Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (September 2016)
62 slides from Rheinmetall's investor presentation, September 2016
Slide 1: Rheinmetall Group Corporate Presentation September 2016
Rheinmetall Group THE TECHNOLOGY GROUP FOR SECURITY AND MOBILITY R H E I N M E TA L L A G Corporate Presentation September 2016 © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | September 2016 1
Slide 2: Highlights H1 2016
Rheinmetall Group Highlights H1 2016 Increased sales, strong order backlog, earnings progressing Sales Increased by 9%, FX-adjusted by 10% Order backlog Further increase from EUR 7.1 billion to EUR 7.3 billion Earnings Up to EUR 103 million, margin raised from 3.3% to 4.0% Automotive Solid Q2 overco
Slide 3: Key figures H1 2016
Rheinmetall Group Key figures H1 2016 in EUR million H1 2015 H1 2016 ∆ H1 2016/ H1 2015 Sales 2,394 2,599 + 205 + 9% EBITDA 177 212 + 35 + 20% Operational earnings 79 103 + 24 + 30% EBIT (reported) 79 103 + 24 + 30% EBIT margin in % 3.3 4.0 + 0.7pp EBT 48 75 + 27 + 56% Group net income 34 53 + 19 +
Slide 4: Key figures Q2 2016 per segment
Rheinmetall Group Key figures Q2 2016 per segment Rheinmetall Group in EUR million Q2 2015 Q2 2016 ∆ Q2 2016 /2015 Sales 1.221 1.419 + 198 + 16% EBITDA 106 126 + 20 + 19% EBIT (reported) 57 72 + 15 + 26% EBIT margin in % 4.7 5.1 + 0.4pp Automotive Sales 676 695 + 19 + 3% EBITDA 87 91 +4 + 5% EBIT (r
Slide 5: The Technology Group for Security and Mobility
Rheinmetall Group The Technology Group for Security and Mobility Addressing the basic needs and megatrends in Defence and Automotive Sales: EUR 5.2 billion Employees: 20,800 Sales: EUR 2.6 billion Sales: EUR 2.6 billion Employees: 9,900 Employees: 10,900 Basic need Accumulating international conflic
Slide 6: One Rheinmetall
Rheinmetall Group One Rheinmetall Continuing the successful strategic development of both segments Rebranding/repositioning as an integrated technology group for security and mobility 2016: One Rheinmetall Changing the public perception of Rheinmetall as primarily a supplier of military equipment In
Slide 7: © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | September 2016
© RHEINMETALL AG 2016 | CORPORATE PRESENTATION | September 2016 7
Slide 8: The divisional structure of Automotive
Rheinmetall Automotive The divisional structure of Automotive Focused on the attractive segment of powertrain technology RHEINMETALL AUTOMOTIVE EUR 2.6 billion Hardparts Mechatronics Aftermarket Pistons Emission Systems International Large-bore pistons Solenoid Valves National Bearings Commercial Di
Slide 9: Highlights H1 2016 Automotive
Rheinmetall Automotive Highlights H1 2016 Automotive gaining momentum after a soft start into the year Growth in Q2 stabilizes H1 sales slightly above Sales previous year’s level Ramp-up of new products begin to show New orders positive topline impact Margin of 8.6% in Q2 reached again the Earnings
Slide 10: Key figures H1 2016 Automotive
Rheinmetall Automotive Key figures H1 2016 in EUR million H1 2015 H1 2016 ∆ H1 2016 /2015 Order intake 1.320 1.304 - 16 - 1% Order backlog (June 30) 397 401 +4 + 1% Sales 1.340 1.349 +9 + 1% EBITDA 170 176 +6 + 4% EBIT 114 112 -2 - 2% EBIT margin in % 8.5 8.3 - 0.2pp Free cash flow from operations 1
Slide 11: Sales growth in Mechatronics continues
Rheinmetall Automotive Sales growth in Mechatronics continues Strong Q2 shift sales and earnings in H1 on previous year’s level Sales Automotive Operational earnings Automotive in EUR million in EUR million +1% 1,340 1,349 -2% 114 112 Reasons for earnings development 751 +26 777 Mechatronics 65 — St
Slide 12: Automotive LV sales development
Rheinmetall Automotive Automotive LV sales development H1 LV-sales above growth of global LV production Global LV production Sales Automotive LV/Non-LV in million units in EUR million 46,9 1,340 1,349 45,9 285 -8.4% 261 10,9 11,4 143 +2.8% 147 without 8,8 9,1 China: +0.9% Global: 11,3 11,1 +2.2% 912
Slide 13: Automotive organic growth: main strategic drivers
