Rheinmetall Ag · XETR:RHM
Rheinmetall — Q3 2017 Earnings Presentation
31 slides from Rheinmetall's earnings presentation, Nov 7, 2017
Slide 1: Conference Call Q3 2017
Conference Call Q3 2017 Düsseldorf / 7 November 2017
Slide 2: 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
Slide 3: Highlights Rheinmetall Group Q3 2017
Highlights Rheinmetall Group Q3 2017 Solid quarter with strong result contribution from Defence Sales increased by 4.7% to €1.366 bn or 5.4% currency adjusted Operating result improved by 23% to €97 m Group margin gained 100bp advancing from 6.1% to 7.1% Automotive optimized global footprint with Q3
Slide 4: Operational margin improvement continues in Q3
Operational margin improvement continues in Q3 Sales Operational result in EUR million in EUR million Operational margin in % 5% 1,366 23% 97 1,305 79 7.1 6.1 Q3 Q3 Q3 Q3 2016 2017 2016 2017 © Rheinmetall AG / Conference Call Q3 2017 4
Slide 5: Cash flow affected by working capital buildup in Defence
Cash flow affected by working capital buildup in Defence Operating Free Cash Flow Earnings per share Headcount in EUR million in EUR in capacities -86% 3% 36 1.18 20,982 21,552 0.97 0.35 0.83 5 Q3 Q3 Q3 Q3 30.09.2016 30.09.2017 2016 2017 2016 2017 © Rheinmetall AG / Conference Call Q3 2017 5
Slide 6: Solid financial status further improved
Solid financial status further improved Net debt Equity ratio in EUR million in % of total assets -46% +5pp 445 31% 26% 242 30.09.2016 30.09.2017 30.09.2016 30.09.2017 © Rheinmetall AG / Conference Call Q3 2017 6
Slide 7: Highlights Rheinmetall Automotive Q3 2017
Highlights Rheinmetall Automotive Q3 2017 Market outperformed, margin improved Sales rose by 6% to €684 m, FX adjusted 7.3% Operating result grew by 12% to €57 m Operating margin increased by 40bp to 8.3% Quarterly free cash flow improved by €34m to €81 m Restructuring impact on reported EBIT of €22
Slide 8: Rheinmetall Automotive: Good operational performance on profitability and cash level
Rheinmetall Automotive Good operational performance on profitability and cash level Quarterly sales and margins development Comments on quarterly performance 737 Sales increased by 6.4% compared to global LV growth of 2.2% 728 684 643 664 8.4 9.2 8.3 Operating result rose to €57 m lifting margin to
Slide 9: Operational leverage in Mechatronics and Hardparts drive the quarter
Operational leverage in Mechatronics and Hardparts drive the quarter Sales Automotive Operating result Automotive Reasons for result development in EUR million in EUR million 6% 684 12% Mechatronics 643 57 Strong demand for fuel 51 optimization as main driver; emission reduction on solid level 382 3
Slide 10: Markets in better shape than anticipated, outperformance intact
Markets in better shape than anticipated, outperformance intact Regional sales development Automotive Regional sales growth Q3 2017 in EUR million in % (IHS October 2017) 6% 684 Global 6.4 643 2.2 27 4 Row 3 21 South America 95 84 RoW 21 Asia -10 105 113 North America Asia 13 (incl. China) 4 Germany
Slide 11: Chinese entities stronger than the market
Chinese entities stronger than the market China LV production Sales in million Operating result in million / in % in million units +7% +8% 1,845 146 Strong growth and operating 1,717 134 -0.4% earnings 1,514 1,610 CNY 119 6.3 6.3 116 JVs: Hardparts sales up; 0 204 -2 236 18 27 operating margin sligh
Slide 12: Hardparts streamlined its global footprint
Hardparts streamlined its global footprint Closure of pistons plant in Thionville (Lorraine/France) Financial impact Strategic step to improve the One time cost of around €22 m, cost basis of Hardparts thereof: Concentration of European €17 m for severance payments LV pistons production and site rem
Slide 13: Highlights Rheinmetall Defence Q3 2017
Highlights Rheinmetall Defence Q3 2017 Strong momentum in earnings and order intake Order intake rose by €296 m to €870 m Sales gained 3% to €682 m Operating result increased by 53% from €30 m to €46 m Operating margin went up from 4.5% to 6.7% Boxer „UK edition“ for DSEI fair 2017 © Rheinmetall AG
Slide 14: Rheinmetall Defence: Margin and order intake trend positively
Rheinmetall Defence Margin and order intake trend positively towards FY guidance Quarterly sales and margins development Comments on quarterly performance Strong increase of German orders (i.e. vehicles and ammunition) 1,034 661 731 682 Moderate sales growth of 3% as anticipated 11.2 612 4.5 3.3 6.7
Slide 15: Operational strength in Vehicle Systems as well as Weapon and Ammunition
Operational strength in Vehicle Systems as well as Weapon and Ammunition Sales Defence Operating results Defence Reasons for result development in EUR million in EUR million +3% +53% Weapon and Ammunition 662 682 46 Good sales development leads to higher earnings 227 248 +9% 30 28 Electronic Solutio
Slide 16: German contracts essential for high order intake in Q3
