Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (March 2020)
72 slides from Rheinmetall's investor presentation, Mar 17, 2020
Slide 1: Rheinmetall Group Corporate Presentation
Rheinmetall Group Corporate Presentation March 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 2-4% 6.000 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 March 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 March 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: product portfolio by division and engine type
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** 108 CO2 NOx AP in g/km in mg/km 100 Fuel Cell Core Diesel 89 87 14% 10% Electric -24% -56%
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 March 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 March 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 March 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 March 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: New Markets Telecommunication
New Markets Telecommunication Diversification into new growth areas 5G-Data safety: Major production contract for manufacturing aluminum housings for 5G network Rheinmetall JV with HASCO in China is the leading supplier of die-casting capacities in China High technological competence Great opp
Slide 22: 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 23: Defence – Managing the “super cycle”
Defence – Managing the “super cycle” Corporate Presentation March 2020 23
Slide 24: Defence Leading supplier with an 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 25: 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 26: 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 Ma
Slide 27: 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 28: 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 IFV(wheeled/tracked) Trucks Czech Rep: IFV (tracked) MGCS Slovakia: IFV Germany Bulgaria: IFV (wheeled) USA Trucks Rom
Slide 29: 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 30: German defence budget
German defence budget Investment expenses and Rheinmetall-share - budgets become sizeable in €m Expense increase based on 3 pillars: More budget, investment share increased by 36% from 2018 to 2019: if political 8.263 1.5% commitment is to be achieved in 2024 this could lead to €~12 bn 6.011 6.063
Slide 31: 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 32: Australia: Successful establishment of a new home market
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 33: United Kingdom - Joint Venture with BAE
United Kingdom - Joint Venture witch 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 +
Slide 34: 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 March 2020 34
Slide 35: 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 36: Financials
FINANCIALS Corporate Presentation March 2020 36
Slide 37: FY 2019 Group: Highlights
FY 2019 Group: Highlights Strong operating performance with high shareholder return Order backlog Sales Operating result €10.8bn €6.3bn €505m +20% +2% +3% EPS Dividend proposal Operating FCF €7.77 €2.40 €314m +9% +14% >100% Corporate Presentation March 2020 37
Slide 38: FY 2019 Highlights: Automotive
FY 2019 Highlights: Automotive Strong cash flow generation under difficult market conditions -6.6% Sales Sales drop beyond market slow down 2,930 2,736 especially in Diesel and unfavorable customer mix with additional impact 2018 2019 of net negative ramp-ups -29.8% Operating Cost reduction meas
Slide 39: FY 2019 Highlights: Defence
FY 2019 Highlights: Defence Excellent performance of our Defence business -6.8% Order 5,565 5,186 Another year with order intake > €5bn intake 2018 2019 +9.4% Sales increased 9% to new record Sales 3,221 3,522 2018 2019 +35.3% Result growth of €89m accelerated Operating margin by almost 2%p to
Slide 40: FY 2019 Group: EPS and dividend
