Engineering precisely what you value

Half year presentationRorschacherberg, 23 July 2020

Disclaimer

1

Starrag Group is making great efforts to include accurate and up-to-date information in this

presentation, however we make no representations or warranties, expressed or implied, as to the

accuracy or completeness of the information provided in this presentation and Starrag Group does

not accept any liability whatsoever with respect to the use of this presentation.

The information provided in this presentation is not intended nor may be construed as an offer,

invitation or solicitation for the purchase or disposal, trading or any transaction in any Starrag

Group securities. Investors must not rely on this information for investment decisions.

All statements in this presentation which do not refer to historical facts are forecasts for the future

which offer no guarantee whatsoever with respect to future performance; they embody risks and

uncertainties which include - but are not confined to - future global economic conditions, exchange

rates, legal provisions, market conditions, activities by competitors and other factors which are

outside the company's control.

Agenda

Market and business review

Financial review

Outlook

2

Agenda

Market and business review

Financial review

Outlook

3

Order intake and sales considerably below prior-year period – Lower profit –

Substantial order backlog – Solid balance sheet and low net debt

4

Sales down 28% to CHF 155 million

Order intake down 49% to 89 million

Order backlog of CHF 213 million ensures basic capacity utilization for second half 2020 and

beyond

Operating profit EBIT CHF 0.6 million or 0.4% of sales

Net income CHF 0.5 million

Comprehensive cost reduction program and strengthened focusing

Significant decline in order intake and order backlog in line with market

5

141

231

142

217173 173

89

244

170

192

249

208

244

170

238

348302

366

284321

213

0

100

200

300

400

500

259

CHF m

Order intake H2 prior year Order intake H1 Order intake H2 Order backlog

333

480

2015 2016 2017 2018 2019

349

Order intake last twelve months 259m CHF, fx adjusted down 36.0%

Order intake H1 2020 89m CHF, down 49%

Order backlog 213m CHF, down 25% compared with 2019 year-end

417

461

H2 2018 /

H1 2019 H2 2019 /

H1 2020

343

Order intake breakdown: Recurring service more stable

6

CHF m

Large orders(>5m CHF) 18%

Recurringservice 25%

Small/mediumorders 57%

Ongoing increase of service share, small/medium orders suffering most

Large orders difficult to forecast; average 2015-2019: 83m CHF (without extraord. 2016)

63 68 69 80 77 75 66

199 178239 237

199

284

148

79

239

41

143

67

64

45

0

100

200

300

400

500

600

2015 2016 2017 2018 2019 H2 2018 /H1 2019

H2 2019 /H1 2020

Order intake by industry

7

CHF m

45 36 4476 63 60

21

143194 157

176132

172

125

29

5038

38

25

44

19

116

200

110

171

122

141

94

0

100

200

300

400

500

600

2015 2016 2017 2018 2019 H2 2018 /H1 2019

H2 2019 /H1 2020

Covid-19 and recession negatively impacting all industries

Aerospace 36%

Energy 8%

Industrial 48%

Transport 8%

Order intake by region

8

196 205 231272

186257

131

105

174 94

120

112

95

79

32

101

25

69

45

65

49

0

100

200

300

400

500

600

2015 2016 2017 2018 2019 H2 2018 /H1 2019

H2 2019 /H1 2020

CHF m

Americas 19%

Europe 51%

Asia 30%

Covid-19 and recession negatively impacting all regions

Impact of Covid-19 on H1 2020

9

Measures to protect employees with highest priority

Order fulfillment as well as adherence to agreed intervention times and quality in customer

service basically guaranteed without restriction

Restrictions depending on situation, including official orders

Temporary closing of certain plants, severe travel restrictions, cancelling of exhibitions

Immediate implementation of comprehensive cost reduction program plus strengthened focus on

core business

Pay-out of dividend cancelled by Annual General Meeting as precautionary measure

Comprehensive cost reduction program

10

Immediate flexible adaptation of capacities to lower demand

Reduction of time accounts

Short-time work

Termination of temporary employment contracts

Natural attrition

Substantial reduction of various cost items (trade fairs, travelling, etc.)

Number of employees end 2020 10% down compared to end 2019

Fixed compensations of Board of Directors down 20%, Executive Board down 10% in 2020,

plus considerable reduction of variable compensations

Result: Additional CHF 20 million cost reduction in 2020, thereof CHF 8 million already realized in

first half

Strengthened focusing on core business

11

Reinforced management at Mönchengladbach and Bielefeld with strategic options under review

Operational focus on

Efficient use of resources

Achievement of cost reduction targets

Strict risk management in tendering process

Accurate multi-project management in order processing

Unchanged strategy: Concentration on market segments and regions with best growth and margin

potential

Even more focused on China

Further strengthening of sales organization (Group CSO)

Further developing service business (new offers, active selling, capacity expansion)

Launch of new generation of mid-sized horizontal machining centers

Production network with substance

12

Rorschacherberg Vuadens

Chemnitz

St. Etienne * Bangalore

Bielefeld Mönchengladbach

* Rental property

Land area 250‘000 m2

Floor area 132‘000 m2

Net carrying value CHF 74 m

Insurance value CHF 190 m

Technology and application: Process time and space requirement cut in half

Machining in only two clamping positions

Reduction of clamping errors higher

process reliability

Process integration with 5 axis milling and turning

Significant reduction of throughput time

Lower costs for fixtures

Automation

Simultaneous machining of two types of planet

carriers

Fully automated work piece handling lower

personnel cost

Changeover

Changeover during machining, thus reducing

non-productive time

Highly integrated and automized system with two 5-axis mill-turn Heckert T45

13

Innovation: Processing time down 30%

Complete machining process without interruption

Thanks to two grinding supports, process time

reduced by 30%

Follow-up projects from the large bearing

industry for the sizes RVU 4000 and RVU 6000 in

process

Vertical ginding machine Berthiez RVU 2800

14

Covid-19 forces localization in complex projects

Installation of several highly complex machine tools in

China

Successfully done by Chinese service and application

team without help on site by European experts

Potential for significant efficiency improvements

15

Changes in Board of Directors and Executive Board

Board of Directors

Michael Hauser new Chairman as from April 2020, following Walter Fust who is remaining as

