Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (November 2020)
63 slides from Rheinmetall's investor presentation, November 2020
Slide 1: Rheinmetall Group Corporate Presentation November 2020
Rheinmetall Group Corporate Presentation November 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 6.000 2-4% 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 November 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 November 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
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** CO2 NOx Fuel Cell AP 101 in g/km in mg/km 93 Core Diesel 89 Electric 15% -24% -56% Others
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 November 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 November 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 November 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 November 2020 19
Slide 20: Trucks
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: Automotive China
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 22: Defence – Managing the “super cycle”
Defence – Managing the “super cycle” Corporate Presentation November 2020 22
Slide 23: Defence: Leading supplier with 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 24: 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 25: 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 No
Slide 26: 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 27: 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 Lynx, Trucks IFV(wheeled) MGCS Czech Rep: IFV (tracked) Germany Slovakia: IFV USA Trucks Bulgaria: IFV (wheeled) Ammun
Slide 28: German defence
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 29: German defence budget
German defence budget Investment expenses and Rheinmetall-share - budgets become sizeable in €m 9253 8908 8263 Drivers for budget increase: More personnel, return to ~200.000 soldiers 6063 5894 More equipment (100% equipment 5327 5323 level) 4890 More finance, investive share increased by 14%
Slide 30: 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 31: Australia
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 32: United Kingdom - Joint Venture with BAE
United Kingdom - Joint Venture with 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 + A
Slide 33: 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 November 2020 33
Slide 34: 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 35: Financials
FINANCIALS Corporate Presentation November 2020 35
Slide 36: Q3 2020 Group: Highlights
Q3 2020 Group: Highlights Global awareness campaign to support employee safety in Q3 Corona update Upgraded measures in place to prepare for second wave All sites fully operational in Q3 Auto volume recovery supported strong operating leverage Strict cost management yielded results Operati
Slide 37: Q3 2020 Group: Key financial data
Q3 2020 Group: Key financial data Strong profitability in a recovering market and effective cost management Sales Operating result and EBIT in €m Earnings per share in €m Operating margin in % in € -6.6% +1.4% reported EPS 1.481 99 101 adjusted EPS 1,382 4 -23% -72 -27 -3 1,33 1,33 -35 66 1,03
Slide 38: Q3 2020 Group: Operating free cash flow
Q3 2020 Group: Operating free cash flow Very strong cash generation Q3 operating free cash flow in €m 2016 2017 2018 2019 2020 150 36 41 5 0 Q3 2019 included €15m CTA funding in Auto Strong contribution from working capital -116 -127 -150 reduction Operating free cash flow bridge €45 m res
Slide 39: Q3 2020 Group: Capex
Q3 2020 Group: Capex Cash preservation in Automotive remains a key priority Capital expenditure in €m High confidence to achieve FY capex saving +4% target of -30% in Automotive ~320 309 YTD already down 37% +28% Defence FYe capex plan includes 165 201 ~220 Higher capitalized development c
Slide 40: Q3 2020 Group: Group key financials
Q3 2020 Group: Group key financials Moody‘s confirmed financial strength in latest Q3 rating Equity and Equity ratio Equity ratio Gross debt and maturity profile Ʃ 1.260 in €m and % Total equity in €m 87 Commercial Paper 255 Leasing & Other 3,000 30,6 30,3 40 27,9 26,4 26,1 2020 2021 2022 2023 2
Slide 41: Q3 2020 Automotive: Highlights
Q3 2020 Automotive: Highlights Return to earnings and cash generation on the back of recovering demand Quarterly sales and margin development Comments on quarterly performance In €m and % Sequential market recovery continued 6,5 6,2 1,7 5,1 FX adjusted growth of -9.8% compares to -8.8% regionall
Slide 42: Q3 2020 Automotive: Highlights
