

27%

34%

12%

Melco Embroidery Twisting Tire Cord

Oerlikon Saurer – Leading Technology for Twisting and Embroidery

Influencing factors

0

20

40

60

80

100%

Other

Tajima

RITM

Lässer

OerlikonSaurer


+ 3%§ Governmental

interventions(e.g. TUF program in India, Chinese 11th 5-year Mgmt. plan, Turkish special zone agreement)

§ Cotton prices (weather/cotton crop)

§ Consumer behavior (Carpet and Fashion)

§ AutomotiveSektor (Tires PA -> PES)

Oerlikon SaurerAverage Market Share: 37%

Average Market Volume: CHF 600m


Oerlikon Saurer – Executive summary

§ Brand recognition§ Global presence§ Large worldwide customer base§ Reliable products§ Flexible production§ New products (Glass, e-save)§ Synergies over product lines§ E-commerce for personalization § Worldwide market for Melco




Oerlikon Textile Components – Products

Filament Spinning & Nonwoven

Accotex®

TexpartsDaytex®

Heberlein®

Temco

Enka Tecnica

Staple Monitoring & Sensors

FibrevisionHeberlein®


Oerlikon Textile Components – Focus on yarn quality

Influencing factors

0

20

40

60

80

100%Other

OerlikonTextile

Components

70%

19%

11%

Staple Filament Nonwoven


+ 2%Oerlikon Textile ComponentsAverage Market Share: 38%

Average Market Volume: CHF 930m

§ Governmental interventions(e.g. TUF program in India, Chinese 11th 5-year Mgmt. plan, Turkish special zone agreement)

§ OEM investment

§ Oil prices and raw material supply outlook

§ Volume is related to installed base and not only to new machines

TCC/Rieter

Changde


Oerlikon Textile Components – Executive summary

§ Portfolio of high-quality state-of the art components§ Market position, reputation § worldwide manufacturing capabilities§ Low break even§ Flexible and committed workforce§ Shift towards high-quality components of Chinese OEM’s and

end-users§ Significant improvement of market position in India § Untapped potential in consumables markets


§ Introduction

§ Business Units


§ Strategy

§ Summary

Agenda


Textile trends 2015 – Which forces influence textile industry?

Textile IndustryTextile Industry

Market Forces

EntrepreneurialForces

Political Forces

Natural Forces


Textile trends 2015 – World fiber market is further growing

mill. tonnes

=0

20'000

40'000

60'000

80'000

100'000

120'000

1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2015 2020

· Wool · Cotton · Manmade Fibers

'000 tonnes


Textile trends 2015 – Volatility in textile machinery markets

*) until 1991 only West Germany


Textile trends 2015 – Nonwoven industry

Close to the customer


Textile trends 2015 – Manmade fiber industry

Grow in Middle EastHigh Quality Production in China


Textile trends 2015 – Spun yarn industry

China will be the Cotton Factory of the world> branded products> highest quality>newest innovations

India will be No. 2> political push> newest machines


Textile trends 2015 – Worldwide textile trends

0

1020

30

4050

60

7080

90

1990 1995 2000 2001 2002 2003 2004 2005 2010

Manmade Fiber Cotton/Wool/Silk Other Fibers

Chemical FiberNonwoven Total Solution

Personalization Energy Consumption

e-save

Quality


Strategy – Oerlikon Textile supports all textile trends

Nonwoven Chemical Fiber

Energy Consumption

PersonalizationTotal Solution Quality


§ Introduction

§ Business Units


§ Strategy

§ Summary

Agenda


Strategy – Executive summary

Fixed Cost Reduction: Simplify

Target:

Product portfolio: Focusing and Cooperations

6-8% Average EBIT over a cycle

Strategy:

Contribution Margin: Simplify, Move to Asia, Innovation

Sales: Innovation, Marketing


Strategy Target sales future

(in CHF m)

1,960 1,910

2004 2005

2,148

2006 2007

2,719

1,900

future

InnovationsMid RangeConsolidationCooperation

2,700

2,300


Strategy Target EBIT future

120

92

2004 2005

68

2006 2007

208 10%

future

4%(in CHF m)


Strategy - Executive summary


Target:


6-8% Average EBIT over a cycle

Strategy:




Strategy - Simplification program to reduce breakeven point

Simplify product portfolio§ 25% less products§ Keep 90% of profitability§ Divest or give up all non focus products § Develop all relevant potential products

Simplify production locations§ 50% less production plants worldwide§ Divest, close or relocate production

Simplify processes§ 20% less fixed costs§ Full use of synergies§ Optimized processes§ Central or decentralized optimization§ Reduce European employee base by

approx. 1000 personnelSimplify

Oerlikon Textile

Breakeven minus CHF 300mfrom 2007 to 2010

Prod

ucts

Processes

Locations

Long term perspective for Textile fully intact


Strategy Focusing portfolio

Relevant “Performer”

