Capital Markets Day

Introduction

Digitalisation

Streamlining central warehouse

Break at 10.00

International strategy

Supplier consolidation

Business development &

Innovation

Financial development

Contents Capital Markets Day

Group Management

Magnus Johansson President and CEO

Marcus Larsson

Executive Vice President

Morten BirkelandManaging Director

Sørensen og Balchen

Örjan GrandinSupply Chain Director

Per HedblomCFO

David LarssonCOO

Pehr OscarsonManaging Director MECA

Scandinavia

The difference

between brand-

dependent and

brand-independent

players has

increasingly been

erased

Consolidation in

Europe – to achieve

profitability through

synergies

Demand for a higher

degree of technical

expertise and

advanced equipment

The average age of

the European car

fleet

is increasing

Shortage of

competence –

mechanics

The car – a

smartphone on four

wheels, Telematics,

Digital services

Market trends

1-2 % long-

term growth

More cars

Car pools

Electric

/Hybrid cars

E-commerce

Potential for increase in cars older than three years in Sweden coming years

Strong sale of new

cars in recent years

gives potential for

increase in carpark

older than three

years when these

cars become older

Such increase of

carpark > 3y requires

that sprapping does

not increase from

current levels

3 706 268 3 751 475 3 844 722 3 861 298

695 084 743 998740 797 807 765

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

3 500 000

4 000 000

4 500 000

5 000 000

2011 2013 2014 2015

Carpark Sweden

Older than 3 years Up to 3 years

CAGR 2011-2015

Total:

1,49%

3,83%

1,03%

33%

817Stores

85

Workshops

50%

1025Stores

187

Workshops

Sørensen og balchen

13%

246Stores

70

Workshops

MekonomenMECA

Overview group companies

Vision

We are the car owner’s first choice

and strive for a simpler and more

affordable CarLife

Strategic focus

We lead the development

in the industry

We have the best supply

chain in the industry and

the optimum

infrastructure for our

business

We have the best

purchasing terms in the

industry

We have differentiated

concepts to meet our

B2C & B2B customers´

various needs

We have the customers in

focus in everything we do

The workshop as the

focus for growth – We are

the best workshop

partner

Focus areas

Digitalisation Customer focus B2C & B2B

Wholesale optimisation/ Automation Business development & Innovation

The company's development & growth

Utveckling

Technical support & product information- Competent employees- Technical support B2B

- Catalogue – ”Level good”

Price worthiness- Price benchmark

- Own brands

Assortment- Competence product & category

- Same suppliers as the car manufacturers- ProMeister & Carwise- Workshop equipment

- Own wholesale operation

Availability- Wide workshop- & store network

- E-commerce B2C + B2B- Mekonomen/MECA Direct

- Lasingoo

Services & Offers- Service & repairs of all car brands

- Efficient logistics- Courtesy car

- Car glass- Fleet agreements

- Assistance Insurance - Lasingoo

Customer service- Customer rating

- Mystery shopping

Quality- ProMeister Academy

- Guiding system- “Godkänd bilverkstad”

(certification “Approved workshop”)- Mystery Shopping

The company's further initiatives to drive the development and growth

Technical support & product information- Group common technical support B2B

- Catalogue –”level best in class”

Price worthiness- The most affordable workshop

offers in the industry- Modern price system

- Store optimisation- Supplier consolidation

Sortiment- Implementation of a new warehousecontrol system for local warehouses

- Modern, automated central warehouse- One stop shop supplier to workshops

Availability- Meeting the customer in physical and

digital channels- Digital workshop bookings – fixed price

- New workshop concepts solving more ofthe car owners needs

- Shop in shop in the workshops

Services & Offers- Continued customer based business

development- 1-2-1 marketing

Customer service- The highest ambassador Index

in the industry

Quality- ProMeister Solutions

Focus

The company - impacts

3D-printing

Self-driving cars

Telematics

Private leased cars New digital services linked to car ownership

Carsharing

Digitalisation

Target image

Automatedcentral warehouse

Digital transactions

Halve the number of

manual moments from

purchasing to the end-

customer

Digitalisation

PIM

Modernisedproductinformation flow- ”Best in class”

