ANNUAL REPORT 2020 Executive Summary Play video ANNUAL REPORT 2020 Executive Summary Play video
2020: GOODTHINGS TOO “The year that broughtout the best in us” 2020MILESTONES HOW DID WE TACKLE A YEAROF UNPRECEDENTED CHALLENGES? CONTENTS We focused our efforts on achieving RESULTSWe defended our SHAREHOLDERS' interestsWe offered our CUSTOMERS solutions they can count onWe ensured EMPLOYEE safetyWe stepped up collaboration with our SUPPLIERSWe renewed our ENVIRONMENTAL commitmentsWe reaffirmed our COMMUNITY commitments Chairman and CEO's statement The year in numbers 2020: GOODTHINGS TOO 2020MILESTONES “The year that broughtout the best in us” HOW DID WE TACKLE A YEAROF UNPRECEDENTED CHALLENGES? CONTENTS We focused our efforts on achieving RESULTSWe defended our SHAREHOLDERS' interestsWe offered our CUSTOMERS solutions they can count onWe ensured EMPLOYEE safetyWe stepped up collaboration with our SUPPLIERSWe renewed our ENVIRONMENTAL commitmentsWe reaffirmed our COMMUNITY commitments Chairman and CEO's statement The year in numbers
READ LETTER AntónPradera Jesús MªHerrera “THE YEAR THAT BROUGHT OUT THE BEST IN US” CHAIRMAN AND CEO'S STATEMENT CEO Chairman 2020 will forever go down in the history books as the year of the COVID-19 pandemic. A year in which we looked on powerless as the virus spread, taking the lives of over two million people across the planet, confined us to our homes, paralysed industry and services and ushered in the worst global recession in 75 years. However, in the midst of that catastrophe, the human race once again demonstrated its ability to resist, find solutions and find a way through extreme conditions. We are proud to say, without wanting to blow our own trumpet, that CIE Automotive was a paradigm of that resilience. READ LETTER AntónPradera Jesús MªHerrera “EL AÑO EN EL QUE DIMOS LO MEJOR DE NOSOTROS MISMOS” CHAIRMAN AND CEO'SSTATEMENT CEO Chairman 2020 will forever go down in the history books as the year of the COVID-19 pandemic. A year in which we looked on powerless as the virus spread, taking the lives of over two million people across the planet, confined us to our homes, paralysed industry and services and ushered in the worst global recession in 75 years. However, in the midst of that catastrophe, the human race once again demonstrated its ability to resist, find solutions and find a way through extreme conditions. We are proud to say, without wanting to blow our own trumpet, that CIE Automotive was a paradigm of that resilience.

CHAIRMAN AND CEO'S STATEMENT

For those of us in the CIE Automotive family, that annus horribilis will also be remembered as the year in which we gave our best: we prioritised the safety of our employees, uninterrupted supplies for our customers and protection of our shareholders' investments, while supporting our suppliers and maintaining our environmental and community commitments. Thanks to that formidable effort, we managed to end the year with almost €1.5 billion of surplus liquidity, putting us in a strong financial position, having generated a net profit of €185 million in the worst year on record for the automotive industry, all while making firm continued progress on our ESG agenda.

In the 2020 Annual Report you have before you we will describe in detail how we managed to remain profitable in a year in which the automotive market contracted by 16.2%. We will also tell you about the considerable progress we made on measuring our environmental footprint and advancing towards a circular economy, as well as what we did as a socially responsible company vis-a-vis all of our stakeholders. We would like to use these lines to sincerely thank everyone who accompanied us on this complicated journey.

Looking back on the events of 2020, and fully aware that the pandemic is far from over, it would be pretentious to say we were ready for what lay in store. Nobody was. What we can tell you, however, is that we had the solidity and flexibility needed to tackle the challenges induced by it. Having learned our lessons in the wake of prior crises, we had a resilient business model in place, the know-how of an unbeatable team and the technological capabilities needed to tackle the ensuing challenges.

