Slide 1: Conference Call Fiscal Year 2016
Conference Call Fiscal Year 2016 Düsseldorf / 23 March 2017
Slide 2: 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
Slide 3: Highlights Rheinmetall Group FY 2016
Highlights Rheinmetall Group FY 2016 Performance improvements in both segments and high cash conversion Guidance achieved: €5.6 bn sales and margin of 6.3% EBIT increased by 23% to €353 m Free cash flow jumped from €29 m to €161 m EPS grew by 21% from €3.88 to €4.69 Dividend proposal of €1.45 New Te
Slide 4: Sales and profit growth boosted Free Cash Flow
Sales and profit growth boosted Free Cash Flow Sales Operational Result in EUR million Operating FCF in EUR million Margin in % in EUR million +8% +455% 5,602 +23% 161 353 5,183 287 4,688 160 6.3 5.5 29 3.4 -182 2014 2015 2016 2014 2015 2016 2014 2015 2016 © Rheinmetall AG / FY 2016 Report / 23 Marc
Slide 5: Increased net income transformed into higher dividend
Increased net income transformed into higher dividend Net income Earnings per share Dividend per share in EUR million in EUR million in EUR million +21% +32% +34% 4.69 1.45 * 215 3.88 1.10 160 0.30 21 0.47 2014 2015 2016 2014 2015 2016 2014 2015 2016 * Dividend proposal 2016 to the AGM 2017 © Rheinm
Slide 6: Highlights Rheinmetall Automotive FY 2016
Highlights Rheinmetall Automotive FY 2016 Automotive demonstrated margin resilience EBIT margin rose to 8.4% Mechatronics outperformed with excellent sales and profitability Ongoing challenges in Brazil and a weakness in Large-Bore Pistons International footprint expanded in China, India, Mexico and
Slide 7: Highlights Rheinmetall Defence FY 2016
Highlights Rheinmetall Defence FY 2016 Defence delivered excellent 2016 results and gears up for future growth Order execution well on track with sales growth >10% EBIT margin improved from 3.5% to 5.0% High order entry leads to book-to-bill ratio of 1.04 Down selection in major vehicle programs Pre
Slide 8: Stable capex and R&D levels support future growth
Stable capex and R&D levels support future growth Capex Group Research & Development Group in EUR million / ratio in % of Group sales in EUR million / ratio in % of Group sales 5.7% 6.0% 5.1% 4.6% 4.6% 4.6% 310 283 269 258 239 214 291 245 258 24* 19 * 25* 2014 2015 2016 2014 2015 2016 * Subsidies fo
Slide 9: First orders for public security and e-mobility
First orders for public security and e-mobility Public Security Electromobility Survivor vehicles Pump technology for for German police forces electric vehicles Drone detection systems Aluminum battery boxes for Swiss prisons for German premium OEM Innovative body armor Electric engine housing for G
Slide 10: Investments in "New Technologies" initiated
Investments in „New Technologies” initiated Cyber Security 3D Techcenter PanoView Development of two products Metal 3D print services Merging modern sensor finished technology with virtual reality to First applications: Compressor Marketing phase started in 2017 create a real-time 360° view wheel fo
Slide 11: Financial Details 2016
Financial Details 2016 © Rheinmetall AG / FY 2016 Report / 23 March 2017 11
Slide 12: Conversion of profitable growth into free cash flow
Conversion of profitable growth into free cash flow in EUR million Q4 2015 Q4 2016 Δ% FY 2015 FY 2016 Δ% Sales 1,601 1,698 6.1% 5,183 5,602 8.1% Operating result 147 172 17.0% 287 353 23.0% Operating result margin in % 9.2 10.1 0.9 pp 5.5 6.3 0.8 pp Operating Free Cash Flow 299 463 54.8% 29 161 >100
Slide 13: Operating Free Cash Flow improved materially
Operating Free Cash Flow improved materially Operating Free Cash Flow changes y.o.y in EUR million 1 24 Operational performance lifts net income by €55 m 27 Higher D&A driven by Automotive 25 Capex decreased in Automotive and Holding 161 55 Others includes CTA funding (€30 m) Net-working capital sta
Slide 14: Net-financial debt considerably improved on positive cash development
