Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (May 2020)
71 slides from Rheinmetall's investor presentation, May 2020
Slide 1: Rheinmetall Group Corporate Presentation May 2020
Rheinmetall Group Corporate Presentation May 2020
Slide 2: Mobility and security form the DNA of the business model
Rheinmetall Group Mobility and security form the DNA of the business model RHEINMETALL GROUP INTEGRATED TECHNOLOGY GROUP FOR SECURITY AND MOBILITY Automotive Our heart beats for your engine Defence Force protection is our mission Tier 1 supplier System house for land based operations Business Mo
Slide 3: Highlights
Rheinmetall Group Highlights Group performance indicator Strategy roadmap Grow sales ~8% op. Organic International around 8% margin RHEINMETALL growth expansion Targeted 2-4% Cash on sales 30-35% payout ratio GROUP Leading by innovations Targeted acquisitions AUTOMOTIVE Our heart beats for your engi
Slide 4: Financial overview - Growth in all relevant KPI
Rheinmetall Group Financial overview - Growth in all relevant KPI Sales, operating result and operating margin Operating FCF and operating FCF to Sales In €m In €m / in % 4,7% 5,0% 6.500 6.255 12 400 5 6.148 314 5.896 10 300 276 4 2-4% 6.000 5.602 8 3 OFCF 200 161 5.500 5.183 8,0% 8,1% TARGET 6 2,9%
Slide 5: Rheinmetall Automotive Products per division
Rheinmetall Automotive Products per division MECHATRONICS HARDPARTS AFTERMARKET PUMP TECHNOLOGY SMALL BORE PISTONS HARDPARTS AUTOMOTOVE EMISSION SYSTEMS BEARINGS MECHATRONICS SOLENOID VALVES LARGE BORE PISTONS COMMERCIAL DIESEL SYSTEMS CASTINGS ACTUATORS Corporate Presentation May 2020 5
Slide 6: Rheinmetall Defence Products per division
Rheinmetall Defence Products per division WEAPON AND ELECTRONIC VEHICLE AMMUNITION SOLUTIONS SYSTEMS HX-FAMILY MID & LARGE CALIBER AMMO INTEGRATED ELECTRONIC SYSTEMS TACTICAL VEHICLES MID & LARGE CALIBER WEAPONS AIR DEFENCE & RADAR SYSTEMS LOGISTIC VEHICLES TECHNICAL PUBLICATIONS Medium wheeled Medi
Slide 7: One Rheinmetall
One Rheinmetall Realization of growth in changing market conditions Positioning as integrated technology group for Mobility and Security Realization of growth potentials in changing market environments ONE Leveraging strengths by bundling and channeling our expertise and RHEINMETALL competenci
Slide 8: Automotive – A changing world
Automotive – A changing world Corporate Presentation May 2020 8
Slide 9: Automotive Leading technology and market positions
Automotive Leading technology and market positions Key Figures 2019 Sales by division* Sales by region Sales Total Management View Sales: €2.7bn Aftermarket Hardparts Asia 4% RoW China JV-Sales 13% in €bn 33% 18% 1.1 Op. result: €184m 43% USMCA 16% Europe 54% w/o 2.7 Op. margin: 6.7% Mechatronics Ge
Slide 10: Automotive Leading technology and market positions
Automotive Leading technology and market positions Sales driver Segment Structure Key Competitor Differentiator Hardparts Hardparts Strong brand Megatrend mobility Pistons Mahle, Nemak, GGB, Growing demand for Castings Tenneco (Federal Global footprint Bearings Mogul), Dong Yang Stro
Slide 11: Automotive overview: product portfolio by division and engine type
Automotive overview Product portfolio by division and engine type VACUUM PUMPS EXHAUST CONTROL FUEL TANK ISOLATION THERMAL MANAGEMENT HRB eCATHODE VALVE MECHATRONICS VALVE VALVE GEN. 3 ELECTRICAL COOLANT GASOLINE EGR HIGH-VOLTAGE E-MOTOR COOLING EGR MODULE SC AIR SYSTEM eWastegate PUMP COOLANT PUMP
Slide 12: Drivers for growth
Drivers for growth Rising global fleet and regulatory restrictions are supporting our growth LV production forecast* Further regulatory pressure*** Automotive sales distribution [mUnits] by engine type** 108 CO2 NOx AP in g/km in mg/km 100 Fuel Cell Core Diesel 89 87 14% 10% Electric -24% -56%
