Rheinmetall Ag · XETR:RHM
Rheinmetall — Investor Presentation (January 2013)
50 slides from Rheinmetall's investor presentation, Jan 16, 2013
Slide 1: International Technology Group for Defence and Automotive
Corporate Presentation I January 2013 International Technology Group for Defence and Automotive © Rheinmetall 2013
Slide 2: Leading positions in Defence and Automotive
Rheinmetall Group Rheinmetall Group Leading positions in Defence and Automotive Sales : € 4.5 billion Employees: 22,000 RHEINMETALL DEFENCE RHEINMETALL AUTOMOTIVE Leading European Defence company Leading Automotive supplier for ground forces technology in engine components and systems Sales: € 2.1 b
Slide 3: Times of change and continuity
Rheinmetall Group Rheinmetall Group Times of change and continuity Armin Papperger Helmut P. Merch Dr. Gerd Kleinert CEO Rheinmetall AG CFO Rheinmetall AG CEO Automotive CEO Defence Strategic review: new opportunities and objectives to be announced in March 2013 Outlook FY 2013 as well as mid-term
Slide 4: Latest published Group figures
Rheinmetall Group Latest published Group figures Top-line growth, but weaker earnings Group Q1-3 Q1-3 Δ Q1-3 € million 2011 2012 (2012/2011) Sales 3,105 3,275 + 170 +5% EBITDA 336 321 - 15 -4% EBIT 203 177 - 26 - 13 % EBIT margin (%) 6.5 5.4 - 1.1pp EBT 161 136 - 25 - 15 % Tax rate (%) 26 21 - 5pp G
Slide 5: Outlook FY 2012 as of Q3
Rheinmetall Group Outlook FY 2012 as of Q3 Rheinmetall on track to deliver solid Group EBIT Sales Group in € million EBIT Group in € million approx. 4,800 4,454 3,869 3,989 354 approx. 3,420 300 297 245 15* 2008 2009 2010 2011 2012e 2008 2009 2010 2011 2012e * € 138 million restructuring costs deduc
Slide 6: Rheinmetall Defence
RHEINMETALL DEFENCE © Rheinmetall 2013
Slide 7: The divisional structure of Defence
Rheinmetall Defence The divisional structure of Defence Broad range of technologically leading products Sales (FY 2011): € 2.1 billion Combat Systems Electronic Solutions Wheeled Vehicles € 1.1 billion* € 0.8 billion* € 0.3 billion* Combat Platforms Air Defence Systems Logistic Vehicles** Infantry D
Slide 8: Main characteristics of the division
Rheinmetall Defence Main characteristics of the division Strong market position with well-balanced product and risk portfolio Strong European player for ground forces with significant product spin-offs for navy and airforce Combination of long-running/large-scale systems supplier business (e.g. ve
Slide 9: International Defence markets: The current situation
Rheinmetall Defence International Defence markets: The current situation In general still high global demand for modernization of forces: Defence remains a growth market Lower growth momentum and higher volatility in the development of Defence budgets worldwide Increasing budgets in many regions
Slide 10: Defence industry in a challenging environment
Rheinmetall Defence Defence industry in a challenging environment Global defence budgets will continue to grow, but less dynamically Expected global defence spending and procurement in US$ billion +2% 1,590 1,588 1,629 1,567 1,555 1,292 1,278 1,259 1,277 1,307 +8% Defence Procurement 298 289 296 311
Slide 11: Budget cuts in the US and in many European countries
Rheinmetall Defence Budget cuts in the US and in many European countries… …but strong growth in other strategically important regions Change in expected defence spending 2016 vs. 2012 Canada - 6% Russia + 17% South Korea + 11% USA - 12% Algeria + 37% Turkey + 23% UAE + 15% Saudi Arabia + 18% India S
Slide 12: Different kinds of business
Rheinmetall Defence Different kinds of business Well-balanced mix of systems, components and aftersales business Split of sales Systems Components Tracked and Wheeled Vehicles Turrets and Weapon Stations Simulation and Training Weapon and Ammunition Air Defence 40-50% 35-45% Protection S
Slide 13: Global location network