Net-financial debt considerably improved on positive cash development Net-financial debt in EUR million at quarter end Debt composition and maturity profile of instruments Net Gearing in % at year end in EUR million 28% 5% -1% Other & 787 Leasing -19 16 Promissory 121 notes 146 Bank loan 2017 2018 2
Slide 15: Group ROCE of 12.3% clearly above capital cost
Group ROCE of 12.3% clearly above capital cost in EUR million FY 2015 FY 2016 Δ abs. EBITDA 490 581 +91 EBIT increase with major contribution from Defence Operating result / EBIT 287 353 +66 Actual tax rate amounted to 28% Interest result - 66 - 54 +12 Net income increased by 34% EBT 221 299 +78 Net
Slide 16: Rheinmetall Automotive
RHEINMETALL AUTOMOTIVE © Rheinmetall AG / FY 2016 Report / 23 March 2017 16
Slide 17: Automotive accelerated by excellent Mechatronics performance
Automotive accelerated by excellent Mechatronics performance in EUR million Q4 2015 Q4 2016 Δ % FY 2015 FY 2016 Δ % Sales 635 664 4.6% 2,592 2,656 2.5% Operating result 52 60 15.2% 216 223 3.0% Operating margin in % 8.2 9.0 0.8 pp 8.3 8.4 0.1 pp Operating Free Cash Flow 26 147 465% 96 105 9.4% Opera
Slide 18: Automotive car sales again outperforming global markets
Automotive car sales again outperforming global markets Global LV production Sales Automotive LV/Non-LV in million units in EUR million 4.9% 2,656 2,592 93,0 88,7 21,5 838 -2.9% 814 Non LV business 20,9 17,8 Without China: 17,5 +1.4% 22,7 22,4 1,754 +5.0% 1,842 LV business 4,0 4,2 23,7 27,1 China: +
Slide 19: Automotive with broad and global customer portfolio
Automotive with broad and global customer portfolio Sales by customers 2016 Sales by region in % in EUR million Rest of the World Ford Asia 3% Germany 13% 13% 20% others VW 38% 11% €2,656m* NAFTA 17% €2,656m* 11% Renault / Nissan 2% 6% 3% PSA 5% GM 47% 3% DAF 4% 5% Fiat Volvo Europe Daimler BMW (exc
Slide 20: Further margin improvement at slightly increased sales level
Further margin improvement at slightly increased sales level Sales Automotive Operational earnings Automotive Reasons for earnings development in EUR million in EUR million 2% +3% Mechatronics 2,592 2,656 216 223 Sales growth and very good profitability +20% Hardparts 1,450 +5% 1,527 119 142 Declini
Slide 21: Impressive profitability improvement of Chinese activities
Impressive profitability improvement of Chinese activities China LV production Sales in CNY million EBIT in CNY million / in % in million units +13% +39% Sales growth in line with market development in local 6,835 518 6,070 currency 373 14% CNY 27,1 5,488 6,037 million 452 FX Effect on sales -€43.7
Slide 22: Rheinmetall Defence
RHEINMETALL DEFENCE © Rheinmetall AG / FY 2016 Report / 23 March 2017 22
Slide 23: Defence with excellent cash conversion on improved profitability
Defence with excellent cash conversion on improved profitability in EUR million Q4 2015 Q4 2016 Δ % FY 2015 FY 2016 Δ % Order entry 919 725 -21.1% 2,693 3,050 13.3% Sales 966 1,034 7.0% 2,591 2,946 13.7% Operating result 101 115 14.3% 90 147 62.7% Operating margin in % 10.4 11.2 0.8 pp 3.5 5.0 1.5 p
Slide 24: Profitable growth especially in Weapon and Ammunition and Vehicle Systems
Profitable growth especially in Weapon and Ammunition and Vehicle Systems Sales Defence Operational earnings Defence Reasons for earnings development in EUR million in EUR million +14% +63% Weapon and Ammunition 2,946 147 Significantly higher sales 2,591 1,112 Electronic Solutions 881 +26% Lower sal
Slide 25: Regional distribution documents success of internationalization strategy
Regional distribution documents success of internationalization strategy Order intake by region Order backlog by region in EUR million in EUR million +4% +13% 6,656 3,050 6,422 4% 18% 2,693 3% 19% 3% 16% 3% 6% 46% 41% 41% 32% Rest of the World North America 26% 19% Asia/Middle East/Australia 13% 17%
Slide 26: High order book coverage of near-term sales
High order book coverage of near-term sales Order backlog by division Order backlog profile in EUR million in EUR million +4% ~2,500 6,422 6,656 ~2,300 Weapon and Ammunition 1,709 1,817 ~1,900 Electronic Solutions Vehicle Systems 1,334 Consolidation 1,579 3,975 3,577 -596 -317 2017e 2018e 2019e ff 2