Slide 13: Automotive Market trends
Automotive Market trends The growth drivers remain strong NT E 3+ Efficiency (CO2 Reduction) Emission (Reduction) Electrification Outside powertrain The innovation pipeline is packed! Corporate Presentation May 2020 13
Slide 14: Efficiency: CO2 reduction with Automotive products
Efficiency CO2 - reduction with Automotive products – gasoline engine vehicle 130 g 95 g CO2/km CO2/km 2015 2021 -1 g -3 g -3 g -7 g -2 g -2 g CO2/km CO2/km CO2/km CO2/km CO2/km CO2/km Variable Tribology Electr. control Variable Electr. Lightweight oil pump system valve and variable valve train EGR
Slide 15: Facing technological disruption
Facing technological disruption Rheinmetall needs to manage the transition Corporate Presentation May 2020 15
Slide 16: Electrification: Rheinmetall Automotive products
Electrification Rheinmetall Automotive products Life time order value of €1.3bn booked* * Rheinmetall Automotive and Joint Ventures, incl. BEV and Hybrid Corporate Presentation May 2020 16
Slide 17: Innovative products for a variety of applications
Innovative products for a variety of applications High El. Vapor El. Climate El. Cooling High Voltage Multi Purpose Compact Door Voltage Pump Compressor Pumps Recirculation Valve Actuator 4,000 Contactor Blower Book to bill 3,000 Sales Order intake 1.7x 1.9x ratio 1.5x 1.5x 1.5x 2,000
Slide 18: Micro Mobility
Micro Mobility Starting with competitive product into a booming market High growth market Unique Selling Proposition European market with 10% CAGR between 2018 and Smooth phasing of engine support 2030 Excellent freewheeling High market concentration with Bosch representing Low weight and
Slide 19: Diversification
Diversification Increasing portfolio for non-LV applications Trucks Large bore pistons Bearings & Aftermarket continuous casting Diverse portfolio for E.g. ship and locomotive truck applications pistons Sanitary application Global supply of spare parts Corporate Presentation May 2020 19
Slide 20: Trucks: Diverse portfolio for truck applications
Trucks Diverse portfolio for truck applications Permaglide bearings for truck compressors and truck hydraulics Main coolant pumps Aluminum pistons Auxiliary coolant pumps Steel pistons Electrical oil pumps Piston rings Cooperation with Riken Bushings for injection pumps Main-bearings Sales Connectin
Slide 21: New Markets Telecommunication
New Markets Telecommunication Diversification into new growth areas 5G-Data safety: Major production contract for manufacturing aluminum housings for 5G network Rheinmetall JV with HASCO in China is the leading supplier of die-casting capacities in China High technological competence Great opp
Slide 22: Automotive China: Outperforming the market
Automotive China Outperforming the market Highlights Sales China 1,149 in €m 972 1,003 871 934 WFOEs Partner of local big players SAIC and HASCO (50/50 528 681 joint ventures) 401 JVs (100%) Biggest casting capacities in China – technology leader Regulation (China 6) – provides substantial g
Slide 23: Defence – Managing the “super cycle”
Defence – Managing the “super cycle” Corporate Presentation May 2020 23
Slide 24: Defence Leading supplier with an increasing international presence
Defence Leading supplier with an increasing international presence Key Figures 2019 Sales by division* Sales by region Order backlog by region Sales: €3.5bn Aus/NZ RoW RoW Weapon and 13% Germany 1% USMCA 1% Germany 27% 22% 27% Ammunition 3% Aus/NZ Op. result: €343m 41% 48% USMCA 23% 3% Asia / 28% Ve
Slide 25: Defence Leading technology and market position
