Rheinmetall Ag · XETR:RHM
Rheinmetall — FY2014 Earnings Presentation
47 slides from Rheinmetall's earnings presentation, Mar 19, 2015
Slide 1: Conference Call FY 2014
R H E I N M E TA L L A G T H E T EC H N O LO GY G RO U P FO R S EC U R I T Y A N D M O B I L I T Y Conference Call FY 2014 Düsseldorf | March 19, 2015 © RHEINMETALL AG 2015
Slide 2: Reviewing 2014
Rheinmetall Group Reviewing 2014 Success on markets, mixed picture of results, innovative products — Strong Automotive growth above market and high Defence order intake pushing order backlog — Outstanding results in Automotive, but exceptional negative impacts on Defence earnings — Innovative produc
Slide 3: Fiscal year 2014 in detail: sales, order backlog, headcount
Rheinmetall Group Fiscal year 2014 in detail Sales increased, order backlog at a high level, headcount reduced Sales in EUR million Order backlog in EUR million Headcount in full-time equivalents +6% +8% -0.5% 4,688 6,932 20,264 20,166 4,417 6,442 2013 2014 2013 2014 2013 2014 2013 figures adjusted
Slide 4: Fiscal year 2014 in detail: weak earnings
Rheinmetall Group Fiscal year 2014 in detail Weak earnings due to a set of negative impacts in Defence Operational earnings in EUR mn EBIT in EUR million EBT in EUR million Operational margin in % EBIT margin in % -24% -16% -51% 211 121 45 102 160 4.8% 3.4% 22 2.7% 2.2% 2013 2014 2013 2014 2013 2014
Slide 5: Dividend payment proposed despite decreased earnings per share
Rheinmetall Group Fiscal year 2014 in detail Dividend payment proposed despite decreased earnings per share Net income* in EUR million Earnings per share* in EUR Dividend per share in EUR Payout ratio in % -5% -37% -25% 22 0.75 0.40 21 0.30** 0.47 64% 53% 2013 2014 2013 2014 2013 2014 * Continuing a
Slide 6: Capex and R&D at a high level
Rheinmetall Group Capex and R&D at a high level More than EUR 400 million invested in the future R&D in EUR million Capex in EUR million Depreciation & amortization in EUR million +14% +2% -2% 219 214 269 194 197 237 24* 32* 245 205 thereof 29 24 capitalized 2013 2014 2013 2014 2013 2014 * Subsidies
Slide 7: Balance sheet
Rheinmetall Group Balance sheet Higher pension liabilities due to lower discount rate Pension liabilities in EUR million Equity in EUR million Discount rate* in % Equity ratio in % of total assets +230 -142 — Low interest rates burden 1,121 1,339 globally, particularly in 1,197 Germany and Switzerla
Slide 8: Cash flow statement
Rheinmetall Group Cash flow statement High level of capex and increase of working capital burden free cash flow 2013 in EUR million 2014 in EUR million 211 -191 205 0.5%* -284 -3.9%* 22 -22 21 20 Net Depr./ Capex Working Free cash income ∆Pensions (Cash-out) capital/ flow from others operations -182
Slide 9: Cash flow statement: main impacts on free cash flow
Rheinmetall Group Cash flow statement Main impacts on free cash flow from operations Defence Automotive Holding/Consolidation ∆ EUR - 94 million* ∆ EUR - 62 million* ∆ EUR - 46 million* — Weak earnings — Higher investments — Higher holding costs — Increase of working due to sales growth — Tax effect
Slide 10: Cost efficiency program
Rheinmetall Group Cost efficiency program Restructuring measures in the final phase Costs Costs Total reduction Savings Full annual 2013 2014 of employees 2014 savings until 2016 from 2015 Combat Systems (esp. Tracked Vehicles) 15 4 240 Electronic Solutions (esp. Air Defence Zurich) 14 5 130 Wheeled
Slide 11: Rheinmetall Automotive
Rheinmetall Automotive © RH E I N M ETAL L A G 2 0 1 5 | F Y 2 0 1 4 RE P ORT | M A RC H 1 9 , 2 0 1 5 11
Slide 12: Reviewing 2014: Automotive in a nutshell
