Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (May 2013)
59 slides from Rheinmetall's investor presentation, May 2013
Slide 1: International Partner for Security and Mobility
Corporate Presentation I May 2013 International Partner for Security and Mobility © Rheinmetall 2013
Slide 2: Rheinmetall Group: Leading positions in Defence and Automotive
Rheinmetall Group Rheinmetall Group Leading positions in Defence and Automotive Sales : € 4.7 billion Employees: 23,700 RHEINMETALL DEFENCE RHEINMETALL AUTOMOTIVE Leading European Defence company Leading Automotive supplier for ground forces technology in engine components and systems Sales: € 2.3 b
Slide 3: Business Year 2012
BUSINESS YEAR 2012 © Rheinmetall 2013
Slide 4: Sales and earnings
Rheinmetall Group Sales and earnings Earnings remain high Sales in € million EBITDA in € million 4,454 4,704 538 464 495 3,869 3,989 3,420 411 180 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 EBIT in € million Net income in € million EBIT margin in % of sales 354 297 301 225 245 174 190 7.9% 14
Slide 5: Finance: Solid equity ratio
Rheinmetall Group Finance Solid equity ratio Equity (at year-end) in € million Rheinmetall – own shares (at year-end) in % Equity ratio in % 1,546 1,461 1,355 4.8 4.5 1,080 1,134 3.5 3.3 3.4 32% 30% 30% 30% 30% 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Company presentation | May 2013 © Rhein
Slide 6: Rising pension provisions; net financial debt low
Rheinmetall Group Rising pension provisions triggered by decreasing interest rates Net financial debt low Pension liabilities (at year-end) in € million Net financial debt (at year-end) in € million Interest rate* in % Net gearing* in % 920 729 677 610 577 205 6.00 5.50 5.25 5.25 130 19% 98 3.25 76
Slide 7: Cash flow: Improved operating free cash flow
Rheinmetall Group Cash flow Improved operating free cash flow 2011 in € million 2012 in € million 177 197 182 234 225 190 2.7%* 2.1%* 112 13 125 93 Net income Depr. Capex Working Operating Net income Depr. Capex Working Operating DPensions Capital free DPensions Capital free increase cash flow incre
Slide 8: Earnings per share and dividend
Rheinmetall Group Earnings per share and dividend Dividend stable at € 1.80 Earnings per share in € Dividend per share in € Payout ratio in % 5.55 5.00 4.09 4.23 1.80 1.80* 1.50 1.30 36% 35% 32% 32% 0.30 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 -1.60 * Proposal to the annual general meeting
Slide 9: The divisional structure of Defence
Rheinmetall Defence The divisional structure of Defence Broad range of technologically leading products Sales (FY 2012): € 2.3 billion Combat Systems Electronic Solutions Wheeled Vehicles € 1.1 billion € 0.7 billion € 0.6 billion Combat Platforms Air Defence Systems Logistic Vehicles Infantry Defenc
Slide 10: Order intake: Increasing share from growth regions
Rheinmetall Defence Order intake Increasing share received from growth regions Order intake by region in € million +60% 2,933 Germany 24% 46% 1,831 Europe* 22% Germany 28% 58% Asia/Middle East Europe* 27% 30% Asia/Middle East 54% 14% Rest of the World Rest of the World 42% 27% 28% 2011 2012 * Withou
Slide 11: High order backlog of almost € 5 billion
Rheinmetall Defence High order backlog of almost € 5 billion Strong backbone for future sales Combat Systems Electronic Solutions Wheeled Vehicles Puma: roll-out at the end of 2013 Air Defence equipment for Asian Boxer Netherlands: roll-out (order volume > € 1 billion) customers (order volume € 2
Slide 12: Earnings development: Lower operational performance
Rheinmetall Defence Earnings development Lower operational performance EBITDA in € million EBIT Defence in € million EBITDA margin in % of sales EBIT margin in % of sales -13% 303 One-offs 2012 in € million 263 -22% Partial divestment of + 48 223 drone business 11* Restructuring costs - 20 174 14.1
