Presentation for 10

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C Athens, Greece September 26-29, 2006

Global Market for Industrial Lead Acid Batteries

Current Status and Trends for the Future

Hollingsworth & Vose Company

Bob Cullen

Vice President, Sales & Marketing

List of Participants - Major Manufacturers

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C&D Technologies, Inc.

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Douglas Battery Mfg. Company

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East Penn Mfg. Co., Inc.

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EnerSys, Inc.

•

CSB

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Fiamm

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B.B. Battery

•

Kung Long Battery

•

Leoch

•

Eurobat

•

Exide Technologies

•

GNB Industrial Power

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Exide India

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Panasonic (Worldwide)

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Power Sonic Corporation

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Power Battery Company, Inc.

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C&D China

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Yuasa/U.S., U.K., China, Taiwan

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Amara Raja

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Battery Council International

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Crown Battery

Special Thanks to Key Industry Contacts “Special thanks for their contribution”

• • • • • • • • • •

Key Industry Contacts Mark Wilson - Ericsson, Inc.

Larry Lang - Cisco Karen Sansone - Nortel Steve McCluer - American Power Michael Keith - AT&T, Wireless Alan Katz - MGE Conversion Robert Parker - IBM/Internet John Wirtz - Wirtz Manufacturing Tucker Roe - Daramic, Inc.

Robert Wittemann- C&D

• • • • • • • • • • •

Battery Manufacturers Evan Wescoe - East Penn Ray Kubis - EnerSys, Inc.

Mr. J.C. Lee - KLB Keith Schmid- Exide Steve Vechy - EnerSys, Inc.

Tom Lynn - C&D Technologies Tom Minner- East Penn Jerry Hoffman- NorthStar Guy Clum - Power Sonic Hal Hawk – Crown Battery Company Alison Huang - CSB

Presentation Notes (Methodology & Conditions)

• •

Market projection covers period of 2006-2010

• • •

All figures reflect production within a given geographic area

•

U.S. dollars are used for consistency. Euro value of $1.20 was used to convert to $; 8. RMB = $.

Recent market price increases are not reflected .

Known export figures are identified.

Recent Chinese Government change in VAT refund policy not factored in.

Overview of Global Industrial Market

• • • • • •

2000 market size - $3.79 billion Overall market lost - $605 million in 2001 & 2002 Stationary market decreased by almost 30% driven by Telecom/UPS implosion Motive Power lost 7% due to a global recession Market began recovery in 2003 - 5% Strong Global Economies driving growth in 2004 & 2005.

2005 Global Industrial Battery Sales

By Market Class ($ billions) $2.712

Stationary

63% 37%

$1.592

Motive

Total: $4.304 Billion

Total Worldwide Industrial Battery Production 2004 vs. 2006 ($ billions) 4.8

4.6

4.4

4.2

4 3.8

3.6

3.4

3.2

3 2.8

$3.81

2004 $4.77

2006

Worldwide Battery Production, 2005 ($ millions)

$1,511

1600 1400 1200 1000 800 600 400

$1,306

200 0 N . A m er ic a 625 681 E ur op e 804 707

$922

72 850 C hi na R es t o f A si a

$180

33 147 Stationary

$199

31 168 In di a R es t o f Wo rl d

$186

27 159 Motive

Growth for Motive Power and Stationary Batteries, 2004-2006

Stationary 53% Motive Power 47% $957 Million Total

Motive Growth Rates by Region (%), 2006 - 2010 S. America Australia India Rest of Asia Taiwan 1 China Europe N. America 0 3 2 4 4 5 6 8 4 6 11 8 10 12

Stationary Growth Rates by Region (%), 2006 - 2010 -15 -10 -11 -5 S. America Australia India -5 Rest of Asia Taiwan China Japan Europe N. America 3 4 7 8 0 7 5 12 12 10 15

