Rheinmetall Ag · XETR:RHM
Rheinmetall — Q3 2018 Earnings Presentation
33 slides from Rheinmetall's earnings presentation, Nov 8, 2018
Slide 1: Stable performance in a challenging quarter
Stable performance in a challenging quarter Conference Call Q3 2018 Düsseldorf, 8. November 2018
Slide 2: Disclaimer
Disclaimer This presentation contains “forward-looking statements” within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to Rheinmetall’s financial condition, results of operations and businesses and certain of Rheinmetall’s plans and objectives. These forward-lo
Slide 3: Q3 2018 Group: Tragic incident
Q3 2018 Group: Tragic incident Explosion in ammunition site in South Africa Rheinmetall mourns the loss of 8 colleagues Rheinmetall Denel Munition administration building Explosion at propellants operations building in Somerset West on 3 Sept 2018 led to the destruction of one building Site of incid
Slide 4: Q3 2018 Group Commercial Highlights
Q3 2018 Group Commercial Highlights Stable performance in a challenging quarter Order backlog Sales Operating result EPS €9.3bn +29% €1.4bn +5% CER* €98m +1% €1.80 +117% Order backlog on new record level boosted by Australian contracts Sales climbed 5.0% at constant exchange rates* (reported 3.3%) t
Slide 5: Top line growth and accelerated EPS development
Top line growth and accelerated EPS development Sales Operating result in €m Earnings per share in €m Operating margin in % in € adjusted EPS 1.80 +5.0% +2.0% 97 98 reported EPS 117% 2 -24 -1 1,411 1.33 69 -1.0% 1.18 -1.7% 1,366 0.83 7.1% 6.9% +3.3% +1.0% Q3 Operational FX Q3 Q3 Operational FX Q3 Q3
Slide 6: Cash flow still negative but improving quarter by quarter
Cash flow still negative but improving quarter by quarter Cash flow development 2018 Operating free cash flow bridge in €m in €m 9 0 42 5 167 -116 -140 5 -287 -116 Q1 Q2 Q3 Q3 2017 EAT D/A Delta Delta WC Invest Q3 2018 Pensions and others © Rheinmetall AG / Conference Call Q3 2018 6
Slide 7: Further improvement of equity ratio despite net debt increase
Further improvement of equity ratio despite net debt increase Net debt Equity ratio in €m in % of total assets IFRS 16 effect Restated for Restated for leasing leasing liabilities IFRS 15/16 liabilities and effect 32.6% 230 €158 m cost to obtain contract 72 31.6% unadjusted 30.6% 30.4% -242 -514 30.
Slide 8: Q3 2018 Summary: Automotive
Q3 2018 Summary: Automotive Automotive resilient in a contracting market Quarterly sales and margin development Comments on quarterly performance Sales climbed to €708 million with a strong FX-adjusted growth 684 712 751 740 708 of 5.2% (rep 3.5%), largely driven by non-LV performance 9.2 Q3 support
Slide 9: Robust sales and margin improvement
Robust sales and margin improvement Sales Automotive Operating result Automotive in €m in €m growth in % / (FX adjusted) Margin Mechatronics Diesel business decline +3.5% +5.3% compensated, especially in (+5.2%) Commercial Diesel Systems and 684 708 57 60 8.5% some SOP (e.g. electrical pumps) Result
Slide 10: Europe affected by Diesel and WLTP uncertainties
Europe affected by Diesel and WLTP uncertainties Regional sales development Automotive in €m 3.5% 708 684 0.9% 5.5% 0.9% 10.1% Effect 9.7% 9.8% 3.9% Diesel sales declined, 3.4% 16.5% especially in Germany and Europe RoW 16.7% China WLTP induced production cuts in Europe Asia (excl. CN) South America
Slide 11: China: Strong sales performance helped by product starts in a negative market