Vice-Chairman

Executive Board

Long-standing CFO Gerold Brütsch decided to continue his career outside Starrag

Thomas Erne new CFO as per 1 September 2020

Marcus Queins, Head Business Unit Large Parts Manufacturing Systems since 2019, left as per

30 June 2020

16

Agenda

Market and business review

Financial review

Outlook

17

Significant decline in sales revenue

Sales revenue -28%, fx adjusted -25%

18

214

155

-53

-6

0

50

100

150

200

250

H1 2019 Organic FXTrans-lation

H1 2020

CHF m Organic decrease due to

Low order intake 2019

Delays in order fulfillment caused

by Covid-19

FX translation impact

Weaker EUR/CHF translation rate

(H1 2020: 1.0757 vs 1.1414 in H1 2019)

EBIT development: 14 m CHF cost savings compensating volume impact

19

CHF m

EBIT

Margin 0.4% 0.4%

6 m CHF

2019 Capacity

adjustment

7.9

4.5

1.7

2.5

2.6 1.1

0.9 0.9 -22.3 0.7 0.6

-25

-20

-15

-10

-5

0

5

H1 2019 Contribution One time2019

Personnel Various Short TimeWork /

Time Accounts

OtherPersonnel

Travel Sales,including

Exhibitions

Various H1 2020

8 m CHF

Covid 19 Cost Savings program

Net income down due to one time tax effect in 2019

20

H1 2020 H1 2019 Change

Operating result EBIT 0.6 0.9 -37%

Interest expenses, net -0.1 -0.2 -36%

FX result, net -0.3 - na.

Other financial result -0.4 -0.4 -5%

Total Financial result, net -0.8 -0.6 39%

Income before taxes -0.2 0.4 na.

Income tax expenses 0.8 3.1 -74%

Net income 0.6 3.4 -82%

Earnings per share in CHF 0.15 1.01 -85%

CHF m

Slightly lower FX result due to weaker EUR (-0.3 m CHF)

Swiss corporate tax reforms led to positive one-time effect in income tax expenses of

2.3 m CHF in H1 2019

Balance sheet: Equity and equity ratio continuously strong

21

177 178

118143

2214

93 91

108 111

118 105

15 10

0

50

100

150

200

250

300

350

400

31.12.2019 31.12.2019 2

CHF m

Significant reduction in total assets thanks to lower receivables

Reduction in operating liabilities due to severance payments and timing effects

Total assets 335 317

Net debt 11.5 -0.6

Equity ratio 55.8% 53.2%

Assets Liabilities

30.06.2020

Cash

Receivables

Inventories

Fixed assets

Financial debt

Operating liabilities

Shareholders' equity

Free cash flow impacted by increase in net working capital

22

CHF m

Increase in net working capital due to lower operating liabilities

(severance payments and timing effects)

Units

Base Value

Change1

Change2

Change3

Change4

Change5

Change6

Change7

Change8

Change9

Change10

Change11

Change12

Change13

Change14

Change15

Change16

Change17

Change18

Change19

Change20

-3.1

0.5

4.3 0.2 -0.3 -13.5

-8.8 -11.9

-15

-10

-5

0

5

10

Netincome

Depre-ciation

Non-current

provisions

Othernon-cash

items

Changein NWC

Operatingcash flow

Capex Freecash flow

H1 2019: 3.4 5.2 -6.1 0.1 5.5 8.2 -3.0 5.2

Agenda

Market and business review

Financial review

Outlook

23

Subdued expectations

Global economic and political uncertainties plus Covid-19 to delay customer decisions

Negative impact on all market segments and industries

Recovery not likely before 2021

Consistent implementation of cost reduction program

24

Focus of strategic actions reinforced

25

Innovation Geographical footprint Operational excellence

USA

China

Dealer network in

key markets

Simplifying

go to market

Sales effectiveness

Customer service

readiness

Project

management

People

development

Leading application

competence

Starrag Integrated

Production System

(Industry 4.0)

Next generation

of machine tools

(H series)

Dedicated

automation concepts

Financial outlook

26

2019 H1 2019 H1 2020Guidance 2020

(in local currencies)

Order intake 343 173 88 2020 << 2019

Sales revenue 418 215 155 2020 << 2019

EBIT margin 1.1% 0.4% 0.4% 2020 << 2019

Despite substantial cost reductions in 2019 and 2020:

H2 2020 below H1 2020 to an extent that can currently not be assessed,

due to unprecedented market slump in H1 2020

Corporate calendar and Contact details

29.01.2021 Preliminary information on FY 2020

05.03.2021 Presentation of FY 2020 annual report and results to analysts/media

in Zurich

23.04.2021 Annual General Meeting in Rorschach

29.07.2021 Half-year report 2021

Christian Walti, CEO

Phone +41 71 858 81 11

Gerold Brütsch, CFO

Phone +41 71 858 81 11

investor@starrag.com

www.starrag.com

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We are pleased to answer your questions.

Thank you.

www.starrag.com