Slide 13: The divisional structure of Automotive
Rheinmetall Automotive The divisional structure of Automotive Focused on the attractive segment of powertrain technology Sales (FY 2012): € 2.4 billion Hardparts Mechatronics Motor Service € 1.1 billion € 1.1 billion € 0.3 billion Pistons Pierburg International Aluminum Technology Pierburg Pump Tech
Slide 14: Automotive sales: balanced customer base
Rheinmetall Automotive Automotive sales Automotive benefits from balanced customer base Sales Automotive in € million Sales by customer in % +2% Trucks/ 2,313 2,369 Others VW/Porsche/Audi 19% 16% Ships/ Power plants/ Ford 7% 12% MIR* 2012 11% 8% Renault/ Aftermarket Nissan 7% 4% 4% 6% PSA Fiat 6% 20
Slide 15: Automotive sales by region
Rheinmetall Automotive Automotive sales by region Growth particularly encouraging in North America and Asia Sales by region in € million resp. % +2% 2,313 2,369 Germany Germany 24% 23% 75% 71% Europe* Europe* 51% 48% Asia (without China JVs) Americas Americas Rest of 17% 19% 29% 25% the World 7% 9%
Slide 16: Earnings development: Ramp-ups and investments affect margin
Rheinmetall Automotive Earnings development Ramp-ups and investments in non-domestic locations affect margin EBITDA in € million EBIT in € million EBITDA margin in % of sales EBIT margin in % of sales -3% 254 247 -5% 151 143 11.0 10.4 6.5 6.0 2011 2012 2011 2012 Company presentation | May 2013 © Rhe
Slide 17: Q1 2013
Q1 2013 © Rheinmetall 2013
Slide 18: Financial highlights
Rheinmetall Defence Financial highlights Decline in sales of 13% Quarterly operational loss* of € - 14 million Free cash flow from operations: impact of negative earnings almost absorbed by lower increase of working capital Net financial debt reduced by € 79 million to € 325 million Outloo
Slide 19: Divisional highlights
Rheinmetall Group Divisional highlights Defence Automotive Stable order intake, e.g. „Gladius“ from Sales decreased by 6 % to € 599 million, but Germany, recovery vehicles from Denmark, lower than Western European market (- 12%) ammunition from South Africa Operational earnings** declined to
Slide 20: Status quo of restructuring
Rheinmetall Group “Rheinmetall 2015” Status quo of restructuring Tracked Vehicles (D): Reduction by 150 employees implementation phase Total volume: € 28 million, thereof € 17 million booked in Q4 2012 DEFENCE Air Defence Zurich (CH): Reduction by 100-110 employees implementation phase Total
Slide 21: Q1 2013 in detail
Rheinmetall Group Q1 2013 in detail Sales decreased, EBIT dropped, free cash flow from operations stable Rheinmetall Group Q1 2012* Q1 2013 D Q1 2013/ in € million Q1 2012 Sales 1,109 962 - 147 Operational earnings (EBIT pre-restructuring) 43 - 14 - 57 Restructuring costs 0 -5 -5 EBIT (reported) 43
Slide 22: Defence: Solid order situation
Rheinmetall Defence Solid order situation Quarterly loss caused by decreasing sales Rheinmetall Defence Q1 2012* Q1 2013 D Q1 2013/ in € million Q1 2012 Order intake 432 416 - 16 Order backlog 4,527 5,002 + 475 Sales 471 363 - 108 Operational earnings (EBIT pre-restructuring) 4 - 43 - 47 Restructuri
Slide 23: Weak operational performance
Rheinmetall Defence Weak operational performance Decline in earnings due to lower sales and product mix effects Sales Defence in € million EBIT Defence in € million -108 -48 471 4 Reasons for weaker EBIT 12* 2* 2 Combat Systems: 363 Lower sales in tracked -24 vehicles and ammunition Restructurin
Slide 24: Weakness in Western European markets continued
Rheinmetall Automotive Weakness in Western European markets continued Sales and earnings declined, first restructuring costs booked Rheinmetall Automotive Q1 2012* Q1 2013 D Q1 2013/ in € million Q1 2012 Sales 638 599 - 39 Operational earnings (EBIT pre-restructuring) 44 31 - 13 Restructuring costs
Slide 25: Sales by region
