Conference Call Q1 2017
Düsseldorf / 4 May 2017
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-looking statements reflect the current views of Rheinmetall’s
management with respect to future events.
In particular, such forward-looking statements include the financial guidance contained in the outlook for 2017.
Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as “will”, “anticipates”, “aims”, “could”, “may”, “should”,
“expects”, “believes”, “intends”, “plans” or “targets”. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because
they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking statements. In particular, such factors may have a material adverse effect on the costs and revenue
development of Rheinmetall. Further, the economic downturn in Rheinmetall’s markets, and changes in interest and currency exchange rates, may also have an impact on
Rheinmetall’s business development and the availability of financing on favorable conditions. The factors that could affect Rheinmetall’s future financial results are discussed
more fully in Rheinmetall’s most recent annual and quarterly reports which can be found on its website at www.rheinmetall.com.
All written or oral forward-looking statements attributable to Rheinmetall or any group company of Rheinmetall or any persons acting on their behalf contained in or made in
connection with this presentation are expressly qualified in their entirety by factors of the kind referred to above. No assurances can be given that the forward-looking
statements in this presentation will be realized. Except as otherwise stated herein and as may be required to comply with applicable law and regulations, Rheinmetall does not
intend to update these forward-looking statements and does not undertake any obligation to do so.
This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise
acquire or dispose of securities in Rheinmetall AG or any of its direct or indirect subsidiaries.
© Rheinmetall AG / Conference Call Q1 2017
2
Highlights Rheinmetall Group Q1 2017
Successful start into 2017 for both segments
Sales increased by 14% to €1.349 bn
EBIT moved up by 61% to €50 m
Margin gained 1.1pp to 3.7%
Strong balance sheet with equity ratio at 29.3%
EPS grew by 75% from €0.32 to €0.56
Announcements of strategically important
partnerships in Defence
Outlook confirmed
© Rheinmetall AG / Conference Call Q1 2017
3
Sales and results improved year over year
Sales
EBITDA
in EUR million
in EUR million
14%
Operational earnings in EUR million
Operational margin in %
+24%
1,349
+61%
107
50
86
31
1,180
3.7
2.6
Q1
2016
Q1
2017
© Rheinmetall AG / Conference Call Q1 2017
Q1
2016
Q1
2017
Q1
2016
Q1
2017
4
Cash flow and earnings per share confirm positive trend
Operating Free Cash Flow
Earnings per share
Headcount
in EUR million
in EUR million
in capacities
+2%
+75%
+24%
0.56
-199
20,759
21,229
Q1
2016
Q1
2017
0.32
-263
Q1
2016
Q1
2017
© Rheinmetall AG / Conference Call Q1 2017
Q1
2016
Q1
2017
5
Highlights Rheinmetall Automotive Q1 2017
Favorable market development and base effect lead to strong sales growth
Sales rose by 13% to €737 m
Strong Q1 sales in line with front end loaded FY
expectation for global LV production
EBIT grew by ~20% to €62 m
Margin increased by 0.4pp to 8.4%
China activities with further improved sales and
profitability
© Rheinmetall AG / Conference Call Q1 2017
6
Automotive with positive leverage on the back of strong sales
in EUR million
Sales
Operating earnings
Operating margin in %
Operating Free Cash Flow
Operating FCF / Sales in %
Quarterly sales and margins development
Q1 2016
Q1 2017
Δ %
654
52
8.0
737
62
8.4
12.7%
19.2%
0.4 pp
- 139
- 21.3
- 118
- 16.0
15.1%
5.3pp
Q1
Comments on quarterly performance
+13%
654
695
643
9.0
8.6
8.0
Q1
664
737
8.4
