Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (January 2016)
91 slides from Rheinmetall's investor presentation, January 2016
Slide 1: Technology Group for Security and Mobility
TECHNOLOGY GROUP FOR SECURITY AND MOBILITY COR POR ATE PR ES E NTATION January 2016 © RHEINMETALL AG 2016
Slide 2: The Technology Group for Security and Mobility
Rheinmetall Group The Technology Group for Security and Mobility Addressing the basic needs and megatrends in Defence and Automotive Sales: EUR 5.1 billion Employees: 20,700 Sales: EUR 2.5 billion Sales: EUR 2.6 billion Employees: 9,600 Employees: 11,000 Basic need Accumulating international conflic
Slide 3: Group key figures
Rheinmetall Group Group key figures Successful development in first nine months 2015 Order intake in EUR million Order backlog in EUR million Sales in EUR million +405 +367 +311 4,360 6,690 6,583 6,988 3,582 3,756 3,215 Australia 3,445 2,956 ~3,260 9M 2013 9M 2014 9M 2015 9M 2013 9M 2014 9M 2015 9M
Slide 4: Targets FY 2015
Rheinmetall Group Targets FY 2015 Highly confident to achieve the guided figures Group Automotive Defence Sales in EUR million Sales in EUR million Sales in EUR million +9% +6% +12% ~5,100 2,448 ~2,600 ~2,500 4,417 4,688 2,262 2,155 2,240 FY 2013 FY 2014 FY 2015e FY 2013 FY 2014 FY 2015e FY 2013 FY
Slide 5: Automotive
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Slide 6: The divisional structure of Automotive
Rheinmetall Automotive The divisional structure of Automotive Focused on the attractive segment of powertrain technology RHEINMETALL AUTOMOTIVE EUR 2.6 billion Hardparts Mechatronics Aftermarket Pistons Emission Systems International Large-bore pistons Solenoid Valves National Bearings Commercial Di
Slide 7: Automotive – completed by the activities in China
Rheinmetall Automotive Automotive – completed by the activities in China Grasping chances in partnerships and with own subsidiaries 50/50 joint ventures Wholly Foreign-Owned Enterprises JV subsidiary with HASCO (SAIC group) (100% Rheinmetall Automotive) Castings (ATAG) Pistons (KSSP) Castings (KPSNC
Slide 8: Organic growth of Automotive
Rheinmetall Automotive Organic growth of Automotive The three main drivers 3 Higher value of products The value of included products will rise, e.g. due to electrification trend 2 More content per car The number of Rheinmetall products per vehicle will increase 1 Market growth The number of globally
Slide 9: Growth driver “Market growth”: global light vehicle demand
Rheinmetall Automotive Growth driver “Market growth” Ongoing increase of global demand for light vehicles Forecast global light vehicle (LV) production in million units / 120 112 − Light vehicles remain 110 2 on growth path: 100 17 88 CAGR 2010-2025: 3% 90 20 80 − Combustion engines 70 losing market
Slide 10: Growth driver “Market growth”: truck engine production
Rheinmetall Automotive Growth driver “Market growth” Truck engine production heading towards a growth phase Forecast truck engine production in million units Rheinmetall Automotive sales of non-LV and truck business in EUR million 5.0 CAGR 2015-2025 4.5 CAGR CAGR +7% 0.2 2010-2014 2010-2014 +9% 802
Slide 11: Growth driver “More content per car”
Rheinmetall Automotive Growth driver “More content per car” Stricter environmental standards require additional products LEGISLATION EXAMPLES OF PRODUCTS /FUEL SAVINGS in % Low-pressure EGR External EGR for gasoline engines 5-6% Steel pistons 2% less fuel for diesel engines less fuel Additional 4% l
Slide 12: Sales share of green technology products
Rheinmetall Automotive Growth driver “More content per car” and “higher value per product” Sales share of green technology products will increase to 60% Automotive sales share 2014 Expected Automotive sales share 2016 Products for Products for emission control and emission control and fuel consumpti