Digital services

Booking online at fixed prices

1-2-1 marketing

M.e-comInterface e-commercetowardscustomers B2C & B2B – new standard in the industry for managing orders and bookingonline

Business develop-ment & Innovation

Customer value

Automation central warehouse

Streamlining flow ofgoods

A significant part

of today´s B2B-

orders are digital

Streamlining of central warehouse

Central warehouse - vision

The industry´s most efficient business

flows with optimum infrastructure for our

business

Central warehouse – current situation

Central warehouses in Eskilstuna, Strängnäs

and Oslo. Regional warehouses in Gjövik,

Oslo, Odense, Luleå and Helsinki

Logistics structure in addition to stores

Older automations in parts of the flow in

Strängnäs and Eskilstuna

Estimated investment SEK 250 M during

2016 – 2018 with full EBIT-effect from

savings of SEK 50 M from 2020 and

reduction of tied up capital of SEK 80 M as

of 2020

Central warehouse – streamlining

Streamlining by centralisation of the central

warehouses in Sweden, one management in

the group (Sørensen og Balchen not

included)

Expansion of an automated central

warehouse next to existing central warehouse

in Strängnäs

Future flow of goods – streamlining regional warehouses

Central warehouses

Regional warehouses

Stores Workshops

Integration forward

Central warehouse – advantages in addition to savings

Lower level of tied up

capital, as a consequence

of centralisation, is made

possible by the

automation

Enable to respond to

changed customer

demands

Prepared for future

growth

Positive effects in sales

force

- Increased availibility

- Fewer returns and order picking per

customer

Increased

competitiveness

- The industy’s leading supply chain

model in existing markets in the Nordic

region

- Strength relative to the consolidation in

Europe

Model which supports

e-commerce B2C

Central warehouse

Letter of intent signed with the automation supplier

Next step

- Refine technology solution and timetable

- Negotiate and sign the final contract with the automation supplier

- Union negotiations with affected parties

- Building permit documents and contract building extension

Internationalstrategy

International strategy

Continued ambition to participate in the European consolidation of our

industry

Conditions

Acquisitions at right price,

significant purchasing

synergies to be achieved

Europe in focus

(Number of countries is not a

priority)

International strategy - ProMeister

Own premium spare part assortment with over 5000 articles

Sales growth SEK 0-500 M since 2013. Represents today 13% of total

consolidated sales of spare parts - long-term target is 30%

5 years warranty - extensive quality work

International strategy - ProMeister

Export of ProMeister spare parts into new markets with focus on specific

customers rather than countries

Supplier consolidation

• Acquisition MECA & Sørensen og Balchen

• Growth - Gain

Synergy projects

• Developing our own sparepart assortment

• Sales growth: SEK 0 – 500 M from 2013

ProMeister

spare parts• Fewer suppliers will

account for a larger part ofthe group assortment

• Rationalisation of articles

Focus on supplierconsolidation

Supplier consolidation

160 suppliers account for approximately 75 % of the Mekonomen

Group´s assortment

Business development& Innovation

Heavy vehicles – market

80 000

82 000

84 000

86 000

88 000

90 000

92 000

94 000

96 000

2013 2014 2015

Numbers of heavy vehicles (Trucks and buses over 3.5 tonnes) in traffic in Sweden and Norway

Sweden Norway

Source: SCB, OFV

IAM20-25%

Volvo Trucks30-35%

Scania Sweden30-35%

Others OES5-8%

Segments of the Swedish market for heavy vehicles per channel

IAM Volvo Trucks Scania Sweden Others OES

Heavy vehicles – segments of the Swedish aftermarket

Swedish aftermarket for spare parts to heavy vehicles, estimated at SEK 5.5-6.5 billion per

year (End customer prices excl. VAT and labor costs)

Source: Mekonomen analysis

Heavy vehicles – Nobina

First contract in the business area heavy vehicles - MECA enters a sales cooperation with

Nobina. Supply of batteries for Nobina's vehicle fleet and depots in the Nordic countries