Defence Leading technology and market position Sales driver Structure of Corporate Segments Key Competitor Differentiator Increasing demand Vehicle Systems Vehicle Systems Reputation as trustful and for security Tactical Vehicles General Dynamics, reliable company Logistic Vehicles BAE, KNDS
Slide 26: Defence Managing the super cycle
Defence Managing the super cycle Demand for next generation 1990 Upscaling of systems forces and Downscaling Inflection modernization Return to treaty of forces and point and territorial armament NATO Out of area defence missions 2% target 2014 Annexation committment Crimea Corporate Presentation Ma
Slide 27: Defence super cycle: our home markets
Defence super cycle Successful internationalization provides diverse sources of growth Our home markets Germany Australia United Eastern Kingdom Europe Largest customer Established „home JV with BAE serves Modernization to Budget increase: market“ „home market“ NATO standards Commitment to
Slide 28: Defence tender overview
Defence tender overview High demand could lead to promising super cycle UK Eastern Europe MIV Boxer Lithuania: Boxer Challenger Poland: Leopard II Hungary: Leopard, Howitzer, France IFV(wheeled/tracked) Trucks Czech Rep: IFV (tracked) MGCS Slovakia: IFV Germany Bulgaria: IFV (wheeled) USA Trucks Rom
Slide 29: German defence: NATO commitment key driver
German defence NATO commitment key driver for German demand Lead role in Very High Readiness Joint Task Force ( VJTF) Bundeswehr ‘19 ‘23 ‘27 ‘31 ’32+ 2016 White paper 04/2018 VJTF´23 1x Division 3x Division 3x Division Concept VJTF´19 (1 Brigade) (3x Brigade) (8x Brigade) (10x Brigade) Bundeswehr 09
Slide 30: German defence budget
German defence budget Investment expenses and Rheinmetall-share - budgets become sizeable in €m Expense increase based on 3 pillars: More budget, investment share increased by 36% from 2018 to 2019: if political 8.263 1.5% commitment is to be achieved in 2024 this could lead to €~12 bn 6.011 6.063
Slide 31: German Defence: additional structural demand
German Defence Additional structural demand of German armed forces Vehicles Fox Boxer Trucks Puma Leopard 2 (>500 vehicles) (~150 vehicles) (>10.000 vehicles) (~250 vehicles) (>200 vehicles) Programs and ammunition NNBS TLVS/Next Gen. Patriot DLBO TEN Ammunition Military Camps (Short range air defen
Slide 32: Australia: new home market
Australia Successful establishment of a new “home market” 2020 MilVehCoE Military Vehicle 2018 Center of Excellence Land 17: 155mm Munition Framework Contract: 2017 EUR 60m p.a. Supashock 2018-2023 49% Rheinmetall „Brain-Trust“ 2022/2023 T 2017 LYNX 2018 Land 400 Phase 3 JV Rheinmetall NIOA
Slide 33: United Kingdom - Joint Venture with BAE
United Kingdom - Joint Venture witch BAE Creating a new “home market” and strengthening our position LEGACY BUSINESS EXPANSION OF PRODUCT PORTFOLIO BAE UK business Future Armoured engineering vehicles and Boxer Mechanized Infantry Vehicle (MIV) bridge-laying tanks - 500 vehicles @ € 1.4bn +
Slide 34: System house for land based operations
System house for land based operations Integrating components to systems VJTF System-of-Systems System house Systems Armored Infantryman Puma Gladius Platforms Key Components Lance turret Protection Ammunition Laser opto-sensoric Corporate Presentation May 2020 34
Slide 35: Total life cycle potential
Total life cycle potential Platform sales are just the tip of the iceberg – success creates opportunities 1X SALES OF PLATFORM 2X LIFECYCLE SPENDINGS Rheinmetall creates additional business opportunities over the entire life cycle of 50 years Ammunition Spare parts Service & Maintenance Trai
Slide 36: Financials