Rheinmetall Automotive Sales by region Moderate decrease of sales due to weaker European markets Sales by region in € million resp. % -6% 638 599 Germany 23% Germany 24% 73% 72% Europe* Europe* 50% 48% Asia (w/o China JVs) Americas Americas Rest of 17% 27% 18% 28% the world 9% 9% 1% 1% Q1 2012 Q1 20
Slide 26: Sales in Hardparts following market slowdown
Rheinmetall Automotive Sales in Hardparts following market slowdown EBIT in Mechatronics reduced by restructuring costs and R&D expenses Sales Automotive in € million EBIT Automotive in € million -39 638 599 -19 46 Reasons for weaker EBIT 2* Hardparts: -9 Lower sales of € - 39 million -4 Mechatronic
Slide 27: Looking at the markets
Rheinmetall Automotive Looking at the markets Recovery of global markets expected for H2 2013 Expected global and Western European production of light vehicles in thousand units +2% 0% +4% 81,422 Global 79,723 40,767 40,803 40,619 38,956 -5% -8% -1% 13,559 12,929 Western Europe 7,319 6,742 6,240 6,1
Slide 28: Rheinmetall 2015
“RHEINMETALL 2015” © Rheinmetall 2013
Slide 29: Rheinmetall 2015: Key points of strategy
Rheinmetall Group “Rheinmetall 2015” Key points of strategy Two pillars • Defence and Automotive with good growth potential • Risk diversification for the group Internationalization • Higher proportion of business outside of Europe in both segments Growth, products • From 2015 organic growth of 3-5%
Slide 30: Two pillars: Defence and Automotive
Rheinmetall Group “Rheinmetall 2015” Two pillars: Defence and Automotive Rheinmetall AG Defence Automotive Automotive is a solid pillar of Rheinmetall group with a stable and steady earnings development Both segments have attractive growth prospects and contribute to the necessary risk diversifi
Slide 31: Rheinmetall 2015 – Defence
“RHEINMETALL 2015” – Defence © Rheinmetall 2013
Slide 32: Global defence budgets develop differently by region
Rheinmetall Defence “Rheinmetall 2015” Global defence budgets develop differently by region Expected global defence spending and procurement 2012-2017 in US$ billion Ø Growth p.a. (CAGR): -1.2% +0.4% 1,591 1,571 1,538 1,561 1,580 1,597 392 417 506 Asia +5.3% 435 465 486 128 139 139 144 147 149 MENA*
Slide 33: Strategic development Defence
Rheinmetall Defence “Rheinmetall 2015” Strategic development Defence Internationalization • Focused continuation of the hub strategy • Strengthening of local presence in growth markets outside of Europe • Safeguarding technological leadership by comprehensive Growth, products innovation pipeline and
Slide 34: Internationalization – Blue print South Africa
Rheinmetall Defence “Rheinmetall 2015” Internationalization – “Blue print” South Africa Market entry by takeover of Acquisition (51%) of the ammunition business of 1 a local supplier state-owned Denel Ltd. in 2008 Support by global Accelerated growth from € 80 million (2008) to 2 marketing power € 1
Slide 35: Acquisition of new markets by hub strategy
Rheinmetall Defence “Rheinmetall 2015” Acquisition of new markets by hub strategy Nordic Region Russian Federation North Europe America Gulf Region (GCC) South America Africa Australia Company presentation | May 2013 © Rheinmetall 2013 35
Slide 36: Extension of systems- and service business
Rheinmetall Defence “Rheinmetall 2015” Extension of systems- and service business Sales split Components Systems Turrets and weapon stations Tracked vehicles Weapon and ammunition Wheeled vehicles Active and passive protection Simulation and training Propellants 35-45% 40-50% Air def
Slide 37: Measures to improve cost efficiency
Rheinmetall Defence “Rheinmetall 2015” Measures to improve cost efficiency Measures Restructuring costs € 20 million in 2012 Adjustment of capacities to the segment € 40-50 million in 2013 specific order situation (e.g. Tracked Vehicles, Air Defence) Optimization of the location structure (e.g.
