worldwide. on site. · opening of houston site in the heart of the oil&gas industry. pittsburgh...

Worldwide. On Site.

Analyst‘s ConferenceDrägerwerk AG & Co. KGaA

Lübeck, March 8, 2017

OVERVIEW GROUP AND REGIONSFINANCIALSFIT FOR GROWTHOUTLOOK

OVERVIEW GROUP AND REGIONS

2,609

532 579 593820

2,524

2015 Q1 Q2 Q3 Q4 2016

Strong EBIT improvement despite disappointing net salesBusiness development Dräger Group

Net Sales (in EUR million)

-1.5%Currency adjusted

-3.3%Nominal

2.6%EBIT-Margin

5.4%EBIT-Margin

Order intake +2.1% cc, but disappointing net sales development with a decline of 1.5% cc.

Strong year-end business. Again record Q4.

„Fit for growth“ efficiency measures on track. Good cost containment with functional expenses down -6.1%*

FY EBIT-margin 5.4% at the top end of guidance.

Full-year FX impact negative on net sales and EBIT. (FY FX: Net sales -1.8pp, EBIT margin ~ -0.5pp)

Highlights

4

* excluding currency effects and restructuring charges

Positive order intake in all regionsOrder development Dräger Group

Order entry (in EUR million)Group

2,539

1,383

641

515

Group

Europe

Africa, Asia,Australia

America +7.2%

+0.9%

+0.9%

+2.1%

Net Sales

+2.1%

-5.1%

-1.1%

-1.5%

Growth rates are net of currency effects; incl. allocations

+7.1%+7.2%

Medical Safety

-5.8%+3.7%

+1.1%+0.7%

+0.7%+2.9%

5

New regional setup increases execution capabilitiesRegional responsibilities

Regional setup

Americas

Asia, Africa & Australia

Europe Full regional business

responsibility is assigned to three board members in addition to their functional role.

Strategic importance of three direct reporting countries is reflected.

Local management fully accountable for executing business plan.

6

Anton Schrofner

Dr. Reiner Piske

Rainer Klug

Business development Americas

Order intake Q4 (FX adjusted): +12.4%

Order growth in North America, as well as Central-, South-America.

Gross profit margin: +1.6pp yoy

Functional expenses (FX adjusted): FY -7.0% yoy

Opening of Houston site in the heart of the Oil&Gasindustry.

Pittsburgh site closed as planned. Cost targets achieved.

7

-18.6

10.3

Order Entry

EBIT

497 515

2015 2016

+7.2%Currency adjusted

>100%-3.7%EBIT-margin

2.0%EBIT-margin

Net Sales

509 504

2015 2016


Comments

2015 2016

Business development Europe


Strong top line growth in Germany, Switzerland, Russia

Large Orders from Swiss Rail and UKSH Lübeck.

Gross profit margin: -0,6pp yoy


59.484.5

2015 2016

Order Entry

EBIT

1,391 1,383

2015 2016


+42%4.2%EBIT-margin

6.1%EBIT-margin

Net Sales

1,421 1,384

2015 2016


Comments

7

Business development Africa, Asia, Australia


Strong decline in the Middle East, driven by low oil price and public budget restraints.

Strong demand in India.

Improvement in Greater China. Medical business with solid recovery.

Gross profit margin:+0.5% yoy


9

25.842.1

2015 2016

Order Enty

EBIT

645 641

2015 2016


+63%3.8%EBIT-margin

6.6%EBIT-margin

Net Sales

679 636

2015 2016


Comments

FINANCIALS

66,5

Q4‘15 Q4‘16

108.9 66,7136,9

FY15 FY16

Business developmentDräger Group

Net Sales

EBIT

825,4 819,5

Q4‘15 Q4‘16

2.608,92.523,8

FY15 FY16



+63.7% +105.3%8.1%EBIT-margin

13.3%EBIT-margin

2.6%EBIT-margin

5.4%EBIT-margin

11

Order intake (FX adjusted)

Orders on hand ~+5% cc Gross profit margin

12M 45.0% (py 44.9%) 12M Functional Expenses

yoy -8.2% (cc); excluding restructuring -6.1%

12M Other financial result€ 0.2m (py € -6.8m)

12M restructuring cost€ ~10m (py € ~35m)

EBIT-margin incl. ~ -0.5 pp from FX

DVA €49.8m (py € -46.3m)