Rheinmetall Automotive Reviewing 2014 Automotive in a nutshell ― Dynamic top line growth of 8%, mainly driven by Mechatronics (+ 13%) ― High growth and equity contribution of Hardparts JVs in China ― Improved results above expectations ― New JV with HASCO* improves growth prospects for aluminum tech
Slide 13: Top- and bottom line growth
Rheinmetall Automotive Top- and bottom line growth Increase of earnings driven by higher sales and improved efficiency Sales Automotive in EUR million Operational earnings Automotive in EUR million +26 +186 184 2,448 2,262 158 Reasons for earnings development 96 Mechatronics 1,322 1,171 — Higher sal
Slide 14: Automotive benefits from balanced customer base
Rheinmetall Automotive Automotive benefits from balanced customer base Sales growth outperforms especially the European and Asian markets Sales by customer in % Sales by region in EUR million Sales growth in % +8% Non-LV business: 33% Market 2,448 growth* Trucks/Others 2,262 VW/Porsche/Audi +7% 523
Slide 15: Automotive outperforms strong increase of Chinese LV production
Rheinmetall Automotive Automotive outperforms strong increase of Chinese LV production Joint ventures contribute significantly to results and cash flow LV production in million units Sales in EUR million +9% +29% 19.4 21.3 681 528 628 JVs* 499 WFOEs** 29 53 2013 2014 2013 2014 EBIT in EUR million Co
Slide 16: Rheinmetall Defence
Rheinmetall Defence © RH E I N M ETAL L A G 2 0 1 5 | F Y 2 0 1 4 RE P ORT | M A RC H 1 9 , 2 0 1 5 16
Slide 17: Reviewing 2014: Defence in a nutshell
Rheinmetall Defence Reviewing 2014 Defence in a nutshell ― Back to top line growth in a difficult market environment ― 60% of order intake and 50% of sales generated outside of Europe ― High order book coverage of sales for future periods ― Negative one-offs and unfavorable shift from components to
Slide 18: Weak operational performance
Rheinmetall Defence Weak operational performance External and internal effects impacted earnings Sales Defence in EUR million Operational earnings Defence in EUR million -69 +85 Reasons for earnings development 60 2,240 2,155 Combat Systems ― Impact of tightened export 47 policy 977 1,027 ― Provisio
Slide 19: Weak performance: special items burden earnings
Rheinmetall Defence Weak performance Special items burden earnings Bridge from operational earnings to EBIT reported in EUR million -9 39 9 10 -67 Operational Compliance Restructuring costs Purchase price EBIT reported 2014 earnings 2014 case Greece* adjustment drones business * Incl. EUR 2 million
Slide 20: 60 percent of order intake received from outside of Europe
Rheinmetall Defence 60 percent of order intake received from outside of Europe Strong order backlog implies high order book coverage of future sales Order intake by region in EUR million Order backlog… …turning into sales in EUR mn +8% -527 3,339 6,516 2,812 6,050 Australia 33% ~2,800 EUR 1.1 billio
Slide 21: Markets and Outlook
Rheinmetall Group MARKETS AND OUTLOOK © RH E I N M ETAL L A G 2 0 1 5 | F Y 2 0 1 4 RE P ORT | M A RC H 1 9 , 2 0 1 5 21
Slide 22: Automotive expected to remain a growth market
Rheinmetall Automotive Automotive expected to remain a growth market Tailwind by a continuously increasing global production Global LV production in million units +2.5% CAGR +2.3% 85.6 120 110 Rest of the World 100 90 Asia* 80 70 China 60 50 Japan 40 30 NAFTA 20 Europe** 10 Germany 0 2000 2005 2010
Slide 23: Automotive tomorrow
Rheinmetall Automotive Automotive tomorrow Strategic orientation for Rheinmetall Automotive − Expanding Mechatronics product portfolio to a global scale − Utilizing future growth potential of our innovative product pipeline (two third of current sales) − Broadening the product portfolio to alternati