China Strong sales performance helped by product starts in a negative market Sales in €m +6.4% -1.7% 236 15 247 4 Sales increased by 6.4% to €247m (4.7% reported) 206 214 +4.7% vs. a negative LV-market growth of -4.2% 30 33 Result development held back by ramp-ups Q3 2017 operational FX Q3 2018 sche
Slide 12: Q4 2018 outlook: Automotive
Q4 2018 outlook: Automotive Market uncertainties responsible for growth adjustment Sales cumulated in €m New H2 supported by product starts 2,861 guidance Ramp-ups in Germany and China 2.3% (e.g. electrical pumps) 2017 2018 but: 2,149 2,199 multiple issues unsettle the market 1.8% Global tariffs WLT
Slide 13: Q3 2018 Summary: Defence
Q3 2018 Summary: Defence Slower start to H2 because of additional burdens Quarterly sales and margin development Comments on quarterly performance Record order intake of €3bn, driven by AUS vehicle orders 1,011 682 754 703 Sales grew to €703m with an operational improvement of 4.9% 11.3 6.7 509 (3.1
Slide 14: Strong performance of Vehicle Systems and Electronic Solutions
Strong performance of Vehicle Systems and Electronic Solutions Sales Defence Operating result Defence Weapon and Ammunition in €m in €m Negative operational leverage growth in % / (operational) Margin Explosion in South Africa +3.1% Missing export permits (+4.8%) 46 -4.3% 682 703 44 6.3% Delayed cus
Slide 15: Record order intake in Vehicle Systems driven by Australian orders
Record order intake in Vehicle Systems driven by Australian orders Order intake by division Order backlog profile in €m in €bn change in % Weapon and Ammunition +30.5% Electronic Solutions 3,044 Vehicle Systems 185 8.8 241 ~1.1 ~2.5 ~5.2 +250% Consolidation 6.7 2,808 870 284 197 434 -45 -190 Q3 Q3 3
Slide 16: Vehicle Systems propelled backlog to €8.8bn
Vehicle Systems propelled backlog to €8.8bn Order backlog by Division Order backlog by Region in % in % RoW Weapon & Germany Ammunition 11% Vehicle 22% Systems 22% MENA 22% €8.8bn €8.8bn 13% Europe 58% (excl. GER) 20% 32% Electronic Solutions Australia All 9/2018 excl. Consolidation © Rheinmetall AG
Slide 17: Q4 2018 outlook: Defence
Q4 2018 outlook: Defence FY guidance too ambitious on the back of recent risk development Sales cumulated in €m New guidance Progressive closure of sales gap in the course of the year 3,036 2017 but: 2018 -3% pending export approvals 2,025 1,966 FY sales impact of South Africa -6% 1,343 1,263 -17% a
Slide 18: Q4 2018 outlook: Defence …but high confidence for catch-up in Q4
Q4 2018 outlook: Defence …but high confidence for catch-up in Q4 Sales Defence Operating margin Defence Weapon and Ammunition in €m in % on sales ~€70-80m higher sales level than PY Q4 2017 Q4 2018 Better operating leverage due to a higher share of pure ammunition business WA 17.9% ~25% Beneficial p
Slide 19: FY Guidance
FY Guidance Higher profitability in light of more realistic sales expectations Sales Operating margin 2017 2018e 2017 2018e Growth y/y in % Reported growth y/y in % in % in % 5.2 ~5 6.8 clearly above 7.0 Group (previously: ~8) (previously: ~7.0) 7.7 2-3 8.7 slightly above 8.5 Automotive (Global LV:
Slide 20: Next events and IR contacts
Next events and IR contacts Events 2018/19 IR Contacts Berenberg Pennyhill Conference London 4 December Franz-Bernd Reich Head of IR GIS Commerzbank Conference New York 15-16 January Tel: +49-211 473-4777 GCC Kepler Cheuvreux Conference Frankfurt 21-22 January Email: franz-bernd.reich@rheinmetall.co
Slide 21: Appendix
APPENDIX © Rheinmetall AG / Conference Call Q3 2018 21
Slide 22: Selected key data: outlook 2018