FINANCIALS Corporate Presentation May 2020 36
Slide 37: Corona update: protect, secure and support
Corona update: All action taken to protect, secure and support Protect our employees Secure our supply chains • Maximum protection on shop floor level • Supply chains in both segments tightly managed • Mobile office for all eligible staff • Business continuity safeguarded • Daily monitoring of g
Slide 38: Corona update: production plants status
Corona update: Majority of production plants fully operational at the end of Q1 2020 Production 31.3. 30.4. Production 31.3. 30.4. Production 31.3. 30.4. Americas A/D A/D Europe + ME A/D A/D China JV A A Normal 5/5 3/5 Normal 12/35 7/41 Normal - 12 Reduced 3/0 3/0 Reduced 5/1 12/0 Reduced 12 - On Ho
Slide 39: Corona update: impact on light vehicle markets
Corona update: Pandemic with global impact, especially on light vehicle markets Global LV market collapsed almost 23%* in Q1 • Automotive outperformance of 1% compared to relevant non-China market growth of -15%* • Production in China back on track after initial governmental lockdown -14% • Europe
Slide 40: Q1 2020 Group: Highlights
Q1 2020 Group: Highlights Robust Defence helped to weather crisis ridden quarter Order backlog Sales Operating result €10.3bn €1.4bn €34m +13% +1% -37% Order intake Earnings per share Operating FCF €1.2bn €0.30 €-188m -59% -46% Corporate Presentation May 2020 40
Slide 41: Q1 2020 Group: Key financial data
Q1 2020 Group: Key financial data Results impacted by pressure on Automotive business Sales Operating result in €m Earnings per share in €m Operating margin in % in € 1% -37% -59% 54 0.74 1,342 1,358 -5 -6 25 -22 34 1 2 -0.3% -0.4% +1.8% 4.0% 0.30 -41.1% +1.1% +3.5% 2.5% Q1 Operational FX M&A
Slide 42: Q1 2020 Group: Operating Free Cash Flow
Q1 2020 Group: Operating Free Cash Flow OFCF held back by CTA funding and working capital built-up in Defence Operating free cash flow per quarter in €m OFCF on normal level despite lower results 2016 2019 2017 2020 2018 Slight increase of D&A €42m CTA funding Q1 Q2 Q3 Q4 Operational built
Slide 43: Q1 2020 Group: Group key financials
Q1 2020 Group: Group key financials Balance sheet and financing remain rock solid Equity and Equity ratio Equity ratio Maturity profile in €m and % Total equity in €m Ʃ300 973 Other & Leasing 207 2020 2021 2022 2023 2024 2025 2026ff. 3,000 32.1 30.6 30.3 40 Bank loans 114 28.5 27.9 2,000 Promiss
Slide 44: Q1 2020 Highlights: Automotive
Q1 2020 Highlights: Automotive Positive result despite market collapse Quarterly sales and margin development Comments on quarterly performance In €m and % Lower order intake reflects muted environment 714 726 659 637 618 6.9 7.2 6.5 Sales decline of -13.5% vs relevant non-China market of -14.7%
Slide 45: Q1 2020 Highlights: Automotive
Q1 2020 Highlights: Automotive Result remained in positive territory Sales Automotive Operating result Automotive in €m in €m Margin Margin Mechatronics -13.5% Q1 2019 Q1 2020 •Decrease in market volumes -79.6% 714 6.9% 49 1.7% aggravated by negative ramp up 618 Hardparts 401 7.6% 31 •Market dec
Slide 46: Q1 2020 Highlights: Automotive non-LV sales
Q1 2020 Highlights: Automotive Very slow non-LV sales created additional burden Sales split LV/ Non-LV Sales split Non-LV in €m / in % in €m / in % Delta absolute in % -13.5% Diesel -25 -14.1% 714 Gazoline -23 -9.0% other LV -7 -18.7% 618 -16.8% 177 252 LV Business -54 -11.7% LV: 152 210 Truck 6
Slide 47: Automotive: regional consolidated sales split
Automotive: regional consolidated sales split Europe and USMCA performance clearly better than the market Regional sales in % vs. IHS 4 May 2020 -47% -20% -22% -23% -46% Q1 19 Q1 20 Q1 19 Q1 20 Q1 19 Q1 20 Q1 19 Q1 20 Q1 19 Q1 20 Germany Global IHS China** LV production -21% -14% -15% -14% -10% +2