Euro vs. Dollar

1.40

1.30

1.20

1.10

1.00

0.90

0.80

1999 2000 2001 2002 2003 2004 2005 Euro 2006 Forecast $1.28 May 2006 2004 Forecast $1.18 May 2005

Source: Merrill Lynch Research

2005 China Industrial Battery Market- Exports

Millions of $

71% 29%

$260 Domestic $662 Export

Total: $ 922 million

Worldwide Motive Battery Production by Region, 2004 vs. 2006 2004 $1.46 billion 8% 1%1% 5% 2% 2% 45%

Europe

36%

N. America

N. America Rest of Asia Europe India 2006 $1.74 billion 3% 5% 2% 7% 2% 0% 2%

Europe

43% Japan Australia China S. America Taiwan

N. America

37%

Worldwide Stationary Battery Production by Region, 2004 vs. 2006 2004 $2.35 billion 4% 3% 5%

Taiwan India

2% 3% 20%

China Japan Europe N. America

28% 5% 30% 2006 $3.04 billion 6% 5%

India Rest of Asia

7%

ROW China N. America

25% 31% N. America Rest of Asia Europe India Japan Australia China S. America Taiwan

Europe

26%

Comparison of Stationary to Motive Battery Production by Region, 2006 (%) 1200 1000 ($ millions) 800 600 400 200 0 N . A m er ic a 53% 47% 46% 54% E ur op e 92% C hi na /A si a Stationary In di a R es t o f Wo rl d Motive 8% 84% 16% 88% 12%

Stationary vs. Motive Power, 2006 vs. 2010 ($ billions) 4 3.5

3 2.5

2 1.5

1 0.5

0 $1.74

$3.05

$2.05

$3.60

2006 Motive Stationary 2010

Stationary and Motive Trends, 2001 - 2010 4000 ($ millions) 3000 2000 1000 0 19 99 20 00 Motive Stationary 20 01 20 02 20 03 20 04 20 05 20 06 20 10

Global GDP’s 9.00% 7.00% 5.00% 3.00% 1.00% -1.00% 2001 Japan Latin America China 2004 2005 Euro Area Emerging Europe World US Emerging E. Asia

GDP: % change 2001 vs. 2005 (est)

• • • • • • •

United States Euro area Japan Emerging East Asia China Latin America Emerging Europe

•

World 2001 0.5

1.5

0.4

-0.4

7.3

2.0

4.3

2.7

2005 3.8

0.7

2.7

6.3

9.5

3.8

4.5

4.6

Source: CIA Factbook; Various Economic Websites

2005 Worldwide Sales of Motive Power

Batteries by Application ($ millions)

Industrial Truck $1,512 95% Mining Vehicles $26 1.2% Railroad/Locomotives $54 3.8% Total: $1.592 Billion

Global Motive Power Drivers

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Forklift Trucks account for 95% of total

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Very healthy worldwide economies reflect strong motive power production

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Lead Price increases have driven some of this growth.

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Europe – largest producer of motive power batteries – has higher percentage of electric vs. gas trucks than in N. America

Global Stationary Power Market Segments

2003 • • • • • • • • Telecommunications UPS Misc. Standby Security Control & Switchgear Emergency Lighting Electronics Medical

Total

41% 36% 4% 5% 6% 3% 2% 1%

100%

2004 2005 2006 40% 41% 42% 37% 36% 36% 4% 4% 7% 4% 4% 5% 7% 5% 4% 4% 6% 4% 3% 2% 3% 2% 2% 2%

100% 100% 100%

Worldwide Production of >25 Ah Batteries by Region, 2006 1% 3% 4% 3% 5%

S. America

41%

N. America China

18%

Japan Europe

6% 19%

$1.817 Billion

Worldwide Production of <25 Ah Batteries by Region, 2006 6% 11%

Taiwan

7% 1% 4% 3% 1% 8%

China

58%

$895 Million

Stationary Battery Sales by Size by Region, 2006 ($ millions) 1200 $1,035 1000 >25 Ah $767 14 $769 22 800 787 600 753 400 200 0 N . A m er ic a E ur op e 747 $220 36 Ja pa n $68 0 68 C hi na 248 184 In di a R es t o f Wo rl d $220 31 189 <25 Ah

Stationary Power Trends

• Telecommunications Market • Recovery from a steep decline began in 2003 • Consolidation is the trend in North America • Expanding beyond traditional markets in order to ward off new competitors.