FY 2019 Group: EPS and dividend Shareholders to benefit from increased dividend Earnings and dividend per share in € +14% EPS increased notably due to improved results and +9% minorities declining structurally on M&A by €0.71 7.77 7.10 0.16 0.44 Underlying EPS growth of 14% Payout ratio arou
Slide 41: FY 2019 Group: Highlights Solid margin development
FY 2019 Group: Highlights Solid margin development Sales Operating result in €m in €m Margin in % 512 +1.7% +2.9% 6,255 7 -2 505 5 52 26 11 6,148 29 491 +0.5% +0.4% +0.9% +2.3% +1.1% -0.5% 8.1% 8.2% 8.0% FY Operational FX M&A FY FY Operational FX M&A FY Special EBIT 2018 2019 2018 2019 items 201
Slide 42: FY 2019 Group: Key financials
FY 2019 Group: Key financials Sound balance sheet Equity and Equity ratio Equity ratio in €m and % Total equity In €m In % 3,000 32.1 40 29.0 30.7 30.6 27.3 2,000 20 Equity increase was held back by OCI (lower 1,000 1,781 1,870 2,173 2,272 1,562 pension discount factor) 0 0 and last year’s M&A a
Slide 43: FY 2019 Group: OFCF
FY 2019 Group: OFCF Considerable working capital improvement as main driver Operating free cash flow per quarter in €m 2016 2017 2018 2019 Typical seasonal pattern of cash flow Q1 Q2 Q3 Q4 Absence of unscheduled D&A (PY €42m) Operating free cash flow bridge Pension driven by lower CTA fund
Slide 44: FY 2019: Capex
FY 2019: Capex Segmental growth path reflected in different capex development Automotive with diligent capex approach Defence preparing for growth in €m and in (% of sales) in €m and in (% of sales) (5.5%) (5.2%) (3.1%) (4.7%) 161 166 6 143 12 11 54 17 101 23 15 4 142 115 83 89 (2.2%) (2.1%) 201
Slide 45: FY 2019: R&D
FY 2019: R&D Innovation remains key in both segments Automotive Defence in €m and in (% of sales) in €m and in (% of sales) (6.6%) (7.7%) (4.4%) (4.1%) 210 193 39 36 145 17 143 12 47 68 23 154 4 145 (4.9%) (5.6%) 70 75 (2.2%) (2.1%) 2018 2019 2018 2019 Customer-financed R&D Capitalized developme
Slide 46: Automotive Financials
AUTOMOTIVE FINANCIALS Corporate Presentation March 2020 46
Slide 47: Automotive: Q4 2019 Highlights
Automotive: Q4 2019 Highlights Strong cash generation in a slow sales quarter with burdening one-offs Quarterly sales and margin development Comments on quarterly performance In €m and % Sharp sales decline of -12.9% (FX-adjusted -13.2%) significantly 731 714 726 659 637 higher than global LV prod
Slide 48: Automotive: Q4 2019 Highlights
Automotive: Q4 2019 Highlights Negative leverage intensified by special effects Sales Automotive Operating result Automotive in €m in €m Mechatronics •Weak Truck and Diesel demand in Margin Margin Q4 2018 Q4 2019 combination with ramp down -12.9% -42.0% 9.5% 69 6.2% effects 731 •Negative leverag
Slide 49: Q4 2019 Highlights: Automotive
Q4 2019 Highlights: Automotive Decline in all business areas except Aftermarket Sales split LV/ Non-LV Sales split Non-LV in €m / in % in €m / in % Delta absolute in % -12.9% Diesel -24 -14.7% 731 Gazoline -21 -7.7% other LV -10 -20.8% 638 -14.9% 164 253 LV Business -55 -11.2% 140 LV: 215 Truck
Slide 50: Automotive: FY 2019
Automotive: FY 2019 Diesel decline had the biggest single impact on sales EU registrations by fuel type Sales by fuel type in % of total registrations in €m 1.5% 1.7% 100% -6.7% other 4.0% 2.0% 5.9% 2,930 Hybrids 3.0% -89 2,735 -32 -26 -32 -15 Electric Vehicles 41% -3.0% -1.1% -0.9% -1.1% -0.5%
Slide 51: Automotive: Q4 2019 China performance
Automotive: Q4 2019 China performance Strong finish to the year Sales Comments on the quarter in €m +33.1% 60 4 19 330 Strong operational performance supported by FX 248 and favorable M&A effect vs. market growth of 288 3.2% 211 37 (IHS Markit 4 March 2020) 42 Q4 ’18 op. FX M&A Q4 ’19 Succes
Slide 52: Defence Financials
DEFENCE FINANCIALS Corporate Presentation March 2020 52
Slide 53: Defence: Q4 2019 Highlights
Defence: Q4 2019 Highlights Best closing quarter in history Quarterly sales and margin development Comments on quarterly performance In €m and % 14.2 15.8 Order intake jumped to ~€3bn with large share for 2020 Sales increase of 5.5% on an already strong Q4 ’18 8.1 7.8 1,255 1,324 WA and VS wer