Slide 13: Trend to hybrid vehicles expected to accelerate
Rheinmetall Automotive Growth driver “More content per car” Trend to hybrid vehicles expected to accelerate Forecast production of hybrid vehicles in million units 15 14.6 − Stricter emission regulations increase 4.1 attractiveness of alternative 10 energy concepts 1.9 − Hybrid powertrains will 2.1
Slide 14: Trend of hybridization requires more products (combustion portfolio)
Rheinmetall Automotive Growth driver “More content per car” Trend of hybridization requires more products of Rheinmetall The traditional product portfolio for combustion engines … Actuators Engine bearings Solenoid valves Electric throttle bodies Pistons Mechanical coolant pumps Engine blocks Oil pu
Slide 15: Trend of hybridization requires more products (hybrid portfolio)
Rheinmetall Automotive Growth driver “More content per car” Trend of hybridization requires more products of Rheinmetall … will be enlarged by products for hybrid engines. Actuators Engine bearings Solenoid valves Electric throttle bodies Electrical coolant valve Structural Electrical Mechanical Pis
Slide 16: Growth driver “Higher value of products”
Rheinmetall Automotive Growth driver “Higher value of products” Electrification and downsizing require more sophisticated products Products / product groups and possible price shifts Coolant pump Exhaust gas recirculation Valve, cooler, Mechanical >6x Electrical Valve >3x bypass and bypass actuator
Slide 17: Technological change leads to new products and services
Rheinmetall Automotive Growth drivers “More content per car” and “Higher value of products” Technological change leads to new products and services Strategic target “engine neutrality” – Reducing dependency on specific engine types – Flexible product capacities, adjusted to the need of the customers
Slide 18: Automotive Key investment highlights
Rheinmetall Automotive Automotive Key investment highlights – Rising global demand for light vehicles M a r ke t s – Continuing trend: efficient engines and lower emissions – Focus: fuel-reduction by Mechatronics and CO2-reduction by Hardparts Products – More complex products leading to higher conte
Slide 19: Defence
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Slide 20: The divisional structure of Defence
Rheinmetall Defence The divisional structure of Defence More focused organizational structure for the future RHEINMETALL DEFENCE EUR 2.5 billion Vehicle Systems Electronic Solutions Weapon & Munition Logistic Vehicles Air Defence & Naval Systems Weapon & Munition Tactical Vehicles Mission Equipment
Slide 21: Organic growth of Defence
Rheinmetall Defence Organic growth of Defence The three main drivers 3 New markets & new products Entry on new markets with local partners, innovations in the pipeline 2 High order backlog More than 2x sales imply solid growth in the future, esp. in system business 1 Market growth Substantial change
Slide 22: Substantial change in global security situation
Rheinmetall Defence Growth driver “Market growth” Substantial change in global security situation RUSSIA/UKRAINE CRISIS is challenging NATO − Armed military conflict at the Eastern border of NATO “ISLAMIC STATE” − Increasing threat of terrorism for Western countries “FAILING STATES” in the MENA regi
Slide 23: Defence budgets forecast by region
Rheinmetall Defence Growth driver “Market growth” Budgets slightly increasing in Europe and MENA, but strongly in Asia/Pacific Forecast defence budgets in EUR billion 1,800 1,691 1,621 1,600 162 164 Asia/Pacific/MENA 1,400 − Strong increase due to rising threats in Asia, slight increase until 1,200