• Wireless continue spending to build out networks

Stationary Power Trends Has the Telecom Market returned?

• 2003 recovery began - 5% • Long term outlook improves .

• Teleco’s have more choices: Lithium, Fuel Cells & Chinese Battery Manufacturers.

Global Infrastructure Expenditures (in billions) 300 250 200 150 $136 $155 $182 $260 $209 $185 $195 $214 $244 $269 $288 100 50 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Tech Spending Slips Worldwide Hardware Sales

2000 2001 2002 2003 1 2004 2005 2006 $0 $200 $400 $600

Sale s (in Billions )

$771 $679 $655 $684 $720 $760 $805

$800 $1,000

Source: Gartner

Stationary Power Trends

Telecom Market will be driven by

• Wireless • Internet • Traditional Telecoms offering broadband and digital TV to stay competitive.

Stationary Power Trends Wireless Market • Killer Application?

Data and Entertainment - Games • 50% of voice minutes worldwide - wireless • $1 trillion by 2005 & Growing 25% of Internet access will be via wireless.

Internet

• • •

Online purchases amount to over $500 billion in 2003 Projected to reach $864 million by 2006 Projected to grow at over 15% per year until 2010.

Internet Innovations

Web Computing Growth of software rental market, including software licenses and services 70 60 50 $ Billions 40 30 20 10 0 1999 2000 2001 2002 2003 2005 2007

3G is Growing! 4G is next

3G Applications

•

Internet mobile game users expected to explode over the next 5 years from 32 million today, to 220 million users by 2009

•

3G will create $8 billion market that did not exist 18 months ago

•

VC’s are flocking to mobile game startups

Global Stationary Power Trends

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Telecommunications

•

Recovering from spending binge of the 90’s Getting back to basics - reducing debt



profitability

•

3G beginning to fulfill initial promises

•

Telco’s being forced to compete with Cable

•

Global partnerships/acquisitions will continue

•

Opportunities will be on global scale

Global Stationary Power Trends

•

Telecommunications

•

Infrastructure

•

Network holes in wireless infrastructure must be filled

•

Asia/Pac Rim continues to be growth area

UPS Market

• Data Storage Centers – US Industry has insatiable need for instant data.

– Move away from complete centralization of data to having multiple back up.

• Spending on Data Centers increasing - Global equipment spending to hit $10.1 Billion by 2009, and continue at a 6.8% growth • Projected growth of 5-7% in US – small and mid size batteries being manufactured in Asia(12-15% growth rate).

Leading UPS Suppliers to North America

• Annual Battery Purchases – – – APC $255 million Powerware $ 153 million MGE $ 90 million – – – – – Lieberts $ 40 million Phoenixtec $ 42 million Mitsubishi Elec $ 12 million Toshiba $ 17 million Triplight $ 27 million

Summary

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Global Stationary Market began to recover in 2003- becoming Robust in 04 & 05.

•

Telecom consolidations/joint ventures on 3G/4G will be in fashion over next several years

•

Wireless infrastructure far from complete

•

Global Motive Power Market:

•

Will show steady growth of 5% + annually

•

Europe will continue as largest producer

•

Overall Industrial Lead Battery Market will grow to a $5.6 billion market by 2010.

Presentation for 10



E



L



B



C Athens, Greece September 26-29, 2006

Global Market for Industrial Lead Acid Batteries

Current Status and Trends for the Future

Hollingsworth & Vose Company

Bob Cullen

Vice President, Sales & Marketing