Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (June 2016)
63 slides from Rheinmetall's investor presentation, June 2016
Slide 1: Rheinmetall AG Corporate Presentation June 2016
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 June 2016 © RHEINMETALL AG 2016
Slide 2: Highlights Q1 2016
Rheinmetall Group Highlights Q1 2016 Strong order backlog, stable sales development, earnings progressing Sales increased by 1%, FX-adjusted by 2% Order backlog further increase to EUR 7.3 billion Earnings up to EUR 31 million, margin raised to 2.6% Rating Moody´s outlook improved from “negative” to
Slide 3: Key figures Q1 2016
Rheinmetall Group Key figures Q1 2016 in EUR million Q1 2015 Q1 2016 ∆ Q1 2016 / Q1 2015 Order backlog 7,070 7,317 + 247 + 3% Sales 1,173 1,180 +7 + 1% EBITDA 71 86 + 15 + 21% EBIT (reported) 22 31 +9 + 41% EBIT margin in % 1.9 2.6 + 0.7pp EBT 6 17 + 11 + 183% Group net income 5 12 +7 + 140% Earning
Slide 4: Cash flow statement
Rheinmetall Group Cash flow statement Q1 Q2 Q3 Q4 Q1 ∆ Q1 in EUR million 2015 2015 2015 2015 2016 2016/2015 Group net income 5 29 30 96 12 +7 Amortization / depreciation 49 50 49 55 55 +6 Change in pension accruals 0 1 0 2 -16 - 16 Cash flow 54 80 79 153 51 -3 Changes in working capital and - 202 -
Slide 5: Pension obligations – set-up of a CTA
Rheinmetall Group Pension obligations – set-up of a CTA Rheinmetall decided to start the external funding of German pension obligations and to establish a „Contractual Trust Arrangement“ (CTA) for the Group In January 2016, the CTA was initially funded with an amount of EUR 30 million Main goals of
Slide 6: 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 7: Review 2015: Strong sales and earnings growth
Rheinmetall Group Review 2015 Strong sales and earnings growth Rheinmetall Group: targets achieved, Sales for the first time above EUR 5 billion Automotive: Record sales and earnings Defence: Turnaround accomplished, order flow underpins strong market position Restructuring phase 2013 - 2015 success
Slide 8: © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | June 2016
© RHEINMETALL AG 2016 | CORPORATE PRESENTATION | June 2016 8
Slide 9: The divisional structure of Automotive
Appendix: 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 Com
Slide 10: Automotive: Key figures Q1 2016
Rheinmetall Automotive Key figures Q1 2016 in EUR million Q1 2015 Q1 2016 ∆ Q1 2016 / Q1 2015 Order intake 689 662 - 27 - 4% Order backlog (March 31) 407 452 + 45 + 11% Sales 664 654 - 10 - 2% EBITDA 83 85 +2 + 2% EBIT (reported) 55 52 -3 - 5% EBIT margin in % 8.3 8.0 - 0.3pp Free cash flow from ope
Slide 11: Sales affected by partially weaker demand, EBIT margin at 8.0%
Rheinmetall Automotive Sales affected by partially weaker demand EBIT margin at 8.0% Sales Automotive in EUR million Operational earnings Automotive in EUR million 664 654 55 Reasons for earnings development 52 Mechatronics 375 380 — Continuing growth 31 Hardparts 34 — Further deterioration of deman
Slide 12: 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 13: 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 14: China: Continuing growth, but with lower rates
Rheinmetall Automotive Growth driver “Market growth” China: Continuing growth, but with lower rates LV production in million units Sales 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 15: China: LV production grows; stable joint ventures
Rheinmetall Automotive China: LV production continues to grow, but with reduced rates Stable performance of Chinese joint ventures LV production EBIT** in EUR million in million units 18 16 6.0 6.2 14 JVs 15 WFOEs* 4 2 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Sales** in EUR million Earnings contribution in E
Slide 16: Global alliance with Riken