Slide 24: Europe: Swing in defence budgets
Rheinmetall Defence Growth driver “Market growth” Europe: Swing in defence budgets triggered by conflict situations CAGR CAGR CAGR CAGR CAGR CAGR 2010-2015 2015-2019e 2010-2015 2015-2019e 2010-2015 2015-2019e +0.2% +3.7% -0.4% +2.3% +1.0% +1.6% Eastern EU Scandinavia & Baltic States Turkey CAGR CAGR
Slide 25: Germany: projects towards full equipment of ground forces
Rheinmetall Defence Growth driver “Market growth” Germany: A number of projects towards full equipment of ground forces Fox Leopard 2 Demand for upgrade, order Upgrade of 103 tanks expected for 2016, delivery projected, order expected starting 2017. In addition for 2017 potential for further vehicle
Slide 26: Mid-term future sales covered by received orders
Rheinmetall Defence Growth driver “High order backlog” Mid-term future sales covered by received orders Order backlog by region in EUR million Order backlog… …turning into sales in EUR million +6% +382 6,547 6,547 ~3,700 6,165 6% Rest of the World RoW 7% 6,165 48% Asia/ 56% Asia/MENA MENA ~2,000 18%
Slide 27: Turnaround of Wheeled Vehicles in 2016
Rheinmetall Defence Growth driver “High order backlog” Higher capacity utilization will lead to turnaround of Wheeled Vehicles in 2016 Sales of business unit “Logistic Vehicles” 500 Norway/Sweden Australia (Land 121) 250 - UK Military Basic Business (conventional trucks, maintenance) Commercial spec
Slide 28: Non-European share of orders raised to roughly 60%
Rheinmetall Defence Growth driver “New markets & new products” Non-European share of orders raised to roughly 60% Order intake by region in EUR million 1,977 1,830 2,933 3,339 2,812 1,592 1,774 Rest of 6% 16% 16% 14% 12% the World 21% 19% Military Trucks Australia 33% 56% Asia/MENA 27% 25% 60% 39% 4
Slide 29: International network for realizing growth potential
Rheinmetall Defence Growth driver “New markets & new products” Recent activities expand international network for realizing growth potential Scandinavia UK Russia (not active) Canada Netherlands Poland Kazakhstan Switzerland USA Italy Turkey Algeria Saudi Arabia India (not active) Mexico UAE Indones
Slide 30: New products with local partners in NATO countries
Rheinmetall Defence Growth driver “New markets & new products” New products with different local partners in NATO countries 6X6 AMPHIBIOUS VEHICLE AMMUNITION AND VEHICLES — Cooperation agreement with PGZ ― Local entity “Rheinmetall Turk” in the course (major supplier of Polish forces, 19,000 of form
Slide 31: Further market potential beyond the large-scale truck order
Rheinmetall Defence Growth driver “New markets & new products” Further market potential beyond the large-scale truck order LAND 400 PROGRAM ― Tender submitted in 2015, offering Boxer with Lance turret ― Teamed up with Northrop Grumman ― Down-selection in 2016, final decision not before 2018 ― Total
Slide 32: High-energy laser: Weapon technology of the 21st century
Rheinmetall Defence Growth driver “New markets & new products” High-energy laser: Weapon technology of the 21st century ― Laser technology developed, ready for operations in 3-5 years ― Domestic R&D orders of EUR ~40 million received ― Next step: qualification phase for navy and air defence ― Custom
Slide 33: Modernization of MBT and new concept
Rheinmetall Defence Growth driver “New markets & new products” Modernization of MBT in the medium term, new concept in the long term 1. Modernization 2. New 130mm caliber 3. New concept (MGCS) Rheinmetall recently developed/ — New cannon with a larger — MGCS concept for new main is developing innova
Slide 34: Defence Key investment highlights