Rheinmetall Defence Global location network Rheinmetall has established sites in all important defence markets Production sites and sales offices 2012 Europe Norway Sweden Russia United Kingdom Germany Canada Netherlands Austria Switzerland Turkey USA Americas Italy Greece Middle East Algeria UAE Sa
Slide 14: Latest published Defence figures
Rheinmetall Defence Latest published Defence figures Order intake remains strong, but earnings not satisfying Defence Q1-3 Q1-3 Δ Q1-3 € million 2011 2012 (2012/2011) Order intake 1,303 1,578 + 275 + 21 % Order backlog 4,746 4,528 - 218 -5% Sales 1,370 1,470 + 100 +7% EBITDA 161 144 - 17 - 11 % EBIT
Slide 15: Outlook FY 2012 as of Q3 Defence
Rheinmetall Defence Outlook FY 2012 as of Q3 Non-organic sales growth and lower earnings expected Order intake Defence in € million Sales Defence in € million EBIT Defence in € million 3,153 approx. >2,400 2,400 2,141 1,977 2,007 1,831 1,814 1,898 1,723 234 223 215 197 170-180 2008 2009 2010 2011 20
Slide 16: Rheinmetall Automotive
RHEINMETALL AUTOMOTIVE © Rheinmetall 2013
Slide 17: The divisional structure of Automotive
Rheinmetall Automotive The divisional structure of Automotive Focused on the attractive segment of powertrain technology Sales (FY 2011): € 2.3 billion Hardparts Mechatronics Motor Service € 1.1 billion* € 1.0 billion* € 0.3 billion* Pistons Pierburg International Aluminum Technology Pierburg Pump T
Slide 18: Main characteristics of the division
Rheinmetall Automotive Main characteristics of the division Rheinmetall Automotive en route in attractive market segments Leading supplier of Clean & Lean products, driven by challenging CO2 regulations and tighter emission standards Solid footprint in dynamic growth markets, such as Brazil, India
Slide 19: How will international Automotive markets develop?
Rheinmetall Automotive How will international Automotive markets develop? Global growth trend of light vehicles: experts expect increasing production figures for the upcoming years… …but “Continental Shift” in international light vehicle production continues: Emerging markets (e.g. Brazil, India,
Slide 20: LV production expected to grow continuously
Rheinmetall Automotive LV production expected to grow continuously Global growth driven by emerging markets Expected production of light vehicles by region in thousand units +20% 95,006 CAGR: +4.6% 90,653 85,620 79,380 80,879 Brazil: +6.3% India: +11.0% World China: +9.6% Mexico: +7.3% +5% 37,846 36
Slide 21: Clean & Lean products: tightened emission regulations
Rheinmetall Automotive Clean & Lean products Growth driver: Tightened emission regulations EGR valve EGR cooler Double EGR cooler high/low pressure EURO 4 EURO 5 EURO 6 Truck business expected to follow 2005 2010 2015 EGR valve EGR cooler modules Emerging countries expected to follow with a lag of
Slide 22: Clean & Lean products: reduction of fuel consumption and CO2
Rheinmetall Automotive Clean & Lean products Growth driver: Reduction of fuel consumption and CO2 emissions CO2 fleet emission targets in g/km -25% 160 Downsizing/Turbocharging Hybridization 120 95 EU Actual Target Target 2006 2015 2020 -27% 216 157 140 USA High-performance bearings Wastegate actuat
Slide 23: Clean & Lean products: powertrain growth
Rheinmetall Automotive Clean & Lean products Both trends are fueling current and future powertrain growth Future growth secured by innovative products (examples) Powertrain technology content Global powertrain revenues per mid-size gasoline vehicle in € billion in € Steel pistons +36% CAGR 5.0% 3,00
Slide 24: Automotive well-positioned
Rheinmetall Automotive Automotive well-positioned Outperforming growth in the emerging markets Expected change of LV production and Automotive sales growth Q1-3 2012 vs. Q1-3 2011 +35% +63% Mexico + 13% China + 9% 306* 44 226* 27 India + 6% +207%** Shift of Brazil - 3% 31 production -9% Kirloskar fr
Slide 25: Growth strategy in the high-margin non-LV business