Slide 27: Outlook 2017
Outlook 2017 © Rheinmetall AG / FY 2016 Report / 23 March 2017 27
Slide 28: Further increase of German defence budget expected
Further increase of German defence budget expected Enhanced future profile of German Bundeswehr German Defence budget 2016-2021 in EUR billion* 62 23% 2% “Anchor army” for smaller neighbors 37 39 40 41 42 34 1.2% Leading role in the “enhanced Forward Presence” in Lithuania 2% NATO target Framework n
Slide 29: Assumptions 2017
Assumptions 2017 AU TO M OT I V E DEFENCE M a c ro v i ew Global LV production expected Further demand increase in key markets to grow by ~2%* expected Chinese LV production only with moderate Germany and other allies have increased growth of 2.5% investment budgets R h e i n m eta l l Automotive ex
Slide 30: Outlook FY 2017 Sales growth and earnings improvement targeted
Outlook FY 2017 Sales growth and earnings improvement targeted Sales Operational margin in % 2016 2017e 2016 2017e in EUR billion Growth yoy in % Group 5,602 4-5 6.3 ~6.3 Automotive 2,656 3-4 8.4 ≥8 Defence 2,946 5-6 5.0 5.0 - 5.5 New Guidance includes a P&L impact of a low 2-digit EUR million figur
Slide 31: Appendix
Appendix © Rheinmetall AG / FY 2016 Report / 23 March 2017 31
Slide 32: Financial reminder for 2017
Financial reminder for 2017 Automotive Defence Capex ~5.5-6.5% ~3-4% D&A ~4.5-5.5% ~3-3.5% R&D ~4-6% ~2-3% Holding cost (underlying) ~EUR20 million - EUR25 million Expected corporate tax rate ~30% Financing EUR500 million bond (5,25% coupon) will mature in September EIB loan EUR250 million (0,962% c
Slide 33: Cooperation between Rheinmetall and Raytheon
Cooperation between Rheinmetall and Raytheon Memorandum of understanding signed February 2017; Sales: USD24 bn, 63,000 employees* Combining strength in possible Sales: EUR5.6 bn, 21,000 employees* new business opportunities: Missile based, expert in radar technology, Canon based, long-term market pr
Slide 34: Group 2012 – 2016: Key figures
Group 2012 – 2016: Key figures in EUR million 2012 2013 2014 2015 2016 Balance sheet Total assets 4,899 4,866 5,271 5,730 6,124 Shareholder‘s equity 1,465 1,339 1,197 1,562 1,781 Equity ratio (in %) 29.9 27.5 22.7 27.3 29.0 Pension liabilities 919 891 1,121 1,128 1,186 Net financial debt 98 147 330
Slide 35: Segments 2012 – 2016 Key figures
Segments 2012 – 2016 Key figures AUTOMOTIVE DEFENCE 2012 2013 2014 2015 2016 in EUR million 2012 2013 2014 2015 2016 2,378 2,270 2,466 2,621 2,670 Order intake 2,933 3,339 2,812 2,693 3,050 418 392 416 445 459 Order backlog (Dec. 31) 4,987 6,050 6,516 6,422 6,656 2,369 2,262 2,448 2,592 2,656 Sales
Slide 36: Cash Flow Statement Group
Cash Flow Statement Group Q4 Q1 Q2 Q3 Q4 Δ Q4 in EUR million 2015 2016 2016 2016 2016 2016/2015 Group Net Income 96 12 41 46 117 21 Amortization / depreciation 55 55 54 52 67 12 Change in pension accruals 2 - 16 2 - - 4 - 6 Cash Flow 153 51 97 98 180 27 Changes in working capital and other items 267
Slide 37: Quarterly development Group
Quarterly development Group Sales Operational earnings in EUR million in EUR million +6% +17% 1,698 171 1,601 146 1,419 1,305 1,180 1,034 115 966 724 101 662 72 79 526 19 30 31 52 52 60 51 60 635 654 695 643 664 -7 -7 -2 -4 -17 -4 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q4 2015 Q1 2016 Q2 2016 Q3 20
Slide 38: Focused on the attractive segment of powertrain technology
Focused on the attractive segment of powertrain technology RHEINMETALL AUTOMOTIVE EUR 2.7 billion* Hardparts Mechatronics Aftermarket Bearings Automotive Emission Systems Castings Solenoid Valves Pistons Commercial Diesel Systems Large-bore Pistons Actuators Pump Technology Joint ventures with HASCO
Slide 39: Quarterly development Automotive
Quarterly development Automotive Sales by division Operational earnings by division in EUR million in EUR million +5% +15% 695 60 60 664 635 654 643 51 52 52 397 387 36 366 380 364 36 26 34 36 231 243 225 245 20 16 19 225 11 13 68 69 78 78 80 6 7 8 7 5 1 -24 -26 -23 -24 0 0 -2 -48 -4 Q4 2015 Q1 2016
