Rheinmetall Ag · XETR:RHM
Rheinmetall — German Corporate Conference 2004
35 slides from Rheinmetall's conference presentation, Mar 30, 2004
Slide 1: German Corporate Conference
German Corporate Conference Frankfurt am Main March 30, 2004 1
Slide 2: At a glance: Rheinmetall continuing on track
At a glance Rheinmetall continuing on track Corporate restructuring programs completed Focus on Automotive and Defence New corporate culture Consolidated financial statements 2003 Organic growth outpaces industry averages Earnings and other performance targets achieved Prospects Growth and value enh
Slide 3: Corporate restructuring programs completed: focus on core businesses
Corporate restructuring programs completed Focus on core businesses: 50%+ of sales in 2000 now disposed of EUR million 23% (annualized) 8% 8% 961 5% Hirschmann Divestments 376 374 Heidel 2000 - 2004 239 EUR 2.3 billion 400 4,570 4,603 4,571 4,248 3,500 Divestments as % of annual sales Divestments An
Slide 4: Corporate restructuring streamlined: minority interests repurchased
Corporate restructuring programs completed Corporate restructuring streamlined: EUR 500 mill. invested in repurchase of minority interests EUR 500 million Minority interests in equity downscaled Kolbenschmidt Pierburg 75% 95.5% 60% EUR 210 million EUR 56 million Oerlikon Contraves 100% in 2002 in 20
Slide 5: Profitability enhanced: returns much improved
Corporate restructuring programs completed Profitability enhanced: Returns much improved Adjusted EBIT margin in % Adjusted ROCE in % 13.4 5.2 10.9 4.7 4.2 8.6 2.3 4.3 2000 2001 2002 2003 2000 2001 2002 2003 vkm-meu 15-03-04 page 5
Slide 6: Balance sheet structure and free cash flow improved
Corporate restructuring programs completed Balance sheet structure and free cash flow from operations improved Total equity / Free cash flow from operations stockholders' equity EUR million EUR million total equity stockholders' equity 869 98 93 691 717 731 659 675 (92%) 30 (76%) 463 450 (67%) (63%)
Slide 7: Financial debts and pension accruals further reduced
Corporate restructuring programs completed Financial debts and pension accruals further reduced Net financial debts Pension accruals 24% EUR million EUR million 1,004 Net adjusted debt ratio 17% 685 678 673 660 8% 530 7% 301 230 2000 2001 2002 2003 2000 2001 2002 2003 vkm-meu 15-03-04 page 7
Slide 8: Working Capital reduced
Corporate restructuring programs completed Working Capital reduced Working capital (12/31) Ø Working capital / sales EUR million in % 986 780 630 21.8 19.2 419 15.4 12.3 2000 2001 2002 2003 2000 2001 2002 2003 vkm-meu 15-03-04 page 8
Slide 9: Target structure achieved: Focus on Automotive and Defence
Corporate restructuring programs completed Target structure achieved at the start of 2004: Focus on Automotive and Defence 95.5% Rheinmetall AG 100% AUTOMOTIVE DEFENCE Innovative engine components Land forces technology Kolbenschmidt Pierburg AG Rheinmetall DeTec AG Share of group sales: about 55% S
Slide 10: Five divisions focused on engine components
Corporate restructuring programs completed Five divisions focused on engine components Kolbenschmidt Pierburg AG Sales: EUR 1.9 billion Employees: 11,300 Air Supply & Pistons Bearings Aluminum Motor Service Pumps Technology Sales: Sales: Sales: Sales: Sales: EUR 880 million EUR 590 million EUR 150 m
Slide 11: Four divisions focused on ground forces technology
Corporate restructuring programs completed Four divisions focused on ground forces technology Rheinmetall DeTec AG Sales: EUR 1.6 billion, Employees: 7,400 Land Systems Air Defence Systems Weapon & Ammunition Defence Electronics Sales: Sales: Sales: Sales: EUR 330 million EUR 330 million EUR 570 mil
Slide 12: Rheinmetall Group: Earnings and financial targets achieved
