Conference Call FY 2013 Düsseldorf March 19, 2014

Transcription

1 RHEINMETALL AG THE TECHNOLOGY GROUP FOR SECURITY AND MOBILITY Conference Call FY Düsseldorf March 19, 2014 RHEINMETALL AG 2014

2 Rheinmetall Group at a glance RHEINMETALL 2015 DETERMINED OUR STRATEGIC AGENDA Transition year finalized in both sectors, recovery expected 2014 Group order backlog increased by 20% to record level of 6.5 billion Group sales decreased by 2% to 4,613 million, adjusted for FX effects at previous year s level Operational Group earnings (EBIT before special items) of 213 million exceeded outlook as of November Positive free cash flow from operations despite a weak earnings performance Dividend of 0.40 proposed, payout ratio of 53% 2

3 Rheinmetall Group Mid-term strategy program Rheinmetall 2015 First successful steps in Internationalization Defence: Order intake of 2.4 billion from non-european customers Automotive: Expansion of operations in China (sales +32%), Mexico (sales +38%) and the Czech Republic (sales +14%) Growth by products and innovation More than 400 million R&D/Capex invested for future growth Defence: Ramp-up of large innovative systems: Puma (Germany), Boxer (Netherlands) and Fox (Algeria) Automotive: Start of production of 19 new products with relevant sales contribution Cost efficiency All restructuring measures negotiated and initiated in More than 50% implemented regarding headcount 3

4 Rheinmetall Group Order backlog increased Earnings down due to weak performance in Defence Sales in million Order backlog in million 3,420 3,989 4,454 4,704 4,613 4,940 5,136 4,950 5,405 6, Operational earnings in million resp. margin in % EBIT in million % % % 268* 5.7% % * * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 4

5 Rheinmetall Group Earnings particularly affected by restructuring charges EPS at 0.75, dividend proposed at 0.40 EBT in million Net income in million * * Earnings per share in Dividend per share in * ** * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) ** Proposal to the Annual General Meeting 5

6 Rheinmetall Group Capex and R&D at a high level Even in a difficult year more than 400 million invested in the future Capex* in million resp. in % of sales R&D (self-funded) in million % 4.7% 4.6% 5.1% 4.4% R&D thereof capitalized * Including non-cash-out investments 6

7 Rheinmetall Group Cash flow statement Positive free cash flow from operations in despite weak earnings in million in million * 2.7%** %** 4 Net income Depr. DPensions Capex Decrease of working capital Free cash flow from operations Net income Depr. DPensions Capex Increase of working capital Free cash flow from operations * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) ** in % of sales 7

8 Rheinmetall Group Weak earnings burden free cash flow in Defence Free cash flow in Automotive significantly positive Free cash flow from operations Group in million Free cash flow from operations Defence in million Free cash flow from operations Automotive in million

9 Rheinmetall Group Transition phase finalized, restructuring program fully on track All planned measures in implementation Costs Costs Total reduction of employees until 2016 Combat Systems (esp. Tracked Vehicles) Electronic Solutions (esp. Air Defence Zurich) Wheeled Vehicles (esp. Logistic Vehicles) Total Defence Hardparts (esp. Pistons Thionville/Neckarsulm) Mechatronics (esp. merging Neuss/Nettetal) Motor Service Total Automotive Expected savings 2014 Full annual savings from Total Group , Additionally, further expenses of 15 million 5 million in Defence and 10 million in Automotive were booked in for strategic portfolio measures. Costs and savings in million 9

10 Rheinmetall Defence 10

11 Rheinmetall Defence at a glance HIGH SHARE OF ORDER INTAKE FROM NON-EUROPEAN CUSTOMERS Order intake increased by 406 million (+ 14%) to 3,339 million despite weak traditional markets International large-scale orders from non-european customers acquired Operational earnings declined by 85 million to 60 million Restructuring program on track, charges of 51 million booked New international sales offices opened, e.g. Saudi Arabia New joint venture with Ferrostaal started, accelerating Rheinmetall Defence s internationalization efforts 11

12 Rheinmetall Defence Defence in a transition year Sales declined, order intake at a record level Sales in million Order intake in million 1,898 2,007 2,141 2,335 2,155 3,153 1,977 1,831 2,933 3, Operational earnings in million resp. margin in % EBIT in million * * * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 12

13 Rheinmetall Defence Weak operational performance Earnings affected by lower sales and cost overruns Sales Defence in million Operational earnings Defence in million 2, * 2, Combat Systems Electronic Solutions Wheeled Vehicles Consolidation/Others 1,136 1,027 22** ** Reasons for earnings development Combat Systems Lower sales in tracked vehicles and ammunition Cost overruns Electronic Solutions Lower sales in Air Defence Cost overruns Wheeled Vehicles Loss mainly generated in H1, H2 indicates improvement * Without FX effects: million ** 51% of drone business divested in Q2 13

