Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (June 2019)
58 slides from Rheinmetall's investor presentation, June 2019
Slide 1: Rheinmetall Group Corporate Presentation June 2019
Rheinmetall Group Corporate Presentation June 2019
Slide 2: Rheinmetall Group structure
Rheinmetall Group Rheinmetall Group structure Group performance indicator Strategy roadmap Grow sales ~8% op. RHEINMETALL Organic International around 8% margin growth expansion Targeted 2-4% 30-35% GROUP Leading by Targeted Cash on sales payout ratio innovations acquisitions AUTOMOTIVE Our heart be
Slide 3: Q1 2019 Group commercial highlights
Rheinmetall Group Q1 2019 Group commercial highlights Solid operational performance and improved cash flow Order backlog Sales Operating result EPS oFCF €9.1bn +26% €1.3bn +6%* €54m +15% €0.74 +35% €-128m +55% Order backlog increased 26% y-o-y Sales climbed 6.5% at *constant exchange rates (reported
Slide 4: Higher operating result drove EPS by almost 35%
Rheinmetall Group Q1 2019 Group commercial highlights Higher operating result drove EPS by almost 35% Sales Operating result in €m Earnings per share in €m Operating margin in % in € +6.5% +0.1% 1,343 2 +12.8% +2.1% 34.5% 6 1 54 1 55 0.74 81 47 0.55 1,260 3.7% 4.0% +6.6% +14.9 % Q1 2018 Operational
Slide 5: Working capital optimization main driver for cash flow improvement
Rheinmetall Group Q1 2019 Group commercial highlights Working capital optimization main driver for cash flow improvement Operating free cash flow bridge in €m No CTA funding in Q1 2019 Working capital inflow especially 3 from Defence -128 109 40 6 1 -287 Q1 2018 EAT D/A Delta Pensions Delta WC Capex
Slide 6: KPI improvement continues
Rheinmetall Group Q1 2019 Group commercial highlights KPI improvement continues Net debt Net Gearing in €m Net debt in % of total equity 11.7 7.8 +48 31.03.2018 31.03.2019 Equity ratio in % of total assets +210bp 32.1% 30.0% -171 -219 31.03.2018 31.03.2019 31.03.2018 31.03.2019 © Rheinmetall AG / Co
Slide 7: Typical seasonal increase of net debt
Rheinmetall Group Q1 2019 Group commercial highlights Typical seasonal increase of net debt Net financial debt Debt composition and maturity profile in €m at quarter-end in €m ∑ 853 Other & 176 Leasing 2019 2020 2021 2022 2023 2024 2025ff. 127 Bank loans -31 28 25 53 300 Promissory 73 -171 notes -21
Slide 8: FY 2019 Guidance confirmed
Rheinmetall Group FY 2019 Guidance Guidance confirmed Sales Operating margin 2018 2019e 2018 2019e Growth y/y in % at Growth y/y in % at in % in % constant FX constant FX Group 6.1 4–6 8.0 around 8 Automotive 4.2 0–1 8.9 around 8 Defence 7.9 9 – 11 7.9 8.0 – 8.5 Operational growth at constant FX; As
Slide 9: Automotive – Focus on innovation
Automotive – Focus on innovation 9
Slide 10: Automotive with leading technology and market positions
Rheinmetall Automotive Automotive with leading technology and market positions Key Figures Structure Sales by region Sales by division* Sales: €2.9bn RoW Hardparts Asia 1% 17% Aftermarket 12% Op. result: €262m Pistons Large-bore Pistons 33% Hardparts 45% Europe Op. margin: 8.9% USMCA 16% w/o Bearing
Slide 11: Overview Rheinmetall Automotive
Rheinmetall Automotive Overview Rheinmetall Automotive Legislation is driving the business Gain bigger share in NEV market 1 International market offer great Growth strategy outperforming 2 growth potentials Chinese market development E-Mob and Diesel impacts Build up strong local engineering / Pres
Slide 12: Strategic outlook: Increase independence from combustion engine
Rheinmetall Automotive Strategic outlook Increase independence from combustion engine Sales split in % ICE* ICE* 63% LV 77% 40% LV 30% 14% Non-LV 10% Non-LV (e.g. pistons, engine blocks, Non-ICE* AGRs) 20% Continuous 2040 Casting 2018 strategic Aftermarket 20% plan other Non-engine Non-ICE* related