"Thanks to that formidable effort, we managed to end the year with a net profit of €185 million in the worst year on record for the automotive industry"

Our business model was, without a shadow of a doubt, the key to surmounting the difficulties encountered in 2020. Our geographical diversity, with 110 manufacturing facilities in 16 countries, enabled us to service the global OEMs throughout and partially offset successive stoppages in certain regions with ongoing activity in others. Thanks to our customer diversification, specifically a well-populated portfolio of OEMs and Tier-1 suppliers, we were able to mitigate the drop in demand from some of them. Our multi-technology approach enabled us provide our customers with products that match their evolving vehicle mixes and needs as vehicle electrification accelerated further in 2020. The strict financial discipline that frames every single decision we take was critical to keeping our EBITDA-to-cash conversion ratio at 59%. Our decentralised management made it possible for each region and division to take the best decisions for its specific circumstances, underpinned by a common strategy, thus helping to create value for the group as a whole. Lastly, the integration of ESG criteria into our model, which materialised in the rollout of a new dashboard with 79 performance indicators in every factory's management plan, coupled with our renewed pledge to upholding the United Nations Global Compact principles, meant that our values and determination to attain excellence and sustainability remained unshakeable even at the height of the pandemic.

We had, therefore, a very solid base on which to layer a global strategy aimed at maintaining profitability in the face of the pandemic: the COVID-19 Response Plan. We launched that plan during the second quarter, articulating it around four key lines of initiative: (i) work flexibility measures, aligned with the legislation and specifics of each country; (ii) war economy tactics, which meant strict control over fixed costs, capex and working capital; (iii) liquidity and financing, which translated into new and extended credit lines; and (iv) astute production planning, including new safety measures at the factories and stock buffers to ensure supply continuity.

Coordinated execution of that plan and the gradual improvements eked out at the more recently integrated companies underpinned EBITDA and EBIT margins of 15% and almost 10%, respectively, very high levels considering the double-digit contraction in the automotive market which had a highly adverse impact on most sector players' profitability. In addition, thanks to high operating cash flow, we were able to contain net debt, close our M&A transactions, pay our shareholders the agreed-upon dividend and cancel shares to boost remuneration.

Although the resilience displayed by CIE Automotive in the face of the pandemic was not tangible in its share price performance throughout the year, our shares did end 2020 higher than they started, at €22.06, a gain of 4.6%, despite the dire performance sustained by Spanish equities, with the benchmark Ibex-35 index correcting by over 15%.

All of our markets contributed to our healthy earnings performance with positive operating margins. Revenue in constant currencies declined by 13.2% even though vehicle production in our markets collapsed by over 20%.

Our healthy performance across Europe, North America, Brazil and Asia is largely attributable to the reliability and quality of our supply chain worldwide. In the midst of the pandemic, when many automotive parts suppliers were facing difficulties in honouring their obligations, CIE Automotive was able to offer business continuity thanks to good production planning and supply chain optimisation. To achieve that feat, we relied on the invaluable contribution of our suppliers, 92% of which are local.

That being said, we had to take difficult decisions to safeguard our viability as a company. In the face of the government decreed closures and the attendant ramifications on the industry, we were forced to temporarily reduce our headcount, availing of the schemes and measures put in place in each country. During the second half of the year, however, as our business picked up, we began to bring people back to work, ending the year with a headcount of 25,196.

"Our healthy performance across Europe, North America, Brazil and Asia is largely attributable to the reliability and quality of our supply chain worldwide"

While employee safety has always been a priority, in 2020 it became the key factor driving all our decisions. To ensure their safety, in addition to formulating and overseeing a prevention protocol at every factory, we introduced remote working arrangements for all positions not requiring in-person presence. In parallel, we continued to make progress on a series of initiatives designed to guarantee application of universal labour rights and equal opportunities across our diverse workforce.

Given our vested interest in the automotive industry, to tackle the challenges induced by the pandemic, we joined the sector in its call for an emergency action plan for the sector, and we continued to work through a number of associations on shaping the mobility of tomorrow. We believe we are well positioned to continue to respond to the prevailing trends in the automotive sector: vehicle electrification; decarbonisation and productive process efficiency; vehicle light-weighting; and process digitalisation.