14 Rheinmetall Defence Internationalization Increasing share of order intake received from growth regions Order intake by region in million resp. % +14% 3,339 2,933 24% 22% 46% 17% 11% 32% 28% Large-scale orders from growth regions (e.g. Australia, Indonesia, Qatar) overcompensate decreasing demand from established markets 27% 27% 54% 40% 72% System orders secure long-term relationship including service business Order intake includes components business like ammunition or weapon stations Germany Europe* Asia/Middle East Rest of the World * Excluding Germany 14

15 Rheinmetall Automotive 15

16 Rheinmetall Automotive at a glance AUTOMOTIVE OUTPERFORMS THE GLOBAL MARKET Growth trend continued: sales increased by 4%, adjusted for FX effects by 6% Operational earnings at a record level of 160 million Products for reducing emissions and fuel consumption are growth drivers Operations in China, Mexico and the Czech Republic expanded Restructuring program on track, charges of 35 million booked 16

17 Rheinmetall Automotive Sales and earnings Strong sales and operational earnings in spite of a flat European market Sales in million Sales China JVs (100%) in million 1,522 1,982 2,313 2,369 2, Operational earnings in million resp. margin in % EBIT in million * * * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 17

18 Rheinmetall Automotive Top and bottom line growth Mechatronics pushes sales and operational earnings Sales Automotive in million Operational earnings Automotive in million 2, * 2, ** Reasons for earnings development 1,087 1, Hardparts Unfavorable product mix Start-up costs Large-bore pistons China 1, , Mechatronics Higher sales of 80 million and increase of R&D by 12 million Motor Service Improved earnings Hardparts Mechatronics Motor Service Consolidation/Others * Without FX effects: million ** figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 18

19 Rheinmetall Automotive Sales growth due to European and American markets Automotive benefits from balanced customer base Sales by region in million Sales by customer in % 2,369 Germany % 2,458 Germany 576 Non-LCV business: 30% Ships/ Power plants/ MIR** Trucks/Others 6% 13% 16% VW/Porsche/Audi Asia (w/o China JVs) Rest of the world Europe* 1,142 Americas % 29% Europe* 1,195 Americas % 28% Aftermarket 11% 8% Others 7% 4% 5% 6% Daimler 5% 5% Fiat PSA BMW GM 14% Ford Renault/ Nissan * Excluding Germany ** MIR = Marine, Industry, Recreation 19

20 Rheinmetall Automotive Strong growth in non-lcv business Sales of truck business doubled within 5 years Sales Automotive and non-lcv sales in million Non-LCV sales and truck business sales in million 1,982 2,313 2,369 2, CAGR +13% , CAGR +19% Rest of Automotive sales Non-LCV sales Rest of Non-LCV sales Truck business sales 20

21 Appendix: Rheinmetall Automotive Internationalization Joint ventures in China see another successful year LV production China in million +14% Sales Automotive China in million Yantai % JVs* WFOEs** Kunshan Shanghai Source: IHS Automotive (February 2014) * Rheinmetall Automotive owns 50% of the joint ventures, consolidated at equity ** WFOE = Wholly Foreign-Owned Enterprise 21

22 Rheinmetall Group MARKETS AND OUTLOOK 22

23 Rheinmetall Defence Looking at the markets Shift of budget growth from traditional markets to emerging markets Defence spending by region in US$ billion Europe USA South America MENA* Asia/Pacific Rheinmetall focuses on the MENA region and Asia/Pacific for future growth. * MENA = Middle East and Northern Africa Source: IHS Jane s (March 2014), Rheinmetall team analysis 23

24 Rheinmetall Defence Weapon and ammunition business Recovery expected to begin later and to a lower extent Sales weapon and ammunition business in million Previous estimates Order intake gap Recurring business (framework agreements, e.g. propulsions) Order backlog (e.g. Qatar, Indonesia) Sales e 2015e 2016e 24

25 Rheinmetall Automotive Looking at the markets China still expected to grow rapidly, slight increase in Europe and the US Light vehicle production by region in million units Western Europe USA India China Japan Rest of the World Source: IHS Automotive (February 2014) Rheinmetall focuses on China, India and the Americas for future growth. 25

