Palfinger – global niche player; attractive growth market

Strong competitive position (ROCE -5YR: 7.3%); investment returns burdened by investments for global expansion

Competitive position – relative strength rests mainly on niche market focus, technology and network

- Market leadership – Its size (global market leader for load handling equipment – land-based) gives Palfinger the advantage of economies of scale (highest R&D investments in the industry) vs. smaller regional peers.

- Dense global sales and service network – One big difference in comparison to the biggest competitor (HIAB – subsidiary of listed group Cargotec): Palfinger relies on an independent dealer network whenever possible (this improves the scalability of the business model), while HIAB usually owns its dealers.

- Cost leadership – Palfinger moved quite early parts of its production to Eastern Europe (mainly Bulgaria) and therefore benefits from lower wages there. The production and process know-how (just in time) is another factor contributing to Palfinger’s cost leadership.

- Technological leadership – Due to its size advantage (highest R&D budget in the industry) as well as full commitment (Palfinger was the only player to develop new products even during the financial crisis of 2009), Palfinger offers the most advanced hydraulic lifting technology on the market.

Competitive advantage durability – market size (small) and network support durability of Palfinger’s competitive position

- We believe that HIAB will not be able to challenge Palfinger’s market leadership (in terms of size) anytime soon.

- Due to the facts that the market is rather small and the industry is cyclical, we deem the threat of new entrants challenging Palfinger’s position as limited.

- Since Palfinger cooperates already with the most attractive dealers in many countries, we believe that it will be very difficult for any peer to build a comparably dense dealer and service network (which is mandatory in order to sell products in the first place).

Market / growth potential – rising cost for labor in Emerging Markets as biggest growth driver

- Attractive organic growth potential – The rising cost of labor is in our opinion the biggest growth driver for Palfinger’s load-handling equipment; recent market entry into China reflects this development.

- M&A – M&A is an integral part of Palfinger’s globalization strategy. While these deals usually drive the top line, they tend to burden the investment return in the short term.