Rheinmetall Defence Defence Key investment highlights – International conflicts trigger increasing budgets M a r ke t s – Defence markets are at a turning point in Europe – New products in the pipeline addressing the new challenges Products – Innovative solutions as well as traditional products allo
Slide 35: Group
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Slide 36: Mid-term perspective
Rheinmetall Group Mid-term perspective Looking ahead: Markets and Rheinmetall ― Markets with good mid-term perspectives: Global growth in Defence and Automotive Automotive Market Sales CAGR 2015-2018e: 3.5% ~ 5% Defence Market Sales — Changing markets: CAGR 2015-2018e: 0.9% ~ 8% Stable market deve
Slide 37: Automotive 2015 and beyond
Rheinmetall Automotive Automotive 2015 and beyond Maintaining the target margin level Operational margin in % of sales Automotive 2015-18 8% 8% 7.5% 7.0% 6.5% 5.9% 4.1% Recovery from the crisis Best-cost concept Downturn of LV Ongoing growth of production in Europe global LV production Impact of res
Slide 38: Defence 2015 and beyond
Rheinmetall Defence Defence 2015 and beyond Based on turnaround 2015, earnings improvement will continue Operational margin in % of sales Defence 2015-18 11.1% 9.9% Declining ammunition business: From 33% of sales (2010) to 24% (2015e) 6-7% 6.3% Increasing systems business: Weakening markets From 48
Slide 39: Appendix: Rheinmetall Group
Appendix: Rheinmetall Group Group © RH E I N METAL L A G 2 0 1 6 | C ORP ORA TE P RE S ENTATI ON | JA NU A RY 2 0 1 6 39
Slide 40: Key figures: Group
Appendix: Rheinmetall Group Key figures: Group in EUR million 2010 2011 2012 2013 2014 Balance sheet Total assets 4,460 4,832 4,899 4,866 5,271 Shareholder‘s equity 1,355 1,546 1,465 1,339 1,197 Equity ratio (in %) 30.4 32.0 29.9 27.5 22.7 Pension liabilities 677 729 919 891 1,121 Net financial debt
Slide 41: Key figures: Segments
Appendix: Rheinmetall Group Key figures: Segments AUTOMOTIVE DEFENCE 2010 2011 2012 2013 2014 in EUR million 2010 2011 2012 2013 2014 1,996 2,357 2,378 2,270 2,466 Order intake 1,977 1,831 2,933 3,339 2,812 365 409 418 392 416 Order backlog (Dec. 31) 4,772 4,541 4,987 6,050 6,516 1,982 2,313 2,369 2
Slide 42: Key figures 9M 2015
Rheinmetall Group Key figures 9M 2015 in EUR million 9M 2014 9M 2015 ∆ 9M 2015 / 9M 2014 Sales 3,215 3,582 + 367 + 11% EBITDA (reported) 162 288 + 126 + 78% Operational earnings 39 140 + 101 + 259% Special items: one-offs, restructuring costs - 16 0 + 16 EBIT (reported) 23 140 + 117 + 509% EBIT marg
Slide 43: Quarterly development
Rheinmetall Group Quarterly development Sales in EUR million Operational earnings in EUR million +104 +54 1,473 121 1,221 1,188 1,173 1,084 75 856 61 57 509 545 22 1 571 16 489 7 55 59 46 45 50 1 -3 -5 617 664 676 617 595 -32 -28 -5 -7 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q3 2014 Q4 2014 Q1 2015
Slide 44: Cash flow statement
Rheinmetall Group Cash flow statement in EUR million Q3 Q4 Q1 Q2 Q3 ∆ Q3 2014 2014 2015 2015 2015 2015/2014 Group net income - 14 41 5 29 30 + 44 Amortization / depreciation 49 59 49 50 49 ±0 Change in pension accruals -2 -1 0 1 0 +2 Cash flow 33 101 54 80 79 + 46 Changes in working capital and 70 3
Slide 45: Balance sheet
Rheinmetall Group Balance sheet in EUR million 2014 2014 2015 ∆ 2015/ 2014 Sep 30 Dec 31 Sep 30 Sep 30 Assets 5,211 5,271 5,230 + 19 Non-current assets 2,389 2,504 2,577 + 188 Current assets 2,822 2,767 2,653 - 169 Equity & Liabilities 5,211 5.271 5,230 + 19 Equity 1,253 1,197 1,256 +3 Pension liabi
Slide 46: Capex and R&D
Rheinmetall Group Capex and R&D More than EUR 400 million invested in the future R&D in EUR million Capex in EUR million Depreciation & amortization in EUR million in % of 5.0% 4.6% 5.4% 5.7% 4.4% 4.2% total sales +14% 269 -2% 24 Subsidies for 237 tooling costs +2% 219 214 14 32 9 Capitalized 194 19