With the mobility of tomorrow ever closer to becoming a reality, in 2020 we launched a number of projects in the electric and hybrid vehicle segment; we worked to collect data for the purpose of calculating our carbon footprint; we took our first steps in the self-generation of clean energy with photovoltaic facilities at a number of factories; and we continued to work on a number of projects related with the implementation of Industry 4.0 capabilities at the factory level.

In tandem, we fortified our global positioning with the completion in January of the acquisition of Italy's Somaschini, a deal which makes us a top global player in gear systems; the inauguration of greenfield facilities by CIE Plastics in Mexico and by AEL in India; and an increased shareholding in MCIE, the venture resulting from our strategic alliance with Mahindra&Mahindra.

“You will never find a better sparring partner than adversity”, said Golda Meir. Adversity was our sparring partner for every day of 2020 and it ended up boosting our motivation and resilience, leaving us stronger and better prepared for the next challenge. Stick with us because we will continue to exceed your expectations.

Antón Pradera | Chairman

Jesús Mª Herrera | CEO

2020: GOOD THINGS TOO The COVID-19 pandemic, which has sadly taken the lives of more than two million people and caused a drastic global recession, represented a formidable challenge for CIE Automotive in 2020. We responded to the temporary shutdown of manufacturing activity and the unprecedented collapse in the global automotive market with an action plan focused on profitability, the safety of our employees and business continuity, ending the year in the black. 2020: GOOD THINGS TOO The COVID-19 pandemic, which has sadly taken the lives of more than two million people and caused a drastic global recession, represented a formidable challenge for CIE Automotive in 2020. We responded to the temporary shutdown of manufacturing activity and the unprecedented collapse in the global automotive market with an action plan focused on profitability, the safety of our employees and business continuity, ending the year in the black.
(*) CIE markets: calculated by weighting the markets in which CIE Automotive has manufacturing facilities (**) Both the net debt and EBITDA figures include 50% of the SAMAP JV € MILLION € MILLION € MILLION € MILLION RATIO € MILLION NET DEBT/EBITDA** NETPROFIT REVENUE EQUITY EBITDA-TO-CASHCONVERSION EBIT VS € MILLION EBITDA EBITDAMARGIN CIE MARKETS* EBITMARGIN MARGIN OVEREBITDA 3.59x 185.2 2,882.5 995.0 239.0 283.4 431.2 15.0% -13.2% -20.7% 9.8% 6.4% 59.0% (*) CIE markets: calculated by weighting the markets in whichCIE Automotive has manufacturing facilities (**) Both the net debt and EBITDA figures include 50% of the SAMAP JV € MILLION € MILLION € MILLION € MILLION RATIO € MILLION NET DEBT/EBITDA** NETPROFIT REVENUE EQUITY EBITDA-TO-CASHCONVERSION EBIT € MILLION EBITDA EBITDAMARGIN EBITMARGIN MARGIN OVEREBITDA VS CIE MARKETS* 3.59x 185.2 2,882.5 995.0 239.0 283.4 431.2 15,0% 9,8% 6,4% 59,0% -13.2% -20.7%