Slide 38: Growth and earnings targets
Rheinmetall Defence “Rheinmetall 2015” Growth and earnings targets From 2014 onwards we want to grow organically and gain market share From 2015 onwards about 50% of our sales should be generated with customers from outside Europe We see growth potential especially in Asia and Australia The
Slide 39: Rheinmetall 2015 – Automotive
“RHEINMETALL 2015” – Automotvie © Rheinmetall 2013
Slide 40: Global growth driven by emerging markets
Rheinmetall Automotive “Rheinmetall 2015” Global growth driven by emerging markets Expected production of light vehicles by region 2012-2017 in thousand units Ø Growth p.a. (CAGR): +23% 95,275 98,336 91,144 85,603 79,745 80,929 +52% 31,853 34,421 36,294 BIC* +8.8% 23,823 25,857 28,819 9,243 8,136 8,
Slide 41: Strategic development Automotive
Rheinmetall Automotive “Rheinmetall 2015” Strategic development Automotive • Strengthening of presence in the growth markets China and India Internationalization • Expanding Mechatronics business activities outside of Europe • Realization of growth potential of Mechatronics products, Growth, product
Slide 42: Disproportionately high growth in emerging markets
Rheinmetall Automotive “Rheinmetall 2015” Disproportionately high growth in emerging markets with local production Expected change of LV production 2015 vs. 2012 in % Sales Automotive 2012 in € million Western Europe + 2% 400* USA + 13% 59 China + 35% 42 Mexico + 21% Automotive Automotive Automotive
Slide 43: Automotive well-positioned with large product portfolio
Rheinmetall Automotive “Rheinmetall 2015” Automotive well-positioned with large product portfolio Sales split 2012* Mechatronics Hardparts Exhaust gas recirculation LV- and truck pistons Solenoid valves Large bore pistons Actuators Bearings 45% 44% Water-, oil- and vacuum pumps Conti
Slide 44: Stricter emission regulations drive Mechatronics
Rheinmetall Automotive “Rheinmetall 2015” Stricter emission regulations drive the Mechatronics business Estimated value-added of KSPG per vehicle for EGR-products KSPG-share per truck in € (est.) x2 +60% +21% +22% 80 x2 41 50 34 2005 2010 2015 2010 2011 2012 Target 2015 EURO 4 EURO 5 EURO 6 Truck bu
Slide 45: Stricter standards for energy efficient fuel consumption
Rheinmetall Automotive “Rheinmetall 2015” Stricter standards for improved energy efficient fuel consumption Savings effect of CO2-penalties in € Downsizing/Turbocharging Hybridization UniValve Low friction High performance bearings Wastegate actuator Electric vacuum pump piston Variable Legal famewo
Slide 46: Measures to improve cost efficiency
Rheinmetall Automotive “Rheinmetall 2015” Measures to improve cost efficiency Measures Restructuring costs Optimization of the European production- and € 20-30 million in 2013 location structure: adjustment of capacities in line with the market development in Western Europe Enhanced expansion of
Slide 47: Growth and earnings targets
Rheinmetall Automotive “Rheinmetall 2015” Growth and earnings targets In a continuously growing Automotive market, Automotive wants to exceed sector growth slightly and, together with the Chinese JVs, exceed sector growth clearly From 2015 on, more than one third of sales should be generated in