Slide 47: Capex and R&D: long-term stable ratios
Rheinmetall Group Capex and R&D Long-term stable ratios R&D in EUR million Capex in EUR million 5.2% 4.8% 4.9% 5.0% 4.6% 4.7% 4.6% 5.1% 4.4% 5.5% Ratio (in % of total sales) +20% -2% 230 238 245 212 219 214 208 206 205 83 189 76 74 65 90 88 82 62 102 93 149 158 130 147 145 148 142 120 96 104 1 11 20
Slide 48: Cash flow statement
Appendix: Rheinmetall Defence Cash flow statement in EUR million Q3 Q4 Q1 Q2 Q3 ∆ Q3 2014 2014 2015 2015 2015 2015/2014 Net income - 39 20 - 30 -8 3 + 42 Amortization / depreciation 21 23 21 21 21 ±0 Change in pension accruals 2 -2 0 3 2 ±0 Cash flow - 16 41 -9 16 26 + 42 Changes in working capital
Slide 49: Pension obligations
Appendix: Rheinmetall Group Pension obligations Internal funding in Germany, external funding in Switzerland Pension obligations by country in EUR million Plan assets and Defined Benefit Obligation (DBO) by country (per Dec 31 2014) in EUR million Plan assets DBO 1,121 1,106 54 52 891 176 189 163 Ne
Slide 50: Pension obligations: actuarial losses
Appendix: Rheinmetall Group Pension obligations Actuarial losses are main factor for increase of pensions Elements of change in pension liabilities in EUR million 52 Correlated with the discount rate for 1,121 35 future pension obligations, which is based on high-quality corporate bonds 266 891 26 2
Slide 51: Cost efficiency program
Rheinmetall Group Cost efficiency program Restructuring measures in final phase Costs Costs Total reduction Savings* Savings* Full annual 2013 2014 of employees 2014 2015 savings* until 2016 from 2016 Combat Systems (esp. Tracked Vehicles) 15 4 240 Electronic Solutions (esp. Air Defence Zurich) 14 5
Slide 52: Capital increase: corporate development 2009 - 2015
Rheinmetall Group Capital increase: corporate development 2009 - 2015 Rising sales managed with a shrinking equity basis and higher net debt Sales — Growth by EUR 1.7 billion (+50%) Balance sheet — Assets and liabilities increase by EUR 1.7 billion (+45%) Pensions — Increase by EUR 511 million (+84%
Slide 53: Market environment
Rheinmetall Group Market environment Reduced global LV production expectations, Defence slightly decreasing A U TO M O T I V E DEFENCE Global Europe Brazil China Global Europe USA MENA/Asia (excl. Russia) (incl. China) +0.9% +2.9% -19.0% +2.2% -0.4% +0.2% -5.2% +3.8% ― Global LV production with +0.9
Slide 54: Cash flow generation as future priority
Appendix: Rheinmetall Group Cash flow generation as future priority Automotive und Defence: mixed effects in previous years Operating Free Cash Flow Automotive in EUR million Operating Free Cash Flow Defence in EUR million in % of sales (Ø): 0.3% ~ 2.4% in % of sales (Ø): 3.9% ~-4% 169 96 67 40 34 1
Slide 55: Forecast 2016e and 2017e
Appendix: Rheinmetall Group Forecast 2016e and 2017e Return to long-term profitability path Sales Group in EUR billion Segmental operational margin in % of segmental sales 5.1 4.7 4.7 4.5 4.4 4.0 4.0 3.9 3.6 3.5 3.4 8% ≥8% ≥8% 6-7% 4-5% >3% 0% -5% 2005 2006 2007 2008 2009 2010 2011 2012 2013* 2014 2
Slide 56: Being prepared for the future
Rheinmetall Group Being prepared for the future Capital increase – Condition for stable finances and for future growth Restructuring – Restructuring finished: Measures have improved cost structures – Concentration on high-end products with attractive profitability Profitability in Automotive – Impro
Slide 57: Automotive
Appendix: Rheinmetall Group Automotive © RH E I N METAL L A G 2 0 1 6 | C ORP ORA TE P RE S ENTATI ON | JA NU A RY 2 0 1 6 57
