Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (January 2015)
55 slides from Rheinmetall's investor presentation, January 2015
Slide 1: Rheinmetall Corporate Presentation January 2015
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 Corporate Presentation January 2015 © RHEINMETALL AG 2015
Slide 2: Rheinmetall 2015
Rheinmetall Group “Rheinmetall 2015” Automotive fully on track, in Defence time shift of full realization — Strong development of Automotive in China and Mexico Internationalization — Export license delays affect international Defence orders and thus, the development of certain hubs, e.g. in Russia
Slide 3: Automotive
Rheinmetall Automotive AUTOMOTIVE © RH E I N M ETAL L A G 2 0 1 5 | C ORP ORA TE P RE S ENTATI ON | JA N U A RY 2 0 1 5 3
Slide 4: Situation analysis: KSPG product portfolio for growth
Rheinmetall Automotive Situation analysis Benefiting from important trends Higher performance Reduction of Reduction of from downsized emissions fuel consumption engines KSPG has the right product portfolio for a substantial growth © RH E I N M ETAL L A G 2 0 1 5 | C ORP ORA TE P RE S ENTATI ON | JA
Slide 5: Situation analysis: innovative products
Rheinmetall Automotive Situation analysis Innovative products In serial production Steel pistons Oil, water and vacuum for LV and trucks pumps Consumption reduction High efficiency and long up to 4% durability, fully variable oil pumps are saving up to 5% fuel Aluminum castings for EGR cooling modul
Slide 6: Internationalization
Rheinmetall Automotive Internationalization Strong increase of sales and earnings in China expected Sales in EUR million EBIT in EUR million x2.5 x2.5 WFOEs WFOEs 29 13 JVs* JVs* 8 6 499 0 39 388 0 31 258 298 22 15 -1 -5 2010 2011 2012 2013 2016e 2010 2011 2012 2013 2016e * Rheinmetall Automotive ow
Slide 7: Cost management
Rheinmetall Automotive Cost management 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 11,699 10,875 10,928 Low-cost 20% countries − Czech Republic 30% 40% − Mexico 37% − China
Slide 8: Long-term perspective
Appendix: Rheinmetall Automotive Long-term perspective Tailwind by a continuously growing market Global LV production in million units 120 CAGR 85.5 +2.3% Rest of 110 the World 100 90 Asia* 80 70 China 60 50 Japan 40 30 NAFTA 20 Europe** 10 Germany 0 2000 2005 2010 2015 2020 2025 2014 * Without Chin
Slide 9: Market trends for future drive systems
Rheinmetall Automotive Market trends for future drive systems Car sales in million units Phase 1: Phase 2: until 2020 after 2020 Pure combustion Hybrid and E-Drive 250 Gasoline-Hybrid 200 Gasoline-Plugin-Hybrid Diesel-Hybrid 150 Diesel-Plugin-Hybrid 100 E-Drive Gasoline 50 Fuel Cell-Drive 0 Diesel 2
Slide 10: Defence
Rheinmetall Defence DEFENCE © RH E I N M ETAL L A G 2 0 1 5 | C ORP ORA TE P RE S ENTATI ON | JA N U A RY 2 0 1 5 10
Slide 11: External and internal impacts on earnings 2014
Rheinmetall Defence External and internal impacts on earnings 2014 Situation analyzed, countermeasures initiated External impacts Internal impacts / Product mix (EUR 10 million) Delayed export Provisions for Withdrawal of order licenses, Sales decline potential warranties Cost overruns in export lic
Slide 12: Order backlog
Rheinmetall Defence Order backlog Large-scale systems contracts form the backbone for future top line growth Order backlog as of September 30, 2014… …turning into sales in EUR million in EUR billion -2% 6,285 ~2.0 6,165 ~1.8 ~1.6 ~0.8 09/2013 09/2014 Q4 2014e 2015e 2016e 2017ff. e Expected sales cov
Slide 13: High order backlog of more than EUR 6 billion
Rheinmetall Defence High order backlog of more than EUR 6 billion Strong backbone for future sales Combat Systems Electronic Solutions W h e e l e d Ve h i c l e s ― Puma: volume > EUR 1 billion ― Air Defence equipment for Asian ― Military trucks for Australia ― Tank howitzers, Leopard 2 customers a
Slide 14: National perspective
Rheinmetall Defence National perspective The “Magic Square” of German defence industry Key technologies National procurement Definition of key defence Clarification of national technologies in Germany 1 2 demand and procurement by German government Exogenous in order to set up programs Export licens
Slide 15: Definition of national demand for security products
