Bombardier Transportation: Troger (CEO) innovazione e tecnologia al centro della strategia industriale (2)

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Laurent Troger President

Market Analysis and Company Strategy

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Bombardier Transportation business overview

We are transforming for profitable growth in an attractive rail market

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1. Resilient market with steady growth

2. Leading position in the market 3. Transformation strategy to

further grow profitability

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Solid growth for rail industry

Strong underlying sector trends

3

▪

Crisis resilient capital goods market globally

▪

Favorable megatrends

– Population growth – Urbanization

– Environmental awareness

▪

Public transport investments to grow across geographies



Target market at €84B

3,6%

(2,1)%

2,3%

Total rail market (€B) Global GDP growth (%)

Forecast

€150B

€146B

€37B

€123B

€159B

€176B Total annual average rail market¹vs. global GDP growth

€B, 2005-2019

€159B

Key facts

1. Source: UNIFE 2014 World Rail Market Study; World Bank Data; Bombardier Transportation analysis

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Highest growth in services and systems

Rolling stock to remain largest segment and Europe largest region

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Annual BT target market¹

€B, 3-year average, 2011-2019

Source: BT management calculation based on UNIFE World Rail Market Study published in 2014

1. Based on total rail market as defined by UNIFE, excluding markets non-accessible for BT which are associated with contracts that are awarded to local players without open-bid competition, and segments in which BT does not actively compete in, including the infrastructure segment, shunter segment and certain freight wagon services 2. RoW includes South America, Central America, Africa, the Middle East and CIS

3. North American region comprises United States, Canada and Mexico

+2.7

+0.7

+4.3 +3.3

+5.0

+1.9 +1.8

Total CAGR 2011-13 – 2017E-19E

%

Services

Rolling stock Signalling &

Systems

Europe Asia Pacific

North America³

RoW² +3.4

Total CAGR 2011-13 – 2017E-19E

% +2.7

By product segment By geographical region

34 33 38

25 27

30

13 15

72 75 16

84

2011–13 2014-16E 2017E–19E

28 29 31

14 16 19

13 14

16

17 16

72 75 18

84

2011–13 2014-16E 2017E–19E

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Strengthened financial position

Agreement with La Caisse de dépôt et placement du Québec

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Bombardier Inc.

Bombardier Transportation

Impact on Bombardier Transportation

Caisse de dépôt et placement du

Québec

70% 30%

 Transaction strengthens Bombardier’s overall financial position and provides flexibility in liquidity

 Transaction very well received from customers and other stakeholders

 The investment includes performance

incentives for Bombardier Transportation to further drive improvement in execution

 No changes to key operational procedures Key facts

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Extended global presence

We secured orders in all segments and regions

6 ^1. Bombardier Sifang Transportation, a Chinese entity in which Bombardier holds a 50 % interest, has been awarded a contract with China Railway Corp. (CRC) to supply 15 CRH380D very high-speed trains valued at $381 million

80 ELECTROSTAR Class 387 vehicles for Porterbrook

€150 M (2015)

10 years maintenance on 74 ELECTROSTAR trains €196 M (2015)

Option for 19 SPACIUM trains for SNCF

€160 M (2015)

Signalling for high-speed rail lines for ADIF

€164 M (2015)³

INNOVIA APM for Chicago O’Hare International Airport

€161 M (2015)

62 FLEXITY trams for the Rhineland region

€127 M (2015) 15 CRH380D trains for

China Railways

€339 M (2015)¹

156 FLEXITY trams for Vienna

€431 M (2015) 180 AVENTRA cars and 35 years of maintenance for Transport for London

€505 M (2015)

62 TRAXX locomotives for Israel Railways

€230 M (2015)

30 years maintenance on FLEXITY trams for Toronto

€282 M (2015)

162 MOVIA cars for India’s Delhi Metro

€204 M (2015)²

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Confirmed market leadership

We have the broadest portfolio of rail solutions globally

7 1.Based on Bombardier Transportation management's tracking of published Rolling Stock orders in 2010-14 outside of China;

excluding Services, Systems and Signalling, and Diesel locomotives outside Europe 2.North America comprises United States, Canada and Mexico

In Europe, Bombardier

Transportation is the market leader in all major rolling stock segments

Market leader for metros in North America, the biggest segment of the region

Strong in India and leader in the fast growing Australian market

Highest global market share, making

Bombardier Transportation the industry leader outside of China

Queensland Rail New Generation R179 New York

V300ZEFIRO TRAXX South Africa

#2 Bombardier #1

~32%

#2 #2

#3

Bombardier

~38%

#3

Bombardier

~18%

Others Others

Others Competitor

#2

#3

Bombardier

~ 22%

Others

Global Rolling Stock market¹ Europe¹ North America ^1,2 Asia-Pacific excl. China¹

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Strong backlog

We aim to continue outgrowing the market over the next 5 years

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2012 2013 2014 2015 2016 2017 2018 2019 2020

Revenues from backlog Revenues from new contracts

€9.5B+ target ($10B+)

Revenue evolution target [€]

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Revenue conversion

Company growth is supported by strong backlog and future bid pipeline

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FLEXITY LRV for Vienna

TRAXX locomotives platform

 Strong bid pipeline with large projects in all segments and geographies

 Differentiation factors and total value proposition allow Bombardier Transportation to win with value-based pricing

MOVIA C30 Metro for Stockholm Examples of value-based orders Key facts

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55%

25%

20%¹

Rolling Stock²

71%

14%

15%¹

61%

29%

10%¹ 65%

18%

17%¹

Business model enhancements

Better revenue mix to drive profitability

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2014

Q3 2015 backlog at $30B

1. Excluding the Rolling Stock portion of Systems orders manufactured by the Rolling Stock division.

Signalling order backlog traditionally low due to short cycle of the business 2. Rolling Stock includes Bogies and Propulsion.

2010

Signalling & Systems Services

2020 target

… and the future is already visible in backlog Increasing Services revenue contribution today…

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Company transformation

Organizational framework to improve competitiveness

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Head of Region Critical A Projects / bids

A Projects / bids

Other projects Head of Project Management

Portfolio Manager

Strategic panel suppliers

Other panel suppliers

Non-panel suppliers

BT President

Rolling Stock Regions

Global Businesses BT Core: Value

Chain Functions Group Headquarters (Governance, Finance, Human Resources,

Information Systems)

Increasing standardization

Centralizing global supply chain

Empowering project management Selective bidding

process

Stronger organization and key account management

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Innovation is a key differentiator

12 1.Total engineering cost including project development and R&D expenditure 2.RoW comprises South America, Central America, Africa, the Middle East and CIS

Self-funded R&D in percentage of sales 2013 2014 2015 2016 2016+

Significant engineering innovation investments of about

€2.8bn¹over past 3 years

Around 11.5m engineering hours contributed by Bombardier Transportation engineers in 2014 alone

More than 8,000 employees in innovation and engineering across 80 countries

Majority of engineering and design of critical components for trains performed in Germany or at other European sites to protect IP

Further IP protection, e.g. through patent registrations and legal structuring of JVs

Engineers by region (2014)

72%

16%

9% 3%

Americas

Europe Asia-Pacific

RoW²

Increased R&D investments Capabilities and capacities

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In summary

A clear strategy to remain market leader

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 Focus on company transformation to increase competitiveness

 Secure key strategic orders to maintain market leadership

 Enhancing the business model for profitable growth and execution

 Stay in the lead in a consolidating industry

Current priorities