Q3 2020 Automotive: Highlights Ongoing cost discipline and recovering volumes helped operating leverage Monthly sales growth vs. IHS LV-production growth in % Y-o-Y -8 -4 Q1 -6 -6 Q2 Q3 -8 -4 0 -18 -18 -15 -16 Automotive -26 -33 -29 -36 -20 IHS LV Production growth (ex China) -68 -61 -70 -83 -40 -
Slide 43: Q3 2020 Automotive: Divisional highlights
Q3 2020 Automotive: Divisional highlights Divisional business environment on different recovery levels Sales Automotive Operating result Automotive in €m in €m Mechatronics • Market in recovery mode, but Margin Margin Q3 2019 Q3 2020 strain from FX-effects -13% -31% • Strict cost management 659
Slide 44: Q3 2020 Automotive: Highlights
Q3 2020 Automotive: Highlights Non-LV still a drag, but trucks with sequential improvement Sales split LV/ Non-LV Sales split Non-LV in €m / in % in €m / in % Delta absolute in % -13% Diesel -27 -17.2% 659 Gasoline -31 -12.9% other LV +6 +19.3% 572 -15% 154 237 LV Business -52 -12.3% 127 LV: 202
Slide 45: Q3 2020 Automotive: China performance
Q3 2020 Automotive: China performance Strong results, but sales burdened by adverse FX effects Sales* Comments on the quarter in €m -1% Operational sales increase of +2.4% compares to 298 295 very strong PY Q3 (first ramp-up quarter of electric 7 -11 265 vapor and vacuum pumps), but held back
Slide 46: Q3 2020 Automotive: Innovation
Q3 2020 Automotive: Innovation Latest order for EVAP increases life time order value to above €1bn Electronic Vapor Pump (EVAP) Regulatory requirements for fuel emissions tightened Pump allows cleansing of activated carbon filters during standstill or electric operation Serial production in the US a
Slide 47: Q3 2020 Defence: Highlights
Q3 2020 Defence: Highlights Further improvement of operating margin and cash generation Quarterly sales and margin development Comments on quarterly performance In €m and % Sales better than expected including slightly negative FX effect 1,324 15,8 Good execution supported margin development 823
Slide 48: Q3 2020 Defence: Divisional highlights
Q3 2020 Defence: Divisional highlights All divisions were able to expand margins and absolute results Sales Defence Operating result Defence in €m in €m Margin Margin Weapon & Ammunition Q3 2019 Q3 2020 • Stronger ammunition sales -2% +18% 823 • Additional personnel protective 809 7.8% 76 9.4% e
Slide 49: Q3 2020 Defence: Order overview
Q3 2020 Defence: Order overview Order intake on expected level Order intake by division Order backlog profile in €m in €bn -58% „Shadow backlog“ from truck 1,136 framework agreements 252 €3.1bn (2021-26) 345 +12% €6,3bn Weapon and Ammunition €2,3bn 477 Key orders: Electronic Solutions -VJTF ~€19
Slide 50: Q3 2020 Defence: Launch of new IFV platform
Q3 2020 Defence: Launch of new IFV platform Hungary is the first NATO member to select the Lynx Details Establishment of JV with the Hungarian MOD with a 51% Rheinmetall share Order Size Quantity: 218 Lynx and 9 armored recovery vehicles “Büffel” Order volume: clearly above €2bn 2 phase deli
Slide 51: Outlook 2020
OUTLOOK 2020 Corporate Presentation November 2020 51
Slide 52: 2020 Guidance update
2020 Guidance update FY result guidance upgraded GROUP Operational sales growth for 2020 between minus 7% and minus 6% Operating margin expected between positive 6% to 6.5% Based on the current IHS’ FY 2020 regionally adjusted outlook of 21.9%* we guide our AUTOMOTIVE operational sales develop
Slide 53: Appendix
Appendix Corporate Presentation November 2020 53
Slide 54: 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 55: 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 Green House Gas intensity (tCO2/EUR m revenue) 2015: 101,2 | 2019: 65,7 CO2 Revenue coverage ISO 14001 72,4 % Revenue c
Slide 56: 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 57: 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 Cobham Saab BAE Systems JV partnerships with compa
Slide 58: Capital allocation policy
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 November 2020 58
Slide 59: Group 2015 – 2019 Key figures
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 1
Slide 60: 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 61: 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 November 2020 61
Slide 62: Next events and IR contacts
Next events and IR contacts Next Events* IR Contacts Deutsches Eigenkapitalforum Dirk Winkels 16 November 2020 Berenberg, European Conference Head of IR 2 December 2020 Credit Suisse, Industrial Conference Tel: +49-211 473-4749 3 December 2020 Email: dirk.winkels@rheinmetall.com Commerzbank, Ger
Slide 63: 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
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