Rheinmetall Ag · XETR:RHM

Rheinmetall — Investor Presentation (August 2022)

72 slides from Rheinmetall's investor presentation, Aug 5, 2022

1. Slide 1: Rheinmetall Investor Presentation August 2022

   PASSION FOR TECHNOLOGY Rheinmetall Investor Presentation August 2022

2. Slide 2: Agenda

   Rheinmetall - Investor Presentation Agenda Rheinmetall at a glance Market & Drivers Five divisions under one roof Financials Outlook Responsibility @ Rheinmetall Appendix © Rheinmetall AG I August 2022 2

3. Slide 3: Rheinmetall at a glance: Selected key business highlights

   Rheinmetall - Investor Presentation Rheinmetall at a glance Selected key business highlights Sales by division Result by division In €m In €m -6% 11% 12% 22% Weapon and Ammunition -11% 48% Weapon and Ammunition Electronic Solutions 23% Electronic Solutions 23% 5,658 16% Vehicle Systems 594 Vehicle S

4. Slide 4: Historic financial development

   Rheinmetall - Investor Presentation Rheinmetall at a glance Historic financial development Sales, operating result and operating margin Operating FCF and operating FCF to Sales In €m / in % Op. Margin Sales Op. Result In €m / in % oFCF oFCF/Sales 6,148 6,255 10.5% 5,896 8.3% 7.4 5,602 5,658 5,405 4.

5. Slide 5: Management sets clear strategic objectives

   Rheinmetall - Investor Presentation Rheinmetall at a glance Management sets clear strategic objectives 1 Reduce Automotive exposure 2 Minimum profitability level requirement 3 Continuous portfolio management © Rheinmetall AG I August 2022 5

6. Slide 6: The new corporate structure - Five divisions under one roof

   Rheinmetall - Investor Presentation Rheinmetall at a glance The new corporate structure - Five divisions under one roof Rheinmetall Group Holding Weapon and Electronic Vehicle Sensors and Materials Ammunition Solutions Systems Actuators and Trade  Mid & Large  Integrated  Tactical Vehicles  Pump

7. Slide 7: Strategy as clear commitment to our technological leadership

   Rheinmetall - Investor Presentation Rheinmetall at a glance Strategy as clear commitment to our technological leadership ONE Rheinmetall Passion for technology Re-organization to Leverage our core Focus on growth better fit our needs technological strengths business areas  Divest non-core business

8. Slide 8: Sustainability is a central component of our corporate strategy

   Rheinmetall - Investor Presentation Rheinmetall at a glance Sustainability is a central component of our corporate strategy FRAME-WORKS & INITIATIVES CSR-DIA* GRI UN GC CDP SBTi TCFD SASB Since 2017 Since 2017 Joined in 2021 Applied in 2021 Commitment Q4 2021 2022 2022 ACTION ENVIRONMENT SOCIAL GOVE

9. Slide 9: Markets & Drivers

   Rheinmetall - Investor Presentation Markets & Drivers © Rheinmetall AG I August 2022 9

10. Slide 10: Start of a new era in German defence policy

    Rheinmetall - Investor Presentation Start of a new era in German defence policy Olaf Scholz: "We are living through a watershed era." “The 2022 federal budget will provide a one-off sum of 100 billion euro for the fund. We will use this money for necessary investments and armament projects.” “We wil

11. Slide 11: Government announcement on Feb 27, 2022

    Rheinmetall - Investor Presentation Start of a new era in German defence policy Government announcement on Feb 27, 2022 Special fund €100bn As of 2023 Germany will spend 2% plus of GDP for defence Support for Ukrainian armed Short-term increase in Closing the investment gap and forces Bundeswehr cap

12. Slide 12: Market update: Germany defence spending backend loaded

    Rheinmetall - Investor Presentation Market update: Germany Acceleration of defence spending more backend loaded in €bn Total Defence 50.4 58.6 >70 expense Special  Base defence budget stable fund at around €50bn 0.0 8.5 Backend loaded  €100bn special fund will be 50.4 50.1 50.1 50.1 50.1 Defence s