Good leverage rose operating result by ~20% to EUR 62 m
7.9
Q2
Q3
Sales increase of €82 m driven by all divisions,
Mechatronics contributing the major share
Operating free cash flow increased on higher results and
lower investment by €21 m to -€118 m0
Q4
© Rheinmetall AG / Conference Call Q1 2017
Q1
7
Very strong quarter for all three divisions
Sales Automotive
Operational earnings Automotive
in EUR million
in EUR million
+13%
+19%
737
62
654
52
370
+15%
425
+26%
43
31%
17
40%
7
34
231
+8%
249
13
74
-21
Q1 2016
+12%
83
-20
Q1 2017
0
5
Q1 2016
-5
Q1 2017
Restatement of 2016 reported figures in Mechatronics and Aftermarkets related to change in plant assignment
© Rheinmetall AG / Conference Call Q1 2017
Reasons for earnings development
Mechatronics
Sales increased mostly in products
for emission reductions
Hardparts
Solid start to the year, especially in
Europe; recovery in Large-bore
Pistons and stable sales in Brazil on
low levels
Aftermarket
Positive sales environment in
Europe and Asia
Consolidation and others
Effect related mostly to buildup of a
provision for environmental risks
8
Markets for light vehicle and non-light vehicle products outpaced
Global LV production
Sales Automotive LV/Non-LV
in million units
in EUR million
4%
13%
737
24.0
23.0
654
5.9
5.5
+10%
232
Non-LV business
505
LV business
210
4.5
4.5
5.8
6.0
0.9
1.0
6.4
6.6
Q1 2016
Q1 2017
Europe
Without China:
+5%
+14%
NAFTA
Asia without China
© Rheinmetall AG / Conference Call Q1 2017
444
China: +3%
Source: IHS Automotive, March 2017
Rest of the World
Q1 2016
Q1 2017
China
9
Growth especially in regions outside Europe
Regional sales development Automotive
Regional sales growth Q1 2017
in EUR million
in %
+13%
Row
Asia
654
18
80
North America
102
Germany
133
Europe
(excl. Germany)
RoW
121
Asia
149
69%
321
737
27
88
North America
68%
Germany
352
Europe
(excl. Germany)
Q1 2016
© Rheinmetall AG / Conference Call Q1 2017
RHM
IHS LV production
Q1 2017
10
Mechatronics products gaining momentum in China
China LV production
Sales in million
in million units
EBIT in million / in %
+8%
+24%
1,847
1,710
144
116
3%
6.4
6.6
1,537
1,601
174
246
CNY
120
104
24
12
7.5%
6.8%
9.8%
6.9%
+6%
238
+26%
252
Hardparts JVs with modest
growth
Strong growth of WFOEs,
especially in Mechatronics
Limited FX-effect on sales
Margin further improved,
especially in Mechatronics
19
16
Q1 2016
Q1 2017
EUR
16
214
218
24
34
2
3
Q1 2016
Q1 2017
Q1 2016
Q1 2017
14
JVs
WFOEs
© Rheinmetall AG / Conference Call Q1 2017
Including 100% figures of 50/50 JV, consolidated at equity
WFOE = Wholly Foreign-Owned Enterprise
11
Highlights Rheinmetall Defence Q1 2017
Solid quarter marked by strategic milestones
Lance turret
Sales increased by 16% to €612 m
EBIT rose by €7 m to -€10 m
EBIT margin gained 1.6pp to -1.6%
Despite low order intake in Q1, full year book-to-bill
ratio expected to be at least around 1.0
Announcements of three strategically important
partnerships
© Rheinmetall AG / Conference Call Q1 2017
12
Defence: Top line growth converted into result improvements
Q1 2016
in EUR million
Order intake
Sales
Operating result
Operating margin in %
Operating Free Cash Flow
Operating FCF / Sales in %
Quarterly sales and margins development
1,034
526
725
2.6
661
4.5
11.2
612
-1.6
Q3
Q4
Q1
-3.2
Q1
Q2
© Rheinmetall AG / Conference Call Q1 2017
Q1 2017
Δ %
948
526
391
612
-58.7%
16.4%
-17
-3.2
-104
-19.8
-10
-1.6
-72
-11.8
41.2%
1.6 pp
30.8%
8.0 pp
Q1
Comments on quarterly performance
Order entry in Q1 ’16 inflated by two major orders (~€520 m)
Main sales driver: Vehicle Systems
Results improved by €7 m to -€10 m
Operating free cash flow rose by €32 m to -€72 m0
13
Earnings improvement in two divisions, Electronic Solutions stable
Sales Defence
Operational earnings Defence
in EUR million
in EUR million