German contracts essential for high order intake in Q3 Order intake by division Order backlog profile in EUR million in EUR billion 6.9 +52% 6.7 2.5 870 284 1.8 574 1.5 173 Major German 197 orders with total 185 value > €460 m 0.9 included 434 288 -72 -45 30.09. 30.09. 2017e 2018e 2019e 2020e ff Q3
Slide 17: Rheinmetall will modernize German logistical fleet
Rheinmetall will modernize German logistical fleet 2017 2018 2021 First lot Second lot Bundeswehr Truck Order 558 trucks ~1.600 trucks Framework agreement signed Framework agreement HX2 family replaces the existing fleet of military trucks Net value: €760 m for ~2.200 vehicles First lot delivered be
Slide 18: Outlook: Guidance affirmed for 2017
Outlook Guidance affirmed for 2017 AU TO M OT I V E DEFENCE M a c ro v i ew Global LV production growth ~2%* Further demand increase in key markets Chinese LV production growth ~1% Germany and other allies have stepped up investment budgets R h e i n m eta l l Automotive expected to outperform marke
Slide 19: Appendix
Appendix © Rheinmetall AG / Conference Call Q3 2017 19
Slide 20: Financial reminder for 2017
Financial reminder for 2017 Automotive Defence Capex ~5.5-6.5% ~3-4% D&A ~4.5-5.5% ~3-3.5% R&D ~4-6% ~2-3% Holding cost (underlying) ~EUR20 million - EUR25 million Expected corporate tax rate ~30% Financing EUR500 million bond (5,25% coupon) redeemed in September EIB loan EUR250 million (0,962% coup
Slide 21: Quarterly development Group
Quarterly development Group Sales Operational results in EUR million in EUR million 1,698 171 1,459 1,349 1,366 1,305 1,034 115 612 731 95 97 682 662 79 45 46 30 50 664 737 728 684 643 60 62 57 51 56 -2 -4 -10 -6 -6 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 -2 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 D
Slide 22: Cash Flow Statement Group
Cash Flow Statement Group Q3 9m Q4 Q1 Q2 Q3 9m Δ Q3 Δ 9m in EUR million 2016 2016 2016 2017 2017 2017 2017 2016/2017 2016/2017 Group Net Income 46 99 116 28 51 43 122 -3 23 Amortization / depreciation 52 161 67 57 55 59 171 7 10 Change in pension accruals - -14 - -34 -3 1 -36 1 -22 Cash Flow 98 246
Slide 23: Quarterly development Automotive
Quarterly development Automotive Sales by division Operational results by division in EUR million in EUR million 737 728 67 684 664 62 643 60 57 51 425 407 380 382 47 355 35 43 40 35 249 251 232 22 225 222 16 11 17 13 82 85 83 93 95 9 8 7 9 9 -19 -23 -20 -23 -25 -4 -5 -5 -5 -5 Q3 2016 Q4 2016 Q1 201
Slide 24: Cash flow statement Automotive
Cash flow statement Automotive Q3 9m Q4 Q1 Q2 Q3 9m Δ Q3 Δ 9m in EUR million 2016 2016 2016 2017 2017 2017 2017 '16/'17 '16/'17 Net income 36 116 49 46 50 25 121 -11 5 Amortization / depreciation 29 93 40 32 32 37 101 8 8 Change in pension accruals -1 -1 -1 - - - - 1 1 Cash Flow 64 208 88 78 82 62 2
Slide 25: Quarterly development Defence
Quarterly development Defence Sales by division Operational earnings by division in EUR million in EUR million 115 1,034 63 391 46 662 731 682 613 25 227 305 248 30 244 191 28 24 172 138 165 141 25 12 483 30 6 361 351 337 370 5 14 13 4 0 1 -98 -84 -67 -52 -101 -4 -3 -4 -1 -1 -1 -7 Q3 2016 Q4 2016 Q1
Slide 26: Cash flow statement Defence
Cash flow statement Defence Q3 9m Q4 Q1 Q2 Q3 9m Δ Q3 Δ 9m in EUR million 2016 2016 2016 2017 2017 2017 2017 '16/'17 '16/'17 Net income 13 -4 78 -16 8 32 24 19 28 Amortization / depreciation 22 66 26 24 22 21 67 -1 1 Change in pension accruals 1 4 1 -3 -6 2 -7 1 -11 Cash Flow 36 66 105 5 24 55 84 19
Slide 27: Income statement Group
Income statement Group In EUR million Income Statement Q3 '16 Q3 '17 Δ Q3 '16 Q3 '17 Δ Total operating performance 1,385 1,407 22 Net operating income (EBIT) 79 75 -4 Net interest income 1 3 2 Interest expenses - 15 - 13 2 Other operating income 26 19 -7 Earnings before tax (EBT) 65 65 0 Cost of mat
Slide 28: Cash flow statement Group
Cash flow statement Group In EUR million Cash Flow Statement 9m 2016 9m 2017 Δ 9m 2016 9m 2017 Δ Net Income 99 122 23 Capital payment to/ capital contribution by non-controlling interests-8 -10 -2 Amortization, depreciation and impairment 161 171 10 Increase in shares in consolidated subsidiaries 0
Slide 29: Balance Sheet Group
Balance Sheet Group In EUR million Balance Sheet 31.12.'16 30.09.'17 Δ 31.12.'16 30.09.'17 Δ Non-current assets 2,762 2,715 -47 Equity 1,781 1,811 30 Intangible assets 819 798 -21 Share capital 112 112 0 Property, plant and equipment 1,378 1,340 -38 Additional paid-in capital 532 540 8 Investment pr
Slide 30: Next events and IR contacts
Next events and IR contacts Events 2017 IR Contacts Q3 Earnings call 7 Nov Franz-Bernd Reich Capital Markets Day 2017 Bremen 21 – 22 Nov Head of IR Berenberg Conference Pennyhill 4 – 5 Dec Tel: +49-211 473-4718 Email: franz-bernd.reich@rheinmetall.com Dirk Winkels Senior Investor Relations Manager E
Slide 31: © Rheinmetall AG / Conference Call Q3 2017
© Rheinmetall AG / Conference Call Q3 2017 31