Rheinmetall Ag · XETR:RHM

Rheinmetall — Q2 2018 Earnings Presentation

31 slides from Rheinmetall's earnings presentation, Aug 2, 2018

  1. Slide 1: Reassuring Q2 performance

    Reassuring Q2 performance Conference Call Q2 2018 Düsseldorf, 2. August 2018

  2. 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

  3. Slide 3: Q2 2018 Group Highlights

    Q2 2018 Group Highlights Rheinmetall with robust Q2 performance Order backlog Sales Operating margin EPS €7bn stable €1.5bn +4.7% 7.2% +1.4pp €1.24 +23% CER* ƒ Order backlog remains stable above €7bn ƒ Sales growth of 4.7% at constant exchange rates* to €1,493m (reported 2.3%) ƒ Operating result gre

  4. Slide 4: Strong operational delivery - FX headwinds persist

    Strong operational delivery ‐ FX headwinds persist „ Sales „ Operating result in €m „ Earnings per share in €m Operating margin in % in € 22.8% 1.24 +4.7% +31.0% 107 ‐3 1.01 ‐34 26 1,493 84 68 ‐2.4% ‐3.6% 1,459 7.2% +27.4% +2.3% 5.8% Q2 Operational FX Q2 Q2 Operational FX Q2 Q2 Q2 2017 2018 2017 201

  5. Slide 5: OFCF mainly held back by working capital changes

    OFCF mainly held back by working capital changes „ Operating free cash flow bridge „ Composition of delta working in €m capital and others in €m as of Q2 2018 vs. Q2 2017 4 Other 36 Accounts payables Automotive 19 14 Key drivers: unadjusted Inventories ƒ Higher increase 210 Accounts receivables of i

  6. Slide 6: Working capital changes reflected in net debt development

    Working capital changes reflected in net debt development „ Net debt „ Equity ratio in €m in % of total assets Restated for IFRS 16 leasing liabilities Restated for leasing effect €158 m 230 IFRS 15/16 liabilities and effect cost to obtain contract 72 31.6% 31.2% 31.0% unadjusted unadjusted 30.4% ‐2

  7. Slide 7: Q2 2018 Highlights: Automotive

    Q2 2018 Highlights: Automotive Profitable growth in‐line with global markets Quarterly sales and margin development Comments on quarterly performance ƒ Sales grew operationally by 3.6% (+1.6% reported) to €740m 751 740 728 684 712 ƒ High profitability maintained, supported by all divisions 9.2 8.8 9

  8. Slide 8: Profitability repeated on high operational level

    Profitability repeated on high operational level „ Sales Automotive „ Operating result Automotive Mechatronics in €m in €m ƒ Growth supported by demand for growth in % / (FX adjusted) Margin emission reduction products +1.6% +1.5% slowed by declining diesel share (+3.6%) 728 740 67 68 9.2% ƒ Commerc

  9. Slide 9: German demand key driver for sales growth

    German demand key driver for sales growth „ Regional sales development Automotive „ Global LV‐Production vs. Automotive sales in €m growth in % q‐on‐q (IHS July 2018) 1.6% 728 740 0.8% 0.8% 3.9 5.3% 5.2% 9.5% 3.6 9.2% 3.5% 3.2% 17.2% 16.1% RoW China Asia (excl. CN) South America 46.0% 44.9% 1.6 NAFT

  10. Slide 10: China: Profitable growth above local market development

    China Profitable growth above local market development „ Sales in €m +9.8% 23 260 239 2 ƒ Sales increased by 9.8% to €260m (9.0% reported) 229 vs. a LV‐market growth of 8.7% 210 +8.7% ƒ Favorable product mix development 29 31 Q2 2017 operational FX Q2 2018 ƒ EBIT rose 24% and improved to €21m taking

  11. Slide 11: H2 2018 outlook: Automotive

    H2 2018 outlook: Automotive Addressing market uncertainties – risks well managed Global tariffs Emission testing Europe Diesel Raw material Short‐term: Key raws: Long‐term: Mechatronics ƒ No cancelation Diesel decline 1. Aluminum ƒ Good growth of customer compensated 2. Copper chance for call‐offs u

  12. Slide 12: Q2 2018 Highlights: Defence

    Q2 2018 Highlights: Defence High leverage quarter Quarterly sales and margin development Comments on quarterly performance ƒ Order intake compared to high Q2 17, boosted by German orders 1,011 731 682 754 ƒ Sales operationally up 5.8% to €754m (3.1% reported), driven by 11.3 6.7 509 ES and VS 3.3 5.