+7
+16%
0
1
612
+5
526
+7%
+7
178
-8%
138
-4
Weapon and Ammunition
Favorable product mix
-4
-5
191
Reasons for earnings development
+/-0
-7
Electronic Solutions
Impact from lower sales in Air Defence
and Radar Systems
150
261
+34%
-10
-6
350
-2
-63
-67
-17
Q1 2016
Q1 2017
Q1 2016
Weapon a. Ammunition
© Rheinmetall AG / Conference Call Q1 2017
Electronic Solutions
Vehicle Systems
Q1 2017
Consolidation
Vehicle Systems
Ramp-up of Australian trucks reflected
in sales growth and results
Consolidation and others
Losses at RIE* and Rheinmetall
International
* Rheinmetall International Engineering GmbH
14
High backlog declines on soft order intake in Q1
Order intake by division
Order backlog profile
in EUR million
in EUR billion
6.9
6.4
-59%
2.5
948
243
515
Two major orders in Q1 2016:
ES: Air Defence Skyguard: €390 m
VS: Leopard 2 upgrade (Poland): €126 m
2.0
1.9
2017e
2018e
391
207
Weapon and Ammunition
-25
116
83
-15
Q1 2016
Q1 2017
Vehicle Systems
215
Electronic Solutions
31.03.2016 31.03.2017
2019e ff
Consolidation
© Rheinmetall AG / Conference Call Q1 2017
15
Three major partnering agreements mark next step for potential growth
Objective
Status
Next steps
Bid for the planned rifle
procurement of the Bundeswehr
Plan: Technology partnership
with 60% value creation in
Germany
Cooperation agreement
January 2017
Submit final bid for Special
Forces tender until May 2017
Prepare bid for general army
tender
© Rheinmetall AG / Conference Call Q1 2017
Potential areas of cooperation:
Air defence (Patriot-replacement)
Weapon & Munition
Combat vehicles
Training
Cyber security
Future digital communication
and battle management system
of the German ground forces:
MoTaKo
MoTIV
Memorandum of Understanding
February 2017
Memorandum of Understanding
March 2017
Finalize assessment phase
Invite additional partners
16
Outlook 2017
Sales and earnings targets confirmed
AU TO M OT I V E
M a c ro v i ew
R h e i n m eta l l
DEFENCE
Global LV production expected
to grow by ~2%*
Further demand increase in key markets
expected
Chinese LV production only with moderate
growth of 2.5%
Germany and other allies have increased
investment budgets
Automotive expected to outperform
markets
Defence 2017 order intake is expected
to grow starting Q3 especially from
German orders
Ongoing efforts to streamline the global
footprint of Hardparts to optimize assets
and cost structure
Sales growth of 3-4% and margin ≥8
Single digit sales growth expected for 2017
Stronger sales momentum 2018
Sales growth of 5-6% and margin 5-5.5%
Outlook 2017
Group expected to grow 4-5% at a margin around 6.3% incl. efforts for New Technologies
*Source: IHS March 2017
© Rheinmetall AG / Conference Call Q1 2017
17
Appendix
© Rheinmetall AG / Conference Call Q1 2017
18
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) will mature in September
EIB loan EUR250 million (0,962% coupon) as of August 2017
Rating
Ba1 (stable) Moody’s
© Rheinmetall AG / Conference Call Q1 2017
19
Cash Flow Statement Group
in EUR million
Q1
2016
Q2
2016
Q3
2016
Group Net Income
12
41
46
116
28
16
Amortization / depreciation
55
54
52
67
57
2
Change in pension accruals
- 16
2
-
-
51
97
98
183
51
Changes in working capital and other items
- 262
- 112
1
389
- 207
55
Net cash used in operating activities
Cash outflow for additions to tangible
and intangible assets
Free Cash Flow from Operations
- 211
- 15
98
572
- 156
55
- 52
- 60
- 62
- 109
- 43
9
- 263
- 75
36
463
- 199
64
Cash Flow
© Rheinmetall AG / Conference Call Q1 2017
-
Q4
2016
Q1
Δ Q1
2017 2016/2017
- 34
-
18
-
20
Quarterly development Group
Sales
Operational earnings
in EUR million
in EUR million
1,698
171
1,419
1,349
1,305
1,180
1,034
724
526
612
662
115
31
654
695
643
664
Q2 2016
Q3 2016
Q4 2016
-17
Q1 2017
19
30
60
51
60
62