Rheinmetall Automotive Growth strategy in the high-margin non-LV business Risk diversification and increase of profitability Non-LV business Q1-3 2012 compared to Q1-3 2011 in € million +5.0% 1,805 1,735 Truck business € 156 million 550 Non-LV 524 Industrials* € 190 million +3.6% LV 1,211 1,255 Afte
Slide 26: Latest published Automotive figures
Rheinmetall Automotive Latest published Automotive figures Sales and earnings development Automotive Q1-3 Q1-3 Δ Q1-3 € million 2011 2012 (2012/2011) Sales 1,735 1,805 + 70 +4% EBITDA 191 194 +3 +2% EBIT 115 115 +0 +0% EBIT margin (%) 6.6 6.4 - 0.2pp EBT 104 104 +0 +0% Capex 74 105 + 31 + 42 % Amort
Slide 27: Outlook FY 2012 as of Q3 Automotive
Rheinmetall Automotive Outlook FY 2012 as of Q3 Constant sales and earnings in spite of shrinking Western European markets Sales Automotive in € million EBIT Automotive in € million slightly below 2,400 2,313 2,055 1,982 on previous 151 year’s level 1,522 81 61 2008 2009 2010 2011 2012e 2008 2010 20
Slide 28: Summary
SUMMARY © Rheinmetall 2013
Slide 29: Summary and investment highlights
Rheinmetall Group Rheinmetall Group Summary and investment highlights Defence as a leading international partner for ground forces Strong with a broad and well-balanced product portfolio market positions Automotive as a leading supplier of “clean” and “lean” engine parts and solutions for the gl
Slide 30: Appendix
APPENDIX © Rheinmetall 2013
Slide 31: New management in charge
Appendix: Rheinmetall Group New management in charge Short CVs Armin Papperger Helmut P. Merch Dr. Gerd Kleinert CEO Rheinmetall AG CFO Rheinmetall AG CEO Automotive CEO Defence Born in 1963 Born in 1956 Born in 1948 Graduated in Engineering Graduated in Economics Successfully completed an apprentic
Slide 32: Group cash flow
Appendix: Rheinmetall Group Group cash flow Benefitting from strongly improved working capital in Defence Group Q1-3 Q1-3 Δ Q1-3 € million 2011 2012 (2012/2011) Group net income 119 108 - 11 Amortization / depreciation 133 144 + 11 Change in pension accruals -9 - 11 -2 Cash flow 243 241 -2 Changes i
Slide 33: Key figures Defence by divisions
Appendix: Rheinmetall Defence Key figures Defence by divisions Combat Systems Electronic Solutions Wheeled Vehicles +7% -2% -15% 1,470 +118% Sales 1,370 718 701 556 474 378 173 Q1-3 2011 Q1-3 2012 Q1-3 2011 Q1-3 2012 Q1-3 2011 Q1-3 2012 Q1-3 2011 Q1-3 2012 -24% -34% 0% EBIT 104 79 59 59 59 -38% 39 Q
Slide 34: Development of Defence sales and earnings
Appendix: Rheinmetall Defence Development of Defence sales and earnings (Q1-3) Sales bridge Q1-3 2011 to Q1-3 2012 in € million -73 1,470 +183 0 1,370 0 -10 EBIT bridge Q1-3 2011 to Q1-3 2012 in € million -1 +37 -22 104 -24 -15 79 Q1-3 2011 One-offs Deconsolidation Logistic Volume Effect Product/pro
Slide 35: Defence cash flow
Appendix: Rheinmetall Defence Defence cash flow Operating cash flow improved due to successful working capital program Defence Q1-3 Q1-3 Δ Q1-3 € million 2011 2012 (2012/2011) Net income 69 55 - 14 Amortization / depreciation 57 65 +8 Change in pension accruals -3 -8 -5 Cash flow 123 112 - 11 Change
Slide 36: Cyclical development of US defence budget
Appendix: Rheinmetall Defence Cyclical development of US defence budget Rheinmetall impacted by US sequestration on a limited scale US defence budget since 1948 in US$ billion US share of expected total sales Rheinmetall Defence approx. 4% 2012e € 2.4 bn Expected Rheinmetall share of total US defenc
Slide 37: Significant product spin-offs for navy and airforce
Appendix: Rheinmetall Defence Significant product spin-offs for navy and airforce Securing access to all services of armed forces Naval products Airforce products Softkill protection Sensor systems Aircraft canons Flight simulation Naval guns Submarine simulation Flares Unmanned aerial systems 10-15
Slide 38: Driven by high international presence