  13. Slide 13: Profitable growth and net-positive effect from project review

    Profitable growth and net‐positive effect from project review „ Sales Defence „ Operating result Defence Weapon and Ammunition in €m in €m ƒ Expected lower level of sales due to growth in % / (operational) Margin absence of PY trading contract (€112m) +3.1% ƒ Substantial margin improvement 83.3% (+5

  14. Slide 14: Order backlog remains on high plateau

    Order backlog remains on high plateau „ Order intake by division „ Order backlog profile in €m in €m Weapon and Ammunition change in % / (operational) Electronic Solutions ‐2.3%/ Vehicle Systems (‐0.7%) 1,031 Consolidation ‐45% 6,661 6,617 ~1.800 ~2,000 ~2,700 208 FX‐effect 570 633 272 6,509 225 229

  15. Slide 15: Australia decided to expand the existing truck contract with Rheinmetall

    Australia decided to expand the existing truck contract with Rheinmetall LAND 121 Phase 5b > 1.000 trucks > 800 modules Scheduled delivery 2019‐24 © Rheinmetall AG / Conference Call Q2 2018 15

  16. Slide 16: Innovations - Defence: Lynx KF41 at Eurosatory 2018

    Innovations ‐ Defence Rheinmetall presented Lynx KF41 at the Eurosatory 2018 Modular configuration Current tenders: Best in class mobility Unprecedented flexibility Australia Land 400 Phase 3 Attractive value for money ~450 vehicles Czech Republic Lynx – Next Generation Combat Vehicle BMP‐2 replacem

  17. Slide 17: FY Guidance

    FY Guidance Defence guidance rebased towards lower end of growth and higher end of margin Sales Operating margin 2017 2018e 2017 2018e Growth y/y in % Reported growth y/y in % in % in % 5.2 ~8 6.8 ~7.0 Group (before: 8 – 9) Automotive 7.7 3‐4 8.7 ~8.5 (IHS 2.2%) (IHS 2.1%) 3.1 ~12 5.7 ~6.5 Defence (

  18. Slide 18: Next events and IR contacts

    Next events and IR contacts „ Events 2018 „ IR Contacts Commerzbank Conference Frankfurt 29 August Franz‐Bernd Reich Head of IR RS Brussels & Paris Soc Gen Brussels & Paris September Tel: +49‐211 473‐4777 RS Iberia Madrid & Lisboa September Email: franz‐bernd.reich@rheinmetall.com Goldman Sachs Bere

  19. Slide 19: Appendix

    APPENDIX © Rheinmetall AG / Conference Call Q2 2018 19

  20. Slide 20: 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% Interest expense On previous year level R&D ~5 ‐ 5.5% ~2 ‐ 2.5% Divestiture of real ~€30m EBIT estate an

  21. Slide 21: Quarterly development Group

    Appendix Quarterly development Group „ Sales „ Operational results in €m in €m 1,722 169 1,459 1,493 1,366 1,260 1,011 114 107 731 754 97 682 509 84 44 24 46 47 728 684 712 751 740 67 63 65 68 57 ‐1 ‐1 ‐7 ‐6 ‐8 ‐13 ‐5 ‐5 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