-7
-2
-4
-10
Q2 2016
Q3 2016
Q4 2016
Q1 2017
50
-4
Q1 2016
Defence
© Rheinmetall AG / Conference Call Q1 2017
79
737
52
Q1 2016
72
Automotive
-2
Consolidation/Others
21
Quarterly development Automotive
Sales by division
Operational earnings by division
in EUR million
in EUR million
737
695
654
60
60
664
643
51
52
35
425
387
370
35
380
355
243
74
83
-21
Q1 2016
-18
Q2 2016
225
222
249
81
85
-23
83
-20
Q4 2016
Q1 2017
-18
Q3 2016
11
13
Mechatronics
© Rheinmetall AG / Conference Call Q1 2017
22
16
0
5
Q1 2016
Hardparts
Aftermarket
43
36
34
231
62
8
1
Q2 2016
8
17
8
-4
-5
7
-5
Q3 2016
Q4 2016
Q1 2017
Consolidation/Others
22
Key figures Automotive by division (Q1 2016/2017)
Mechatronics
+13%
Hardparts
Aftermarket
+15%
+8%
Sales
737
654
425
370
+19%
Operational
earnings
+11%
249
231
83
75
+26%
+31%
62
52
43
34
+40%
17
13
7
5
+1.6pp
Operational
margin
+0.4pp
8.0%
8.4%
+0.9pp
9.2%
10.1%
+1.2pp
5.6%
6.8%
6.8%
8.4%
Figures before intra-segmental consolidation
© Rheinmetall AG / Conference Call Q1 2017
23
Quarterly cash flow statement Automotive
in EUR million
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
Δ Q1
2017 2016/2017
Net income
38
42
36
49
46
+8
Amortization / depreciation
33
31
29
40
32
-1
Change in pension accruals
-
-
Cash Flow
- 1
-
1
-
+/-0
71
73
64
88
78
+7
Changes in working capital and other items
- 178
14
17
130
- 172
+6
Net cash used in operating activities
Cash outflow for additions to tangible
and intangible assets
Free cash flow from operations
- 107
87
81
218
- 94
+13
- 32
- 36
- 35
- 71
- 24
+8
- 139
51
46
147
- 118
+21
© Rheinmetall AG / Conference Call Q1 2017
24
Quarterly development Defence
Sales by division
Operational earnings by division
in EUR million
in EUR million
1,034
528
724
662
315
227
178
150
179
115
63
391
612
244
172
30
191
19
138
483
25
25
350
25
-1 1
263
287
361
-63
-57
-98
-84
-67
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
-4
-5
30
-6
4
4
-3
-3
1 -4
-7
-10
Q3 2016
Q4 2016
Q1 2017
-6
-2
-17
Weapon & Ammunition
Electronic Solutions
© Rheinmetall AG / Conference Call Q1 2017
Vehicle Systems
Consolidation/Others
Q1 2016
Q2 2016
0
25
Key figures Defence by division (Q1 2016/2017)
Weapon a. Munition
+16%
Electronic Solutions
Vehicle Systems
+34%
+7%
Sales
Operational
earnings
612
526
-8%
191
178
150
+5
+65%
-10
-17
138
+7
0
0
-5
-4
350
261
-4
1
-6
+2.8pp
Operational
margin
+1.6pp
-3.2%
-1.6%
+2.6pp
0.0%
-0.2pp
+0.3%
-2.8%
-2.7%
-2.9%
-2.3%
Figures before intra-segmental consolidation
© Rheinmetall AG / Conference Call Q1 2017
26
Quarterly cash flow statement Defence
in EUR million
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
Δ Q1
2017 2016/2017
- 20
3
13
78
- 16
+4
Amortization / depreciation
22
22
22
26
24
+2
Change in pension accruals
1
2
1
3
-4
Cash Flow
3
27
36
105
5
+2
Changes in working capital and other items
- 90
- 123
- 8
248
- 61
+29
Net cash used in operating activities
Cash outflow for additions to tangible
and intangible assets
Free cash flow from operations
- 87
- 96
28
353
- 56
+31
- 17
- 21
- 23
- 34
- 16
+1
- 104
- 117
5
319
- 72
+32
Net income
© Rheinmetall AG / Conference Call Q1 2017
-
3
-
27
Income statement Group
Income Statement
In EUR million
Q1 '16
Total operating performance
Other operating income
Cost of materials
Personnel expenses
Amortization, depreciation and impairment
Other operating expenses
Income from companies carried at equity
Other financial results
Net operating income
© Rheinmetall AG / Conference Call Q1 2017
1,256
26
688
364
55
148
8
- 4
31
Q1 '17
1,416
27
762
398
57
174
4
-6
50
Δ
160
1
74
34
2
26
-4
-2
19
Q1 '16
Net operating income (EBIT)
Net interest income
Interest expenses
Earnings before tax (EBT)
Income tax
Net income
of which:
Minority interest
Rheinmetall shareholders
EBITDA
31
Q1 '17
Δ
- 14
17
- 5