Slide 48: Cash flow and finance
Rheinmetall Group “Rheinmetall 2015” Cash flow and finance We concentrate on the successful organic development of both segments and on the improvement of operating free cash flow We want to maintain our investment grade rating We will seize opportunities for focused acquisitions in both segme
Slide 49: Outlook
OUTLOOK © Rheinmetall 2013
Slide 50: Outlook 2013 unchanged
Rheinmetall Group Outlook 2013 unchanged A year of transition to improved profitability Sales EBIT in € billion in € million 2012 2013e 2012 2013e Restructuring costs 60 - 80 Defence 2.3 around 2.4 174 130** Restructuring costs 40 - 50 Automotive 2.4 2.4 - 2.5 143 140** Restructuring costs 20 - 30 *
Slide 51: Appendix
APPENDIX © Rheinmetall 2013
Slide 52: Income statement: Sales decreased, EBIT dropped
Appendix: Rheinmetall Group Income statement Sales decreased, EBIT dropped Rheinmetall Group Q1 2012* Q1 2013 D Q1 2013/ in € million Q1 2012 Sales 1,109 962 - 147 EBITDA 91 29 - 62 EBITDA margin in % 8.2 3.0 - 5.2 pp EBIT (reported) 43 - 19 - 62 EBIT margin (reported) in % 3.9 - 2.0 - 5.9 pp Restru
Slide 53: Income statement: Net income and EPS declined
Appendix: Rheinmetall Group Income statement Net income and EPS declined Rheinmetall Group Q1 2012* Q1 2013 D Q1 2013/ in € million Q1 2012 EBIT (reported) 43 - 19 - 62 Interest - 17 - 18 -1 EBT 26 - 37 - 63 Taxes -6 +8 + 14 Group net income 20 - 29 - 49 Minority interests -2 -6 -4 Group earnings (a
Slide 54: Cash flow statement
Appendix: Rheinmetall Group Cash flow statement Cash flow impacted by lower earnings and improved working capital Rheinmetall Group Q1 2012* Q1 2013 D Q1 2013/ in € million Q1 2012 Group net income 20 - 29 - 49 Amortization / depreciation 48 48 +0 Change in pension accruals -6 -6 +0 Cash flow 62 13
Slide 55: Key figures Defence by division
Appendix: Rheinmetall Defence Key figures Defence by division Combat Systems Electronic Solutions Wheeled Vehicles -108 -57 471 -34 Sales -29 205 148 163 363 129 127 98 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 -48 -14 -24 -9 EBIT* 4 7 0 -4 -44 -24 -7 -13 Q1 2012 Q1 2013 Q1 201
Slide 56: Cash flow Defence
Appendix: Rheinmetall Defence Cash flow Defence Rheinmetall Defence Q1 2012* Q1 2013 D Q1 2013/ in € million Q1 2012 Net income -1 - 39 - 38 Amortization / depreciation 21 22 +1 Change in pension accruals -2 -1 +1 Cash flow 18 - 18 - 36 Changes in working capital and other items - 208 - 155 + 53 Net
Slide 57: Key figures Automotive by division
Appendix: Rheinmetall Automotive Key figures Automotive by division Hardparts Mechatronics Motor Service -39 -39 0 Sales 638 599 -1 301 262 288 288 67 66 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 -17 -9 -8 EBIT* 44 -1 19 20 27 10 12 6 5 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q
Slide 58: Cash flow Automotive
Appendix: Rheinmetall Automotive Cash flow Automotive Rheinmetall Automotive Q1 2012* Q1 2013 D Q1 2013/ in € million Q1 2012 Net income 29 19 - 10 Amortization / depreciation 26 26 +0 Change in pension accruals -2 -5 -3 Cash flow 53 40 - 13 Changes in working capital and other items - 69 - 22 + 47
Slide 59: 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