Slide 58: Key figures 9M 2015
Rheinmetall Automotive Key figures 9M 2015 in EUR million 9M 2014 9M 2015 ∆ 9M 2015 / 9M 2014 Order intake 1,853 1,982 + 129 + 7% Order backlog (September 30) 418 441 + 23 + 6% Sales 1,831 1,957 + 126 + 7% EBITDA (reported) 215 248 + 33 + 15% Operational earnings 139 164 + 25 + 18% Special items: on
Slide 59: Mechatronics showing increasing sales share
Rheinmetall Automotive Mechatronics showing increasing sales share Automotive significantly outperforming the NAFTA and the Asian market Sales by division in EUR million Sales by region in EUR million Market growth* 1,831 1,957 +7% +1% 1,957 1,831 -16% 83 Rest of the World -11% 99 227 Asia (w/o Chin
Slide 60: Top line growth particularly driven by Mechatronics
Rheinmetall Automotive Top line growth particularly driven by Mechatronics Earnings benefit from higher sales volumes Sales Automotive in EUR million Operational earnings Automotive in EUR million +126 +25 1,957 1,831 164 Reasons for earnings development 139 Mechatronics +10% 1,084 — Higher sales 98
Slide 61: Cash flow statement
Appendix: Rheinmetall Automotive Cash flow statement in EUR million Q3 Q4 Q1 Q2 Q3 ∆ Q3 2014 2014 2015 2015 2015 2015/2014 Net income 37 29 40 43 35 -2 Amortization / depreciation 27 36 28 28 28 +1 Change in pension accruals 0 -1 0 0 -2 -2 Cash flow 64 64 68 71 61 -3 Changes in working capital and -
Slide 62: FY 2014 Key figures Automotive by division
Rheinmetall Automotive FY 2014 Key figures Automotive by division Continuing operations in EUR million Mechatronics Hardparts Aftermarket +186 +151 +45 2,448 +1 Sales 1,322 2,262 1,171 889 934 268 269 2013 2014 2013 2014 2013 2014 2013 2014 +26 +19 +23 Opera- 184 -2 tional 158 77 96 72 49 28 26 earn
Slide 63: 9M 2015 Key figures Automotive by division
Rheinmetall Automotive 9M 2015 Key figures Automotive by division in EUR million Mechatronics Hardparts Aftermarket +126 +102 +22 1,957 +15 Sales 982 1,084 1,831 705 727 202 217 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 +25 +18 Opera- 164 +2 +2 tional 139 74 92 51 53 19 21 earn
Slide 64: Automotive market
Rheinmetall Automotive Automotive market Globally growing with moderate increase in Europe and the United States Development of LV production 2015e-2019e in % p.a. UK Russia USA -0.3% France +12.1% +1.3% Germany +2.3% -0.2% Japan Spain -0.6% +1.9% Mexico China +8.8% +5.6% India +9.8% Brazil Global +
Slide 65: Quarterly development
Appendix: Rheinmetall Automotive Quarterly development Sales Automotive in EUR million Operational earnings Automotive in EUR million +22 +4 664 676 59 55 617 617 595 45 50 46 375 376 31 34 340 333 317 22 24 27 21 20 19 242 248 237 18 14 232 229 7 6 7 7 7 67 67 69 74 74 2 -2 -3 -1 -21 -19 -22 -22 -2
Slide 66: Markets in focus: China
Rheinmetall Automotive Markets in focus: China Weak third quarter after a strong H1 performance LV production in mn units Sales* in EUR million EBIT* in EUR million +7% +45% +37% — Signs of economic slowdown 10.4 11.1 466 32 and lower Auto market growth H1 321 23 JVs JVs — Strong and profitable grow
Slide 67: Nomination letters indicate good coverage of planned revenues
Rheinmetall Automotive Nomination letters indicate good coverage of planned revenues Sales covered by booked business ― In general: in EUR million resp. in % of planned sales Nomination letters represent frame contracts (“booked business”) for the >90% >75% >75% lifetime of an engine platform Re
Slide 68: Markets in focus: Diesel engines
Rheinmetall Automotive Markets in focus: Diesel engines Core LV diesel exposure less than 20% of sales, high customer diversification Sales 2014 by fuel engine type in % of total sales Sales 2014 by customer in % of total sales 18% Core diesel (LV) VW Group Others 17% 12% Non-LV business 33% Ford (i