Slide 13: Q1 2019 Highlights: Automotive
Rheinmetall Automotive Q1 2019 Highlights: Automotive Q1 sales in line with expectations, operating result slightly better Quarterly sales and margin development Comments on quarterly performance Sales decline of -4.9% (FX-adjusted -5.4%) in line with a contracting 751 740 708 731 714 market environ
Slide 14: All three divisions impacted by a slow market environment
Rheinmetall Automotive Q1 2019 Highlights: Automotive All three divisions impacted by a slow market environment Sales Automotive Operating result Automotive in €m in €m Mechatronics Sales slower than market on Margin Margin -4.9% Q1 2018 Q1 2019 particular customer order pattern -24.6% 751 8.6% 65 6
Slide 15: Automotive sales follow weak global LV production pattern
Rheinmetall Automotive Q1 2019 Highlights: Automotive Automotive sales follow weak global LV production pattern Regional sales development Automotive in €m -4.9% 751 714 5.1% 0.6% 0.6% 9.4% 5.9% 3.2% 9.1% Weak market environment, global LV production 3.3% 15.1% declined by 5.7% 15.5% RoW China Diese
Slide 16: Truck and other businesses helped mitigating the LV sales decline
Rheinmetall Automotive Q1 2019 Highlights: Automotive Truck and other businesses helped mitigating the LV sales decline Sales split LV/ Non-LV Sales split Non-LV in €m / in % in €m / in % Delta absolut in % -4.9% Diesel - 25 -12.4% 751 Gazoline -5 -1.9% 714 other LV -3 -7.7% -1.5% 201 176 256 252 LV
Slide 17: Rheinmetall successfully managed China market crash in Q1
Rheinmetall Automotive China Rheinmetall successfully managed China market crash in Q1 Sales in €m -0.6% +1.2% 248 3 250 -1 Sales stable on previous year level (-0.6% FX-adjusted) 218 219 vs. a crashing Chinese LV-market of -12.1% +0.6% 31 31 Q1 without major adverse FX-effects on sales and EBIT Q1
Slide 18: LV Diesel exposure limited; powertrain neutrality is the strategic target
Rheinmetall Automotive LV Diesel exposure limited; powertrain neutrality is the strategic target Combined global engine production forecast* Automotive sales distribution by engine type** 100 30 LV Non Diesel units 80 25 Core Diesel 20 60 LV Diesel share in % Others 15 7% 40 10 23% Fuel 18% 20 LV Di
Slide 19: Drivers for growth
Rheinmetall Automotive Drivers for growth Rising global fleet and regulatory restrictions are supporting our growth Light vehicle production grows Emission thresholds decrease Stricter emission testing million vehicles per year ICE HEV +2% WLTP 151 CO2 NOx 112 124 Mainly EU! 94 102 76 in g/km in mg/
Slide 20: Broad product range for alternative drive systems
Rheinmetall Automotive Broad product range for alternative drive systems Enlarging the traditional product portfolio for combustion engines … + … by products for hybrid and electric engines Battery boxes (as from 2018) Range Extender (Predevelopment) E-engine housing (as from 2018) Heat Pump Hardpar
Slide 21: Market trends: growth drivers of Rheinmetall Automotive
Rheinmetall Automotive Market trends The growth drivers of Rheinmetall Automotive Efficiency Emission Electrification (CO2 Reduction) (Reduction) The innovation pipeline for all three trends is packed! © Rheinmetall AG / Corporate Presentation June 2019 21
Slide 22: CO2 reduction with Automotive products – gasoline engine vehicle
Rheinmetall Automotive Efficiency CO2 - reduction with Automotive products – gasoline engine vehicle 130 g 95 g CO2/km CO2/km 2015 2020 -2 g CO2/km -2 g CO2/km Reference model -7 g CO2/km Lightweight design parts Electr. 1.4L 4-cylinder -3 g CO2/km Variable valve train EGR system TC DI gasoline engi
Slide 23: E-mobility competence underlined by contracts and initiatives
