Rheinmetall Ag · XETR:RHM

Rheinmetall — Investor Day (November 2017)

25 slides from Rheinmetall's investor day presentation, Nov 22, 2017

Slide 1: Capital Markets Day 2017
Capital Markets Day 2017 Helmut P. Merch, CFO Rheinmetall AG, 22 November 2017
Slide 3: Continuing improvement of key financials
Continuing improvement of key financials Sales, operating result Operating free cash flow in EUR million, in % in EUR million, in % 5.5% 6.3% 2.9% 5.602 5.5% 161 5.183 3.4% 0.6% 0.5% 4.688 -3.9% 4.8% 20 29 4.417 4.174 287 353 211 231 160 -182 2013 2014 2015 2016 9m 2017 2013 2014 2015 2016 Sales Ope
Slide 4: Financial flexibility materially raised
Financial flexibility materially raised Total assets 9M Debt ratios In € m 2017 In % 8.000 31% 40% 1,4 8,0x 6.000 30% 1,0 6,0x 0,6 4,0x 4.000 20% 0,2 2,0x 2.000 10% -0,2 0,0x 0 0% 2013 2014 2015 2016 2013 2014 2015 2016 Net-debt to EBITDA (l.s.) EBITA/Interest Expenses (r.s.) Total Assets (l.s.) Equ
Slide 5: Reliability as key factor to improve credibility
Reliability as key factor to improve credibility Share price Analyst Ratings in EUR as of 09/11/17 Actual Share Price Target Price as of 09/11/17 100 Buy: 12 70 Hold: 6 Market Cap: > €4,000 m Sell: 0 40 Market Cap: Market Cap: > €3,000 m > €2,000 m 10 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16
Slide 7: Change of accounting standards with minimal impact starting in 2018
Looking ahead: Change of accounting standards with minimal impact starting in 2018 IFRS 15 IFRS 16 Revenue from contracts with customers Leases Balance sheet Balance sheet No change in equity Extension of around €150-200m (~3% on total Conversion effect assets) due to recognition of right of use ass
Slide 8: FX impact almost eliminated by natural hedge and diversified sales structure
FX impact almost eliminated by natural hedge and diversified sales structure Rheinmetall Group Automotive Defence Sales growth in % Sales growth in % Sales growth in % 15 20 10 15 10 10 5 5 5 Most important currencies: 0 0 0 EUR, CZK, USD, MXN, BRL, CNY Most important currencies: -5 2013 2014 2015 2
Slide 10: Automotive: Drivers for structural earnings improvement
Automotive: Drivers for structural earnings improvement Automotive EUR In Continuing growth of 100-200 bp above LV production rate billion 4 % 10% Increasing share of higher margin Mechatronics business 9% Optimization of the cost structure in Hardparts, e.g. by 3 closing the pistons plant in Thionv
Slide 11: Automotive: Achieving target margin with different value chains
Automotive: Achieving target margin with different value chains Value chain R&D Raw materials Production Assembly Aftermarket R & D: competitive leadership in fragmented markets Mechatronics Production: assembly of components R & D: Improvements of product design Hardparts Production: casting based
Slide 12: Defence: Drivers for structural earnings improvement
Defence: Drivers for structural earnings improvement Defence EUR In Improving market environment billion CAGR 2017-2020: ~10% % 10% Increasing margins due to the lower influence of 3 legacy contracts 6-7% Higher margin order book Revision 2 of mid- Development of new technology term 5% guidance 1 0
Slide 13: Defence: Extended value chains provide profit potential
Defence: Extended value chains provide profit potential Value R&D Procurement Production Assembly Aftermarket chain (Raw materials) Weapon and Extended value chain: R & D, raw materials (nitrochemicals), casings, fuses, effectors Ammunition Combination of weapon and ammunition with similarities to “
Slide 14: Different business models – different cash requirements and ROCE
Different business models – different cash requirements and ROCE Capex and Working Capital compared to Sales Capex to sales In % Legend Status quo (2016) Size of bubble indicates ROCE (2016) 4.6% Operating working capital to sales 15.8% in % © Rheinmetall AG / CMD 2017 14
Slide 15: Rising return on capital employed
Rising return on capital employed ROCE in % Pre-tax WACC 20% (2016): 15% 12% 11% 10.9% Automotive 10% 9.3% Defence 5% 5% 4% 0% 2013 2014 2015 2016 -5% Group Defence Automotive © Rheinmetall AG / CMD 2017 15
Slide 16: Free cash flow expected to move towards the upper end of guidance mid-term
Free cash flow expected to move towards the upper end of guidance mid-term Operating free cash flow 4 2-4% 2 2.9% 0.5% 0.6% 0 -2 -3.9% -4 2013 2014 2015 2016 2017 2018 2019 2020 © Rheinmetall AG / CMD 2017 16
Slide 17: Increased business activities will slightly lift capex in 2018
Increased business activities will slightly lift capex in 2018 Capex Capex of sales 2013 last year with capex below depreciation In € m In % Defence capex traditionally below Automotive (35:65) 400 10,0% Capex Cash Capex-to-Sales (r.s.) 2018 will see elevated level of capex driven by Defence 350 300
Slide 18: External growth remains a valid option
External growth remains a valid option M&A activity Permanent screening of the market High price premium awareness Current opportunities: Potential transformation of European defence industry might offer some opportunities Structural changes in the automotive industry © Rheinmetall AG / CMD 2017
Slide 19: Commitment to shareholders by maintaining a payout ratio of at least 30%
Commitment to shareholders by maintaining a payout ratio of at least 30% Dividend per share and payout ratio in EUR and in % in € In % 2,0 90% 1,80 1,80 1,50 1,45 60% 1,10 1,0 30% 30% 0,40 0,30 0,0 0% 2010 2011 2012 2013 2014 2015 2016 © Rheinmetall AG / CMD 2017 19
Slide 21: Solid performance from a strong financial base
Solid performance from a strong financial base GROWTH Positive business cycle in both segments Automotive outpacing market Defence growing at double digits PERFORMANCE Profitability significantly improved Targeted margin corridor within reach Cash conversion on high level STABILITY Successful de-lev
Slide 23: Rheinmetall shifts into a higher gear
Rheinmetall shifts into a higher gear EXCITING PRODUCT PORTFOLIO Portfolio shift to powertrain independence in Automotive continues State-of-the-art vehicles portfolio and promising innovations in Defence Integration of components to systems ENTHUSIASTIC PEOPLE Innovative engineers Experienced sales
Slide 24: Mobility. Security. Passion.
MOBILITY. SECURITY. PASSION.
Slide 25: 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

