Slide 1: Rheinmetall Group Corporate Presentation
Rheinmetall Group Corporate Presentation August 2019
Slide 2: Rheinmetall Group Structure
Rheinmetall Group RHEINMETALL GROUP STRUCTURE. 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 b
Slide 3: Q2 2019 Group commercial highlights
Rheinmetall Group Q2 2019 Group commercial highlights Performance in line with expectations Order backlog Sales Operating result EPS oFCF €8.8bn €1.5bn €109m €1.70 €-79m +25% -2%* +2% +37% +44% Order backlog remains on high level Sales declined -2%* at constant exchange rates (reported -1%) to €1.5b
Slide 4: Rheinmetall successful in Q2 with awards and important orders
Rheinmetall Group Q2 2019 Group commercial highlights Rheinmetall successful in Q2 with awards and important orders Foundation stone laid for major ammunition contract – Pierburg China awarded Rheinmetall to serve as the Dutch armed “High Unit Productivity Enterprise” forces’ chief supplier for anot
Slide 5: Solid earnings performance in the second quarter
Rheinmetall Group Q2 2019 Group commercial highlights Solid earnings performance in the second quarter Sales Operating result in €m Earnings per share in €m Operating margin in % in € 1,493 -1.8 % +0.3% 37.1% -27 115 1.70 1,471 +1.1 % +1.3% 109 6 5 107 1 1 1.24 7.2% 7.4% 1,471 Series +2.4 % -1.5% Q2
Slide 6: Operating Free Cash Flow driven by working capital improvements
Rheinmetall Group Q2 2019 Group commercial highlights Operating Free Cash Flow driven by working capital improvements Operating free cash flow bridge in €m -9 Improved earnings -7 -79 Q2 2018 included non-scheduled write-down of €24m 89 Working capital optimization was the major driver for OFCF 11 i
Slide 7: Reduced equity ratio mainly related to M&A transaction
Rheinmetall Group Q2 2019 Group commercial highlights Reduced equity ratio mainly related to M&A transaction Net financial debt Net gearing in €m Net debt in % of total equity +18pp 19.5 -31 1.4 -387 31.12.2018 30.06.2019 31.12.2018 30.06.2019 Equity bridge in €m and equity margin in % 2,172 -83 110
Slide 8: Typical seasonal increase of net debt
Rheinmetall Group Q2 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 Ʃ 1,003 Commercial 134 Papers Other & 182 Leasing 2019 2020 2021 2022 2023 2024 2025ff. -31 137 Bank loans 300 -171 25 -219
Slide 9: Updated view on H2
Rheinmetall Group Updated view on H2 Global LV market AUTOMOTIVE DEFENCE No market recovery H2 sales slightly below H1 Pipeline fully loaded expected 2019 German order entry likely to IHS revised market Ramp-up significantly increase growth to -3.7% for the lower than expected Normal seasonal patter
Slide 10: FY 2019 Guidance. Group guidance specified
Rheinmetall Group FY 2019 GUIDANCE. GROUP GUIDANCE SPECIFIED Sales Operating margin 2018 2019e 2018 2019e Growth yoy in % at Growth yoy in % at in % in % constant FX constant FX GROUP 6.1 around 4 8.0 around 8 (before: 4 – 6) AUTOMOTIVE 4.2 -2 to -3 8.9 around 7 (before: 0 to 1) (before: around 8) D
Slide 11: Automotive – Focus on innovation
Automotive – Focus on innovation 11
Slide 12: 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* Hardparts RoW Sales: €2.9bn Asia 1% Aftermarket Hardparts 17% 12% Pistons Large-bore Pistons 33% Op. result: €262m 45% USMCA 16% Europe Op. margin: 8.9% Bearings C
Slide 13: 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 14: 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 15: Q2 2019 Highlights: Automotive
Rheinmetall Automotive Q2 2019 Highlights: Automotive Maintaining competitiveness in a deteriorating market Quarterly sales and margin development Comments on quarterly performance In €m and % Sales decline of -1.8% (FX-adjusted -2.6%) again far better than 740 708 731 714 727 overall market develop
Slide 16: Pressure on Diesel left a mark in Mechatronics and Hardparts