26 Rheinmetall Automotive Automotive is expected to remain a growth market Continental shift in Rheinmetall s sales and staff figures Market and business expectations Rheinmetall Automotive -2016e USA Market +16% Sales Staff Mexico Market +28% Sales Staff Western Europe Market +8% Sales Staff Brazil Market +22% Sales Staff Eastern Europe Market +13% Sales Staff India Market +30% Sales Staff China* Market +48% Sales Staff * Including 100% of the JVs Source: IHS Automotive (February 2014) Rheinmetall will save costs in the established markets and expand its footprint in the growth markets. 26

27 Appendix: Rheinmetall Automotive Megatrend Protection of the environment Regulations as growth drivers of the powertrain technology CO 2 Fuel consumption EU USA China CO 2 limit g/km Downsizing/ Turbocharging Lightweight Design Powertrain Global automotive component market* CAGR 4.9 % 5.7 % NO X Nitrogen oxides EU USA China EURO 4 EURO 5 EURO 6 EPA 04 EPA 07 EPA 10 EURO 3 EURO 4 EURO Air Supply Exhaust-gas management Chassis Exterior Interior Infotainment 2016e 4.2 % 4.5 % 4.4 % 3.7 % Strongest growth in powertrain * Source: IHS AutoInsight 27

28 Rheinmetall Automotive Megatrend Protection of the environment Sales share of green technology products will increase to 60% Sales share Expected sales share 2016 Other sales Other sales 40% 60% 49% 51% Sales with products for reduction of emissions and fuel consumption Sales with products for reduction of emissions and fuel consumption 28

29 Rheinmetall Group Mid-term strategy program Rheinmetall 2015 The way forward in 2014 Internationalization Defence: Strengthening the international sales force and a non-european order intake of more than 50% Automotive: Further shift of existing and new products to sites in growth regions Growth by products and innovation Defence: Organic growth by system orders (e.g. Puma, Boxer), but delay of ammunition business recovery Automotive: Continuation of the strong growth in Mechatronics Cost efficiency Further execution of the restructuring program in order to generate full savings effects from 2015 onwards 29

30 Rheinmetall Group Outlook 2014 Top line growth and improvement of earnings Sales in billion Operational earnings in million 2014e 2014e Group Defence Automotive Further non-operational expenses of 10 million expected, i.e. expected Group EBIT of million Outlook based on assumptions macroeconomic environment stable global automotive industry growing ammunition markets stabilizing key large-scale projects in Defence to be realized as scheduled 30

31 Rheinmetall Group Mid-term targets out of Rheinmetall 2015 Margin targets Assumptions and drivers Defence 7-9% Recovery of ammunition markets Savings effects out of restructuring Improvement of project management Automotive 8% Recovery of European car production and strong growth in China Strong growth of Mechatronics above market average Savings effects out of restructuring 31

32 Appendix: Rheinmetall Group APPENDIX GROUP 32

33 Appendix: Rheinmetall Group Finance Sound equity ratio Equity (at year-end) in million Equity ratio in % Treasury shares (at year-end) in % of all shares 1,134 1,355 1,546 1,465 1, % 30% 32% 30% 28%

34 Appendix: Rheinmetall Group Solid balance sheet High cash credit facilities and low financial debt Cash credit facilities (as of December 31, ) in million Net financial debt (at year-end) in million Net gearing in % 1,400 Bilateral bank facilities (up to 1 year) Syndicated loan (due December 2016) Promissory notes (due 2014) Bond (4% coupon, due 2017) Financing frame 370 Q1 5-year-Ø net financial debt as of quarter end Q2 Q3 80 Q4-4% % 6% 8% 7% * Net debt in % of equity 34

35 Appendix: Rheinmetall Group Solid balance sheet Pension liabilities reduced, current expenses almost stable Pension liabilities and discount rate* in million resp. in % Domestic pension payments in million Discount rate Pension provisions (foreign and other) Cum. actuarial gains/losses Pension liabilities (domestic) * Discount rate for German pension liabilities of Rheinmetall 35

36 Appendix: Rheinmetall Group Key figures in million * D / Order intake 5,311 5, Order backlog 5,405 6, ,070 Sales 4,704 4, Operational earnings (EBIT before special items) Special items (one-offs, restructuring costs) EBIT (reported) EBT Group net income Earnings per share in Cash flow Free cash flow from operations Employees 21,767 21, * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 36

37 Appendix: Rheinmetall Group Quarterly development Sales in million Operational earnings* in million , , , , Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Defence Automotive Consolidation/Others * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 37

38 Appendix: Rheinmetall Group Cash flow statement in million * D / Net income Amortization / depreciation Change in pension accruals Cash flow Changes in working capital and other items Net cash used in operating activities Cash outflow for additions to tangible and intangible assets Free cash flow from operations * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 38