Appendix Selected key data: outlook 2018 Rheinmetall Group In % of sales Automotive Defence Holding cost ~€30m (PY: €23m) Capex ~5.5 - 6.0% ~3.5 - 4.5% Tax rate <30% (PY: 27%) D&A ~5.5% ~3 - 3.5% Net Interest On previous year level R&D ~5 - 5.5% ~2 - 2.5% © Rheinmetall AG / Conference Call Q3 2018 2
Slide 23: Quarterly development Group
Appendix Quarterly development Group Sales Operational results in €m in €m 1,722 169 1,493 1,411 1,366 1,260 1,011 114 107 754 97 98 682 703 509 44 46 47 60 684 712 751 740 708 63 65 68 57 44 -1 -1 0 -6 -8 -13 -5 -6 -5 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 D
Slide 24: Free Cash Flow summary Group
Appendix Free Cash Flow summary Group Q3 Q4 Q1 Q2 Q3 Δ Q2 in €m 2017 2017 2018 2018 2018 '17/'18 Group Net Income 43 130 27 65 85 42 Amortization / depreciation 59 70 64 91 68 9 Change in pension accruals 1 -8 -42 1 1 - Cash Flow 103 192 49 157 154 51 Changes in working capital -89 343 -258 -197 -20
Slide 25: Quarterly development Automotive
Appendix Quarterly development Automotive Sales by division Operational result by division in €m in €m 751 740 712 708 65 68 684 63 57 60 429 417 382 407 387 44 46 46 38 40 232 236 254 250 251 13 18 17 15 14 95 87 92 97 92 9 8 8 9 9 -25 -18 -24 -24 -22 -5 -5 -5 -4 -2 Q3 2017 Q4 2017 Q1 2018 Q2 2018
Slide 26: Free Cash Flow summary Automotive
Appendix Free Cash Flow summary Automotive Q3 Q4 Q1 Q2 Q3 Δ Q2 in €m 2017 2017 2018 2018 2018 '17/'18 Net income 25 44 45 52 42 17 Amortization / depreciation 37 39 36 38 39 2 Change in pension accruals - - -20 -1 - - Cash Flow 62 83 61 89 81 19 Changes in working capital 21 72 -62 4 -58 -79 Changes
Slide 27: Quarterly development Defence
Appendix Quarterly development Defence Sales by division Operational result by division in €m in €m 114 1,011 44 46 77 44 431 754 682 703 10 23 249 28 19 8 248 196 509 247 5 139 197 170 165 6 30 126 25 23 13 11 370 423 375 395 297 -1 -4 -7 -7 -19 -101 -90 -53 -67 -58 -1 Q3 2017 Q4 2017 Q1 2018 Q2 20
Slide 28: Free Cash flow summary Defence
Appendix Free Cash flow summary Defence Q3 Q4 Q1 Q2 Q3 Δ Q2 in €m 2017 2017 2018 2018 2018 '17/'18 Net income 32 76 -21 23 27 -5 Amortization / depreciation 21 29 26 52 27 6 Change in pension accruals 2 -2 -2 2 2 - Cash Flow 55 103 3 77 56 1 Changes in working capital -16 266 -200 -202 -76 -60 Chang
Slide 29: Income Statement Group
Appendix In €m In €m Income Statement Group Q3 9m Q3 9m 2017 2018 Δ 2017 2018 Δ 2017 2018 Δ 2017 2018 Δ Sales 1,366 1,411 45 4,174 4,164 -10 41 70 29 142 230 88 Total operating performance 1,407 1,481 74 4,316 4,394 78 Earnings before interets and taxes (EBIT) 75 127 52 206 273 198 Net interest inco
Slide 30: Cash Flow Statement Group
Appendix In €m Cash Flow Statement Group 9m 2017 9m 2018 Δ 9m 2017 9m 2018 Δ Net income 122 177 55 Dividends paid out by Rheinmetall AG -62 -73 -11 Amortization, depreciation and impairments 171 223 52 Other profit distributions -10 -7 3 -30 Allocation of CTA assets to secure pension and partial ret
Slide 31: Balance Sheet Group
Appendix In €m Balance Sheet Group In €m 31.12.2017 01.01.2018 30.09.2018 Δ 31.12.2017 01.01.2018 30.09.2018 Δ Non-current assets 2,712 2,939 2,972 33 Equity 1,955 1,950 2,089 139 Goodwill 550 550 550 0 Share capital 112 112 112 0 Other intangible assets 229 229 192 -37 Additional paid-in capital 54
Slide 32: Glossary
Appendix Glossary bn billions m million bp basis points NNBS Short range air defence CAGR compounded average growth rate NWC Net working capital CER Constant Exchange Rates OEM Original Equipment Manufacturer CTA Contractual trust agreement Operating FCF Operating free cash flow D&A Depreciation & A
Slide 33: © Rheinmetall AG / Conference Call Q3 2018
© Rheinmetall AG / Conference Call Q3 2018 33