Rheinmetall Automotive Q2 2019 Highlights: Automotive Pressure on Diesel left a mark in Mechatronics and Hardparts Sales Automotive Operating result Automotive Mechatronics in €m in €m •Low Diesel related sales with Margin Margin adverse margin effect -1.8% Q2 2018 Q2 2019 •Higher R&D expenses for f
Slide 17: Weak development, but global market development was even worse
Rheinmetall Automotive Q2 2019 Highlights: Automotive Weak development, but global market development was even worse Regional sales development Automotive in €m -1.8% 740 727 5.2% 0.8% 0.8% 9.6% 8.7% Weak market environment, global LV production 3.2% 34.8% 9.6% declined by 7.5*% 3.2% 38.7% 16.0% RoW
Slide 18: Q2 2019 China Total Management View
Rheinmetall Automotive Q2 2019 China Total Management View Sales development again significantly better than market Sales in €m -0.4% -0.3% 4.9% 260 271 -1 -1 12 229 238 +4.2% Sales development operationally almost stable, supported by M&A effect of 4.9 % 31 32 Q2 2018 operational FX M&A Q2 2019 Sig
Slide 19: Diesel suffered most in Q2 mitigated by Gasoline and Non-LV
Rheinmetall Automotive Q2 2019 Highlights: Automotive Diesel suffered most in Q2 mitigated by Gasoline and Non-LV Business Sales split LV / Non-LV Sales split Non-LV in €m / in % in €m / in % Delta absolute in % -1.8% Diesel - 33 -17.1% 740 727 Gasoline +3 +1.2% +1.7% other LV +13 +32.5% 193 160 256
Slide 20: 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 21: 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 +1% HEV WLTP 130 CO2 NOx 106 113 Mainly EU! 95 94 in g/km in mg/km -
Slide 22: 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 23: 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 Q3 2019 23
Slide 24: 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 25: E-mobility: Competence underlined by contracts and initiatives
Rheinmetall Automotive E-mobility Competence underlined by contracts and by initiatives for new solutions Lifetime order value for electric vehicles (EV)* in €m E-Taxi London Pump technology for pure electric taxis 1,000 800 Battery cell boxes 500 Aluminum battery boxes for German premium OEM 2017 2
Slide 26: 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 27: 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 28: 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 29: 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 30: 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 31: Defence – at the beginning of a “super cycle”
Defence – at the beginning of a “super cycle” 31
Slide 32: 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 Germany Weapon and 8% Weapon and Protection Aus/NZ 15% Ammunition Ammunition Systems 34% 31% Op. result: €254m
Slide 33: Top products per division
Rheinmetall Defence TOP PRODUCTS PER DIVISION. WEAPON AND ELECTRONIC VEHICLE AMMUNITION SOLUTIONS SYSTEMS HX-FAMILY MID & LARGE CALIBER AMMO MISSION EQUIPMENT LOGISTIC VEHICLES WEAPONS AIR DEFENCE & RADAR SYSTEMS TACTICAL VEHICLES BOXER PUMA PROTECTION SYSTEMS - ACTIVE LEOPARD - PASSIVE - SOFTKILL ©
Slide 34: Q2 2019 Highlights: Defence
Rheinmetall Defence Q2 2019 Highlights: Defence Acceleration of profitability Quarterly sales and margin development Comments on quarterly performance In €m and % 1,255 Order intake of €501m lacking major orders, expected for H2 Sales stable vs last year; FX not relevant 754 703 14.3 746 629 Margin
Slide 35: ES and VS with strong profitability gains
Rheinmetall Defence Q2 2019 Highlights: Defence ES and VS with strong profitability gains Sales Defence Operating result Defence in €m in €m Weapon and Ammunition Margin Margin •Negative impact from ZA +36% -1.1% Q2 2018 Q2 2019 •Slower sales due to missing 754 746 5.8% 60 8.1% German export approva
Slide 36: Modest order intake due to project timing geared towards second half
Rheinmetall Defence Q2 2019 Highlights: Defence Modest order intake due to project timing geared towards second half Order intake by division Order backlog profile in €m in €bn Weapon and Ammunition change in % Electronic Solutions -12% Vehicle Systems 570 Consolidation 28% 501 8.3 ~2.0 ~2.0 ~4.3 27