Slide 69: Different possible scenarios resulting from “Dieselgate”
Appendix: Rheinmetall Automotive Different possible scenarios resulting from “Dieselgate” Impacts principally manageable for Rheinmetall Relative future demand for diesel gasoline – Growth according to market; no changes regarding drive systems – Rheinmetall Automotive will grow due to higher conten
Slide 70: Permanently tightening emission legislation
Appendix: Rheinmetall Automotive Permanently tightening and globally converging emission legislation Region 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 China Diesel China II China III China IV China Gas. China II China III China IV Further convergence India Bharat
Slide 71: Flexibility and Diversification: Future Technology Fields
Technologies: KSPG’s Future Technology Fields SHORT TERM Base Engine Evolutionary Flexibility and Diversification Downsizing/Boosting Portfolio Expansion Emission Control Convenience MEDIUM TERM Ecological Thermal Management Conformity and Energy Efficiency Energy Energy Recuperation Efficiency LONG
Slide 72: Alternative drive systems
Appendix: Rheinmetall Automotive Alternative drive systems Electrification of the powertrain will take place evolutionary © RH E I N METAL L A G 2 0 1 6 | C ORP ORA TE P RE S ENTATI ON | JA NU A RY 2 0 1 6 72
Slide 73: Strong growth in non-LV business
Rheinmetall Automotive Strong growth in non-LV business Sales of truck business almost doubled within 5 years Sales Automotive and non-LV in EUR million Sales non-LV and truck business in EUR million 2,448 2,369 +39% 2,313 2,262 802 714 735 705 1,982 578 735 802 +75% 705 714 578 226 275 157 204 200
Slide 74: Cost efficiency
Appendix: Rheinmetall Automotive Cost efficiency Structural improvement by best-cost concept Headcount in full-time equivalents Split of headcount by high cost- and low-cost countries in % of total headcount ~11,300 10,875 10,830 − Brazil Low-cost − Czech Republic 30% 40% countries 37% − Mexico − In
Slide 75: Cash flow generation as future priority: Automotive
Appendix: Rheinmetall Group Cash flow generation as future priority Automotive Operating Free Cash Flow Automotive in EUR million Cash Flow target: Range of 2% - 4% of sales 96 40 34 Main drivers: 3 − Top-line growth -21 − Stable EBITDA margin level: 12% - 13% 2010 2011 2012 2013 2014 2015e − Capex
Slide 76: Defence
Appendix: Rheinmetall Group Defence © RH E I N METAL L A G 2 0 1 6 | C ORP ORA TE P RE S ENTATI ON | JA NU A RY 2 0 1 6 76
Slide 77: Key figures 9M 2015
Rheinmetall Defence Key figures 9M 2015 in EUR million 9M 2014 9M 2015 ∆ 9M 2015 / 9M 2014 Order intake 1,592 1,774 + 182 + 11% Order backlog (September 30) 6,165 6,547 + 382 + 6% Sales 1,384 1,625 + 241 + 17% EBITDA (reported) - 38 52 + 90 + 237% Operational earnings - 84 - 11 + 73 - 87% Special it
Slide 78: Order situation
Rheinmetall Defence Order situation Successful internationalization outside Europe Order intake by region in EUR million Order backlog by region in EUR million +182 +6% 1,774 6,547 6,165 6% Rest of the World 1,592 RoW 19% Rest of the World 7% RoW 21% 48% Asia/ 56% Asia/MENA Asia/ 37% Asia/MENA MENA
Slide 79: Order backlog
Rheinmetall Defence Order backlog High order book coverage of mid-term future sales Order backlog by region in EUR million Order backlog / sales distribution over time in EUR million +6% +382 6,547 6,547 ~3,700 6,165 6,165 50% Combat Systems 55% ~2,000 20% Electronic Solutions 21% ~850 36% Wheeled V
Slide 80: Top-line rose due to ramp-up of large-scale projects