Rheinmetall — Investor Day (November 2017) on 6ix

Rheinmetall — Investor Day (November 2017)

Slide 1: Capital Markets Day 2017

Slide 2: Review 2017

Slide 3: Continuing improvement of key financials

Slide 4: Financial flexibility materially raised

Slide 5: Reliability as key factor to improve credibility

Slide 6: Financial Insights

Slide 7: Change of accounting standards with minimal impact starting in 2018

Slide 8: FX impact almost eliminated by natural hedge and diversified sales structure

Slide 9: Top Performance

Slide 10: Automotive: Drivers for structural earnings improvement

Slide 11: Automotive: Achieving target margin with different value chains

Slide 12: Defence: Drivers for structural earnings improvement

Slide 13: Defence: Extended value chains provide profit potential

Slide 14: Different business models – different cash requirements and ROCE

Slide 15: Rising return on capital employed

Slide 16: Free cash flow expected to move towards the upper end of guidance mid-term

Slide 17: Increased business activities will slightly lift capex in 2018

Slide 18: External growth remains a valid option

Slide 19: Commitment to shareholders by maintaining a payout ratio of at least 30%

Slide 20: Outlook

Slide 21: Solid performance from a strong financial base

Slide 22: Group Perspective

Slide 23: Rheinmetall shifts into a higher gear

Slide 24: Mobility. Security. Passion.

Slide 25: Disclaimer