13. Slide 13: Status quo on German potential

    Rheinmetall - Investor Presentation Market update: Status quo on German potential All major projects included in special fund and annual budget €100bn special fund RHM Projects Defence base budget Apparel and  Ammo  Headsets with built-in hearing protection  Negotiation of framework personal €2 b

14. Slide 14: Order intake starts later than expected

    Rheinmetall - Investor Presentation Market update: Status quo on German potential Order intake starts later than expected Current timeline for potential order intake H2 2022 H1 2023 H2 2023 Parliamentary Puma 2. Lot Frame contract Ammo C-ATV summer break and upgrade 500-700€m p.a. up to 600 vehicles

15. Slide 15: Defence projects with short-term implementation potential

    Rheinmetall - Investor Presentation Start of a new era in German defence policy Defence projects with short-term implementation potential Lead time Sales period Ammunition 6-12 months ~10 years Trucks ~12 months ~10 years 8x8 and 6x6 12-18 months 6-7 years Puma 24 months 6-7 years Soldier Systems 12

16. Slide 16: Main challenges are addressed

    Rheinmetall - Investor Presentation Start of a new era in German defence policy Main challenges are addressed Highest risk: availability of raw materials Personal / Recruiting  Enormous demand for raw materials e.g. steel,  ~1,500 – 3,000 additional people needed electronics  Rheinmetall has incr

17. Slide 17: Rheinmetall's global production capacities

    Rheinmetall - Investor Presentation Start of a new era in German defence policy Rheinmetall‘s global production capacities Germany UK Vehicles • Kassel: Vehicles • Unterlüss: Vehicles, Ammunition Canada Electronics, Vehicles • Kiel: Vehicles, Electronics • Bremen: Soldier Systems, Electronics, Air D

18. Slide 18: Current developments could offer additional potential

    Rheinmetall - Investor Presentation Market update Current developments could offer additional potential Ring swap agreements CZ Replenishment of vehicles sent to Ukraine with NATO SK standard vehicles; Customers order directly from the SLO industry, financed by German government outside GR defence b

19. Slide 19: Outlook update on order intake

    Rheinmetall - Investor Presentation Outlook update on order intake More clarity on Germany major driver for update of order intake  Order intake* expectation defence divisions in €bn  Details on 100€bn special fund decided in June 14-16 14-16 Ammo and  More clarity on project 13-15 truck contract

20. Slide 20: Outlook update on defence divisions sales development

    Rheinmetall - Investor Presentation Outlook update on defence divisions sales development Shift in order intake leads to adjusted sales profile Sales estimates defence divisions in €bn  2023 Q1 sales estimate Confirmed was a first indication ~+20%  4.5-4.6 5.5 – 6.0 ~5.5  Special fund details sug

21. Slide 21: Participating in the defence super cycle

    Rheinmetall - Investor Presentation Markets & Drivers Participating in the defence super cycle 100bn fund 2022 Ukraine invasion Demand for 1990 next generation Upscaling of systems Downscaling forces and of forces Inflection Return to treaty modernization and point and territorial armament Out of NA

22. Slide 22: Successful internationalization provides diverse sources of growth

    Rheinmetall - Investor Presentation Markets & Drivers - Home Markets Successful internationalization provides diverse sources of growth Our home markets Germany Australia UK Hungary  Largest customer  Established „home market“  JV with BAE serves „home  Established „home market“ with  Commitmen

23. Slide 23: LYNX pipeline refilled with larger potential

    Rheinmetall - Investor Presentation Market update LYNX pipeline refilled with even larger potential in Southern Europe  Italy Greece Tender expected in 2023 USA US Army Bradley replacement ~4.000 vehicles ~ € 40 bn Tender: 2021-2023 Australia Tender expected in 2023 Potential start of production: 2

24. Slide 24: Product life cycle potential

    Rheinmetall - Investor Presentation Markets & Drivers: Product life cycle potential Platform sales are just the tip of the iceberg – success creates opportunities  Service sales* in €m +14% Service sales 2025 1X SALES OF PLATFORM +24% 475 590 ~€1bn 2020 2021 2022e 2023e 2024e 2025e 2X LIFECYCLE SPE