Rheinmetall Automotive E-mobility competence underlined by contracts and by initiatives for new solutions Contract volume for electric vehicles (EV)* E-Taxi London Pump technology for pure electric taxis € ~800 m Battery cell boxes Aluminum battery boxes for German Lifetime order value premium OEM €
Slide 24: Truck: Our current product portfolio
Rheinmetall Automotive Truck Our current product portfolio Coolant Variable valve Main coolant valves control pumps Aluminum pistons Auxiliary coolant pumps Steel pistons Electrical oil pumps Piston rings Cooperation with Cylinder Riken Truck sales in €m bore coating Bearings for seat Main-bearings
Slide 25: Diversification: Increasing portfolio for non-LV applications
Rheinmetall Automotive 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 © Rheinmetall AG / Corpo
Slide 26: Automotive in China
Rheinmetall Automotive Automotive in China 50/50 joint ventures Wholly Foreign-Owned Enterprises JV subsidiary with HASCO (SAIC group) (100% Rheinmetall Automotive) Castings (KSHA) Pistons (KSSP) Castings (KPSNC) Pumps (PHP) Aftermarket Pierburg Large-bore pistons Pumps (PMP Ch.) 2014 1997 2001 2012
Slide 27: Outlook Automotive: 2019
Rheinmetall Automotive Outlook Automotive: 2019 The risk map for Automotive has gained complexity Indirect exposure Hard Brexit? Brexit Car tariffs US/EU Lower disposable unsolved Trade & Tariffs China income Incentive schemes? Raw materials hedged Share of new LV Raw material Increased safety stock
Slide 28: Outlook Automotive: 2019 and mid-term
Rheinmetall Automotive Outlook Automotive: 2019 and mid-term Various instruments available to limit impact of negative markets Sales scenarios Impact on operating result Possible measures Short-term Reduction of leased work force Flexibility of working hours Prioritization of projects (internal) Gen
Slide 29: Defence – at the beginning of a “super cycle”
Defence – at the beginning of a “super cycle” 29
Slide 30: Defence is a leading supplier with an increasing international presence
Rheinmetall Defence Defence is a leading supplier with an increasing international presence Key Figures Structure Sales by region Sales by division* Sales: €3.2bn Weapon and Ammunition RoW Vehicle Systems Weapon and Protection Germany Op. result: €254m Aus/NZ 8% Ammunition Systems 15% Weapon and 34%
Slide 31: Top products per division
Rheinmetall Defence Top products per division Weapon & Ammunition Electronic Solutions Vehicle Systems Mid & large Air defence & Logistical caliber ammo radar systems vehicles HX-family Tracked tactical vehicles Weapons Leopard Puma Mission equipment Protection -active -passive -softkill Wheeled tac
Slide 32: Q1 2019 Highlights: Defence
Rheinmetall Defence Q1 2019 Highlights: Defence Profit turnaround and improved operating FCF Quarterly sales and margin development Comments on quarterly performance 1,255 Order intake of €564m despite absence of major single order 754 703 14.3 629 Strong sales growth of 24% to €629m with easy compa
Slide 33: Strong sales increase drives considerable margin improvement
Rheinmetall Defence Q1 2019 Highlights: Defence Strong sales increase drives considerable margin improvement Sales Defence Operating result Defence Weapon and Ammunition in €m in €m Sales increased supported by 23.6% Margin +€22m Margin higher German demand Q1 2018 Q1 2019 629 9 Solid leverage suppo
Slide 34: Major orders expected for later in the year
Rheinmetall Defence Q1 2019 Highlights: Defence Major orders expected for later in the year Order intake by division Order backlog profile in €m in €bn Weapon and Ammunition change in % Electronic Solutions Vehicle Systems 857 -34% Consolidation 28% 8.6 Incl. €380m ~2.4 ~1.9 ~4.3 for an internationa
Slide 35: Acquisition IBD Deisenroth