Appendix: Rheinmetall Defence Driven by high international presence Order intake shows double-digit growth rate Order intake Q1-3 2011 vs. Q1-3 2012 in € million +21% 1,578 Domestic orders still stable regarding 1,303 Germany absolute numbers, but relatively losing 27% significance Germany 31% Eur
Slide 39: New orders 2012
Appendix: Rheinmetall Defence New orders 2012 Selected competitive products strengthen the order backlog Air defence systems and Canadian wheeled vehicle Weapon station components services for Asian customers program TAPV* for US forces As indicated: Two orders received 500 vehicles to be delivere
Slide 40: High order intake in FY 2012
Appendix: Rheinmetall Defence High order intake in FY 2012 New orders booked in Q4 – some examples Ammunition for a MENA country Air Defence for an Asian customer Military trucks for Far East Volume: € 320 million Volume: € 113 million Volume: € 86 million Weapon stations for Germany Air Defence for
Slide 41: Cost efficiency and structural optimization
Appendix: Rheinmetall Defence Cost efficiency and structural optimization Focusing forces in order to secure future profitability Tracked Vehicles Air Defence Wheeled Vehicles Reduction of workers Staff reduction by Significant change of the Commonly agreed cost savings 80 employees to 700 marke
Slide 42: Key figures Automotive by divisions
Appendix: Rheinmetall Automotive Key figures Automotive by divisions Hardparts Mechatronics Motor Service +4% +3% +6% 1,735 1,805 +2% Sales 809 837 776 823 199 204 Q1-3 2011 Q1-3 2012 Q1-3 2011 Q1-3 2012 Q1-3 2011 Q1-3 2012 Q1-3 2011 Q1-3 2012 0% +13% -6% -12% EBIT 115 115 45 51 56 52 21 18 Q1-3 201
Slide 43: Automotive cash flow
Appendix: Rheinmetall Automotive Automotive cash flow Slight increase of working capital due to growth Automotive Q1-3 Q1-3 Δ Q1-3 € million 2011 2012 (2012/2011) Net income 76 76 +0 Amortization / depreciation 76 79 +3 Change in pension accruals -5 -4 +1 Cash flow 147 151 +4 Changes in working capi
Slide 44: Global manufacturing and distribution network
Appendix: Rheinmetall Automotive Global manufacturing and distribution network Presence in all important Automotive markets Production sites and sales offices 2012 Papenburg Berlin Hartha Neuss/Nettetal Paris Usti nad Labem Thionville Neckarsulm* Abadiano Livorno Marinette, WN Lanciano Yantai Detroi
Slide 45: Dynamic markets: China
Appendix: Rheinmetall Automotive Dynamic markets: China Sales and earnings still growing Sales Joint Ventures* in € million EBIT Joint Ventures* in € million +36% 298 +44% 219 22 16 Q1-3 2011 Q1-3 2012 Q1-3 2011 Q1-3 2012 Sales WFOEs** in € million LV production China in thousand units +9% +32% 8 6
Slide 46: Dynamic markets: India
Appendix: Rheinmetall Automotive Dynamic markets: India Strong revenues caused by both organic growth and strategic acquisition Sales KSPG India in € million Key facts KSPG India Integration of Kirloskar Bearings – included in +207% the figures since Q4 2011 – completed 31 Employees: 602 (as of
Slide 47: Dynamic markets: Mexico
Appendix: Rheinmetall Automotive Dynamic markets: Mexico Focusing production for American markets Sales KSPG Mexico in € million Key facts KSPG Mexico Production of pumps, pistons and bearings +63% Extending production of pistons 44 Shifting production of bearings from the U.S. and Brazil to t
Slide 48: Strong and solid position in the markets
Appendix: Rheinmetall Automotive Strong and solid position in the markets Growing sales and well-balanced customer structure Sales in € million Sales 2011 by customer Trucks/ +17% slightly below Others VW/Porsche/Audi 2,400 2,313 17% 16% 1,982 Ships/ Power plants/ 10% 10% Ford MIR* 2011 8% PSA 11% A
Slide 49: Financial Diary
Appendix: Rheinmetall Group Financial Diary March 20, 2013 Annual report 2012 May 8, 2013 Q1 2013 May 14, 2013 Annual General Meeting August 9, 2013 Q2 2013 Corporate Presentation January 2013 © Rheinmetall 2013 49
Slide 50: 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