(Sweden, Norway, Denmark and Finland). Successive start up in the Spring of 2016

Vehicle fleet of buses in the

Nordic countries

About 3500 buses

Short lead times with fast and

reliable deliveries important

for the customer segment

MECA's logistics,

business model

and geographical

spread is a

strength

MECA Norway is

already active

within heavy

vehicles in the oil

industry

Electric cars

Number of electric vehicles

Norway: 50 000 + (2015)

38 652 (31 Dec 2014)

Total number of cars:

2 591 300 (31 Dec 2015)

Electric / plug-in hybrids

more common in Sweden

than pure electric vehicles

(52 513 on 31 Dec, 2015)

Number of electric vehicles

Sweden:

4 765 (31 Dec 2015)

2 172 (31 Dec 2014)

Total number of cars:

4 669 063 (31 Dec 2015)

The Norwegian market is one

with fastest development

Norway has introduced

extensive government

subsidies: purchase tax, VAT

rebates, road charges,

parking and bus lane which

affected the high pace of

development

Source: SCB, SSB

Electric cars

Examples of electric car components within the

existing range:

Brakes, Suspension, Steering gear (servo becomes

electrical), Shock absorbers (development of control

through the electric air pump), Drive shafts, Wheels / tires,

Body, Exterior parts, Electric components (connectors,

sensors, etc.), Cooling (electrically powered)

Examples of components and service that do not

remain at 100% electric car conversion:

Fuel system, Transmission, Cardan, Engine Parts,

Turbocharger, Starters, Clutch

Easier control and change of cabin filters instead of

replacing the spark plugs, timing belt, oil at car service

New components

Battery, battery packs, more advanced electrical

components

Slightly fewer components in an electric vehicle

compared to a car with a combustion engine - long term

the transaction involves specific update of the range with

new types of items and service needs.

Electric cars – Mekonomen Drammen

35

Financialdevelopment

Financial development

Revenue and operating profit

Operating profit Revenue

SEK M

0

100

200

300

400

500

600

700

3000

3500

4000

4500

5000

5500

6000

2011 2012 2013 2014 2015

SEK M

Financial targets

Overall goal To develop with good profitability and thereby create value growth for the shareholders

Growth goal To achieve annual sales growth of at least 5 per cent, as a combination of organic and acquired growth

Financial goals To annually achieve an operating margin in excess of 10 per cent

The equity/assets ratio shall not in the long term be less than 40 per cent

Net debt / EBITDA shall not in the long term exceed 2,0

Growth goal

To achieve annual sales growth of at least 5 per cent, as a combination of organic

and acquired growth

The market long-term

growth 1-2 %

Growth in sales to

affiliated workshops

(quality, availability,

catalogue, new concepts)

ProMeister Nordic region

and internationally

Complementary

acquisitionsNew business

Cash Flow

SEK M Negative impact of discontinued operation in

Denmark affected 2014 and 2015

Strengthened local stocks to achieve increased availability

and ProMeister which has had a negative impact on

cash flow

Long-term focus on strengthening cash flow, in addition to one-time effect

related to the central warehouse

528

413

573

439

-115

-134

0

100

200

300

400

500

600

700

Excludingdiscontinuedoperations in

2014

Discontinuedoperations in

2014

Total 2014 Excludingdiscontinuedoperations in

2015

Discontinuedoperations in

2015

Total 2015

Cash flow from operating activities

Currency impact

1% strengthening EBIT: + 8,5 SEK M

1% strengthening EBIT: - 9,0 SEK M

Percentage of goods purchased in Euro has increased from 33 per cent in 2014 to 37

percent in 2015

Gross margin

Positive factors

- Purchasing, the "third wave"- Price Compensation

- Increased sales in company-owned workshops

Negative factors

- Customer mix- Competitive pressure

- Temporary currency effects

57,6%56,1% 55,6% 55,6% 55,0%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

2011 2012 2013 2014 2015

Gross marginSEK M

Questions

We are the car owner’s first choice

and strive for a simpler and more

affordable CarLife