25. Slide 25: System house for land based operations

    Rheinmetall - Investor Presentation Markets & Drivers: Product life cycle potential System house for land based operations and integrating components to systems VJTF System-of-Systems Systems System house Armored Infantryman Puma Gladius Platforms Laser Key Components Lance turret Lance turret Prote

26. Slide 26: Strong underlying growth drivers create opportunities

    Rheinmetall - Investor Presentation Markets & Drivers: Market trends Strong underlying growth drivers create opportunities New Applications E 3+ Efficiency (CO2 Reduction) Emission (Reduction) Electrification Outside powertrain The innovation pipeline is packed! © Rheinmetall AG I August 2022 26

27. Slide 27: Clean Mobility: Green ambitions as global trend

    Rheinmetall - Investor Presentation Markets & Drivers: Clean Mobility Green ambitions as a clear global trend for cleaner mobility g CO2/km Europe USA China 162 Q4 Q1 130 2030: NEV 40% of total Sales ‘20 ‘21 but 121 117 Until 2060: Survival of ICE 108 95 100 93 81 89 70 73 59g (-37%) Trump Admin tar

28. Slide 28: LV growth: Declining ICE volumes

    Rheinmetall - Investor Presentation Markets & Drivers: LV growth Declining ICE volumes and accelerated growth for alternative powertrains IHS LV production forecast* In million units 105 +2.4% 105 +8% 101 101 95 95 +6% 88 EV 88 AP 82 19% Hybrid 82 ICE 77 12% 38% 77 9% 52% 23% 34% 6% 11% ICE 13% 18%

29. Slide 29: Mobility market trends: from combustion engine to alternative powertrain

    Rheinmetall - Investor Presentation Markets & Drivers: Mobility market trends From combustion engine to alternative powertrain Mechenical Coolant Pumps ICE Solenoid Valves Variable valve train Electronic throttle Electronic Coolant valve Engine Blocks Valves Heat pumps Exhaust Flaps Engine Bearings

30. Slide 30: Sensors & Actuators: Prepared for future growth

    Rheinmetall - Investor Presentation Markets & Drivers: Sensors & Actuators Prepared for future growth Outperforming the Innovative solutions Growth in alternative Diversify into market for clean mobility powertrains (AP) new applications * Estimated sales development in €bn G r o w t h c a t a l y s

31. Slide 31: Materials and Trade: Well positioned to capture growth

    Rheinmetall - Investor Presentation Markets & Drivers: Materials and Trade Well positioned to capture growth opportunities Aftermarket Bearings Castings (Joint Ventures) Sales in €m Sales in €m Sales in €m Solid profitability Shift to non-ICE applications Technology leadership 5% CAGR 7% CAGR 7% CAG

32. Slide 32: Trucks: Diverse portfolio for truck applications

    Rheinmetall - Investor Presentation Markets & Drivers: Trucks Diverse portfolio for truck applications Permaglide bearings for truck compressors and truck hydraulics Main coolant pumps Auxiliary coolant pumps Electrical oil pumps Bushings for Sales injection pumps in €m Main-bearings 600 ~386 ~436 ~

33. Slide 33: China: Chinese operations geared towards growth

    Rheinmetall - Investor Presentation Markets & Drivers: China Chinese operations geared towards growth Highlights  Sales China in €m  Partner of local big players SAIC and HASCO (50/50 1,149 1,003 957 joint ventures) 871 889 WFOEs*  Biggest casting capacities in China – technology leader JVs 401 (

34. Slide 34: Five Divisions under one roof

    Five Divisions under one roof © Rheinmetall AG I August 2022 34

35. Slide 35: Division Overview: Vehicle Systems

    Rheinmetall - Investor Presentation Five divisions under one roof Division Overview: Vehicle Systems 2021 Results In €m / in % Sales Operating Result OFCF 1,846 1,883 and Margin 8.1% 9.2% 321 149 174 77 2020 2021 2020 2021 2020 2021 Products Market profile Key Competitors Differentiators Market posi

36. Slide 36: Division Overview: Weapon and Ammunition

    Rheinmetall - Investor Presentation Five divisions under one roof Division Overview: Weapon and Ammunition 2021 Results In €m / in % Sales Operating Result OFCF and Margin 1,199 1,233 132 15.4% 17.6% 184 218 -8 2020 2021 2020 2021 2020 2021 Products Market profile Key Competitors Differentiators Mar