Slide 24: Future growth drivers: Automotive
Rheinmetall Automotive Future growth drivers Automotive will grow stronger than the market ― Robust product pipeline: market introduction of steel pistons for LVs, SoP of EGR combi valve and variable coolant pump ― Continuing the shift to low-cost production sites by new significant orders with SoPs
Slide 25: Slight growth for defence markets expected
Rheinmetall Defence Slight growth for defence markets expected Rising budgets particularly in the MENA region and Asia/Pacific Global defence spending in USD billion ±0% CAGR 1,604 +1.0% 1,800 Rest of 1,600 the World 1,400 1,200 MENA/Asia 1,000 800 600 North America 400 Europe* 200 Germany 0 1990 19
Slide 26: Defence tomorrow
Rheinmetall Defence Defence tomorrow Strategic orientation for Rheinmetall Defence − Turning high order backlog into profitable sales − Our involvement in national consolidation requires political decisions (key technologies, procurement and export policy) − Reassessing investment strategy with focu
Slide 27: Future growth drivers: Land systems in Europe
Rheinmetall Defence Future growth drivers Land systems in Europe in the focus again ― New NATO approach provides for stronger role of Germany, combined with higher defence investments ― German defence budget will rise mid-term: first procurement projects identified, e.g. Boxer ― Renewed emphasis on
Slide 28: Short-term outlook
Rheinmetall Group Short-term outlook Outlook 2015 Sales in EUR billion Operational margin in % 2014 2015e 2014 2015e Group 4.7 4.8 - 5.0 3.4 approx. 5 Defence 2.2 2.3 - 2.4 - 0.4 3 Automotive 2.4 2.5 - 2.6 7.5 8 Assumptions ― Key large-scale projects in Defence to be realized as scheduled, no signif
Slide 29: Mid-term guidance
Rheinmetall Group Mid-term guidance Mid-term targets Defence ― Operational margin at 7% Automotive ― Operational margin at 8% Preconditions ― Globally stable macroeconomic environment ― Reliable political frame conditions regarding fiscal and export policy © RH E I N M ETAL L A G 2 0 1 5 | F Y 2 0 1
Slide 30: Summary
Rheinmetall Group Summary ― Future growth and increasing results in both segments ― Improving cash flow situation ― Concentration on operational performance ― Focus on rating improvement ― Increase of earnings per share and dividend © RH E I N M ETAL L A G 2 0 1 5 | F Y 2 0 1 4 RE P ORT | M A RC H 1
Slide 31: Appendix
Appendix: Rheinmetall Group APPENDIX © RH E I N M ETAL L A G 2 0 1 5 | F Y 2 0 1 4 RE P ORT | M A RC H 1 9 , 2 0 1 5 31
Slide 32: High cash credit facilities
Appendix: Rheinmetall Group High cash credit facilities Net financial debt high due to high level of receivables Cash credit facilities (as of December 31, 2014) Net financial debt (at year-end) in EUR million in EUR million Net gearing* in % ~1,580 Bilateral 330 ~400 bank facilities 28% Syndicated
Slide 33: Fiscal year 2014 in detail
Appendix: Rheinmetall Group Fiscal year 2014 in detail in EUR million 2013 2014 ∆ 2014/2013 Sales 4,417 4,688 + 271 Operational earnings 211 160 - 51 Special items: one-offs, restructuring costs - 90 - 58 + 32 EBIT (reported) 121 102 - 19 EBT 45 22 - 23 Group net income* 22 21 -1 Earnings per share*
Slide 34: Quarterly development
Appendix: Rheinmetall Group Quarterly development Sales in EUR million Operational earnings in EUR million 1,461 1,473 153 121 1,100 1,084 1,031 112 892 856 75 414 481 489 0 32 7 44 46 47 46 45 -3 1 617 619 595 617 -10 569 -5 -42 -32 -7 -4 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q4 2013 Q1 2014 Q2 2
Slide 35: Cash flow statement