HOW DID WE TACKLE A YEAR OF UNPRECEDENTED CHALLENGES? The events of 2020 put the resilience of our business model and the reliability of our profit-oriented strategy to test. Thanks to the collective efforts of the entire CIE Automotive team, and with the help of our stakeholders, we continued to provide our customers with excellent service, we supported our suppliers in their time of need, we defended our shareholders' investments and we continued to make progress on our social and environmental commitments. HOW DID WE TACKLE A YEAR OF UNPRECEDENTED CHALLENGES? The events of 2020 put the resilience of our business model and the reliability of our profit-oriented strategy to test. Thanks to the collective efforts of the entire CIE Automotive team, and with the help of our stakeholders, we continued to provide our customers with excellent service, we supported our suppliers in their time of need, we defended our shareholders' investments and we continued to make progress on our social and environmental commitments.
RESULTS 1 19 19 17 10 9 23 3 % % % % % % % WE FOCUSED OUREFFORTS ON ACHIEVING Revenue by technology € MILLION MILLIONS OF EUROS TOTAL (*) Includes €91.5mof intercompany sales 565.4 552.4 264.4 79.7 520.1 2,974.0* 689.8 302.2 FORGING MACHINING PLASTICS CASTING METAL STAMPING AND TUBE FORMING ROOF SYSTEMS ALUMINIUM RESULTS 1 19 19 17 10 9 3 23 % % % % % % % WE FOCUSED OUREFFORTS ON ACHIEVING Revenue bytechnology € MILLION MILLIONS OF EUROS (*) Includes €91.5m of intercompany sales TOTAL 2,974.0* 565.4 552.4 264.4 79.7 520.1 689.8 302.2 FORGING MACHINING PLASTICS CASTING METAL STAMPING AND TUBE FORMING ROOF SYSTEMS ALUMINIUM
840.3 354.6 185.6 760.3 741.7 20.5 3.0 10.7 10.2 7.8 15.7 14.6 15.8 6.9 13.3 Revenue Revenue EBITDA margin EBIT margin Revenue Revenue Revenue M M M M M % % % % % % % % % % Showmore Performance by region € MILLION AND PERCENTAGE EBITDA margin EBIT margin EBITDA margin EBIT margin EBITDA margin EBIT margin EBITDA margin EBIT margin NORTH AMERICA TRADITIONAL EUROPE MCIE EUROPE BRAZIL ASIA EBITDAMIX BYREGION 29.2% 12.3% 25.7% 6.4% 26.4% Europe MCIE Europe North America Brazil Asia EBITDAMIXBYREGION 760.3 840.3 354.6 185.6 741.7 15.8 6.9 3.0 10.7 10.2 20.5 13.3 7.8 15.7 14.6 Revenue Revenue EBITDA margin EBIT margin Revenue Revenue Revenue M M M % % % % % % % % % % M M Showmore Performance by region € MILLION AND PERCENTAGE EBITDA margin EBIT margin EBITDA margin EBIT margin EBITDA margin EBIT margin EBITDA margin EBIT margin NORTH AMERICA TRADITIONAL EUROPE MCIE EUROPE BRAZIL ASIA EBITDA MIXBY REGION 29.2% 12.3% 25.7% 6.4% 26.4% Europe MCIE Europe North America Brazil Asia EBITDAMIXBYREGION
CUSTOMERS 2 WE OFFERED OUR SOLUTIONS THEYCAN COUNT ON UNINTERRUPTED SUPPLY TO OVER TIER 1 and OEM ACROSS 7 TECHNOLOGIES CENTERS WITH TRIPLE CERTIFICATION 80 7,000 10 70 CUSTOMERS SKUs R&D FACTORIES 2 UNINTERRUPTED SUPPLY TO OVER ENTRE TIER 1 Y OEM ACROSS 7 TECHNOLOGIES DE I+D+i WITH TRIPLE CERTIFICATION CUSTOMERS WE OFFERED OUR SOLUTIONS THEYCAN COUNT ON 80 7,000 10 70 CUSTOMERS SKUs R&D FACTORIES