37. Slide 37: Division Overview: Electronic Solutions

    Rheinmetall - Investor Presentation Five divisions under one roof Division Overview: Electronic Solutions 2021 Results In €m / in % Sales Operating Result OFCF and Margin 931 932 9,8% 10,6% 105 92 99 -52 2020 2021 2020 2021 2020 2021 Products Market profile Key Competitors Differentiators Market pos

38. Slide 38: Division Overview: Sensors and Actuators

    Rheinmetall - Investor Presentation Five divisions under one roof Division Overview: Sensors and Actuators 2021 Results In €m / in % Sales Operating Result OFCF and Margin 1,202 1,315 7.8% 3.0% 29 103 5 36 2020 2021 2020 2021 2020 2021 Products Market profile Key Competitors Differentiators Market p

39. Slide 39: Division Overview: Materials and Trade

    Rheinmetall - Investor Presentation Five divisions under one roof Division Overview: Materials and Trade 2021 Results In €m / in % Sales Operating Result OFCF and Margin 651 7.8% 39 536 5.4% 24 51 29 2020 2021 2020 2021 Q1 2021 Q1 2022 Products Market profile Key Competitors Differentiators Market p

40. Slide 40: Market environment of the civil business facing higher risks

    Rheinmetall - Investor Presentation Market update Market environment of the civil business is facing higher risks  2022 Global LV Production growth forecast* 2022 Civil divisions expectations in % World -3.8pp 8.5% Market Downward revision driven by:  FY growth fully depends on strong H2 recovery

41. Slide 41: Financials

    FINANCIALS © Rheinmetall AG I August 2022 41

42. Slide 42: Q2 2022 Group Highlights: Key financial data

    Rheinmetall - Investor Presentation Q2 2022 Group Highlights: Key financial data Sales growth and stable margin in a difficult environment Sales* Operating result and margin in %* Earnings per share in €m in €m in € +93 (+7.1%) +7 1,408 (+6.8%) -16.6% 16 31 (+1.2%) 2 1,315 (+2.4%) (+2.3%) -5 46 (-5.

43. Slide 43: Q2 2022 Group Highlights: Cash flow

    Rheinmetall - Investor Presentation Q2 2022 Group Highlights: Cash flow Continued working capital preparations burden OFCF Operating Free Cash flow* Highlights / Comments in €m -193  Ongoing working capital build up to manage 15 -8 +3 stressed supply chains and to prepare future growth  Operating

44. Slide 44: Q2 2022 Group Highlights: Balance Sheet

    Rheinmetall - Investor Presentation Q2 2022 Group Highlights: Balance Sheet Working capital build up major driver behind net financial position increase Equity and Equity ratio Net financial position* Pensions in % and €m Equity ratio Total equity In €m In €m 2,620 2,700 118 773 33.9 35.1 527 -888 3

45. Slide 45: Q2 2022 Division Highlights

    Rheinmetall - Investor Presentation Q2 2022 Division Highlights Stable group margin and negative OFCF determine the quarter Sales* Operating Result* Margin* OFCF* Q2 2021 Q2 2022 ∆ Q2 2021 Q2 2022 ∆ Q2 2021 Q2 2022 Q2 2021 Q2 2022 ∆ Vehicle Systems 461 451 -2.3% 40 46 15.6% 8.6% 10.2% 96 -16 -112 We

46. Slide 46: Healthy order intake lifts backlog above 15€bn

    Rheinmetall - Investor Presentation Q2 2022 Markets & Drivers Healthy order intake lifts backlog above 15€bn Order intake* Order Backlog Profile* In €m In €m Frame Backlog** ~3,500 ~3,400 -62% +5.9% 2,182 15,011 14,172 8.605 7.990 10,310 1,795 824 Order 10,542 (Incl Challenger, Backlog +16% GePi and

47. Slide 47: Demand for innovative products remains on high level

    Rheinmetall - Investor Presentation Q2 2022 Markets & Drivers Demand for innovative products remains on high level Booked business for Sensors + Actuators and Materials + Trade divisions In €m Booked Business Booked Business +34% Q2 2021 Q2 2022 603 193 108 449 50 (18.0%) 49 154 (10.8%) (11.0%) 449