Rheinmetall Automotive Organic growth Main strategic drivers AUTOMOTIVE O R G A N I C G R O W T H Market growth More content Higher value of products Light Vehicles (LV) Increasing number of Innovative solutions with Globally rising production Rheinmetall products per higher price level, driven by c
Slide 14: Growth driver Market growth: global light vehicle demand
Rheinmetall Automotive Growth driver “Market growth” Ongoing increase of global demand for light vehicles Forecast global light vehicle (LV) production in million units 120 112 110 2 − Light vehicles remain on 100 89 21 growth path 90 0,3 2014-2015: 1% 2 80 2015-2025 (CAGR): 3% 70 − Combustion engin
Slide 15: Growth driver Market growth: China
Rheinmetall Automotive Growth driver “Market growth” China: Continuing growth, but with lower rates LV production Sales in million units in EUR million CAGR +4% 2x CAGR Market 30.0 26.8 1.500 23.6 24.9 22.6 20.0 1.000 871 681 JVs 10.0 500 785 Headcount: 2.081 628 53 86 WFOEs 0 Locations: 11 plants 0
Slide 16: Growth driver Market growth: India
Rheinmetall Automotive Growth driver “Market growth” India: Well prepared to take advantage of increasing demand for mobility LV production Sales in million units in EUR million 100 6.0 5.1 4.1 3.6 3.8 4.0 50 39 Headcount: 509 30 2.0 Locations: 3 plants 0 0 20% stake in Shriram 2014 2015 2016e 2018e
Slide 17: Trend to hybrid vehicles expected to accelerate
Rheinmetall Automotive Growth driver “More content per car/hybridization” Trend to hybrid vehicles expected to accelerate Forecast production of hybrid vehicles* in million units 25 21.5 − Stricter emission regulations 20 increase attractiveness of 5.9 alternative energy concepts 15 − Hybrid powertr
Slide 18: Hybridization opens potential for more Rheinmetall products
Rheinmetall Automotive Growth driver “More content per car/hybridization” Trend of hybridization opens potential for more Rheinmetall products Enlarging the traditional product portfolio for combustion engines … … by products for hybrid and electric engines. Actuators Solenoid valves Structural Elec
Slide 19: Higher value of products
Rheinmetall Automotive Growth driver “Higher value of products” Electrification and downsizing require more sophisticated products Coolant pump Exhaust gas recirculation Mechanical >6x Electrical Valve >3x Valve, cooler, bypass and bypass actuator Oil pump Piston Mechanical >3x Variable Aluminum >3x
Slide 20: Strategic target: Engine neutrality
Rheinmetall Automotive Growth drivers “More content per car” and “Higher value of products” Strategic target: Engine neutrality Product Portfolio Gasoline Diesel Hybrid E-drive Divisions Mechatronics Technological developments in line with customer requirements (e.g., electric and/or variable pumps,
Slide 21: © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | September 2016
© RHEINMETALL AG 2016 | CORPORATE PRESENTATION | September 2016 21
Slide 22: New divisional structure of Defence
Rheinmetall Defence New divisional structure of Defence Transfer of Combat Platforms RHEINMETALL DEFENCE EUR 2.6 billion Vehicle Systems Electronic Solutions Weapon and Ammunition Previously: Wheeled Vehicles Previously: Combat Systems Logistic Vehicles Air Defence & Naval Systems Weapon & Munition
Slide 23: The new Vehicle Systems Division
Rheinmetall Defence Rheinmetall Defence The new Vehicle Systems Division – a competitive international supplier Leading European supplier of military vehicle systems with expected sales of EUR 1.4 billion (in 2016) and a strong order backlog of EUR 4.0 billion (end of 2015) Sole provider of the comp
Slide 24: Highlights H1 2016 Defence
Rheinmetall Defence Highlights H1 2016 Strong performance in orders, sales and earnings Soared by roughly EUR 500 million Order intake pushing the book-to-bill ratio to 1.4 Order backlog Increased to EUR 6.9 billion Sales Up by EUR 200 million or 19% Trend of improving earnings continues; Earnings w
Slide 25: Key figures H1 2016 Defence