12
50
3
- 15
38
- 10
28
19
3
-1
21
-5
16
- 1
13
4
24
5
11
86
107
21
28
Cash flow statement Group
Cash Flow Statement
In EUR million
Net Income
Amortization, depreciation and impairment
Dotation of CTA
Changes in pension provisions
Income from disposal of non-current assets
Changes in other provisions
Changes in inventories
Changes in receivables, liabilities(w/o
financial debts)
and prepaid & deferred items
Pro rata income from investmenst carried at equity
Dividends received from investments carried at equity
Other non-cash expenses and income
Cash flows from operating activities
Investments in assets
Cash receipts from the disposal of assets
Investments in consolidated companies and other financial assets
Payments for the purchase of short-term commercial papers
Change in divestments of consolidated companies and financial assets
Cash receipts from the disposal of short-term financial assets
Cash flow from investing activities
© Rheinmetall AG / Conference Call Q1 2017
Q1 '16
12
55
-30
-1
0
40
-85
Q1 '17
28
57
-30
-4
0
56
-145
Δ
16
2
0
-3
0
16
-60
-180
-121
59
-8
1
-15
-211
-52
0
-13
-67
-132
-3
2
4
-156
-43
2
0
-202
0
120
-123
5
1
19
55
9
2
13
-135
0
120
9
Q1 '16
Capital payment to/ capital contribution by non-controlling interests0
Increase in shares in consolidated subsidiaries
0
Dividends paid out bei RHM AG
0
Other profit distribution
-2
Shares issued to employees
0
Borrowing of financial debts
17
Repayment of financial debts
-14
Q1 '17
4
0
0
-5
0
14
-8
1
5
-342
-4
-346
691
345
-274
2
-75
616
344
Cash flow from financing activities
Changes in financial resources
Changes in cash and cash equivalents due to exchange rates
Total change in financial resources
Opening cash and cash equivalents Jan 1
Closing cash and cash equivalents Dez 1
Δ
4
0
0
-3
0
-3
6
4
68
6
271
-75
-1
29
Balance Sheet Group
Balance Sheet
In EUR million
31.12.'16
31.3.'17
Δ
Non-current assets
Intangible assets
Property, plant and equipment
Investment property
Investments carried at equity
Other non-current assets
Deferred tax assets
2,762
819
1,378
53
240
36
236
2,756
811
1,371
54
244
47
229
-
Current assets
Inventories (net)
Trade receivables
Other financial assets
Other receivables and assets
Income tax receivables
Cash and cash equivalents
3,388
1,098
1,306
43
125
10
806
3,428
1,245
1,337
54
159
17
616
40
147
31
11
34
7
- 190
Total assets
© Rheinmetall AG / Conference Call Q1 2017
6,150
6,184
-
6
8
7
1
4
11
7
34
31.12.'16
Equity
31.3.'17
1,781
112
532
1,074
- 32
95
1,686
1,814
112
532
1,104
- 32
98
1,714
Non-current liabilities
Provision for Pensions and similar obligatinos
Other provisions
Financial debts
Other liabilities
Deferred tax liabilities
1,629
1,186
135
220
56
32
1,623
1,153
141
218
86
25
Current liabilities
Other provisions
Financial debts
Trade liabilities
Other liabilities
Income tax liability
Total liabilies
2,740
516
567
766
838
53
6,150
2,747
564
580
750
783
70
6,184
Share capital
Additional paid-in capital
Retained earnings
Treasury shares
Minorities
Rheinmetall AG shareholders' equity
Δ
33
30
3
28
-
-
6
33
6
2
30
7
7
48
13
16
55
17
34
30
Next events and IR contacts
Events 2017
Annual Stockholders’ Meeting
RS Switzerland
Warburg Highlights
RS Paris
Deutsche Bank dbAccess
IR Contacts
Berlin
9 May
Zurich, Lugano
10-11 May
Hamburg
19 May
Paris
23 May
Berlin
21-23 Jun
H1 Earnings call
3 Aug
Q3 Earnings call
7 Nov
Capital Markets Day 2017
© Rheinmetall AG / Conference Call Q1 2017
Bremen
21-22 Nov
Franz-Bernd Reich
Head of IR
Tel: +49-211 473-4718
Email: [email protected]
Dirk Winkels
Senior Investor Relations Manager
Tel: +49-211 473-4749
Email: [email protected]
Rosalinde Schulte
Investor Relations Assistant
Tel: +49-211 473-4718
Email: [email protected]
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