MILLIONS OF EUROS Thyssen KruppLearSaicBroseAamScaniaMaruti - SuzukiKiaKs KolbenschmidtRheinmetall AutomotiveDafMarelliOpelDanaAp-kayabaLinamar Visteon CorporationVolvo TrucksGeelyGaig AutomobilehondaAutolivMeritorTrwVolvo CarsSeatDpcaBorgwarnerSkodaAntolin IrausaToyotaPlastic OmniumChery * Includes 5% sales to BBAC (BAIC-DAIMLER JV).** Includes 2% sales to SGM (SAIC-GM JV). Revenuemix bycustomer DAIMLER TRUCKSCATERPILLARBAJAJBMWFAWTESLAZFNEXTEERGKN AUTOMOTIVEFIAT 2%2%2%2%2%2%2%2%2%2% PSAMAHINDRANISSAN 3%3%3% MAGNAFORD 4%4% 5%GM** 6%RENAULT CHRYSLERVOLKSWAGEN 7%7% AUDITATANTNJTEKTROBERT BOSCHNSKSCHAEFFLER GROUPMANCONTINENTALHYUNDAIJLRFAURECIA 1%1%1%1%1%1%1%1%1%1%1%1% 20%OTHER 8%DAIMLER CARS* 2,882.5 TOTAL MILLIONS OF EUROS Revenue mix by customer DAIMLER TRUCKSCATERPILLARBAJAJBMWFAWTESLAZFNEXTEERGKN AUTOMOTIVEFIAT 2%2%2%2%2%2%2%2%2%2% PSAMAHINDRANISSAN 3%3%3% MAGNAFORD 4%4% 5%GM 6%RENAULT CHRYSLERVOLKSWAGEN 7%7% AUDITATANTNJTEKTROBERT BOSCHNSKSCHAEFFLER GROUPMANCONTINENTALHYUNDAIJLRFAURECIA 1%1%1%1%1%1%1%1%1%1%1%1% 20%OTHER 8%DAIMLERCARS 2,882.5 TOTAL
SHAREHOLDERS' 3 SHARE BUYBACK PROGRAMME WE DEFENDEDOUR INTERESTS PAID OUT IN DIVIDENDS INVESTED IN THE WITH ANALYSTS €93.9 €95.4 16 16 MILLION MILLION CONFERENCES ROADSHOWS SHAREHOLDERS' 3 SHARE BUYBACK PROGRAMME WE DEFENDEDOUR INTERESTS PAID OUT IN DIVIDENDS INVESTED IN THE WITH ANALYSTS €93.9 €95.4 16 16 MILLION MILLION CONFERENCES ROADSHOWS
0% -25% -50% -75% DEC NOV OCT SEP AUG JUL JUN MAI APR MAR FEB JAN +5% -15% +4% IBEX 35 IBEX 35 STOXX Europe 600 Automobiles & Parts CIE Automotive (MSE) CIE Automotive STOXX Europe 600 Automobiles & Parts Share price performance 0% -25% -50% -75% DEC NOV OCT SEP AUG JUL JUN MAI APR MAR FEB ENE +5% -15% +4% IBEX 35 IBEX 35 STOXX Europe 600 Automobiles & Parts CIE Automotive (MSE) CIE Automotive STOXX Europe 600Automobiles & Parts Share price performance
EMPLOYEE 4 WE ENSURED SAFETY IN JOBS THAT DO NOT REQUIRE A PHYSICAL PRESENCE ON FOUR CONTINENTS OF PREVENTIVE ACTION IN ALL FACTORIES SPECIFIC INSURANCE FOR COVID-19 COVERAGE TRAVEL SERVICES 25,196 EMPLOYEES TELEWORKING PROTOCOL COVID INTERNATIONAL SOS 4 IN JOBS THAT DO NOT REQUIRE A PHYSICAL PRESENCE ON FOUR CONTINENTS OF PREVENTIVE ACTIONIN ALL FACTORIES SPECIFIC INSURANCE FOR COVID-19 COVERAGE TRAVEL SERVICES EMPLOYEE WE ENSURED SAFETY 25.196 EMPLOYEES TELEWORKING PROTOCOL COVID INTERNATIONAL SOS
28% 12% 27% 33% Employment by region NUMBER AND PERCENTAGE 7,042 3,050 6,790 8,314 NORTH AMERICA EUROPE ASIA BRAZIL 28% 12% 27% 33% 7,042 3,050 6,790 8,314 Employment by region NUMBER AND PERCENTAGE NORTH AMERICA EUROPE ASIA BRAZIL
SUPPLIERS 5 WE STEPPED UPCOLLABORATIONWITH OUR SPENT ON PROCUREMENTS SUPPLIER QUALITY SUPPLIER PORTAL SUPPLIERS €1.9 353 1 92% BILLION AUDITS GLOBAL LOCAL 5 SPENT ON PROCUREMENTS SUPPLIER QUALITY SUPPLIER PORTAL SUPPLIERS SUPPLIERS WE STEPPED UPCOLLABORATIONWITH OUR €1.9 353 1 92% BILLION AUDITS GLOBAL LOCAL