Slide 54: Q4 2019 Highlights: Defence
Q4 2019 Highlights: Defence Closing quarter with notable outperformance Sales Defence Operating result Defence in €m in €m Margin Margin Q4 2018 Q4 2019 5.5% 17.3% Weapon & Ammunition 1,324 14.2% 210 15.8% • Sales held back by export 1,255 restrictions 179 438 • Excellent order execution -7.0% 4
Slide 55: Regional overview FY 2019
Regional overview FY 2019 Success in “home markets” is key driver Order intake by region Sales by region Order backlog by region in % in % in % +9% +21% -7% 5,565 3,522 10,399 2% 5,186 3,221 1% 1% 1% 2% 20% 9% 23% 8,577 19% 3% 1% 3% 26% 3% 3% 3% 27% 5% 13% 27% 47% 3% 15% 52% 20% 19% 36% 28% 41
Slide 56: Q4 2019: Defence
Q4 2019 : Defence Strong Q4 order intake with high share for 2020 Order intake by division Order backlog profile in €m in €m per 31/12/2019 +21% +173% 10,399 3,040 1,890 5,469 2,985 344 8,577 2,308 418 2,122 2,188 1,094 2,117 485 2,276 Weapon and Ammunition 6,722 474 Electronic Solutions 5,030 V
Slide 57: Outlook 2020
OUTLOOK 2020 Corporate Presentation March 2020 57
Slide 58: Corona update (1)
Corona update (1) Early adoption of preventive measures to contain the situation Growing catalogue of preventive measures Installation of global corona action team at each site Daily updates on corona situation from all 6 divisions Increased level of disinfection and hygienic measures Initia
Slide 59: Corona update (2)
Corona update (2) Situation very dynamic, first priority to protect employees and supply chains Virus containment measures proven effective Supply chains still stable China production restarted, Critical parts and suppliers under evaluation current activity level >60%, Alternative sourcing and
Slide 60: 2020 Guidance
2020 Guidance Guidance without Corona effect Sales Operating margin 2019 2019 2020e 2019 2020e in €bn Operational growth Operational growth in % in % yoy in % at constant FX yoy in % at constant FX GROUP 6.3 0.5 1–3 8.1 around 7 AUTOMOTIVE 2.7 -7.4 -2 to -3 6.7 around 5 DEFENCE 3.5 7.6 5–7 9.8 9 – 1
Slide 61: Appendix
Appendix Corporate Presentation March 2020 61
Slide 62: Sustainability
Sustainability Path to climate 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:
Slide 63: Sustainability 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 THG intensity (tCO2/EUR m revenue) 2015: 101,2 | 2019: 65,7 CO2 Revenue coverage ISO 14001 72,4 % Revenue coverage ISO
Slide 64: Board remuneration based on three building blocks
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: Average adjusted EBT
Slide 65: 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 Saab JV partnerships with companies in different C
Slide 66: Our capital allocation policy is geared towards further growth
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 March 2020 66
Slide 67: Select key data: outlook 2020
Select key data: outlook 2020 Rheinmetall Group In %(PY) Automotive Defence €20-25 Capex (w/o Holding cost IFRS 16) Around 5.5% (5.5%) Around 5%(4.7%) (PY: €25m) Comparable level Tax rate D&A 5.5-6.0% (5.9%) 3-3.5% (3.1%) (PY: 26%) Interest result ~-€45m (PY:-€35m) R&D Around 6% (5.9%) 2-2.5% (2.0%)
Slide 68: Group 2015 – 2019: Key figures (as reported)
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
Slide 69: 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 70: 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 March 2020 70
Slide 71: Next events and IR contacts
Next events and IR contacts Next Events IR Contacts Dirk Winkels Bank of America, Global Industrials Conference 19 March 2020 All investor meetings Head of IR Bankhaus Metzler, Frankfurt will be conducted as 31 March 2020 Tel: +49-211 473-4749 telephone conferences Email: dirk.winkels@rheinmetal
Slide 72: 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