Rheinmetall Defence Definition of national demand for security products First requests and drafts show rethinking of national procurement Fox Boxer − Budget request for further 131 Boxer vehicles recently approved Trucks Gladius − Continuation of upgrade program for Fox tanks − Equipping forces by f
Slide 16: Future markets and hub development
Rheinmetall Defence Future markets and hub development Realizing growth potential by more value creation in international hubs Scandinavia Russia UK Canada Netherlands Switzerland USA Italy Algeria Israel India Saudi Arabia UAE Indonesia Brazil Australia South Africa Hub with substantial growth pote
Slide 17: 2014 and Beyond
Rheinmetall Group 2014 AND BEYOND © RH E I N M ETAL L A G 2 0 1 5 | C ORP ORA TE P RE S ENTATI ON | JA N U A RY 2 0 1 5 17
Slide 18: Outlook 2014
Rheinmetall Group Outlook 2014 Defence down, Automotive up Sales Operational earnings in EUR billion in EUR million Previous Updated Previous Updated Group 4.6 - 4.7 4.6 200 - 220 150 Defence 2.3 2.2 65 - 75 - 10 Automotive 2.3 - 2.4 2.4 155 - 165 180 Outlook 2014 on operational earnings not includi
Slide 19: First view on 2015 and beyond
Rheinmetall Group First view on 2015 and beyond Defence to be focused on operational improvement • Tough cost and project surveillance • Avoiding unexpected one-offs by strictly controlling our risk profile • Returning to profitability in 2015 Automotive fully on track • Increasing sales by innovati
Slide 20: Mid-term view
Rheinmetall Group Mid-term view Concentration on balanced earnings in both segments Sales Group in EUR billion Segmental operational margin in % of segmental sales 4.7 4.6 4.6 4.5 4.0 4.0 3.9 3.6 3.5 3.4 Return to 10% long-term profitability 5% path 0% -5% 2005 2006 2007 2008 2009 2010 2011 2012 201
Slide 21: Appendix Group
Appendix: Rheinmetall Group APPENDIX GROUP © RH E I N M ETAL L A G 2 0 1 5 | C ORP ORA TE P RE S ENTATI ON | JA N U A RY 2 0 1 5 21
Slide 22: The Technology Group for Security and Mobility
Appendix: Rheinmetall Group The Technology Group for Security and Mobility Addressing the basic needs and megatrends in Defence and Automotive Sales: EUR 4.6 billion Employees: 21,100 Sales: EUR 2.2 billion Sales: EUR 2.5 billion Employees: 9,200 Employees: 11,700 Basic need Conflicts motivated by e
Slide 23: Group report
Appendix: Rheinmetall Group Group report Consolidated income statement Consolidated balance statement in EUR million 2009 2010 2011 2012* 2013 in EUR million 2009 2010 2011 2012* 2013 Sales 3,420 3,989 4,454 4,704 4,613 Total assets 3,835 4,460 4,832 4,899 4,857 EBITDA 180 464 538 490 324 Total equi
Slide 24: Segment report
Appendix: Rheinmetall Group Segment report in EUR million 2009 2010 2011 2012* 2013 Sales 1,898 2,007 2,141 2,335 2,155 Order intake 3,153 1,977 1,831 2,933 3,339 Order backlog (Dec. 31) 4,590 4,772 4,541 4,987 6,050 Rheinmetall EBITDA 263 297 303 262 96 Operational earnings 215 226 211 145 60 Defen
Slide 25: The first three quarters 2014 in detail
Appendix: Rheinmetall Group The first three quarters 2014 in detail Continuing operations 9M 2013 9M 2014 ∆ 9M 2014/ in EUR million 9M 2013 Sales 2,956 3,215 + 259 Operational earnings 58 39 - 19 Special items: one-offs, restructuring costs - 60 - 16 + 44 EBIT (reported) -2 23 + 25 EBT - 56 - 32 + 2
Slide 26: Cash flow statement
Appendix: Rheinmetall Group Cash flow statement Positive operating free cash flow in Q3 due to decrease of working capital Continuing and discontinued operations Q3 2013 Q1 2014 Q2 2014 Q3 2014 ∆ Q3 2014/ in EUR million Q3 2013 Group net income -2 - 13 7 - 14 - 12 Amortization / depreciation 50 48 5
Slide 27: Mitigating compliance risks
Appendix: Rheinmetall Group Mitigating compliance risks Compliance is an essential element of Rheinmetall’s corporate culture — Due to current cases in India and Greece, we completely reshuffled our compliance system — Countermeasures initiated Supporting official investigations Additional external
Slide 28: Continuous growth of book value, volatile share price
Appendix: Rheinmetall Group Continuous growth of book value, but volatile perception of stock exchanges Book value per share and share price at year-end in EUR 60.17 57.48 54.38 53.26 44.85 44.74 39.25 39.04 Share price 34.22 37.00 at year-end 30.00 33.81 34.35* 29.36 36.40 31.64** 28.64 34.24 26.03
