CETOP market outlook 2021

Global mechanical engineering

On the way to pre-crisis level CETOP market outlook web conference online, February 10th 2021

www.vdma.org VDMA | Anke Uhlig

China: Industrial production by sectors

Real, yoy, % Manufacture of Special-Purpose Machinery 20

20

10

10

0

0

-10

-10

-20

-20

-30

-30

20

20

10

10

0

0

-10

-10

-20

-20

-30

-30

2013

2014

Source: NBS, Macrobond, VDMA VDMA | Anke Uhlig

Manufacture of General-Purpose Machinery

2015

2016

2017

2018

2019

2020

5-month moving average Page 2 | Feb. 10th '21

EU / USA / JP: Machinery production

Volume index, 2015 = 100 and 12-months moving average EU-27*

130

Japan

USA

120

Jan- Nov. 2020/2019

110

EU-27: - 13%

100

Jan- Dec. 2020/2019

90

Japan: -12%

80

USA:

-9%

70 60

2008

2009

2010

2011

2012

Source: National Statististics, VDMA, Macrobond

VDMA | Anke Uhlig

2013

2014

2015

2016

2017

2018

2019

2020

*) NACE rev. 2 28.

Page 3 | Feb. 10th '21

EU-27: Production* in mechanical engineering

January - November 2020/2019, %, real 0 -1 -3

-5 -7

-8

-10

-10 -11 -13

-15

-13

-14

-14

-14

-14

-14 -16

-20

FI

NL

DK

HU

Source: Eurostat, Macrobond, VDMA

VDMA | Anke Uhlig

PT

SE

CZ

EU27

FR

DE

PL

ES

BE

IT

-16

AT

*) NACE rev. 2 28.

Page 4 | Feb. 10th '21

EU-27: Capacity utilization in mechanical engineering industry In % of full capacity level of output quarterly values

95

average 2008 - 2020

90 85 80 75 70 65 60

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: EU DG ECFIN, Macrobond, VDMA

VDMA | Anke Uhlig

Page 5 | Feb. 10th '21

Germany: Incoming orders in mechanical engineering Domestic and Foreign Volume index 2015 = 100 Domestic

140

Foreign

130 120 110

Jan.-Dec. 2019/18: - 9 % Jan.-Dec. 2020/19: - 13 % %

100 90

Jan.-Dec. 2019/18: - 9 % Jan.-Dec. 2020/19: - 6 %

80 70 60

2011

Source: VDMA

VDMA | Anke Uhlig

2012

2013

2014

2015

2016

2017

2018

2019

2020

12-months moving average Non-adjusted indices

Page 6 | Feb. 10th '21

VDMA member companies: Existing disturbances (except supply and demand side or liquidity shortages)

VDMA | Anke Uhlig

Page 7 | Feb. 10th '21

World: Industrial production and Purchasing Managers’ Index manufacturing (PMI)

Index 59

PMI manufacturing (lS)

yoy, %

Industrial production, 3mma (rS)

9

56

6

53

3

50

0

47

-3

44

-6

41

-9

38

2015

2016

2017

2018

2019

2020

2021

-12

Source: cpb, IHS Markit, Macrobond, VDMA

VDMA | Anke Uhlig

Page 8 | Feb. 10th '21

World: Mechanical engineering turnover, Scenarios by Oxford Economics Index 2019Q4 = 100, real Rapid Upturn

Baseline forecast

Global Second Wave

110 108 106 104 102 100 98 96 94 92 90

2019

2020

2021

2022

Source: Oxford Ecnomics (8th Dec 2020)

VDMA | Anke Uhlig

Page 9 | Feb. 10th '21

VDMA member companies: Expected development on sales markets in 2021 compared with the previous year Evaluable answers, shares in % clearly worse

60%

worse

same

better

clearly better

50% 40% 30% 20% 10% 0%

Germany (N = 575)

Europe (without Germany) (N = 565)

China (N = 499)

Asia (without China) North America (USA and South and Middle (N = 492) Canada) (N = 514) America (Mexico incl.)