Relevant “Potential” Success

Non-focus

Mar

ket A

ttrac

tiven

ess

Oerlikon Textile Ability to Win

§ Divest or stop non-focus

§ Improve Potential

§ Expand Performer

§ Defend Success


Natural Fibre process

Business Units

Refinement

Spinning Preparation

Ring SpinningEbersbach

WindingPalenberg

Open-end SpinningMönchengladbach

Synthetic Fiber Spinning

Neumünster

Carding / CrosslappingBiella / Friedberg Festooning

Neumünster

Winding

Filament process

Production and Refinement

Nonwoven process

Components

CooperationExpansion

Current presence

Twisting

Krefeld

TwistingCabling

Kempten

Fabric production/ Finishing

WeavingKnittingTuftingDyeing

Embroidery

Arbon

Embroidery

Denver

StapleFellbach

FilamentWattwil

Spinning/ NonwovenPalenberg

Monitoring/Sensoring

Macclesfield

AirformingNeumünster

SpinningNeumünster

Needle PunchingLinz

Thermobonding

Hydroentanglement

Strategy – Cooperation possibilities

Filament Spinning

Remscheid

Texturing

Suzhou

Poly-merisation


Strategy


Target:6-8% Average EBIT over a cycle

Strategy:





Strategy – Innovations§ Revolutionary new Filament

generation from Oerlikon Barmag

§ Less investment

§ Less operational cost

§ Revolutionary new Winding generation from Oerlikon Schlafhorst

§

§ higher productivity§ improved yarn /package quality§ maximum resource exploitation§ more intelligent operation§ maximum process reliability


Strategy – Innovations§ Revolutionary new carpet

fiber production line from Oerlikon Neumag

§ perfect yarn path

§ 40% higher output

§ 99% efficiency

§ New generation for embroidery solutions with AMAYA XT form Oerlikon Saurer

§ modular concept§ increased flexibility § higher productivity§ even better control of the quality


Strategy Plant operation center

textile manufacturing workflow

POC


Strategy – Conquer Russia and Near East

Service Leader

Conquer


Strategy – We conquer the mid range market

Existing Market Split

High End40%

Middle end22%

Low end38%

Trend of Market Split

Low end24%

High End36%

Middle end40%

actual market future market already producedin Suzhou 2008

Fusiontwister

BD 416

eFK

Zinser 360


Strategy



Strategy:





Strategy Simplify Oerlikon Textile

Products

Complexity 2008

Product lines 54Sales/Prod. CHF 39m

Locations

Tools

2006

Product lines 48

Locations 40

Sales/Loc. CHF 55m

Locations 31

Development 27Sales&Service 30Fulfilment 37

Development 15Sales&Service 20Fulfilment 20

ERP 10CAX 10CRM 8

ERP 8CAX 9CRM 6

Processes

Vision 2010

Locations 18

Sales/Loc. CHF 140m

Development 5Sales&Service 10 Fulfilment 10

ERP 1CAX 3CRM 1

Product lines 40Sales/Prod. CHF 50m


Strategy - Move to Asia

§ Oerlikon Suzhou Plant§ Production 70,000m²§ 30,000m² Extension


Strategy



Strategy:





Strategy - Simplify processes with fixed cost minus 20%

10588

71636608

57864950

44954919 5087 4746

3600

170

744

704

857

1112

19042389

2674

3420

640

438

320

286

240

219

225

304 298250

1145

0

2000

4000

6000

8000

10000

12000

1995 2000 2001 2002 2003 2004 2005 2006 2007 2010

Year

Empl

oyee

s

USAAsiaEurope

Restructuring Globalization / Int. Growth Simplify


§ Introduction

§ Business Units


§ Strategy

§ Summary

Agenda


Oerlikon Textile – Executive summary

TargetsSales

EBIT

Focusing

Cooperation

Simplify

Growth

Cyclicality

Megatrends

Strategy

Market

§ Very strong cyclicality with amplitudes of 40% +/- average

§ Long-term sustainable growth in chemical and natural demand

§ Simplify product portfolio - 25% less products in 2010

§ Discussion with potential partners to complete the textile value chain

§ Reduce 50% of production locations, reduce breakeven by CHF 300m

§ CHF 1,900m up to 2,700m - Average CHF 2,300m

§ 4 up to 10% - Average 6-8%

Total SolutionChemical FiberNonwoven QualityPersonalization E-Save

Asia

§ More then 4,000 active Patents - revolutionary new developmentsInnovation

§ 2,500 Employees in China - Suzhou expansion by 30,000 m2

Sales § Conquer Russia / Middle East and Mid Range market


Oerlikon Textile – We create the textile future

Oerlikon Textile -focused and flexible for volatile markets...Himson/Alidhra Chonglee Hongyuan TMT Oerlikon Barmag Yuejian Haiyuan Guidici Jwell Jingwei Market Growth 2006-2010: +

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