Slide 29: Two pillars stabilize group results
Appendix: Rheinmetall Group Two pillars stabilize group results Cyclical development of segmental earnings Sales Group and segmental operational margin in EUR billion resp. in % of segmental sales 4.7 4.6 4.6 4.5 4.0 4.0 3.9 3.6 3.6 3.4 3.4 3.5 3.5 3.4 3.3 10% Weighted average: 5% 6.4% 0% -5% 2000 2
Slide 30: Two pillars: Automotive and Defence
Appendix: Rheinmetall Group Two pillars: Automotive and Defence Overview of synergy effects ENERGY/COMMODITIES FINANCING Pooled energy procurement Risk structure supports credit rating TECHNOLOGY HUMAN RESOURCES Benefits p.a. > EUR 10 million E.g. surface technology, Enlarged pool for management aut
Slide 31: Appendix: Rheinmetall Automotive
Appendix: Rheinmetall Automotive © RH E I N M ETAL L A G 2 0 1 5 | C ORP ORA TE P RE S ENTATI ON | JA N U A RY 2 0 1 5 31
Slide 32: The divisional structure of Automotive
Appendix: Rheinmetall Automotive The divisional structure of Defence Broad range of technologically leading products Automotive: EUR 2.5 billion Hardparts Mechatronics Aftermarket EUR 1.1 billion EUR 1.2 billion EUR 0.3 billion Pistons Pierburg International Large-bore pistons Pierburg Pump Technolo
Slide 33: Looking at the markets
Appendix: Rheinmetall Automotive Looking at the markets Continuing production in China, slight increase in Europe and the US Light vehicle production by region in million units Share of 2014 global LV production in % 17% Western Europe 2014 2015 2016 2017 25% China 14.3 14.5 14.8 15.4 2014 2015 2016
Slide 34: Since 2012 China has been the biggest car market
Appendix: Rheinmetall Automotive Global car production Light vehicle production in million units 25 Western Europe Japan 20 Beijing USA 15 Germany Shanghai 10 Brazil Hongkong Russia 5 India 0 China 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Since 2012 China has been the biggest car
Slide 35: Automotive network in China today
Appendix: Rheinmetall Automotive Automotive network in China today - sites and products Joint Ventures (50 : 50) KPSNC KPSNC KPSNC KPSNC KSSP PHP Shanghai Kunshan Yantai Shanghai Shanghai Shanghai Loutang (Head office) Cylinder heads, Fushan Waigang Anting Yuepuzhen Cylinder heads, Engine blocks Cyl
Slide 36: The first three quarters 2014 in detail
Appendix: Rheinmetall Automotive The first three quarters 2014 in detail Continuing operations 9M 2013 9M 2014 ∆ 9M 2014/ in EUR million 9M 2013 Sales 1,693 1,831 + 138 Operational earnings (EBIT before special items) 114 139 + 25 Special items (one-offs, restructuring costs) - 22 0 + 22 EBIT (repor
Slide 37: A set of factors leads to steady growth
Appendix: Rheinmetall Automotive A set of internal and external factors leads to steady growth Effective measures initiated to recover after the heavy crisis in 2008/2009 Operational earnings in EUR million - Increasing raw material prices and the World + Strong recovery, especially driven by increa
Slide 38: Four key strategic directions
Appendix: Rheinmetall Automotive Four key strategic directions Market attractiveness Improve / Enter Growth high Improve company Grow the profitable capabilities and additionally business as much as possible profitability and volume Exit Cash low Exit unprofitable business Limit resources as soon as
Slide 39: Screening of automotive product groups
Appendix: Rheinmetall Automotive Screening of 70 automotive product groups Business Unit A Business Unit B Business Unit C Division Mechatronics 54% of the product groups Business Unit D Business Unit E Business Unit A Business Unit B Business Unit C Division Hardparts 37% of the product groups Busi
Slide 40: Balanced product portfolio
Appendix: Rheinmetall Automotive Balanced product portfolio Product groups in % of sales in % of sales 1% 65% 31% 3% 30 28 20 15 13 9 10 5 0 Potential Enter Grow Cash Exit © RH E I N M ETAL L A G 2 0 1 5 | C ORP ORA TE P RE S ENTATI ON | JA N U A RY 2 0 1 5 40
Slide 41: CO2 savings with current KSPG products and innovations
Appendix: Rheinmetall Automotive CO2 savings with current KSPG products and innovations 5-6% less fuel 3 g/km CO2 4% fuel reduction Variable valve trains savings Specially composed Steel pistons for sliding layers for bearings diesel engines Optimized piston Coolant, oil and assemblies vacuum pumps