Rheinmetall Defence Top-line rose due to ramp-up of large-scale projects Turn-around in earnings Sales Defence in EUR million Operational earnings Defence in EUR million +241 Reasons for earnings development 1,625 Combat Systems — Improved capacity utilization in +73 1,384 Tracked Vehicles and Ammun
Slide 81: Cash flow statement
Appendix: Rheinmetall Defence Cash flow statement in EUR million Q3 Q4 Q1 Q2 Q3 ∆ Q3 2014 2014 2015 2015 2015 2015/2014 Net income - 39 20 - 30 -8 3 + 42 Amortization / depreciation 21 23 21 21 21 ±0 Change in pension accruals 2 -2 0 3 2 ±0 Cash flow - 16 41 -9 16 26 + 42 Changes in working capital
Slide 82: FY 2014 Key figures Defence by division
Rheinmetall Defence FY 2014 Key figures Defence by division in EUR million Combat Systems Electronic Solutions Wheeled Vehicles +85 -50 -5 +128 2,240 Sales 1,027 977 2,155 710 705 667 539 2013 2014 2013 2014 2013 2014 2013 2014 -69 -47 -28 Opera- +4 60 47 29 tional 0 1 -9 -13 -9 earnings 2013 2014 2
Slide 83: 9M 2015 Key figures Defence by division
Rheinmetall Defence 9M 2015 Key figures Defence by division in EUR million Combat Systems Electronic Solutions Wheeled Vehicles +241 +271 1,625 +22 Sales 829 -33 1,384 558 466 488 422 389 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 +58 +22 +73 -6 Opera- 6 10 -84 -11 -12 -19 -25 t
Slide 84: Quarterly development
Appendix: Rheinmetall Defence Quarterly development Sales Defence in EUR million Operational earnings Defence in EUR million +82 +48 856 75 16 52 419 17 571 13 545 489 509 1 10 4 9 312 1 0 3 1 196 239 278 -6 239 0 -11 -15 -21 140 -2 159 155 174 -8 245 -8 -3 178 137 138 114 -4 -28 -25 -47 -26 -26 -29
Slide 85: Defence policy NATO
Rheinmetall Defence Defence policy NATO Rising budgets in several NATO countries expected, among them Germany Defence budgets 2015e in % of GDP ― NATO summit in Wales 2014 decided return to higher defence budgets: 3.6% target level of 2% of GDP within 10 years ― Target to fulfil operational NATO req
Slide 86: Definition of key defence technologies in Germany
Rheinmetall Defence Definition of key defence technologies in Germany Rheinmetall currently provides a broad product range for key technologies Network Protected and Sensor centric armored Protectio n Subma ri nes technolo gy operations vehicles – Soldier systems – Optical und – Wheeled: Boxer, – So
Slide 87: German export license policy
Rheinmetall Defence German export license policy Fairly reliable practice of case-by-case decision rule achieved — Continuing principle: Decisions are made case by case with restrictive alignment — Neither certain countries nor certain products generally ruled out (except for embargo countries like
Slide 88: Consolidation of the defence industry
Appendix: Rheinmetall Defence Consolidation of the defence industry Land systems industry in Europe Sales 2014 in EUR million 2,951* 2,240 „Kant“ (KMW and Nexter together) 1,048 876 747 700 500 389 250 150 75 BAE Rheinmetall Nexter Patria** KMW General Iveco DV Oto Melara Renault TD Mercedes- Scania
Slide 89: Turning order backlog into sales
Appendix: Rheinmetall Defence Turning order backlog into sales Sales development for top six projects by order volume Puma series contract (EUR 1.0 billion*) Military trucks Australia (EUR 1.1 billion*) Combat Systems 300 300 Wheeled 200 200 Vehicles 100 100 0 0 2014 2015 2016 2017 2018 2019 2020ff.
Slide 90: Cash flow generation as future priority: Defence
Appendix: Rheinmetall Group Cash flow generation as future priority Defence Operating Free Cash Flow Defence in EUR million 169 Cash Flow target: Range of 2% - 4% of sales 67 Main drivers: 16 − Top-line growth − Increasing EBITDA margin: range of 7% - 10% -38 − Capex ratio stable: 3% - 4% − Working
Slide 91: Disclaimer
Rheinmetall Group 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