Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Day (November 2014)
25 slides from Rheinmetall's investor day presentation, Nov 27, 2014
Slide 1: Capital Markets Day 2014 – Helmut P. Merch, CFO
R H E I N M E TA L L A G T H E T EC H N O LO GY G RO U P FO R S EC U R I T Y A N D M O B I L I T Y Capital Markets Day 2014 | Neuss | November 27, 2014 Helmut P. Merch, CFO © RHEINMETALL AG 2014
Slide 2: Two pillars stabilize group results
Rheinmetall Group Two pillars stabilize group results Cyclical development of segmental earnings Sales Group and segmental operational margin in EUR billion resp. in % of segmental sales 4.7 4.6 4.6 4.5 4.0 4.0 3.9 3.6 3.6 3.4 3.4 3.5 3.5 3.4 3.3 10% Weighted average: 5% 6.4% 0% -5% 2000 2001 2002 2
Slide 3: Continuous growth of book value, but volatile perception of stock exchanges
Rheinmetall Group Continuous growth of book value, but volatile perception of stock exchanges Book value per share and share price at year-end in EUR 60.17 57.48 54.38 53.26 44.85 44.74 39.04 Share price 39.25 37.00 34.22 at year-end 30.00 33.81 34.35* 29.36 36.40 31.64** 28.64 34.24 26.03 Book valu
Slide 4: Rheinmetall Defence
Rheinmetall Defence © RH E I N M ETAL L A G 2 0 1 4 | C A P I TAL M A RK E TS D A Y | H E L M U T P . M E RC H | N OV EM BER 2 7 , 2 0 1 4 4
Slide 5: A set of internal and external factors led to steady growth
Rheinmetall Defence A set of internal and external factors led to steady growth Strong earnings development, but erosion after weakened demand Sales in EUR million Operational margin in % of sales + International military operations, e.g. Iraq (2003), - Troops withdrawals from Iraq (until 2011) and
Slide 6: Profitability impacted by product mix effects
Rheinmetall Defence Profitability impacted by product mix effects Lower share of high-margin business, margin dilution by Logistic Vehicles Sales in EUR million Operational margin in % of sales 2,500 15 2,000 10 Weapon and ammunition 1,500 5 1,000 0 Total Defence Remaining 500 -5 business Logistic V
Slide 7: Book-to-bill ratio since 2012 above average
Rheinmetall Defence Book-to-bill ratio since 2012 above average Increasing share from emerging markets drives order intake Order intake in EUR million Book-to-bill ratio 1.7 1.5 1.2 1.3 1.1 1.2 1.0 0.9 1.0 Book-to-bill ratio 0.9 3,359 3,153 2,933 Puma* 1,977 1,804 1,831 1,696 1,723 1,553 1,592 Order
Slide 8: High order intake and ramp-up of Puma
Rheinmetall Defence High order intake and ramp-up of Puma Pushing future top line growth Order intake and sales in EUR million 2,335 2,200 2,141 2,155 2,007 Sales 1,898 1,757 1,814 3,359 1,445 3,153 1,401 2,933 Puma* 2014: Start of serial production 1,977 1,804 1,831 1,696 1,723 1,553 1,592** Order
Slide 9: Order backlog: large-scale systems contracts form the backbone for future growth
Rheinmetall Defence Order backlog Large-scale systems contracts form the backbone for future top line growth Order backlog as of September 30, 2014… …turning into sales in EUR million in EUR billion -2% 6,285 ~2.0 6,165 ~1.8 ~1.6 ~0.8 09/2013 09/2014 Q4 2014e 2015e 2016e 2017ff. e Expected sales cov
Slide 10: Order backlog: managing the challenges of large-scale orders
Rheinmetall Defence Order backlog Managing the challenges of large-scale orders They offer long-term chances… …but risks have to be managed: — Acquisition of new customers — Increased complexity in new markets: Australia, New Zealand, by size of large-scale contracts Indonesia, Algeria, Russia by di
Slide 11: What did we experience in 2011 – 2014?
Rheinmetall Defence What did we experience in 2011 – 2014? Unexpected events diluting earnings in EUR mn Cost overruns Wheeled vehicles (2011), air defence system (2012), tracked - 54 vehicles (2013), combat training center (2013), cost overruns in Norwegian subsidiary (2014) Warranties Provisions f
Slide 12: What have we done?