48. Slide 48: Partial lockdown affects our China activities heavily

    Rheinmetall - Investor Presentation Q2 2022 Markets & Drivers Partial lockdown affects our China activities heavily Sales* Chinese Market update in €m -23 209  Shanghai area lockdown from mid-March to early June, 186 42 -40 17 31 thus our JVs with production sites in and around Shanghai were in loc

49. Slide 49: Mitigating inflation risk and supply chain challenges

    Rheinmetall - Investor Presentation Supply Chain & Energy Mitigating inflation risk and supply chain challenges is key Energy Raw materials & Parts Recruitment  Total energy cost in 2021 were  Important raw materials  Recruitment process well on around 50€m incl. gas significantly down from their

50. Slide 50: Outlook

    OUTLOOK © Rheinmetall AG I August 2022 50

51. Slide 51: Outlook: 2022 Guidance refined

    Rheinmetall - Investor Presentation Outlook 2022 Guidance refined Organic Sales Growth ~15% Operating Margin >11% This growth forecast assumes that the German government's plans for possible procurements from the defence budget for 2022 and from the special funds to be created for the Bundeswehr wil

52. Slide 52: Group forecast business performance in 2022

    Rheinmetall - Investor Presentation Outlook Group - forecast business performance in 2022 2022 2021 Sales Group € million Around 15% 5.658 Division Vehicle Systems € million significantly improved 1.883 Division Weapon and Amunition € million significantly improved 1.233 Division Electronic Solution

53. Slide 53: Responsibility @ Rheinmetall

    Rheinmetall - Investor Presentation Environment Responsibility @ Rheinmetall © Rheinmetall AG I August 2022 53

54. Slide 54: Mainstays of States: sovereignty, national security and stability

    Rheinmetall - Investor Presentation Responsibility @ Rheinmetall Mainstays of States: sovereignty, national security and stability of society Force protection is our mission • We serve governments enabling them to fulfil security policy and military mission obligations We operate in a strictly regul

55. Slide 55: ESG is embedded in our strategy

    Rheinmetall - Investor Presentation Responsibility @ Rheinmetall ESG is embedded in our strategy - Great strides recognized by improved ratings Measures Initiatives & Ratings Targets selection  CO2 Neutrality brought forward CDP MSCI ESG from 2040 to 2035 first participation Q3 2021 AA only 24% of

56. Slide 56: Environmental goals: 2035 CO2 neutral

    Rheinmetall - Investor Presentation Responsibility @ Rheinmetall Environmental goals 2035: CO² neutral * In thousand tCO2  Consistent energy management system well established; energy saving Total Emissions Scope 1 Emissions goals and use of renewable sources Scope 2 Emissions  Reduction of CO2 in

57. Slide 57: Biodiversity activities

    Rheinmetall - Investor Presentation Responsibility @ Rheinmetall Biodiversity acitivities  Fojana – Rheinmetall‘s 5,500 Hectares Natural Paradise near Unterlüss  137t of CO₂ capture/ha 3,300 ha forest bind 452,272t CO₂  1,500 m³ of groundwater formation/ha  30t of O₂/ha One hectare of deciduous

58. Slide 58: Being a responsible corporate citizen

    Rheinmetall - Investor Presentation Responsibility @ Rheinmetall Being a responsible corporate citizen Social responsibility Rheinmetall Worldwide  Awarded a special price by the German Corporate Health  Automotive product portfolio actively reduces CO² emission Award for extra strong commitment i

59. Slide 59: Compliance & Governance System

    Rheinmetall - Investor Presentation Responsibility @ Rheinmetall Compliance & Governance System Culture  " ESG" and "transparency" as pillars of the strategy  Zero tolerance policy  Top Tier ranking in Transparency International Defence Communication Companies Anti-corruption Index 2020  Target

60. Slide 60: Implementing transparency in the supply chain

    Rheinmetall - Investor Presentation Responsibility @ Rheinmetall Implementing transparency in the supply chain Frequent Supplier Monitoring process started  Complex multi-tiered sourcing activities  Environmental and human rights due diligence are a significant responsibility and a major challenge