39 Appendix: Rheinmetall Defence 39

40 Appendix: Rheinmetall Defence Global defence market Decreasing established markets, growth regions MENA and Asia/Pacific USA $ 582 billion Europe $ 271 billion Global market share 38% D / -12% Global market share 17% D / -2% Russia $ 69 billion Global market share 4% D / +7% South America $ 59 billion Global market share 4% D / +0% MENA* $ 121 billion Global market share 8% D / +12% Asia/Pacific $ 366 billion Global market share 24% D / +3% * MENA = Middle East and Northern Africa Source: IHS Jane s (March 2014), Rheinmetall team analysis 40

41 Appendix: Rheinmetall Defence Key figures Defence by division (operational before special items) Sales EBIT before special items* Drones (divested 30 June) Drones (divested 30 June) 2,335 2, , , ,027 Combat Systems Electronic Solutions Wheeled Vehicles Drones (divested 30 June) Drones 49 (divested June) Operational margin* -3.4pp 6.2% 2.8% -5.9pp 10.5% 4.6% -2.5pp 6.6% 4.1% +1.7pp -4.1% -2.4% Figures before intrasegmental consolidation * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 41

42 Appendix: Rheinmetall Defence Quarterly development Sales Defence in million Operational earnings Defence* in million Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q Combat Systems Electronic Solutions Wheeled Vehicles Consolidation/Others * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 42

43 Appendix: Rheinmetall Defence Key figures in million * D / Order intake 2,933 3, Order backlog 4,987 6, ,063 Sales 2,335 2, Operational earnings (EBIT before special items) Special items (one-offs, restructuring costs) EBIT (reported) Employees 9,623 9, * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 43

44 Appendix: Rheinmetall Defence Cash flow statement in million * D / Net income Amortization / depreciation Change in pension accruals Cash flow Changes in working capital and other items Net cash used in operating activities Cash outflow for additions to tangible and intangible assets Free cash flow from operations * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 44

45 Appendix: Rheinmetall Defence New joint venture with Ferrostaal started January 2014 Door opener and accelerator for further internationalization 50:50 Core capabilities: Project management, Plant engineering million sales p.a., 200 employees Joint venture consolidated at equity Core capabilities: Expertise in the Defence business Medium- and long-term benefits for Rheinmetall 1 Accelerating the internationalization of Rheinmetall Defence, especially in markets to which Rheinmetall Defence had only limited access before, e.g. Latin America, Northern Africa 2 3 Meeting the growing demand for local defence technology infrastructure, esp. in emerging markets (e.g. turn-key plant) Improving Rheinmetall s capacities and capabilities in project management by experienced project managers 45

46 Appendix: Rheinmetall Automotive 46

47 Appendix: Rheinmetall Automotive Global automotive market Western Europe stagnating, China and the Americas growing USA 10.9 million units Western Europe 13.6 million units Global market share 13% D / +8% South America 4.5 million units Global market share 5% D / + 6% Global market share 16% D / +0% India 3.6 million units Global market share 4% D / -4% China 19.3 million units Global market share 23% D / +14% Japan 8.9 million units Global market share 11% D / -4% Source: IHS Automotive (February 2014) 47

48 Appendix: Rheinmetall Automotive Key figures Automotive by division (operational before special items) Sales 2, ,458 Hardparts Mechatronics Motor Service ,087 1,085 1,091 1, EBIT before special items* Operational margin* 5.9% +0.6pp 6.5% 5.2% -0.5pp 4.7% 6.3% +0.3pp 6.6% 9.5% +0.9pp 10.4% Figures before intrasegmental consolidation * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 48

49 Appendix: Rheinmetall Automotive Key figures in million * D / Sales 2,369 2, Operational earnings (EBIT before special items) Special items (one-offs, restructuring costs) EBIT (reported) Employees 12,003 11, * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 49

50 Appendix: Rheinmetall Automotive Quarterly development Sales Automotive in million Operational earnings Automotive* in million Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Hardparts Mechatronics Motor Service Consolidation/Others * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 50

51 Appendix: Rheinmetall Automotive Cash flow statement in million * D / Net income Amortization / depreciation Change in pension accruals Cash flow Changes in working capital and other items Net cash used in operating activities Cash outflow for additions to tangible and intangible assets Free cash flow from operations * figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011) 51

52 Appendix: Rheinmetall Automotive Financial diary March 19, 2014 Annual report FY May 6, 2014 Annual General Meeting May 8, 2014 Q August 7, 2014 Q

53 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. 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 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 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. 53