ENVIRONMENTAL 6 START OF IMPLEMENTATION OF PHOTOVOLTAIC PANELS DATA COLLECTION FOR CALCULATION CONTRACTING CALCULATION IN RELATION TO ADDED VALUE USE OF RECYCLED RAW MATERIALS WE RENEWED OUR COMMITMENTS ENVIRONMENTAL FOOTPRINT SELF-GENERATION CLEAN ENERGY COST OF EMISSIONS RECYCLING 6 START OF IMPLEMENTATION OF PHOTOVOLTAIC PANELS DATA COLLECTION FOR CALCULATION CONTRACTING CALCULATION IN RELATION TO ADDED VALUE USE OF RECYCLED RAW MATERIALS ENVIRONMENTAL WE RENEWED OUR COMMITMENTS ENVIRONMENTAL FOOTPRINT SELF-GENERATION CLEAN ENERGY COST OF EMISSIONS RECYCLING
Revenue relative value Revenue relative value Revenue relative value Environmentalindicators CO 2 TONNES M /K€ Tonnes/K€ 3 WATER M 3 WASTERECOVERED TONNES TCO e/K€ 2 415,266 1,450,889 282,367 0.14 0.50 0.10 Revenue relative value Revenue relative value Revenue relative value TONNES M /K€ Tonnes/K€ 3 M 3 TONNES Environmentalindicators CO 2 WATER WASTERECOVERED TCO e/K€ 2 415,266 1,450,889 282,367 0.14 0.50 0.10
COMMUNITY 7 WE REAFFIRMED OUR COMMITMENTS MEMBERSHIP OF THE LEADING SECTOR IN SOCIAL ACTION PROGRAMS TO THE PANDEMIC IN ALL REGIONS PAID IN CORPORATION TAX 941,253 €43 ASSOCIATIONS EUROS RESPONSE MILLION 7 MEMBERSHIP OF THE LEADING SECTOR IN SOCIAL ACTION PROGRAMS TO THE PANDEMIC IN ALL REGIONS PAID IN CORPORATION TAX COMMUNITY WE REAFFIRMED OUR COMMITMENTS 941,253 €43 ASSOCIATIONS EUROS RESPONSE MILLION
2020MILESTONES 2020MILESTONES
OVER THE COURSEOF 2020 JANUARY FEBRUARY JUNE Showmore Milestones 1 SEMESTER ST Purchase of an additional 4% shareholding in MCIE OVER THE COURSE OF 2020 Completion of the acquisition of Somaschini, a deal that consolidates CIE Automotive as a top global player in gear systems JANUARY Rollout of CIE WIKI, an innovation platform that enables the factories to share their know-how FEBRUARY Inauguration of CIE Plásticos Mexico, a factory devoted to moulding, injection processes and assemblyCIE Automotive ties its syndicated loan agreement to ESG criteria JUNE OVERTHE COURSEOF 2020 JANUARY FEBRUARY JUNE Showmore Milestones 1 SEMESTER ST Purchase of an additional 4% shareholding in MCIE OVER THE COURSE OF 2020 Completion of the acquisition of Somaschini, a deal that consolidates CIE Automotive as a top global player in gear systems JANUARY Rollout of CIE WIKI, an innovation platform that enables the factories to share their know-how FEBRUARY Inauguration of CIE Plásticos Mexico, a factory devoted to moulding, injection processes and assemblyCIE Automotive ties itssyndicated loan agreement to ESG criteria JUNE
JULY NOVEMBER DECEMBER Showmore Milestones ND 2 SEMESTER CIE Plasfil and CIE Stratis create their own photovoltaic solar farm in Figueira da Foz (Portugal) JULY CIE completes its share buyback programme CIE publishes its Protocol for the Prevention and Handling of Workplace Harassment NOVEMBER Commissioning of AEL's new facility in Aurangabad (India) DECEMBER JULY NOVEMBER DECEMBER Showmore Milestones ND 2 SEMESTER CIE Plasfil and CIE Stratis create their own photovoltaic solar farm in Figueira da Foz (Portugal) JULY CIE completes its share buyback programme CIE publishes its Protocol for the Prevention and Handling of Workplace Harassment NOVEMBER Commissioning of AEL's new facility in Aurangabad (India) DECEMBER