Appendix: Rheinmetall Group Cash flow statement Continuing operations Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 ∆ Q4 2014/ in EUR million Q4 2013 Group net income 69 - 13 7 - 14 41 - 28 Amortization / depreciation 64 48 52 49 59 -5 Change in pension accruals 2 -2 0 1 -2 -4 Cash flow 135 33 59 36 98 -
Slide 36: Fiscal year 2014 in detail: Automotive
Appendix: Rheinmetall Automotive Fiscal year 2014 in detail Continuing operations 2013 2014 ∆ 2014/2013 in EUR million Sales 2,262 2,448 + 186 Operational earnings 158 184 + 26 Special items: one-offs, restructuring costs - 34 0 + 34 EBIT (reported) 124 184 + 60 Employees (Dec 31) 10,927 10,830 - 97
Slide 37: Key figures Automotive by division
Appendix: Rheinmetall Automotive Key figures Automotive by division (operational before special items) Continuing operations 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
Slide 38: Quarterly development: Automotive
Appendix: Rheinmetall Automotive Quarterly development Sales Automotive in EUR million Operational earnings Automotive in EUR million 617 619 617 45 595 46 47 46 569 44 238 235 229 16 17 21 232 18 223 13 22 25 340 25 24 22 332 333 317 296 7 7 6 6 7 65 67 68 67 67 2 -2 -1 -2 -15 -20 -17 -21 -19 -5 Q4
Slide 39: Cash flow statement: Automotive
Appendix: Rheinmetall Automotive Cash flow statement Continuing operations 2013 2014 ∆ 2014/2013 in EUR million Group net income 81 132 + 51 Amortization / depreciation 121 122 +1 Change in pension accruals -4 0 +4 Cash flow 198 254 + 56 Changes in working capital and other items 25 - 24 - 49 Net ca
Slide 40: Strong growth in non-LV business
Appendix: Rheinmetall Automotive Strong growth in non-LV business Sales of truck business doubled within 5 years Sales Automotive and non-LV sales in EUR million Non-LV sales and truck business sales in EUR million 2,448 2,369 2,313 2,262 802 714 735 705 1,982 578 735 802 705 714 578 226 275 157 204
Slide 41: Cost efficiency
Appendix: Rheinmetall Automotive Cost efficiency Headcount in low-cost countries continuously increasing 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 Low-cost − Czech Republic 30% 40% − Mexico countries 37% −
Slide 42: Fiscal year 2014 in detail: Defence
Appendix: Rheinmetall Defence Fiscal year 2014 in detail 2013 2014 ∆ 2014/ 2013 in EUR million Order intake 3,339 2,812 - 527 Order backlog (Dec 31) 6,050 6,516 + 466 Sales 2,155 2,240 + 85 Operational earnings 60 -9 - 69 Special items: one-offs, restructuring costs - 56 - 58 -2 EBIT (reported) 4 -
Slide 43: Cash flow statement: Defence
Appendix: Rheinmetall Defence Cash flow statement Continuing operations 2013 2014 ∆ 2014/2013 in EUR million Group net income - 27 - 72 - 45 Amortization / depreciation 92 85 -7 Change in pension accruals 2 0 -2 Cash flow 67 13 - 54 Changes in working capital and other items - 47 - 69 - 22 Net cash
Slide 44: Key figures Defence by division
Appendix: Rheinmetall Defence Key figures Defence by division (operational before special items) 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 -
Slide 45: Quarterly development: Defence
Appendix: Rheinmetall Defence Quarterly development Sales Defence in EUR million Operational earnings Defence in EUR million 892 112 856 75 73 462 419 52 489 34 481 414 13 196 220 13 10 265 142 239 -1 -3 1 0 -8 -5 140 -1 -21 174 152 -30 -10 245 -8 217 178 -1 -4 114 130 -10 -1 -32 -52 -16 -21 -25 -47
Slide 46: Weapon and ammunition business
Appendix: Rheinmetall Defence Weapon and ammunition business Recovery to be expected due to high share of booked orders Sales weapon and ammunition business (as of December 31, 2014) in EUR million 682 675 665 643 580 ~580 531 542 ~100 Order intake gap (as of December 31, 2014) Order backlog Sales 2
Slide 47: 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