Rheinmetall Defence Key figures H1 2016 in EUR million H1 2015 H1 2016 ∆ H1 2016/2015 Order intake 1,235 1,751 + 516 + 42% Order backlog (June 30) 6,728 6,905 + 177 + 3% Sales 1,054 1,250 + 196 + 19% EBITDA 15 46 + 31 + 207% EBIT - 27 +2 + 29 - 107% EBIT margin in % - 2.6 + 0.2 + 2.8pp Free cash flo
Slide 26: Sales increase in all divisions
Rheinmetall Defence Sales increase in all divisions H1 earnings significantly improved Sales Defence Operational earnings Defence in EUR million in EUR million -107% +19% 2 1,250 Reasons for earnings development 1,054 Weapon and Ammunition 493 20 +31 — Higher sales in all business units 319 +174 1 E
Slide 27: Defence organic growth: main strategic drivers
Rheinmetall Defence Organic growth Main strategic drivers DEFENCE O R G A N I C G R O W T H Global market growth High order backlog New markets Increase of Defense Secures solid future Approaching new markets budgets due to changing growth of Rheinmetall with local partners and security situation De
Slide 28: The defence macro picture is changing
Rheinmetall Defence Growth driver: Global markets The defence macro picture is changing GERMANY Intention to return to fully equipped forces RUSSIA USA Necessity to spend EUR 130 billion Huge armed forces modernization for armament forces up to 2030 program launched in spite of lower Trend of budget
Slide 29: Global defence budget growth
Rheinmetall Defence Global defence budget growth Defence is a growing market due to globally increasing need for security Globally increasing, particularly in the MENA/Asian region Current conflicts changing the security needs (Development of defence budgets 2015e-2019e in % p.a.) Russia/Ukraine cri
Slide 30: Positive macro picture for defence industry
Rheinmetall Defence Positive macro picture for defence industry Rising defence budgets in NATO countries Increase of defence expenditures of NATO countries German defence budget 2014-2020 from 2014 to 2016 in EUR billion in % Increasing budgets in 22 of 28 NATO countries +6% +14% Baltic states 50% P
Slide 31: High order potential - International
Rheinmetall Defence Growth driver “High order potential - International” A number of projects targeted by Rheinmetall Order received 2016 BEYOND International customer Australia Air defence system Land 400 program Modernization Boxer with Lance turret Volume: €390 mill. Potential: ~ €2.5 bn. Decisio
Slide 32: High order potential - Germany
Rheinmetall Defence Growth driver “High order potential - Germany” A number of projects targeted by Rheinmetall Order received 2016 BEYOND Boxer (12/2015) Gladius soldier system Combat Training Center Order for 131 Boxers Order expected for 2017 Additional equipment Volume: €130 mill. Potential: ~ €
Slide 33: High order backlog
Rheinmetall Defence Growth driver “High order backlog” High order book coverage of mid-term future sales Order intake by region Order backlog … turning into sales in EUR million in EUR million 1,751 6,905 6,728 6% Rest of the World ~3,400 RoW 1,235 21% 58% Asia/MENA ~2,000 Asia/ MENA ~1,500 36% 20%
Slide 34: New markets: local industrial partnerships
Rheinmetall Defence Growth driver “New markets” Expanding local footprint by individual industrial partnerships POLAND TURKEY — Cooperation with the Polish defence industry ― Rheinmetall Turk as a local entity is a partner for a major Leopard modernization program of joint ventures with Turkish defe
Slide 35: New technologies and products ready for market launch
Rheinmetall Defence Growth driver “New products” New technologies and products ready for market launch M B T M O D E R N I Z AT I O N / N E W C A L I B E R NEW CONCEPT MGCS* — Digital turret core system — MGCS concept for new main battle tank started — Currently in concept phase — New high-pressure
Slide 36: Proposition of a 130mm tank gun for future MBT
Rheinmetall Defence Growth driver “New products” Proposition of a 130mm tank gun for future MBT Demonstrator for the main armament of a future generation 120mm 130 mm of main battle tanks (MBT) 8% larger caliber leads to 130mm tank gun 50% higher performance Quantum leap in performance compared with
Slide 37: Launch of the new infantry fighting vehicle Lynx