Rheinmetall Defence Acquisition IBD Deisenroth Strategic move to fully in-house technologies for active and passive protection Acquisition provides 100% access to cutting edge-technology Buy out of minority shareholdings in existing long- term cooperation (Chempro & RAP*) and integration of IBD Grou
Slide 36: Declining budgets globally rising
1990 2035 DECLINING BUDGETS GLOBALLY RISING Upscaling of “Peace dividend” (ESPECIALLY IN THE WEST) BUDGETS forces and modernization Return to Downscaling alliance and of forces and territorial armament defence Out of area INFLECTION NATO 2% missions POINT target 2014 Annexation of the Crimean penins
Slide 37: German Defence: Strong German commitment to 1.5%
Rheinmetall Defence German Defence Strong German commitment to 1.5% with increased demand starting in 2019 German defence expenditure German order intake in €bn in €m 1.555 +54% ~1.200 Expected commitment authorizations 679 724 60 39 43 43 44 44 2018 2019 2020 2021 2022 2023 2024* 2016 2017 2018 201
Slide 38: Timeline for German 100% equipment level
Rheinmetall Defence German Defence Timeline for German 100% equipment level 2023 1 BRIGADE 2027 3 BRIGADES 2031 + 8 BRIGADES UTF SaZgMa 70 t UTF / GTF WLS Puma-VJTF Fuchs LPP PiMachine Puma S1 Puma 2. batch Boxer 3.batch Weapon Station MGCS studies Fox GBF IdZ NNbS TLVS / Patriot NG BPz 3 Leopard 2A
Slide 39: Drivers behind budget increase
Rheinmetall Defence German Defence Drivers behind budget increase “Turnarounds” in Germany Framework nation concept triggers standardization of Personnel: equipment Mid-term return to 220,000 soldiers Material: 100% equipment level and additional division Finance: Increase of defence budget 54% from
Slide 40: Additional structural demand of German army under discussion
Rheinmetall Defence German Defence Additional structural demand of German army under discussion Vehicles – mid-to-long term potential Fox (400 vehicles) Boxer (300-400 vehicles) Trucks (> 10.000 vehicles) Puma (~250 vehicles) Equipment and ammunition – multi billion programs NNBS (Short range air de
Slide 41: Mission Australia
Rheinmetall Defence Mission Australia Establishing a new “home market” down under Australia timing and order size of Land programs Trucks 1st & 2nd order 2016-2024 €2.0bn & €0.4bn Boxer CRV 2019-2026 €2.1bn Ammunition 2018/19 €65m* Lynx tender 2024-2031 €4-5bn *initial assessment, option for 5 year
Slide 42: Rheinmetall is a key beneficiary of large European vehicle programs
Rheinmetall Defence European Defence Rheinmetall is a key beneficiary of large European vehicle programs Current or expected tenders tactical vehicles Drivers for European vehicle programs − Return to territorial and treaty defence UK MIV Challenger upgrade Lt − Standardization of NATO equipment − M
Slide 43: Future Main Battle Tank system MGCS
Rheinmetall Defence European Defence Future Main Battle Tank system MGCS will be a milestone for the industry Germany to take the industrial and military lead in Main Ground Combat System (MGCS) Technical focus Development (€ 1 billion) Prototyping Start of production Project kick-off as working gro
Slide 44: Defence International: Creation of new hubs in 2018
Defence International Creation of new hubs in 2018 CANADA SKANDINAVIA EASTERN EUROPE New GREAT BRITAIN POLAND NETHERLANDS USA New MIDDLE EAST NORTH AFRICA ASIA SOUTH AFRICA AUSTRALIA © Rheinmetall AG / Corporate Presentation June 2019 44
Slide 45: Innovations
Rheinmetall Defence Innovations Demand-driven product development and targeted cooperations New logistical platforms New tactical platforms New business models Groundbreaking sub-systems Innovative weapon and ammunition New cooperations with Sikorsky, Raytheon Digitized command and reconnaissance ©
Slide 46: European Defence Consolidation landscape