61. Slide 61: New Executive Board remuneration policy with 20% ESG targets

    Rheinmetall - Investor Presentation Responsibility @ Rheinmetall New Executive Board remuneration policy with 20% share ESG targets Short Term Incentive Long Term Incentive Overall payout cap: 250% Overall payout cap: 250% Target achievement per target (0% - 250%) Performance period (4 years forward

62. Slide 62: Appendix

    Rheinmetall - Investor Presentation Appendix © Rheinmetall AG I August 2022 62

63. Slide 63: Capital allocation

    Rheinmetall - Investor Presentation Capital allocation Growth remains top priority 1 Funding of growth (organic and M&A) 2 Dividend to shareholders (mid-term payout ratio 35-40%) 9.4% Q3 ‘19 level 3 Further funding of pensions via CTA (Germany, target level 50-60%) 4 Share buyback (Currently not a p

64. Slide 64: Milestones in acquisition strategy

    Rheinmetall - Investor Presentation FY 2021 Group Highlights Milestones in acquisition strategy Zeppelin Drone 4iG Mobile manufacturer Polycharge Systems EMT 25.1% Stake Closing 12/2021 Closing 01/2022 Closing 2022 Closing 03/2022  Positioning further in a  Digitization strategy  Electrification

65. Slide 65: ROCE development

    Rheinmetall - Investor Presentation ROCE development  ROCE in % 20 19.0 17.1 15.4 15 13.4 12.3 Average 12.2% 11.8 10 5 0 2016 2017 2018 2019 2020 2021 © Rheinmetall AG I August 2022 65

66. Slide 66: 2016-2020: Key figures (as reported)

    Rheinmetall - Investor Presentation Rheinmetall 2016-2020: Key figures (as reported) in €m 2016 2017 2018 2019 2020 Balance Sheet Total assets 6.150 6.101 6.759 7.415 7.267 Shareholder's equity 1.781 1.870 2.173 2.272 2.053 Equity ratio (in %) 29,0 30,7 32,1 30,6 28 Pension liabilities 1.186 1.080 9

67. Slide 67: Key Figures

    Rheinmetall - Investor Presentation Key Figures Key Figures 2021 2 0 2 0 ¹⁾ 2 0 19 2 0 18 2 0 17 ² SA LES/EA RNINGS Sales €millio n 5.658 5.405 6.255 6.148 5.896 Of which generated abro ad % 65,9 64,4 68,9 72,3 75,9 Operating result €millio n 594 446 505 491 400 Operating margin % 10,5 8,3 8,1 8,0 6

68. Slide 68: Balance Sheet

    Rheinmetall - Investor Presentation Balance Sheet In € m 12/31/2021 12/31/2020 12/31/2021 12/31/2020 Assets Equity and liabilities Goodwill 481 476 Share capital 112 112 Other intangible assets 287 240 Capital reserves 561 556 Right-of-use assets 214 233 Retained earnings 1.755 1.233 Property, plant

69. Slide 69: Income Statement

    Rheinmetall - Investor Presentation Income Statement In € m 2021 2020 Sales 5.658 5.405 Changes in inventories and work performed by the enterprise and capitalized 117 142 Total operating performance 5.775 5.547 Other operating income 134 114 Cost of materials 2.745 2.792 Staff costs 1.643 1.537 Amo

70. Slide 70: Cashflow Statement

    Rheinmetall - Investor Presentation Cashflow Statement In € m 2021 2020 Earnings after taxes 332 1 Amortization, depreciation and impairment 254 303 Impairment of non-current assets of discontinued operations 91 254 Allocation of CTA assets to secure pension and partial retirement obligations (35) (

71. Slide 71: Next events and IR contacts

    Rheinmetall - Investor Presentation Next events and IR contacts Next Events IR Contacts Commerzbank and Oddo BHF, Corporate Conference, Frankfurt 07 August 2022 Dirk Winkels Head of Investor Relations Metzler Dialog, Frankfurt 12 September 2022 Tel: +49-211 473-4749 Quo Vadis Industrials Tour, UBS,

72. Slide 72: Disclaimer

    Rheinmetall - Investor Presentation 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 pl

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