Rheinmetall Defence Growth driver “New products” Launch of the new infantry fighting vehicle (IFV) Lynx Two versions: Lance turret 38t and 44t 30/35mm for 9 and 11 soldiers 560-700 kW engine; Secondary armament performance >30% in caliber 7.62mm compared to Marder Rubber tracks: Remote controlled Re
Slide 38: Rheinmetall Group
Rheinmetall Group © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | September 2016 38
Slide 39: Short-term perspective: Outlook 2016 confirmed
Rheinmetall Group Short-term perspective Outlook fiscal year 2016 confirmed Sales in EUR billion Operational margin 2015 2016 2015 2016 Group 5.2 ~ 5.5 5.5% ~ 6% Defence 2.6 ~ 2.8 3.5% 4.5-5% Automotive 2.6 ~ 2.7 8.3% ~ 8% Assumptions Key large-scale projects in Defence to be realized as scheduled,
Slide 40: Mid-term perspective
Rheinmetall Group Mid-term perspective Looking ahead: Markets and Rheinmetall Markets with good mid-term perspectives: Global growth in Defence and Automotive Market Sales Operational CAGR 2015-2018e Margin Automotive 2.8% ~ 4-5% ~ 8% Defence 1.1% ~ 8% ~ 6-7% Changing markets Sustainable growth of g
Slide 41: Rheinmetall Group
Rheinmetall Group © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | September 2016 41
Slide 42: Key figures: Group 2011 - 2015
Rheinmetall Group Key figures: Group 2011 - 2015 in EUR million 2011 2012 2013 2014 2015 Balance sheet Total assets 4,832 4,899 4,866 5,271 5,730 Shareholder‘s equity 1,546 1,465 1,339 1,197 1,562 Equity ratio (in %) 32.0 29.9 27.5 22.7 27.3 Pension liabilities 729 919 891 1,121 1,128 Net financial
Slide 43: Key figures: Segments 2011 – 2015
Rheinmetall Group Key figures: Segments 2011 – 2015 AUTOMOTIVE DEFENCE 2011 2012 2013 2014 2015 in EUR million 2011 2012 2013 2014 2015 2,357 2,378 2,270 2,466 2,621 Order intake 1,831 2,933 3,339 2,812 2,693 409 418 392 416 445 Order backlog (Dec. 31) 4,541 4,987 6,050 6,516 6,422 2,313 2,369 2,262
Slide 44: Cash credit facilities and net financial debt
Rheinmetall Group Cash credit facilities and net financial debt Cash credit facilities Net financial debt Net financial debt (at year-end) in EUR million (as of Dec. 31, 2015) (at quarter end) Net gearing* in % in EUR million in EUR million ~1,580 Bilateral 330 ~400 bank facilities Syndicated loan 5
Slide 45: Pension obligations
Rheinmetall Group Pension obligations Internal funding in Germany, external funding in Switzerland Pension obligations by country Plan assets and Defined Benefit Obligation (DBO) in EUR million by country (per Dec 31 2015) in EUR million 1,121 1,128 Plan assets DBO 54 56 891 176 207 161 Net 45 Other
Slide 46: Quarterly development
Rheinmetall Group Quarterly development Sales Operational earnings in EUR million in EUR million 1,601 147 1,419 1,221 1,188 1,180 1,173 101 966 724 72 509 545 526 61 571 57 19 22 1 16 31 55 59 52 52 60 50 664 676 635 654 695 617 -3 -5 -6 -7 -17 -28 -4 -5 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2
Slide 47: Research & development, capex, depreciation & amortization
Rheinmetall Group Research & development, capex, depreciation & amortization R&D Capex D&A in EUR million; in % of sales in EUR million; in % of sales in EUR million; in % of sales 310 19* 269 24* 239 203 197 214 291 215 245 6.0% 190 5.7% 4.2% 4.6% 4.1% 3.9% 24 24 thereof capitalized 2014 2015 2014
Slide 48: Cash flow statement: Group
Rheinmetall Group Cash flow statement: Group in EUR million Q1 Q2 Q3 Q4 Q1 Q2 ∆ Q2 2015 2015 2015 2015 2016 2016 2016/2015 Group net income 5 29 30 96 12 41 + 12 Amortization / depreciation 49 50 49 55 55 54 +4 Change in pension accruals 0 1 0 2 -16 2 +1 Cash flow 54 80 79 153 51 97 + 17 Changes in
Slide 49: Key figures by division: Automotive FY 2014/2015
Rheinmetall Automotive Key figures by division: Automotive FY 2014/2015 in EUR million Mechatronics Hardparts Aftermarket +144 +128 +18 2,592 +16 Sales 1,322 1,450 2,448 934 952 269 285 2014 2015 2014 2015 2014 2015 2014 2015 +32 +22 Opera- +1 216 +1 tional 96 118 72 73 earnings 184 26 27 2014 2015
Slide 50: Key figures by division: Automotive H1 2015/2016