Comments

Q4 FYMedical +9.0% +2.9%Safety +9.4% +0.7%Group +9.1% +2.1%

Functional ExpensesDräger Group

12

12M 2015 12M 2016 Changenet of FX and restructuring

€ million € million %

R&D -231.1 -219.0 -5.2 -4.8 % of Net Sales -8.9% -8.7%

Sales & Marketing -611.0 -554.7 -9.2 -8.2 % of Net Sales -23.4% -22.0%

Administration -250.2 -207.4 -17.1 -7.6 % of Net Sales -9.6% -8.2%

SG&A -861.2 -762.1 -11.5 -8.0 % of Net Sales -33.0% -30.2%

Functional Expenses total -1,098.4 -999.2 -9.0 -6.1 % of Net Sales -42.1% -39.6%

Headcount1 13,936 13,263 -4.8 1 Values as of reporting date

Change

%

Key FiguresDräger Group

13

12M 2015 12M 2016

€ million € million

Cashflow from operating activities 39.9 195.3 >100Investments 196.8 99.9 -49.2

Cash and cash equivalents1 172.8 221.5 28.2

Net financial debt1 145.3 34.7 -76.1 Net financial debt 1 /EBITDA 2 0.96 0.16

Capital employed 1 1,269.3 1,247.0 -1.8 ROCE (EBIT 2/Capital employed 1) 5.3% 11.0% +5,7pp

Net Working Capital1 582.3 563.2 -3.3

Equity ratio 40.9 43.4 2.5pp

EPS per common shares (on full distribution) 1.40 3.40 >100EPS per preferred shares (on full distribution) 1.46 3.46 >1001 Values as of reporting date2 EBITDA and accordingly EBIT of the last twelve months

Change

%

Business development regions and productsDräger Group

14

2016 2016€ million € million

Order entry 1,662.6 2.9 876.1 0.7

Europe 835.8 0.7 546.7 1.1

America 359.5 7.2 155.5 7.1

Africa, Asia, Australia 467.2 3.7 174.0 -5.8

Net Sales 1,647.4 -1.3 876.5 -2.0

Europe 829.2 -0.9 555.0 -1.5

America 353.5 2.3 150.3 1.9

Africa, Asia, Australia 464.7 -4.5 171.2 -6.9

EBIT 85.3 84.5 * 51.6 >100 *

EBIT-margin 5.2 +2.5 pp 5.9 +3.6 pp

* nominal growth rate

Medical products Safety productsChange

% (FX adj.)Change

% (FX adj.)

2015 2016

0.13 € 0.13 €

Dividend proposal for FY 2016

* after earnings attributable to non-controlling interests** Without minimum dividend, after taxes

Dividend percommon share preferred share Dividend policy

2015 (in EUR million) 2016 (in EUR million)

Net profit* 33.3 81.7

Dividend 3.7 3.7

Participation certificates** 0.9 0.9

Common shares 1.3 1.3

Preferred shares 1.4 1.4

Net payout ratio 10.9% 4.5%

15

2015 2016

0.19 € 0.19 € unchangedUntil earnings development has significantly improved and stabilized, Dräger will retain generated earnings to the greatest extent and only pay out a minimum dividend.

FIT FOR GROWTH

FIT FOR GROWTH is on track and delivering results

FIT FOR GROWTHFIT FOR

GROWTH1122

33SHAPE

Optimize global Sales, Marketing &

Administration set-up

FIT!Optimize

innovationset-up

Global footprint

Optimizeproduction

set-up Improveworkflow anddelivery timesand reduce

production cost

Improveworkflow anddelivery timesand reduce

production cost

Bring customervalue faster tothe market and

increaseinnovationshare

Bring customervalue faster tothe market and

increaseinnovationshare

Improve SG & A expense ratio

Improve SG & A expense ratio

17

20172016

SHAPE Short term cost savings show positive impact

2016 2017

Continue roll-out of pricing project, Purchasing optimization, ERP harmonization and further legal consolidation within sales organization

Measures for shorter term cost savings: ~70% of the 250

measures implemented

~700 headcount reduction vs. ~350 originally planned

substantial reduction of functional cost base

New organizational set up and international governance model implemented

18

Additional countries included in harmonized ERP landscape

Pricing excellence project started

......

Continue strict expense management and implementation of the remaining ~30% cost cutting measures

......

SG&A2017~30%

SG&A2017~30%

Global FootprintAll milestones and savings achieved

2016 2017

Closure our Pittsburgh site and relocation of activities to predominantly Houston and Telforth. annual savings of ~3m€ Dräger office in the heart

of the Oil&Gas industry

Transfer of production lines with high labor content to our production site in the Czech Republik. annual savings of ~3m€ project completed in Q2

2016

19

Consolidation of the production at our Lübeck site in the “Zukunftsfabrik” Investmentbudget of ~72m€ on target annual savings of ~9m€ Site up and running without major disruptions project completed in Q4 2016

......

