Rheinmetall Ag · XETR:RHM
Rheinmetall — Q3 2004 Earnings Presentation
32 slides from Rheinmetall's earnings presentation, November 2004
Slide 1: Rheinmetall Group Q3/2004
Rheinmetall Group Q3/2004 November, 2004 1
Slide 2: At a glance
At a glance Rheinmetall continuing on track Corporate restructuring program completed Automotive and Defence geared towards growth and profitability Q3/2004: Earnings and performance achievements 2
Slide 3: Restructuring successfully completed
Rheinmetall Group: Restructuring completed Restructuring successfully completed Rheinmetall Restructuring successfully completed: Focus on two strategic businesses Group Streamlining of portfolio Buy-back of minorities Net debt reduced Creation of shareholder value through profitable growth
Slide 4: Enhanced profitability by operating measures
Rheinmetall Group: Restructuring completed Enhanced profitability by operating measures Adjusted EBIT Margin Q New management culture/orientation towards value creation 5.2% 4.2% 4.7% Q Restructuring of Automotive businesses US pistons business US bearings business Engine block business 2001 2
Slide 5: Financial debt reduced, balance sheet structure improved
Rheinmetall Group: Restructuring completed Financial debt reduced Balance sheet structure improved Net financial debt (€ million) Total equity / Stockholders' equity (€ million) Net debt Total equity Net adjusted debt ratio Stockholder´s equity 24% 1.004 17% 869 685 731 8% 7% 691 717 (76%) (92%) 301
Slide 6: Target structure achieved: Focus on Automotive and Defence
Rheinmetall Group: Restructuring completed Target structure achieved: Focus on Automotive and Defence 96,5% Rheinmetall AG 100% Kolbenschmidt Pierburg AG Rheinmetall DeTec AG Leading automotive supplier in Leading European defence company engine components and systems for ground forces technology 6
Slide 7: Automotive: Kolbenschmidt Pierburg AG
Automotive: Overview Automotive: Kolbenschmidt Pierburg AG Kolbenschmidt Pierburg AG Sales 2003: €1.9 billion, Employees: 11,316 Pierburg Pistons Plain Bearings Aluminum Technology Motor Service Air Supply Passenger Car Pistons Plain Bearings Aluminium Engine Aftermarket Commercial Vehicle Permaglid
Slide 8: Growth drivers for the automotive business
Automotive: Overview Growth drivers for the automotive business Attractive Growth Fuel economy Trends Emission control Weight reduction Diesel trend (Europe) Leading Market In every business unit among top 3 suppliers in relevant markets Positions Excellent customer relationships worldwide Global Ma
Slide 9: Well-balanced customer structure with leading position in key markets
Automotive: Market & Strategy Well-balanced customer structure with leading position in key markets Business Unit Market Position Pierburg Air supply products (Intake manifolds, etc.) Europe 1-3 17% Emission control (Secondary air syst., etc.) Europe 1 27% Pumps (Oil, water, vacuum) Europe 1-2 12% K
Slide 10: Organic growth through innovation (1)
Automotive: Market & Strategy Organic growth through innovation (1) Electric coolant pump Exhaust gas recirculation Integrated intake manifold system Key advantages New DC-motor driven EGR system Combined exhaust gas recirculation Cooling on demand Exhaust gas recirculation is valve, cooling sys
Slide 11: Organic growth through innovation (2)
Automotive: Market & Strategy Organic growth through innovation (2) Pistons with KS casting Engine blocks 3-layer bearings technology (SinteKS) Key advantages High-end aluminium engine Key advantages High-precision casting of complex blocks hypereutectic alloy High loading capacity geometries
Slide 12: Organic growth potential in North America, Asia and Eastern Europe
Automotive: Market & Strategy Organic growth potential in North America, Asia and Eastern Europe Shareholding: 8% Joint Venture in China 16% 32% €1.9 bn* Acquisition: Takeover of site 44% in Japan Germany Rest of Europe New Site: North America Czech Republic Rest of World *Fiscal year 2003 12
Slide 13: EBIT added up to €108 million
Automotive: Financials EBIT added up to €108 million € million 3Q/2003 3Q/2004 Net sales 1,421 1,465 EBITDA 167 196 EBIT 63 108 EBIT margin 4.4% 7.4% Adjusted EBIT 63 100 Adjusted EBIT margin 4.4% 6.8% EBT 45 88 13
Slide 14: Defence: Rheinmetall DeTec AG
Defence: Overview Defence: Rheinmetall DeTec AG Rheinmetall DeTec AG Sales 2003: €1.6 billion, Employees: 7,435 Land Systems Air Defence Systems Weapon and Munition Defence Electronics Armoured tracked and Terrestrial air defence For tank and artillery- Reconnaissance wheeled vehicles systems (mobil
Slide 15: Leading systems integrator for ground forces technology in Europe
Defence: Overview Leading systems integrator for ground forces technology in Europe Sales in 2003 € billion 1.6 0.8 0.7 0.7 0.7 0.5 0.3 Rheinmetall KMW Diehl GIAT Alvis / Alenia / GD / DeTec Hägglunds Oto Melara Mowag Source: Defence News 15
Slide 16: Growth drivers for the defence business
Defence: Overview Growth drivers for the defence business Leading market position Q Market leadership in light-weight armoured vehicles, NBC-reconnaissance, and innovative product short range air defence, weapons, ammunition and fire control systems portfolio Q Key-supplier of land systems to German