Appendix: Rheinmetall Automotive Key figures by division: Automotive H1 2015/2016 in EUR million Mechatronics Hardparts Aftermarket +9 +26 -16 Sales 1,340 1,349 751 777 +4 490 474 143 147 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 -2 +5 Opera- -10 tional 114 112 107 65 70 -2 ear
Slide 51: Quarterly development: Automotive
Rheinmetall Automotive Quarterly development Sales Automotive Operational earnings Automotive in EUR million in EUR million 695 59 60 664 676 55 654 617 635 52 52 46 376 397 31 34 36 375 380 333 366 26 27 34 242 248 237 243 20 19 20 16 225 231 14 13 7 7 7 7 69 74 74 68 69 78 6 5 -1 0 0 1 -22 -22 -27
Slide 52: Research & development, capex, depreciation & amortization
Rheinmetall Automotive Research & development, capex, depreciation & amortization R&D Capex D&A in EUR million; in % of sales in EUR million; in % of sales in EUR million; in % of sales 182 186 19* 24* 167 7.2% 116 7.0% 111 149 6.4% 4.5% 6.1% 4.5% 158 167 158 140 thereof capitalized 9 9 2014 2015 20
Slide 53: Sales by customers and by regions
Rheinmetall Automotive Sales by customers and by regions Sales by customer Sales by region in EUR million Market Growth** in % Sales growth in % in % 2,592 2,448 Trucks/Others Ford 528 523 +1% +2% Ships/ 17% 14% Power plants/ VW/ MIR* Audi/ 1,238 7% 12% +4% Porsche 1,191 +4% 2015 11% Aftermarket 11%
Slide 54: 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 (ATAG) Pistons (KSSP) Castings (KPSNC) Pumps (PHP) Aftermarket Pierburg Large-bore pistons Pumps (PMP Ch.) 2014 1997 2001 2012
Slide 55: Cash flow statement: Automotive
Rheinmetall Automotive Cash flow statement: Automotive in EUR million Q1 Q2 Q3 Q4 Q1 Q2 ∆ Q2 2015 2015 2015 2015 2016 2016 2016/2015 Net income 40 43 35 43 38 42 -1 Amortization / depreciation 28 28 28 32 33 31 +3 Change in pension accruals 0 0 -2 0 0 0 ±0 Cash flow 68 71 61 75 71 73 +2 Changes in w
Slide 56: Key figures by division: Defence FY 2014/2015
Rheinmetall Defence Key figures by division: Defence FY 2014/2015 in EUR million Combat Systems Electronic Solutions Wheeled Vehicles +351 +405 +54 -67 Sales 2,240 2,591 1,382 977 705 759 667 600 2014 2015 2014 2015 2014 2015 2014 2015 +99 +88 +25 Opera- 90 88 -2 26 tional -9 0 1 -9 -11 earnings 201
Slide 57: Key figures by division: Defence H1 2015/2016
Rheinmetall Defence Key figures by division: Defence H1 2015/2016 in EUR million Weapon and Munition Electronic Solutions Vehicle Systems +196 +57 Sales +174 +15 1,054 1,250 493 491 548 319 314 329 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 +31 Opera- +29 -6 +9 20 tional 2 -11 1
Slide 58: Quarterly development: Sales
Rheinmetall Defence Quarterly development: Sales Sales Defence – old divisional structure Sales Defence – new divisional structure in EUR million in EUR million 966 966 404 724 553 545 571 571 546 527 315 509 509 158 270 165 178 239 278 312 154 271 174 179 155 150 159 159 155 174 408 265 296 263 287
Slide 59: Quarterly development: Operational earnings
Rheinmetall Defence Quarterly development: Operational earnings Operational earnings Defence – Operational earnings Defence – old divisional structure new divisional structure in EUR million 101 in EUR million 101 82 77 16 16 19 16 16 17 1 8 25 14 19 4 9 1 9 3 1 1 -1 4 -2 1 -1 -1 -5 -6 -6 -11 -11 -4
Slide 60: Research & development, capex, depreciation & amortization
Rheinmetall Defence Research & development, capex, depreciation & amortization R&D Capex D&A in EUR million; in % of sales in EUR million; in % of sales in EUR million; in % of sales 96 85 85 3.7% 76 72 3.8% 3.3% 65 3.4% 2.8% 2.9% 57 50 15 15 thereof capitalized 2014 2015 2014 2015 2014 2015 © RHEIN
Slide 61: Cash flow statement: Defence
Rheinmetall Defence Cash flow statement: Defence in EUR million Q1 Q2 Q3 Q4 Q1 Q2 ∆ Q2 2015 2015 2015 2015 2016 2016 2016/2015 Net income - 30 -8 3 67 - 20 3 + 11 Amortization / depreciation 21 21 21 22 22 22 +1 Change in pension accruals 0 3 2 3 1 2 -1 Cash flow -9 16 26 92 3 27 + 11 Changes in wor
Slide 62: 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