Major measures of the project completed. further improvement of

new production and logistic workflow

StabilizeGP

margin

StabilizeGP

margin

FIT!Innovation organization is implementing FIT! measures

2016 2017

Merger of segment-and product management into the innovation organization increase speed reduce complexity Transfer of goals and

measures of the FIT project into line organization

20

Vitalize Innovation @ Dräger: Innovation incubator “Garage”

......

Continue to focus on Time to Market target achievementAfter 2 years of intense reshaping the innovation organization no further major changes planned in 2017 –let’s get to work!

......

2019

-50%

2019

-50%Time to Market

Portfolio phase-out reduce complexity increase capacity for

new innovation

Reduction of internal standards where useful

Vitalize Innovation @ Dräger: new methods and tools to increase speed of innovation projects

Faster. Connected. Innovative.Selection of new products 2016

MEDICAL SAFETY

BabyFlow® PlusMview®

Infinity Delta®

(SW Lösung)Integr. Care Mgmt(SW Update)

AlcotestNeu 2x

Dräger Röhrchen

Pointgard® 2000

Polytron® C300(Ammoniak)

Polytron® 8000Fixed Gas

Doppelsensor XXS Regard® 7000Gasmesscontroller

Dräger Flame 2xx0

Babyleo®

Babyleo® Regard® 7000Gasmesscontroller

BabyFlow® PlusMview®

Infinity Delta®

(SW Lösung)Integr. Care Mgmt(SW Update)

AlcotestNeu 2x

Dräger Röhrchen

Pointgard® 2000

Polytron® C300(Ammoniak)

Polytron® 8000Fixed Gas

Doppelsensor XXS Regard® 7000Gasmesscontroller

Dräger Flame 2xx0

Babyleo®

21

OUTLOOK

Outlook

2016 guidance 2016 2017e

Net Sales(net of currency effects)

0.0 % – 3.0 %(lower end)

- 1.5 % 0.0 % – 3.0 %

EBIT margin 3.5 % – 5.5 % 5.4 % 5.0 % – 7.0 %*

Gross profit margin Below prior year(2015: 44.9 %)

45.0 % 44.0 – 46.0 %

Dräger Value Added Improvement(2015: EUR -46.3m)

EUR 49.8m EUR 40m – 90m

* based on exchange rates at the start of the year 2017

23

Assumptions for FY 2017 Guidance

Downside risk of strong market interruptions caused by rising political protectionism (new import taxes, cancellation of international trade agreements) or caused by high level of uncertainty (e.g. repeal of Obamacare) not reflected in guidance.

Demand improvement in AAA region and Europe (ex DACH). Continuously strong development in North America , but increasing challenges in Central- and South America. Possibly softer development in DACH in light of strong 2016.

FX effects of ~+1 pp on net sales. No support from FX on EBIT-margin.*

Restructuring cost of EUR ~10 million (PY EUR 10 million).

24

Questions & Answers

25

Appendix

March 8, 2017 - Accounts press conference, Lübeck- Analysts meeting

May 4, 2017 - Report for the first three months 2017 Conference call, Lübeck

May 10, 2017 - Annual shareholders' meeting, Lübeck

July 27, 2017 - Report for the first six months 2017 Conference call, Lübeck

November 2, 2017 - Report for the first nine months 2017 Conference call, Lübeck

Financial calendar 2017

26

Guidance 2017

27

2016 Forecast 2017

Net sales -1.5%(net of currency effects)

0.0 - 3.0%(net of currency effects)

EBIT margin 5.4% 5.0 - 7.0%1

Dräger Value Added EUR 49.8 million EUR 40 - 90 million

Other forecast figures:Gross margin 45.0% 44.0 - 46.0 %

Research and development costs EUR 219 million EUR 230 - 245 million

Interest result EUR -15.5 million EUR -13 to -17 million

Days wokring capital (DWC) 121.7 days Slight improvement

Investment volume EUR 99.9 million EUR 90 - 105 million

Net financial debt EUR 34.7 million Improvement

1 Based on exchange rates at the start of the year2 excluding company acquisitions

Business Development Group

28

Q4 2015 Q4 2016 12M 2015 12M 2016

€ million € million € million € million

Order Intake 637.2 689.6 8.2 2,532.2 2,538.7 0.3

Net Sales 825.4 819.5 -0.7 2,608.9 2,523.8 -3.3 % growth 7.2% -0.7% 7.2% -3.3%% growth (FX adjusted) 4.4% 0.7% 2.9% -1.5%