Consolidated financial statements 2003 Rheinmetall Group: Earnings and financial targets achieved Organic growth of 4.4% Operating performance improved by 5% Like-for-like adjusted EBIT up by 23% Adjusted EpS (preferred, before goodwill amortization) up by 56% to EUR 2.85 Net financial debts cut by
Slide 13: Automotive and Defence outpacing their industries
Consolidated financial statements 2003 Automotive and Defence outpacing their industries Car production +7.1% -0.8% -3.0% 18.4 19.7 16.9 16.8 16.4 15.9 Car production worldwide: 1.6% Organic growth 2002 2003 2002 2003 2002 2003 Kolbenschmidt Pierburg: >4% Source: VDA W. Europe NAFTA Asia Defence spe
Slide 14: Productivity increased
Consolidated financial statements 2003 Productivity increased Organic growth 2003: +4.4% EUR million Divestments Acquisitions 4,571 Exchange rate effects 2002 Growth 4,248 -502 +179 2003 Organic workforce decrease: -2.0% Divestments 25,949 Acquisitions 2002 - 5,142 Reduction 20,888 - 431 2003 vkm-me
Slide 15: Stable order situation
Consolidated financial statements 2003 Stable order situation Book-to-bill ratio stable since 2000 Order intake Order backlog Book to bill ratio (accumulated) EUR million EUR million 4,840 4,165 700 580 4,300 * 430 4,128 3,300 * 3,143 2002 2003 2002 2003 2000 2001 2002 2003 *adjusted for consolidati
Slide 16: Results from operations up by 5%
Consolidated financial statements 2003 Results from operations up by 5% EUR million 2002 2003 EBIT 392 204 Nonrecurring losses/gains from shareholdings (219) (26) realty 5 (7) restructuring 35 52 Adjusted EBIT (operative) 213 223 +5% vkm-meu 15-03-04 page 16
Slide 17: Like-for-like operative EBIT improved
Consolidated financial statements 2003 Like-for-like operative EBIT improved by EUR 42 million EUR million 2002 2003 Adjusted operative EBIT 213 223 Consolidation group changes (32) – thereof Heimann Systems (35) – Like-for-like adjusted operative EBIT 181 223 +23% vkm-meu 15-03-04 page 17
Slide 18: Income statement key data
Consolidated financial statements 2003 Income statement key data (year-on-year comparison) EUR million 2001 2002 2003 EBITDA 468 701 446 EBIT 195 392 204 Adjusted EBIT (operative) 192 213 223 Net interest expense (111) (102) (84) EBT 84 290 120 Income taxes (46) (16) (52) Group earnings 38 274 68 Mi
Slide 19: Performance of preferred stock
Consolidated financial statements 2003 Performance of preferred stock 2001 2002 2003 in EUR EpS after goodwill amortization 0.62 6.87 1.78 EpS before goodwill amortization 1.09 7.95 2.62 Adjusted EpS before goodwill amortization 1.38 1.83 2.85 Cash flow per share from operating activities 8.71 9.47
Slide 20: Adjusted earnings
Consolidated financial statements 2003 Adjusted earnings Adjusted EBIT rose from EUR 213 mill. to EUR 223 mill. +5% Adjusted EBIT margin climbed from 4.7% to 5.2% +11% Like-for-like adjusted EBIT increased from EUR 181 mill. to EUR 223 mill. +23% Adjusted earnings per preferred share before goodwill
Slide 21: Highlights 2003 Kolbenschmidt Pierburg
Consolidated financial statements 2003 Highlights 2003 Kolbenschmidt Pierburg Asian business base broadened: Acquisition of Mazda piston production, China JV topped up Strenghtening aftermarket business in Germany: Takeover of Trost's engine parts business Aluminium Technologie (ATAG) turnaround in
Slide 22: Kolbenschmidt Pierburg indicators
Consolidated financial statements 2003 Kolbenschmidt Pierburg indicators 2002 2003 Change EUR million Sales 1,883 1,884 0% thereof outside Germany 67% 68% EBIT 97 103 +6.2% Adjusted EBIT 102 114 +11.8% Adjusted EBIT margin in % 5.4 6,1 +13.0% Adjusted ROCE in % 12.3 15.2 +23.6% vkm-meu 15-03-04 page
Slide 23: Highlights 2003 Rheinmetall DeTec
Consolidated financial statements 2003 Highlights 2003 Rheinmetall DeTec Concentration on land forces capabilities now complete: Naval Systems transferred, Heidel/Nico-fireworks sold in 2004 Major projects for armed forces transformation addressed: e.g. Puma, armored transport vehicles, army informa