Rheinmetall Defence European Defence Consolidation landscape Governmental shareholding restricts room for cross-border consolidation 49.9% Kongsberg Big common armament programs could be 50% Nammo Patria catalysts for further consolidation Saab Cobham BAE Systems Chemring Rheinmetall PL RO HUN CZ Rh
Slide 47: Outlook Defence: 2019
Rheinmetall Defence Outlook Defence: 2019 Solid pipeline of projects in our home markets Key projects and potentials Participation in budget increase Czech Republic: Lynx European vehicle (€1 – 1.5bn) German order entry (~€1.2bn) Germany programs Hungary: Boxer/Lynx ( €~2bn) Hungary: Leopard & tank
Slide 48: Group Appendix
GROUP APPENDIX © Rheinmetall AG / Corporate Presentation June 2019 48
Slide 49: Select key data: outlook 2019
Appendix: Rheinmetall Group Select key data: outlook 2019 Rheinmetall Group Automotive Defence In % (Previous Year) Holding cost ~€25-30m (€24m) Capex 5.5-6% (5.5%) 3.5-4.5%(3.1%) (w/o IFRS 16) 3-3.5% (4.8% ~5.5% (5.3% Comparable level reported, Tax rate D&A reported, (27%) scheduled D&A scheduled 5
Slide 50: Group 2014 – 2018: Key figures
Appendix: Rheinmetall Group Group 2014 – 2018: Key figures (as reported) in €m 2014 2015 2016 2017 2018 Balance sheet Total assets 5,271 5,730 6,150 6,101 6,759 Shareholder‘s equity 1,197 1,562 1,781 1,870 2,172 Equity ratio (in %) 22.7 27.3 29.0 30.7 32.1 Pension liabilities 1121 1,128 1,186 1,080
Slide 51: Segments 2014 – 2018 Key figures
Appendix: Rheinmetall Group Segments 2014 – 2018 Key figures AUTOMOTIVE DEFENCE 2014 2015 2016 2017 2018 in €m 2014 2015 2016 2017 2018 2,466 2,621 2,670 2,922 2,889 Order intake 2,812 2,693 3,050 2,963 5,565 416 445 459 520 478 Order backlog (Dec. 31) 6,516 6,422 6,656 6415.8 8,577 2,448 2,592 2,65
Slide 52: More than 100 production sites and offices on all continents
Appendix: Rheinmetall Group More than 100 production sites and offices on all continents Germany UK Defence Russia USA Netherlands Norway Singapore Sites Canada Switzerland Sweden South Saudi Arabia Malaysia Mexico Austria Poland Africa UAE Australia Italy USA Mexico Japan China Germany India France
Slide 53: Continuing ROCE improvement
Appendix: Rheinmetall Group Continuing ROCE improvement ROCE in % Pre-tax WACC 25% (2017): 20% 17.1% 20.2% 19.0% 18.8% 18.7% 15% 16.7% 10.5% Group 12.3% 13.4% 15.9% 10.6% 10% 11.8% 10.7% 9.8% 4.7% 5% 3.9% 6.1% 0.3% 0% -4.6% -5% 2013 2014 2015 2016 2017 2018 Group Defence Automotive © Rheinmetall AG
Slide 54: Board remuneration based on three building blocks
Appendix: Rheinmetall Group Board remuneration based on three building blocks Annual target salary (100%) Fixum (60%) Performance-related variable remuneration (40%) Twelve equal portions of monthly Short term incentive Long-term incentive payments Fringe benefits: • KPI: EBT, ROCE (each 50%) • KPI:
Slide 55: ESG with high importance for Rheinmetall
Appendix: Rheinmetall Group ESG with high importance for Rheinmetall Environment Social Governance • Reduction of the ecological footprint • Clear statement against cluster munition • Transparency towards customer, • Decrease of energy needed • Promoting education and training investors and other st
Slide 56: Rheinmetall Technology Cluster
Rheinmetall Group Rheinmetall Technology Cluster Top five technology cluster identified Automation Digitalization Next Sensors E-Mobility Artificial Intelligence Advanced assistant New, digitalized vehicle New LIDAR* / Hybrid drive AI supported technologies systems for driving, architectures Radar s
Slide 57: Next events and IR contacts
Next events and IR contacts Next Events IR Contacts UBS Conference, London 15 May Franz-Bernd Reich Commerzbank Conference, New York & Boston 15/16 May Head of IR Tel: +49-211 473-4777 RS Zurich/Lugano 21/22 May Email: franz-bernd.reich@rheinmetall.com AGM 2018, Berlin 28 May Dirk Winkels DB Confere
Slide 58: 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