Rheinmetall Automotive Global alliance with Riken Automotive acquires 30% in Riken Automobile Parts in China Riken Automobile Parts (Wuhan) Co. Ltd. Strengthening of the existing strategic partnership concerning development and marketing with Riken Corp., Tokyo Automotive took over 30 % of Riken Aut
Slide 17: India: Well prepared for increasing demand for mobility
Rheinmetall Automotive Growth driver “Market growth” India: Well prepared to take advantage of increasing demand for mobility LV production in million units Sales in EUR million CAGR +10% CAGR >25% 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 2
Slide 18: Non-LV business: Truck engine production heading to growth
Rheinmetall Automotive Growth driver “Non-LV business” Truck engine production heading towards a growth phase Forecast truck engine production in million units Rheinmetall Automotive sales of non-LV and truck business in EUR million 5.0 CAGR 2010-2015 +7% 4.0 802 827 4.0 CAGR 2010-2015 -2% 0.2 714 7
Slide 19: 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 20: More content per car: traditional product portfolio
Rheinmetall Automotive Growth driver “More content per car” Trend of hybridization opens potential for more Rheinmetall products The traditional product portfolio for combustion engines … Actuators Engine bearings Solenoid valves Electric throttle bodies Pistons Mechanical coolant pumps Engine block
Slide 21: More content per car: products for hybrid engines
Rheinmetall Automotive Growth driver “More content per car” Trend of hybridization opens potential for more Rheinmetall products … will be enlarged by products for hybrid engines. Actuators Engine bearings Solenoid valves Electric throttle bodies Electrical coolant valve Pistons Structural Mechanica
Slide 22: 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 23: 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 24: © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | June 2016
© RHEINMETALL AG 2016 | CORPORATE PRESENTATION | June 2016 24
Slide 25: New divisional structure of Defence
Appendix: 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 &
Slide 26: Defence: Key figures Q1 2016
Rheinmetall Defence Key figures Q1 2016 in EUR million Q1 2015 Q1 2016 ∆ Q1 2016/ Q1 2015 Order intake 542 948 + 406 + 75% Order backlog (March 31) 6,629 6,865 + 236 + 4% Sales 509 526 + 17 + 3% EBITDA -7 5 + 12 EBIT (reported) - 28 - 17 + 11 EBIT margin in % - 5.5 - 3.2 + 2.3pp Free cash flow from
Slide 27: Recent order flow
Rheinmetall Defence Recent order flow New orders and frame contracts Air Defence MENA Upgrade Leopard 2 Poland Artillery ammunition MENA EUR 390 million EUR 130 million EUR 84 million © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | June 2016 27
Slide 28: Sales increase in Weapon and Ammunition and Vehicle Systems
Rheinmetall Defence Sales increase in Weapon and Ammunition and in Vehicle Systems Earnings improving but seasonally not yet in profit zone Sales Defence in EUR million Operational earnings Defence in EUR million 526 Reasons for earnings development 509 -5 Weapon and Ammunition 178 -11 -4 — Higher s
Slide 29: 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 €1.4 billion (in 2016) and a strong order backlog of €4.0 billion (end of 2015) Sole provider of the complete p
Slide 30: 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 High order potential High order backlog New markets in German home market Secures solid future Approaching new markets growth of Rheinmetall with local partners and Global market growth Defence in mid-term wi
Slide 31: High order potential Germany
Rheinmetall Defence Growth driver “High order potential Germany” A number of projects targeted by Rheinmetall Fox Leopard 2 Marder Upgrade order (2016) Upgrade order for 104 tanks Lifetime extension Potential ~€200 mill. Potential up to €200 mill. Potential ~€75 million Additional 6x6-vehicles Mid t