Slide 24: Rheinmetall DeTec indicators
Consolidated financial statements 2003 Rheinmetall DeTec indicators MioEUR 2002 2003 Change Sales 1,677 1,605 -4.3% thereof outside Germany 56% 57% EBIT 72 69 -4.2% Adjusted EBIT 80 92 +15.0% Adjusted EBIT margin in % 4.8 5.7 +18.8% Adjusted ROCE in % 13.7 17.4 +27.0% vkm-meu 15-03-04 page 24
Slide 25: Consolidated statement of cash flows 2003
Consolidated financial statements 2003 Rheinmetall Group Consolidated statement of cash flows 2003 2002 EUR million 2002 2003 Net income 274 68 Amortization / change in pension accruals 313 240 Cash flow 587 308 Net gain from fixed-asset disposal (333) (35) Changes in working capital/other 87 28 Net
Slide 26: Stock price hike: market capitalization more than doubled
Consolidated financial statements 2003 Stock price hike Market capitalization more than doubled 200% preferred +173% 150% 100% common +95% MDAX 50% +53% DAX 0% +26% Jan. 2, 03 Apr. 2, 03 July 2, 03 Oct. 2, 03 Jan. 2, 04 Mar. 11, 04 Market capitalization 1/02/03: EUR 464 mill. Market capitalization 3
Slide 27: Dividend for 2003 raised
Consolidated financial statements 2003 Dividend for 2003 raised 0.70 0.70 0.70 in EUR 0.64 0.64 0.64 0.50 0.50 0.44 0.44 1999 2000 2001 2002 2003 Dividend per common share Bonus EUR 0.20 Dividend per preferred share vkm-meu 15-03-04 page 27
Slide 28: Growth driven by innovation and internationalization
Prospects Growth driven by innovation and internationalization Average annual organic growth for the Group: 5% EUR million 4,248 3,700 3,800 3,300 3,500 Defence +7% p.a. Automotive +4% p.a. Divestments 2003 Defence Automotive 2003 2004e 2005e 2006e Calculated investments back on agenda vkm-meu 15-03
Slide 29: Core constituents of Rheinmetall's future growth strategy
Prospects The core constituents of Rheinmetall's future growth strategy Added market share Organic growth has priority Continue the year-earlier organic growth rates (+5% annually) Occupy dynamic market segments (e.g. diesel, emission, armed forces transformation) Maximize added market potentials (e
Slide 30: Growth driven by innovation
Prospects Growth driven by innovation Automotive innovations Defence innovations Lightweight Diesel Mobility (Property) protection Fuel savings Emission control Non lethal agents Robotics vkm-meu 15-03-04 page 30
Slide 31: Growth driven by internationalization
Prospects Growth driven by internationalization Export percentage Automotive 70% Max. exploitation of capacities in Japan 66% 62% Expansion of Chinese activities 59% 51% Pierburg products for the US market Production facilities in Eastern Europe 1998 2000 2002 2004 2006 Exports by region Defence Ste
Slide 32: Higher EBIT margin and ROCE will increase shareholder value
Prospects Higher EBIT margin and ROCE will increase shareholder value EBIT margin in % ROCE in % target: 7% target: 15% 5.2 13.4 4.7 10.9 4.2 8.6 2.3 4.3 2000 2001 2002 2003 2000 2001 2002 2003 Organic growth Optimized working capital Improved productivity More efficient capacity utilization vkm-meu
Slide 33: Like-for-like adjusted EBIT
Prospects Like-for-like adjusted EBIT EUR million EUR million - Hirschmann - Preh - Marine Electronics - Naval Systems 213 223 223 - Jagenberg - Heidel 32 45 181 178 2002 2003 2003 2004 vkm-meu 15-03-04 page 33
Slide 34: Forecasts and objectives for 2004
Prospects Forecasts and objectives for 2004 Sales of around EUR 3.5 billion Organic sales growth of 5+ percent with 18,000 employees Improved EBIT margin All operating units generate profits Further downscaling of net debt and net interest expense vkm-meu 15-03-04 page 34
Slide 35: Investment Highlights
Résumé Investment Highlights Restructuring successfully completed Focus on growth markets assures robust organic growth Efficient cost and expenditure management fuels further earnings growth Upgraded asset/capital structure allows scope for M&As vkm-meu 15-03-04 page 35