Slide 37: Update on M&A
Rheinmetall Defence Update on M&A RBSL (UK) RMMV (D) Leading supplier of land Re-acquisition of systems in Europe tactical vehicles share to Acquisition of 55% stake in JV regain full control with BAE Systems Closing expected in Q3’19 Closing July 1st Reduction of minorities 45% minorities IBD (D) P
Slide 38: Declining budgets (especially in the West) 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 39: Strong German commitment to 1.5% with increased demand starting in 2019
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 ~1.500 +54% Expected commitment authorizations 679 724 60.0 39.0 43.2 44.9 44.1 44.1 44.0 2018 2019 2020 2021 2022 2023 2024* 2
Slide 40: NATO commitment key driver for German demand
Rheinmetall 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 VJTF´19 VJTF´23 1x Division 3x Division 3x Division 04/2018 (1 Brigade) (3x Brigade) (8x Brigade) (10x Brigade) C
Slide 41: German Defence: 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 42: 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 43: Mission Australia: Establishing a new “home market” down under
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 44: European Defence. Current or expected tenders tactical vehicles
Rheinmetall Defence EUROPEAN DEFENCE. CURRENT OR EXPECTED TENDERS TACTICAL VEHICLES. Drivers for European vehicle programmes UK MIV & Challenger upgrade Lt − Return to territorial and alliance defence − Standardization of NATO equipment Pl − Modernization and upgrades Cz Sk H Estimate for European t
Slide 45: Eastern Europe Nato members increased spending by 50%
Rheinmetall Defence European Defence Eastern Europe Nato members increased spending by 50% Defence expenditure in €m +8% +25% 984.234 49.132 39.304 NATO 910.187 GER 2014 2019e 2014 2019e +4% +50% 685.099 20.935 13.990 660.062 USA Eastern- Europe* 2014 2019e 2014 2019e *Including: Poland, Bulgaria, H
Slide 46: Future Main Battle Tank system MGCS will be a milestone
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 47: 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 48: Defence International: Creation of new hubs in 2018
Rheinmetall Defence 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 Q3 2019 48
Slide 49: Innovations: Demand-driven product development and targeted cooperations
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 50: 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 (~€1.5bn) Germany programs Hungary: Boxer/Lynx ( ~€2bn) Hungary: Leopard & tank
Slide 51: Group Appendix
GROUP APPENDIX © Rheinmetall AG / Corporate Presentation Q3 2019 51
Slide 52: 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 53: Group 2014 – 2018: Key figures (as reported)
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 54: 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 55: 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 56: 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 57: 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 58: ESG: High importance for Rheinmetall
Appendix: Rheinmetall Group ESG 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 stakeho
Slide 59: Rheinmetall Technology Cluster
Appendix: Rheinmetall Group RHEINMETALL TECHNOLOGY CLUSTER. TOP FIVE TECHNOLOGY CLUSTER IDENTIFIED AUTOMATION NEXT SENSORS DIGITIZATION E-MOBILITY ARTIFICIAL INTELLIGENCE Advanced assistant New, digitalized vehicle New LIDAR* / Hybrid drive AI supported technologies systems for driving, architecture
Slide 60: Investor Relations: Next events and contacts
Investor Relations Next events and contacts Next Events IR Contacts Commerzbank Conference, Frankfurt 28 August Dirk Winkels Head of Investor Relations RS East Coast 17/18 September Tel: +49-211 473-4749 Email: dirk.winkels@rheinmetall.com Berenberg Conference, Munich 24/25 September Berenberg Confe
Slide 61: 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