Slide 48: Q1 2020 Automotive: China performance
Q1 2020 Automotive: China performance Sales decline less pronounced Sales* Comments on the quarter in €m -34% 249 Sales decline of -34% compares to a market -87 165 collapse of -47% (IHS Markit 4 May, 2020) 219 -1 4 144 Hardparts and Mechatronics both strongly 31 21 affected Q1 19 operativ F
Slide 49: Q1 2020 Automotive: Monthly development
Q1 2020 Automotive: Monthly development Corona started to impact consolidated topline from mid-March onwards China monthly sales @100% in €m (JV and WOFE) -40% February with highest sales impact due to Chinese -7% New Year and beginning of governmental shutdown -55% Recovery already visible in
Slide 50: Q2 2020: IHS outlook
Q2 2020: IHS outlook Impact shifts from China in Q1 to western world in Q2 Q1 LV growth Q2 expected LV growth in % -23% in % -47% -47% -11% -61% -20% -10% -71% 2019 2020 Europe US China World Europe US China World Direct hit on Automotive topline will be worse Automotive topline impact already v
Slide 51: Q1 2020 Highlights: Defence
Q1 2020 Highlights: Defence Strong Q1 performance with high leverage Quarterly sales and margin development Comments on quarterly performance In €m and % Strong order intake 1,324 15.8 Sales increase driven by ES and VS with M&A support 746 823 740 629 Operating result improved materially 8.1
Slide 52: Q1 2020 Highlights: Defence
Q1 2020 Highlights: Defence Strong sales increase helped to triple Q1 results Sales Defence Operating result Defence in €m in €m Margin Margin Q1 2019 Q1 2020 17.6% +222.2% Weapon & Ammunition 740 1.4% 29 3.9% • Sales still held back by export 629 -7% 166 10% 11 6.4% restrictions 177 4% 174 Elec
Slide 53: Q1 2020: Defence order intake
Q1 2020 : Defence Strong Q1 order intake led by international customers Order intake by division Order backlog profile in €m in €m +16% 1,664 113 10,034 +30% -358 731 8,615 Weapon and Ammunition Electronic Solutions 564 327 2,486€m 2,059€m 5,489€m Vehicle Systems Consolidation 344 324 168 136 78
Slide 54: 2020: Defence resilience
2020 : Defence resilience Defence demand more resilient in times of crisis German demand • List of German €25m proposals unchanged International demand • Czech Republic tender not cancelled yet, decision expected for H2 2020 • East European IFV tender under negotiation, contract signing expected
Slide 55: Outlook 2020
OUTLOOK 2020 Corporate Presentation May 2020 55
Slide 56: 2020 Overview
2020 Overview Management aims to provide best possible orientation for 2020 Given the current volatility in the Automotive markets and the potential effects on supply chains and demand, any forecasting statements are subject to increased levels of risk. It is currently not possible to provide an
Slide 57: 2020 Overview: trading update and guidance
2020 Overview Management aims to provide best possible orientation for 2020 Trading update Q2 FY 2020 Guidance Double digit sales decline around Management refrains to provide a FY AUTOMOTIVE 50% to 55% expected, operating guidance in light of the current leverage for Q2 expected to be uncertainty r
Slide 58: Appendix
Appendix Corporate Presentation May 2020 58
Slide 59: Sustainability: Path to CO2 neutrality
Sustainability Path to CO2 neutrality already started 2040 CO² neutral 2020 - 2040 2021 Milestone plan re Reporting CO2 neutrality analogous to 3 years increments 2023 UN Global CDP 2020 Compact 2017 GRI-Report 2022 First CSR ratings selection TCFD (Task Force on Climate-related Financial MSCI: BBB
Slide 60: Sustainability: ESG @Rheinmetall