Slide 40: Key figures Automotive by division (FY 2015/2016)
Key figures Automotive by division (FY 2015/2016) Mechatronics Hardparts Aftermarket +2% +5% -3% +7% Sales 2,592 2,656 1,450 1,527 952 921 285 305 +3% +19% Opera- -15% 0% tional 216 223 119 142 73 62 27 27 earnings -0.6pp +0.1pp +1.2pp -1.0pp Opera- tional 7.7% 6.7% 9.5% 8.9% margin 8.3% 8.4% 8.2% 9
Slide 41: Quarterly cash flow statement Automotive
Quarterly cash flow statement Automotive Q4 Q1 Q2 Q3 Q4 Δ Q4 in EUR million 2015 2016 2016 2016 2016 2016/2015 Net income 43 38 43 36 49 +6 Amortization / depreciation 32 33 28 29 40 +8 Change in pension accruals - - - - 1 - 1 -1 Cash Flow 75 21 68 64 88 +13 Changes in working capital and other item
Slide 42: Divisional structure of Defence
Divisional structure of Defence RHEINMETALL DEFENCE EUR 2.9 billion* Weapon and Ammunition Electronic Solutions Vehicle Systems Weapon and Ammunition Air Defence & Radar Systems Logistic Vehicles Protection Systems Mission Equipment Tactical Vehicles Propulsion Systems Simulation and Training Techni
Slide 43: Quarterly development Defence
Quarterly development Defence Sales by division Operational earnings by division in EUR million in EUR million +7% +14% 965 1,034 115 101 63 404 391 724 662 77 528 315 227 244 25 270 178 30 172 19 150 179 16 408 483 25 263 287 361 30 25 19 -63 -57 -98 -84 4 -117 -1 1 4 -5 -3 -11 -4 -6 -3 Q4 2015 Q1
Slide 44: Key figures Defence by division (FY 2015/2016)
Key figures Defence by division (FY 2015/2016) Weapon a. Munition Electronic Solutions Vehicle Systems +14% +26% +16% -2% Sales 2,591 2,946 1,112 1,195 1,392 881 759 745 +46% +63% Opera- -4% 108 +867% tional 147 74 26 25 90 earnings 29 3 +1.3pp +1.5pp +1.8pp Opera- 0pp tional +5.0% 8.4% 9.7% +2.1% +
Slide 45: Quarterly cash flow statement Defence
Quarterly cash flow statement Defence Q4 Q1 Q2 Q3 Q4 Δ Q4 in EUR million 2015 2016 2016 2016 2016 2016/2015 Net income 67 - 20 3 13 78 +11 Amortization / depreciation 22 22 22 22 26 +4 Change in pension accruals 3 1 2 1 - 3 -6 Cash Flow 92 3 27 36 101 +9 Changes in working capital and other items 21
Slide 46: Income statement Group
Income statement Group Income Statement In EUR million 2015 2016 Δ 2015 2016 Δ Total operating performance 5,182 5,711 529 Net operating income (EBIT) 287 353 66 Net interest income 3 5 2 Interest expenses - 69 - 59 10 Other operating income 170 160 -10 Earnings before tax (EBT) 221 299 78 Cost of m
Slide 47: Cash flow statement Group
Cash flow statement Group Cash Flow Statement In EUR million 2015 2016 Δ 2015 2016 Δ Net Income 160 215 55 Capital increase RHM AG 228 0 -228 Amortization, depreciation and impairment 203 228 25 -1 Capital payment to/ capital contribution by non-controlling interests 0 1 Dotation of CTA -30 -30 Incr
Slide 48: Balance Sheet Group
Balance Sheet Group Balance Sheet In EUR million 2015 2016 Delta 2015 2016 Delta Non-current assets 2,648 2,762 114 Equity 1,562 1,781 219 Goodwill 827 819 - 8 Share capital 112 112 - Other tangible assets 35 53 18 Additional paid-in capital 528 532 4 Property, plant and equipment 1,314 1,378 64 Ret
Slide 49: Moderate headcount increase to accompany growth
Moderate headcount increase to accompany growth Headcount per segment Headcount regional in capacities at year end in capacities at year end 1.5% 20,676 20,993 20,166 RoW Mexico 7% 4% 10,934 10,820 15% 10,830 Brazil 5% Americas 5% Asia 48% Germany Europe 9,184 9,581 10,002 73% 152 161 171 2014 2015
Slide 50: Next events and IR contacts
Next events and IR contacts Events 2017 IR Contacts Lampe Conference Baden-Baden 28 Mar Franz-Bernd Reich Head of IR Roadshow London 4 April Tel: +49-211 473-4718 Q1 Earnings call 4 May Email: franz-bernd.reich@rheinmetall.com Annual Stockholders’ Meeting Berlin 9 May Dirk Winkels Warburg Highlights
Slide 51: © Rheinmetall AG / FY 2016 Report / 23 March 2017
© Rheinmetall AG / FY 2016 Report / 23 March 2017 51