Rheinmetall Defence What have we done? — Comprehensive restructuring Expenses for lay-offs and relocation of plants: EUR 77 million since 2012 Reduction of headcount planned until 2015: 600 employees Effect partially absorbed by preparation for roll-outs of large orders in the coming years and by si
Slide 13: What remains to be done?
Rheinmetall Defence What remains to be done? — Higher emphasis on claim management and working capital management — Reassessing investment strategy in combination with hub strategy, e.g. ammunition research center in South Africa — Strengthening entrepreneurial thinking of top management in division
Slide 14: Order potential beyond the backlog
Rheinmetall Defence Order potential beyond the backlog Front-loaded pipeline of innovative products Selective products per division positioned in the life time cycle New 40mm airburst Combat Gladius MASS Training MBT Puma Center Revolu- C-RAM tion Fox 2 HX Lance Pro- (Mil. High- truck) Marder energy
Slide 15: Rheinmetall Automotive
Rheinmetall Automotive © RH E I N M ETAL L A G 2 0 1 4 | C A P I TAL M A RK E TS D A Y | H E L M U T P . M E RC H | N OV EM BER 2 7 , 2 0 1 4 15
Slide 16: A set of internal and external factors leads to steady growth
Rheinmetall Automotive A set of internal and external factors leads to steady growth Effective measures initiated to recover after the heavy crisis in 2008/2009 Operational earnings in EUR million - Increasing raw material prices and the World + Strong recovery, especially driven by increasing LV pr
Slide 17: Strong underlying growth of sales
Rheinmetall Automotive Strong underlying growth of sales Automotive with higher strength than before the crisis Sales in EUR million Operational margin in % of sales CAGR +4.9% 2,369 2,400 2,313 CAGR 2,249 2,262 2,181 +3.4% 2,050 2,055 1,941 1,982 1,883 1,884 1,826 1,776 7.2 7.1 7.0 7.5 1,522 Weight
Slide 18: Securing further productivity and profitability
Rheinmetall Automotive Securing further productivity and profitability Continued efforts brought capex to a sustainable level Capex in EUR million Capex ratio in % of sales 162 149 148 146 148 142 104 6.8 7.1 96 7.9 6.6 Weighted 6.2 Guidance for the 70 average: 6% coming years: 4.8 5.8 around 6% 4.5
Slide 19: Research and development as basis for future orders
Rheinmetall Automotive Research and development as basis for future orders Focus on improving efficiency of R&D spending R&D in EUR million R&D in % of sales 152 147 138 130 126 120 115 113 107 7.4 6.7 6.1 6.2 6.2 Weighted Guidance for the 5.6 5.6 coming years: average: 6% around 6% 5.2 5.3 2005 200
Slide 20: Cost management
Rheinmetall Automotive Cost management Headcount in low-cost countries continuously increasing Headcount in full-time equivalents Split of headcount by high cost- and low-cost countries in % of total headcount 11,699 10,875 10,928 Low-cost 20% countries − Czech Republic 30% 40% − Mexico 37% − China
Slide 21: Internationalization
Rheinmetall Automotive Internationalization “Continental shift” in Rheinmetall’s sales and staff figures LV production forecasts 2013-2017e in % (CAGR) Expectations 2013-2017e Western +3% Eastern +2% Europe Europe China* +8% USA +3% Sales Sales Sales Sales Staff Staff Staff Staff India +8% Mexico +9
Slide 22: Perspective 2015 and beyond
Rheinmetall Group PERSPECTIVE 2015 AND BEYOND © RH E I N M ETAL L A G 2 0 1 4 | C A P I TAL M A RK E TS D A Y | H E L M U T P . M E RC H | N OV EM BER 2 7 , 2 0 1 4 22
Slide 23: First view on 2015 and beyond
Rheinmetall Group First view on 2015 and beyond Defence to be focused on operational improvement • Tough cost and project surveillance • Avoiding unexpected one-offs by strictly controlling our risk profile • Returning to profitability in 2015 Automotive fully on track • Increasing sales by innovati
Slide 24: Mid-term view
Rheinmetall Group Mid-term view Concentration on balanced earnings in both segments Sales Group in EUR billion Segmental operational margin in % of segmental sales 4.7 4.6 4.6 4.5 4.0 4.0 3.9 3.6 3.5 3.4 Return to 10% long-term profitability 5% path 0% -5% 2005 2006 2007 2008 2009 2010 2011 2012 201
Slide 25: Disclaimer
Rheinmetall Group 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