Slide 17: New determining factors will lead to changing market environment
Defence: Market & Strategy New determining factors will lead to changing market environment in the defence sector Military burden sharing for international operations (NATO, EU) Transformation of armed forces – national and international Market Increased investments in modern technology Homeland sec
Slide 18: Defence expenditures to grow worldwide
Defence: Market & Strategy Defence expenditures to grow worldwide Europe(a) excl. Germany (US$ billion) US (US$ billion) 420 400 380 19% 20% 19% 83.1 85.1 87.5 35% 35% 34% 2004E 2005E 2006E 2004E 2005E 2006E Source: Rheinmetall Military Procurement Source: US Department of Defence Capital expenditur
Slide 19: Innovative products in line with key market trends (1)
Defence: Market & Strategy Innovative products in line with key market trends (1) Multifunctional, air transportable armoured vehicles New infantry fighting Light infantry vehicle for vehicle (PUMA) Special Forces (WOLF) Protection of military and civilian facilities from air raids Light-weight, mis
Slide 20: Innovative products in line with key market trends (2)
Defence: Market & Strategy Innovative products in line with key market trends (2) Increasing threat from weapons of mass destruction and terrorist attacks NBC-Reconnaissance Passive protection system for vehicle (NBC FOX) ships and buildings (MASS) Increased deployment of sensor technology and netwo
Slide 21: Innovative products in line with key market trends (3)
Defence: Market & Strategy Innovative products in line with key market trends (3) Deployment of unmanned systems (Robotic) Unmanned, self-propelled Bomb disposal robot (tEODor) reconnaissance vehicle (PRIMUS) Increased demand for precision and combat effectiveness SMArt and ahead ammunition Air burs
Slide 22: Excellent customer relationships worldwide
Defence: Market & Strategy Excellent customer relationships worldwide European customers Customers ex Europe Europe (without Germany): Rest of the world: 40% of 2003 sales 17% of 2003 sales Norway Finland Sweden Denmark USA/Canada Japan Great Britain Poland Kuwait Egypt South Korea Netherlands UAE G
Slide 23: Operational profitability stronger and sustained
Defence: Financials Operational profitability stronger and sustained € million 2003 3Q/2003 3Q/2004 Net sales 1,605 1,014 853 EBITDA 138 70 53 EBIT 69 21 23 EBIT margin 4.3% 2.1% 2.7% Adjusted EBIT 92 17 25 Adjusted EBIT margin 5.7% 1.7% 2.9% EBT 46 5 9 23
Slide 24: 3Q/2004 highlights
Rheinmetall Group: Performance achievements 3Q/2004 highlights Rheinmetall shows organic growth of 4.0 percent EBIT increases from €79 million to €136 million EBIT margin lifted from 2.6 to 5.7 percent Earnings per preferred share more than tripled Net financial debts slashed by €296 million over pr
Slide 25: Sales trend affected by trimmed portfolio
Rheinmetall Group: Performance achievements Sales trend affected by trimmed portfolio Reported sales in € million 3Q/2003 3Q /2004 Rheinmetall Group 3,102 2,403 Automotive 1,421 1,465 Defence 1,014 853 Others / consolidation 667 85 25
Slide 26: Rheinmetall Group: continuing on the path of organic growth
Rheinmetall Group: Performance achievements Rheinmetall Group: continuing on the path of organic growth Like-for-like (LFL) 3Q sales 2004 vs. 2003 in € million Organic growth 3Q/2003 (LFL) 2,312 Rheinmetall Group +4.0% 3Q/2004 2,403 3Q/2003 (LFL) 1,393 +5.1% 3Q/2004 1,465 Automotive 3Q/2003 (LFL) 83
Slide 27: Rheinmetall earnings increased
Rheinmetall Group: Performance achievements Rheinmetall earnings increased 3Q/2002 3Q/2003 3Q/2004 € million Net sales 3,232 3,102 2,403 EBITDA 281 264 259 EBITDA-margin 8.7% 8.5% 10.8% EBIT 79 79 136 EBIT margin 2.4% 2.6% 5.7% EBT 6 24 87 Group net income 5 (2) 59 Minority interests (3) (4) (4) Gro
Slide 28: Earnings trend: EBIT margin before goodwill amortization up 32 percent
Rheinmetall Group: Performance achievements Earnings trend: EBIT margin before goodwill amortization up 32 percent € million 3Q/2003 3Q/2004 Change Net sales 3,102 2,403 –699 EBIT 79 136 +57 Extraordinary gains / losses 22 (15) –37 Adjusted EBIT 101 121 +20 Goodwill amortization 17 – –17 Adjusted EB
Slide 29: Earnings per preferred share boosted
Rheinmetall Group: Performance achievements Earnings per preferred share boosted € million 3Q/2002 3Q/2003 3Q/2004 Group earnings (after minority interests) 2 (6) 55 Goodwill amortization (incl. write-down for impairment) 17 19 – Group earnings before goodwill amortization 19 13 55 EpS (preferred) i
Slide 30: Forecast 2004 confirmed
Rheinmetall Group: Performance achievements Forecast 2004 confirmed Organic sales growth continues through Q4 Sales of €3.5 billion in 2004 expected All nine business units are profitable EBIT margin improved on prior year (before goodwill effects) Net interest expense slashed by a double-digit mill
Slide 31: Rheinmetall Group Q3/2004
Rheinmetall Group Q3/2004 November, 2004 31
Slide 32: Disclaimer
Rheinmetall AG Disclaimer Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Any forward looking statement contained in this presentation represent our best judgement as to wh