Slide 42: Tightening and converging emission legislation
Appendix: Rheinmetall Automotive Permanently tightening and globally converging emission legislation Region 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 China Diesel China II China III China IV China Gas. China II China III China IV Further convergence India Bharat
Slide 43: The divisions strategy in headlines
Appendix: Rheinmetall Automotive The divisions strategy in headlines Hardparts is growing with existing products in emerging markets Mechatronics is growing with new products in existing markets Aftermarket has a good profitability and potential for internal and external growth © RH E I N M ETAL L A
Slide 44: Automotive tomorrow
Appendix: Rheinmetall Automotive Automotive tomorrow Strategic orientation for Rheinmetall Automotive − Growth with existing products in emerging markets, e.g. Mexico, China − Growth with new products in existing markets, e.g. variable valve train − Expanding Aftermarket business − Safeguarding rest
Slide 45: Appendix: Rheinmetall Defence
Appendix: Rheinmetall Defence © RH E I N M ETAL L A G 2 0 1 5 | C ORP ORA TE P RE S ENTATI ON | JA N U A RY 2 0 1 5 45
Slide 46: The divisional structure of Defence
Appendix: Rheinmetall Defence The divisional structure of Defence Broad range of technologically leading products Defence: EUR 2.2 billion Combat Systems Electronic Solutions Wheeled Vehicles EUR 1.0 billion EUR 0.7 billion EUR 0.5 billion Combat Platforms Air Defence & Naval Systems Logistic Vehicl
Slide 47: Looking at the markets
Appendix: Rheinmetall Defence Looking at the markets Shift of budget growth from traditional to emerging markets Defence spending by region in USD billion Share of 2014 global Defence spending in % 18% Europe Global 2014 2015 2016 2017 2014 2015 2016 2017 293 286 282 283 1,606 1,624 1,629 1,659 36%
Slide 48: The first three quarters 2014 in detail
Appendix: Rheinmetall Defence The first three quarters 2014 in detail Continuing operations 9M 2013 9M 2014 ∆ 9M 2014/ in EUR million 9M 2013 Order intake 2,644 1,592 - 1,052 Order backlog 6,285 6,165 - 120 Sales 1,263 1,384 + 121 Operational earnings (EBIT before special items) - 52 - 84 - 32 Speci
Slide 49: Book-to-bill ratio since 2012 above average
Appendix: Rheinmetall Defence Book-to-bill ratio since 2012 above average Increasing share from emerging markets drives order intake Order intake in EUR million Book-to-bill ratio 1.7 1.5 1.2 1.3 1.1 1.2 1.0 0.9 1.0 Book-to-bill ratio 0.9 3,359 3,153 2,933 Puma* 1,977 1,804 1,831 1,696 1,723 1,553 1
Slide 50: Turning order backlog into sales
Appendix: Rheinmetall Defence Turning order backlog into sales Sales development for top projects per division Puma series contract (EUR 1.1 billion*) Military trucks Australia (EUR 1.1 billion*) Combat Systems 300 300 Electronic 200 200 Solutions 100 100 Wheeled Vehicles 0 0 2012 2013 2014 2015 201
Slide 51: High order intake and ramp-up of Puma
Appendix: Rheinmetall Defence High order intake and ramp-up of Puma Pushing future top line growth Order intake and sales in EUR million 2,335 2,200 2,141 2,155 2,007 Sales 1,898 1,757 1,814 3,359 1,445 3,153 1,401 2,933 Puma* 2014: Start of serial production 1,977 1,804 1,831 1,696 1,723 1,553 1,59
Slide 52: A set of factors led to steady growth
Appendix: Rheinmetall Defence A set of internal and external factors led to steady growth Strong earnings development, but erosion after weakened demand Sales in EUR million Operational margin in % of sales + International military operations, e.g. Iraq (2003), - Troops withdrawals from Iraq (until
Slide 53: Order potential beyond the backlog
Appendix: Rheinmetall Defence Order potential beyond the backlog Front-loaded pipeline of innovative products Selective products per division positioned in the life time cycle New 40mm airburst Combat Gladius MASS Training MBT Puma Center Revolu- C-RAM tion Fox 2 HX Lance Pro- (Mil. High- truck) Mar
Slide 54: Defence tomorrow
Appendix: Rheinmetall Defence Defence tomorrow Strategic orientation for Rheinmetall Defence − Improving operational performance to resolve earnings trough in the short term − Minimizing project risks and corresponding one-offs by strengthening project management capabilities − Reassessing investmen
Slide 55: 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