  22. Slide 22: Free Cash Flow summary Group

    Appendix Free Cash Flow summary Group Q2 Q3 Q4 Q1 Q2 Δ Q2 in €m 2017 2017 2017 2018 2018 '17/'18 Group Net Income 51 43 130 27 65 14 Amortization / depreciation 55 59 70 64 91 36 Change in pension accruals ‐3 1 ‐8 ‐42 1 4 Cash Flow 103 103 192 49 157 54 Changes in working capital and other items ‐34

  23. Slide 23: Quarterly development Automotive

    Appendix Quarterly development Automotive „ Sales by division „ Operational result by division in €m in €m 751 740 728 67 68 712 65 684 63 57 407 429 417 382 407 47 46 44 46 40 251 232 236 254 250 16 13 18 17 14 93 95 87 92 97 9 9 8 8 9 ‐23 ‐25 ‐18 ‐24 ‐24 ‐5 ‐5 ‐5 ‐5 ‐4 Q2 2017 Q3 2017 Q4 2017 Q1 2

  24. Slide 24: Free Cash Flow summary Automotive

    Appendix Free Cash Flow summary Automotive Q2 Q3 Q4 Q1 Q2 Δ Q2 in €m 2017 2017 2017 2018 2018 '17/'18 Net income 50 25 44 45 52 2 Amortization / depreciation 32 37 39 36 38 6 Change in pension accruals ‐ ‐ ‐ ‐20 ‐1 ‐1 Cash Flow 82 62 83 61 89 7 Changes in working capital and other items 20 61 68 ‐82

  25. Slide 25: Quarterly development Defence

    Appendix Quarterly development Defence „ Sales by division „ Operational result by division in €m in €m 114 1,011 44 46 77 431 754 731 682 23 249 28 19 305 248 24 509 247 5 139 197 12 165 141 6 126 25 23 14 13 11 370 423 375 337 297 ‐1 ‐1 ‐1 ‐7 ‐7 ‐19 ‐52 ‐101 ‐90 ‐53 ‐67 ‐1 Q2 2017 Q3 2017 Q4 2017

  26. Slide 26: Free Cash flow summary Defence

    Appendix Free Cash flow summary Defence Q2 Q3 Q4 Q1 Q2 Δ Q2 in €m 2017 2017 2017 2018 2018 '17/'18 Net income 8 32 76 ‐21 23 15 Amortization / depreciation 22 21 29 26 52 30 Change in pension accruals ‐6 2 ‐2 ‐2 2 8 Cash Flow 24 55 103 3 77 53 Changes in working capital and other items ‐38 ‐88 327 ‐

  27. Slide 27: Income statement Group

    Appendix Income statement Group In €m In €m Income Statement Q2 2017 Q2 2018 Δ Q2 2017 Q2 2018 Δ Sales 1,459 1,493 34 34 40 6 Total operating performance 1,493 1,533 40 Net operating income (EBIT) 81 99 18 ‐ 2 Net interest income ‐ 13 ‐ 11 2 Other operating income 36 31 ‐5 Earnings before tax (EBT)

  28. Slide 28: Cash flow statement Group

    Appendix Cash flow statement Group In €m Cash Flow Statement H1 2017 H1 2018 Δ H1 2017 H1 2018 Δ Net Income 79 92 13 Dividends paid out by Rheinmetall AG ‐62 ‐73 ‐11 Amortization, depreciation and impairment 112 155 43 Other profit distributions ‐9 ‐7 2 Dotation of CTA ‐30 ‐40 ‐10 Sale of treasury s

  29. Slide 29: Balance Sheet Group

    Appendix Balance Sheet Group Balance Sheet In €m 31.12.2017 01.01.2018 30.06.2018 Δ 31.12.2017 01.01.2018 30.06.2018 Δ Non‐current assets 2,712 2,939 2,920 ‐19 Equity 1,955 1,950 1,975 25 Goodwill 550 550 550 0 Share capital 112 112 112 0 Other intangible assets 229 229 191 ‐38 Additional paid‐in ca

  30. Slide 30: 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

  31. Slide 31: © Rheinmetall AG / Conference Call Q2 2018

    © Rheinmetall AG / Conference Call Q2 2018 31

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