(N = 488)

Quelle: VDMA, 9th flash survey on coronavirus, January 2021

VDMA | Anke Uhlig

Page 10 | Feb. 10th '21

Germany: Machine production including VDMA forecast until 2021 %, yoy, real 6

4.0

3.9 3

1.2

1.1

0

2.1 0.8 -0.3

-1.2

-3

Forecast -2.6

-6 -9 -12 -15

-12.1 2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: Federal Statistical Office, VDMA

VDMA | Anke Uhlig

Page 11 | Feb. 10th '21

VDMA-member companies: Expected return to the 2019 turnover level Evaluable answers (N = 522, N = 574); shares in % 24 September 2020

60 50

22 January 2021

46 39

40 30 20

21 13

18

16

15

18

10 0

4 probably no turnover losses 2020

2021

2022

2023

5

2024

2

1

2025 to 2030

2

1

never

Source: VDMA, flash surveys on coronavirus, September 2020 to January 2021

VDMA | Anke Uhlig

page 12 | Feb. 10th '21

Your contact.

Anke Uhlig VDMA Economics and Statistics Lyoner Str. 18 60528 Frankfurt, Germany Phone +49 69 6603-1388 Email anke.uhlig@vdma.org

VDMA | Anke Uhlig

Page 13 |

Feb. 10th '21

Oxford Economics Basline Scenario •

In the near future, global production will be restricted by social distancing measures, especially throughout Europe, before a vaccine is introduced around mid 2021 to begin a large-scale and permanent reduction in restrictions. A global second wave of Covid-19 will be avoided.

•

Fiscal policy: Significant tightening after substantial support in 2020.

•

Europe: Upswing in Q1 2021, when companies will reopen. But: Households and companies are looking more cautiously to the future and are prepared for further disruptions in 2021.

•

USA: Republicans expected to retain control of the Senate. In early 2021 a financial package of 1.5 trillion US dollars is expected. Deterioration in the health situation and weakening economic momentum are weighing on the US economy.

•

GDP: 2020 minus 4.1 percent | 2021 plus 4.8 percent, supported by a complete easing of social distancing in mid 2021.

Source: Oxford Economics, as of December 8, 2020 VDMA | Anke Uhlig

Page 14 | Feb. 10th '21

Oxford Economics Scenario Rapid Upturn •

Generally available medical advances - such as a vaccine, therapeutics or robust track and trace networks - allow a faster return to normality, with restrictions being eased three months earlier than in the baseline.

•

The upturn in tourism continues to boost international trade, especially in services.

•

Stronger demand will lead to higher oil prices in 2021, averaging around $51 per barrel.

•

Governments with fiscal space provide their economies greater fiscal incentives than assumed in the baseline forecast. For example, the US economic stimulus programs following the elections are increasing government consumer spending by more than 3.5% above the baseline forecast by the 4th quarter of 2021.

Source: Oxford Economics, as of December 8, 2020 VDMA | Anke Uhlig

Page 15 | Feb. 10th '21

Oxford Economics Scenario Global Second Wave •

The number of coronavirus cases is rising sharply worldwide in the first quarter of 2021, and demand is faltering with the introduction of lockdowns and social distancing measures. W-shaped upswing leaves economic scars.

•

The reintroduction of restrictions leads to an immediate decline in household consumption and business activity. As a result, unemployment rises sharply, reaching 9% according to ILO definitions at the global level.

•

Brent crude oil reaches a low of USD 30 per barrel and recovers weakly. The prices of other commodities, with the exception of gold, are also falling.

•

Fiscal support is more limited and less effective than in the first wave. After an expensive first wave, the policy response is more focused on monetary policy measures.

•

Restrictions will be lifted in Q2 2021. An initially strong upswing is followed by sluggish growth due to increased risk aversion among households and companies.

Source: Oxford Economics, as of December 8, 2020

VDMA | Anke Uhlig

Page 16 | Feb. 10th '21

EU: Investment in equipment & machinery and capacity utilization in manufacturing industry %, yoy

% Investment in machinery & equipm (left scale)

15

Capacity utilization (right scale)

87

10

84

5

81

0 -5

78

-10

75

-15

72

-20

69

-25 -30

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014 2015

2016

2017

2018

2019

2020

2021

66

Source: Macrobond, VDMA

VDMA | Anke Uhlig

Page 17 | Feb. 10th '21