Gross Profit 378.1 387.8 2.6 1,171.7 1,134.5 -3.2 Gross margin 45.8% 47.3% 44.9% 45.0%

Functional Expenses -310.9 -278.7 -10.4 -1,098.4 -999.2 -9.0 % of Net Sales -37.7% -34.0% -42.1% -39.6%

EBIT 66.5 108.9 63.7 66.7 136.9 >100EBIT Margin 8.1% 13.3% 2.6% 5.4%

Net Profit 33.3 81.7 >100

DVA -46.3 49.8 >100

1 Currency adjusted 12M: order intake 2.1%, net sales -1.5% Currency adjusted quarter: order intake 9.1%, net sales 0.7%

Change

% %

Change

Business Development Segments

29

2012 2013 2014 2015 2016SEGMENT EUROPEOrder Entry 1 € million 1,396.8 1,322.4 1,357.0 1,391.0 1,382.5Net Sales 1 € million 1,367.8 1,333.5 1,362.2 1,420.7 1,384.3EBIT € million 142.4 131.2 128.5 59.4 84.5EBIT margin % 10.4 9.8 9.4 4.2 6.1

SEGMENT AMERICAOrder Entry 1 € million 453.2 465.2 461.5 496.8 515.0Net Sales 1 € million 455.8 458.7 471.2 509.1 503.7EBIT € million 16.3 8.5 -0.4 -18.6 10.3EBIT margin % 3.6 1.8 -0.1 -3.7 2.0

SEGMENT AFRICA, ASIA, AUSTRALIAOrder Entry 1 € million 555.5 597.0 597.0 644.5 641.2Net Sales 1 € million 549.8 581.9 601.3 679.1 635.8EBIT € million 71.5 61.2 50.5 25.8 42.1EBIT margin % 13.0 10.5 8.4 3.8 6.6

1 years 2012–2014 were adjusted pro-forma due to the change in segment reporting.

Cash-flow statement

30

12M 2015 12M 2016€ million € million

Group net profit 33.3 81.7 >100

Change in inventories -5.4 17.4 >100

Change in receivables -44.6 31.3 >100

Change in payables -22.8 -10.2 55.0

Depreciation and amortization 84.2 85.8 1.9

Other operating cash flow items -4.8 -10.6 >-100

Operating cash flow 39.9 195.3 >100

Investing cash flow -167.0 -77.3 53.7

Free cash flow -127.1 118.1 >100

Financing cash flow -1.3 -70.0 >-100

Change in cash1 -128.4 48.1 >100

Cash and cash equivalents2 172.8 221.5 28.2 1 Change in cash and cash equivalents, i.e. without any effect of exchange rates2 Values as of reporting date

Change%

Consolidated balance sheet

31

31 Dec 2015 31 Dec 2016 Change€ million € million %

Intangible Assets 351.8 347.6 -1.2 Property, plant and equipment 406.4 420.9 3.6 Other noncurrent assets 149.0 150.1 0.7 Noncurrent assets 907.2 918.6 1.3

Inventories 402.0 386.8 -3.8 Trade receivables 711.3 681.7 -4.2 Other current assets 114.8 103.8 -9.6 Cash and cash equivalents 172.8 221.5 28.2 Current assets 1,400.9 1,393.8 -0.5

Total assets 2,308.1 2,312.3 0.2

Consolidated balance sheet

32

31 Dec 2015 31 Dec 2016 Change€ million € million %

Equity 945.9 1,003.5 6.1

Liabilities from participation certificates 21.8 22.7 4.2 Provisions for pensions and similar oblig 288.1 318.3 10.5 Noncurrent interest bearing loans 138.1 188.6 36.6 Other noncurrent liabilities 97.8 108.6 11.0 Noncurrent liabilities 545.9 638.2 16.9

Current Provisions 233.0 211.2 -9.3 Current loans and liabilities to banks 169.7 57.0 -66.4 Trade payables 186.4 179.8 -3.6 Other current liabilities 230.5 222.6 -3.5 Current liabilities 819.6 670.6 -18.2

Total equity and liabilities 2,311.4 2,312.3 0.0

33

Melanie Kamann Thomas FischlerCorporate Communications Investor Relations

Drägerwerk AG & Co. KGaA Drägerwerk AG & Co. KGaAMoislinger Allee 53−55 Moislinger Allee 53−5523558 Lübeck, Germany 23558 Lübeck, Germany

Tel +49 451 882-3998 Tel +49 451 882-2685 Fax +49 451 882-3944 Fax +49 451 882-3296Mobile +49 170 8558152 Mobile +49 151 12245295

[email protected] [email protected] www.draeger.com

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