Slide 32: Global markets: The Defence macro picture is changing
Rheinmetall Defence Growth driver: Global markets The Defence macro picture is changing GERMANY Intention to return to fully RUSSIA equipped forces Huge armed forces modernization Necessity to spend EUR 130 billion program launched in spite of lower USA for armament up to 2030 growth rates of defenc
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 in EUR million Order backlog ….. turning into sales in EUR million 948 6,865 5% Rest of the World 6,629 RoW ~3,000 56% Asia/MENA 542 ~2,100 Asia/ ~1,800 31% MENA 31% 24% Eu
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 for a major Leopard modernization program, designated partner of joint ventures with
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 — New high-pressure 120mm cannon, — Currently in
Slide 36: Rheinmetall Group
Rheinmetall Group © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | June 2016 36
Slide 37: Rheinmetall Group
Rheinmetall Group © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | June 2016 37
Slide 38: Short-term perspective: Outlook 2016 confirmed
Rheinmetall Group Short-term perspective Outlook fiscal year 2016 confirmed Sales in € 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 39: 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 40: Appendix: Rheinmetall Group
Appendix: Rheinmetall Group © RHEINMETALL AG 2016 | CORPORATE PRESENTATION | June 2016 40
Slide 41: Key figures: Group
Appendix: Rheinmetall Group Key figures: Group 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 de
Slide 42: Key figures: Segments 2011–2015
Appendix: 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
Slide 43: Cash credit facilities and net financial debt
Appendix: 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 Syndica
Slide 44: Quarterly development
Appendix: Rheinmetall Group Quarterly development Sales in EUR million Operational earnings in EUR million 1,601 147 1,221 1,188 1,180 1,173 101 966 509 545 526 61 571 57 22 1 16 31 55 59 52 52 50 664 676 617 635 654 -3 -5 -6 -17 -28 -4 -5 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q1 2015 Q2 2015 Q3 2
Slide 45: Research & development, capex, depreciation & amortization
Appendix: Rheinmetall Group Research & development, capex, depreciation & amortization R&D in EUR million Capex in EUR million D&A in EUR million in % of sales in % of sales 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 201
Slide 46: Automotive: Fiscal year 2015 survey
Appendix: Rheinmetall Automotive Fiscal year 2015: survey 2014 2015 ∆ 2015/2014 in EUR million Sales 2,448 2,592 + 144 + 6% Operational earnings 184 216 + 32 + 17% Special items: one-offs, restructuring costs 0 0 ±0 ± 0% EBIT (reported) 184 216 + 32 + 17% Employees (Dec 31) 10,830 10,934 + 104 + 1%
Slide 47: Key figures by division
Appendix: Rheinmetall Automotive Key figures by division 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 2014 2015 2014
Slide 48: Key figures Automotive by division
Appendix: Rheinmetall Automotive Key figures Automotive by division in EUR million Mechatronics Hardparts Aftermarket -10 +5 -9 Sales ±0 664 654 375 380 242 231 69 69 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Q1 2015 Q1 2016 -3 +3 Opera- -7 55 -2 tional 52 31 34 20 13 7 5 earnings Q1 2015 Q1 2
Slide 49: Top- and bottom line growth
Rheinmetall Automotive Top- and bottom line growth Strong sales and earnings contribution from Mechatronics Sales Automotive in EUR million Operational earnings Automotive in EUR million 216 2,592 2,448 184 REASONS FOR EARNINGS DEVELOPMENT Mechatronics 118 1,450 96 - Strong profitable growth 1,322 H
Slide 50: Quarterly development
Appendix: Rheinmetall Automotive Quarterly development Sales Automotive in EUR million Operational earnings Automotive in EUR million 664 676 59 654 55 617 635 52 52 46 375 376 31 34 333 366 380 26 27 34 242 248 237 231 20 19 20 225 14 13 69 74 74 68 69 7 7 7 6 5 -22 -22 -27 -24 -26 -3 -1 -2 0 0 Q1