Sustainability ESG @Rheinmetall E Automotive Product portfolio actively reduces CO² emission 2040 Reduction energy intensity (MWh/EUR m revenue) 2015: 229,4 | 2019: 157,2 Reduction THG intensity (tCO2/EUR m revenue) 2015: 101,2 | 2019: 65,7 CO2 Revenue coverage ISO 14001 72,4 % Revenue coverage ISO
Slide 61: Active board remuneration schemes
Active board remuneration schemes Current and new remuneration policy for contracts starting in 2020 Current policy New policy 100% annual target salary 100% annual target salary Fixed annual remuneration Fix 39% 33% Fixed annual remuneration Fix over 12 months, 60% over 12 months, 60% including fri
Slide 62: European Defence Consolidation landscape
European Defence Consolidation landscape Governmental shareholding restricts room for cross-border consolidation Big common armament programs could be catalysts for further consolidation 49.9% Kongsberg Nammo 50% Rheinmetall’s approach: Patria Saab JV partnerships with companies in different C
Slide 63: Our capital allocation policy is geared towards further growth
Our capital allocation policy is geared towards further growth Funding of growth (organic and M&A) 9.4% Dividend to shareholders (Payout ratio 30-35%) Q3 ‘19 level Improvement of pension funding via CTA (target 50-60%) level Corporate Presentation May 2020 63
Slide 64: Select key data: outlook 2020
Select key data: outlook 2020 Rheinmetall Group In %(PY) Automotive Defence €20-25 Capex (w/o Holding cost IFRS 16) Around 5.5% (5.5%) Around 5%(4.7%) (PY: €25m) Comparable level Tax rate D&A 5.5-6.0% (5.9%) 3-3.5% (3.1%) (PY: 26%) Interest result ~-€45m (PY:-€35m) R&D Around 6% (5.9%) 2-2.5% (2.0%)
Slide 65: Group 2015 – 2019: Key figures (as reported)
Group 2015 – 2019: Key figures (as reported) in €m 2015 2016 2017 2018 2019 Balance Sheet Total assets 5.730 6.150 6.101 6.759 7.415 Shareholder's equity 1.562 1.781 1.870 2.173 2.272 Equity ratio (in %) 27,3 29,0 30,7 32,1 30,6 Pension liabilities 1.128 1.186 1.080 972 1.169 Net financial debt -81
Slide 66: Segments 2015 – 2019 Key figures
Segments 2015 – 2019 Key figures Automotive Defence 2015 2016 2017 2018 2019 in €m 2015 2016 2017 2018 2019 2.621 2.670 2.922 2.888 2.705 Order intake 2.693 3.050 2.963 5.565 5.186 445 458 520 478 447 Order backlog (Dec. 31) 6.422 6.656 6.416 8.577 10.399 2.592 2.656 2.861 2.930 2.736 Sales 2.591 2.
Slide 67: FY 2019: Capex
FY 2019: Capex Segmental growth path reflected in different capex development Automotive with diligent capex approach Defence preparing for growth in €m and in (% of sales) in €m and in (% of sales) (5.5%) (5.2%) (3.1%) (4.7%) 161 166 6 143 12 11 54 17 101 23 15 4 142 115 83 89 (2.2%) (2.1%) 201
Slide 68: FY 2019: R&D
FY 2019: R&D Innovation remains key in both segments Automotive Defence in €m and in (% of sales) in €m and in (% of sales) (6.6%) (7.7%) (4.4%) (4.1%) 210 193 39 36 145 17 143 12 47 68 23 154 4 145 (4.9%) (5.6%) 70 75 (2.2%) (2.1%) 2018 2019 2018 2019 Customer-financed R&D Capitalized developme
Slide 69: Continuing ROCE improvement
Continuing ROCE improvement ROCE in % 25% 20.2% 19.6% 20% 19.0% 18.8% 18.7% 16.7% 17.1% 15.9% 15.4% 15% 12.3% .13,4% 13.1% 9.8% 11.8% 11,0 % Group 10.7% 10.6% 10% 6.1% 4.7% 5% 3.9% 0.3% 0% -5% -4.6% 2013 2014 2015 2016 2017 2018 2019 Group Defence Automotive Corporate Presentation May 2020 69
Slide 70: Next events and IR contacts
Next events and IR contacts Next Events IR Contacts Dirk Winkels dbAccess Berlin Conference Head of IR All investor meetings UBS Pan European Small and Mid-Cap Conference 2020 Tel: +49-211 473-4749 will be conducted as telephone conferences Email: dirk.winkels@rheinmetall.com Berenberg Conferenc
Slide 71: 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