Slide 51: Research & development, capex, depreciation & amortization
Appendix: Rheinmetall Automotive Research & development, capex, depreciation & amortization R&D in EUR million Capex in EUR million D&A in EUR million in % of sales in % of sales 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
Slide 52: Sales by customers and by regions
Appendix: Rheinmetall Automotive Sales by customers and by regions Sales by customer in % Sales by region in EUR million Market Growth** Sales growth in % in % Non-LV business: 34% 2,592 2,448 Trucks/Others Ford 528 523 +1% +2% Ships/ 14% 16% Power plants/ MIR* VW/Porsche/Audi 1,238 7% 12% +4% 1,191
Slide 53: Automotive in China
Appendix: 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
Slide 54: Cash flow statement
Appendix: Rheinmetall Automotive Cash flow statement Q1 Q2 Q3 Q4 Q1 ∆ Q1 in EUR million 2015 2015 2015 2015 2016 2016/2015 Net income 40 43 35 43 38 -2 Amortization / depreciation 28 28 28 32 33 +5 Change in pension accruals 0 0 -2 0 0 ±0 Cash flow 68 71 61 75 71 +3 Changes in working capital and -
Slide 55: Defence: Fiscal year 2015 survey
Appendix: Rheinmetall Defence Fiscal year 2015: survey 2014 2015 ∆ 2015/ 2014 in EUR million Order intake 2,812 2,693 - 119 - 4% Order backlog (Dec 31) 6,516 6,422 - 94 - 1% Sales 2,240 2,591 + 351 + 16% Operational earnings -9 90 + 99 Special items: one-offs, restructuring costs - 58 0 + 58 EBIT (r
Slide 56: Key figures Defence by division
Appendix: Rheinmetall Defence Key figures Defence by division 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 26 -2 tional -9 0 1 -9 -11 earnings 2014 20
Slide 57: Key figures Defence by division
Appendix: Rheinmetall Defence Key figures Defence by division in EUR million Weapon and Ammunition Electronic Solutions Vehicle Systems +17 +24 -9 +35 Sales 509 526 154 178 159 150 226 261 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Q1 2015 Q1 2016 +11 +6 -2 +7 Opera- -5 -2 -4 -13 -6 -17 -11 tio
Slide 58: Turnaround of the operational performance
Rheinmetall Defence Turnaround of the operational performance Return to profitability by operational improvements and no further one-offs Sales Defence in EUR million Operational earnings Defence in EUR million REASONS FOR EARNINGS DEVELOPMENT 2,591 Combat Systems 2,240 ― Order execution boosts sale
Slide 59: Quarterly development: Sales
Appendix: Rheinmetall Defence Quarterly development: Sales Sales Defence – old divisional structure Sales Defence – new divisional structure in EUR million in EUR million 966 966 404 553 545 571 571 546 527 509 509 158 270 165 178 239 278 312 154 271 174 155 150 159 159 155 174 408 265 296 263 211 2
Slide 60: Quarterly development: Operational earnings
Appendix: Rheinmetall Defence Quarterly development: Operational earnings Operational earnings Defence – Operational earnings Defence – old divisional structure in EUR million new divisional structure in EUR million 101 101 82 77 16 16 16 16 8 17 19 1 1 9 14 4 4 9 -1 -2 1 -5 3 -1 1 -11 -11 -4 -1 -6
Slide 61: Research & development, capex, depreciation & amortization
Appendix: Rheinmetall Defence Research & development, capex, depreciation & amortization R&D in EUR million Capex in EUR million D&A in EUR million in % of sales in % of sales 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
Slide 62: Cash flow statement
Appendix: Rheinmetall Defence Cash flow statement Q1 Q2 Q3 Q4 Q1 ∆ Q1 in EUR million 2015 2015 2015 2015 2016 2016/2015 Net income - 30 -8 3 67 - 20 + 10 Amortization / depreciation 21 21 21 22 22 +1 Change in pension accruals 0 3 2 3 1 +1 Cash flow -9 16 26 92 3 + 12 Changes in working capital and
Slide 63: 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