Corporate Presentation I October 2013 - Rheinmetall AG ...
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Corporate Presentation I October 2013
Rheinmetall Group Consolidated income statement € million 2008 2009 2010 2011 2012 Sales 3,869 3,420 3,989 4,454 4,704 EBITDA 411 180 464 538 495 EBIT 245 15 297 354 301 EBIT margin (%) 6.3 0.4 7.4 7.9 6.4 EBT 193 - 46 229 295 239 Group net income 142 - 52 174 225 190 Earnings per share (€) 4.09 - 1.60 4.23 5.55 5.00 Dividend per share (€) 1.30 0.30 1.50 1.80 1.80 Amortization / depreciation 166 165 167 184 194 Employees (Dec. 31) 21,020 19,766 19,979 21,516 21,767 Consolidated balance sheet € million 2008 2009 2010 2011 2012 Total assets 3,612 3,835 4,460 4,832 4,899 Total equity 1,080 1,134 1,355 1,546 1,461 Net liquidity - 205 + 44 - 76 - 130 - 98 Pension accruals 577 610 677 729 920 Consolidated cash flow statement € million 2008 2009 2010 2011 2012 Cash Flow 308 120 344 402 372 Free operating cash flow 118 186 - 39 93 125
Rheinmetall Group
Rheinmetall Group
Leading positions in Defence and Automotive
Sales : € 4.7 billion Employees: 21,800
RHEINMETALL DEFENCE RHEINMETALL AUTOMOTIVE
Leading European Defence company Leading Automotive supplier
for ground forces technology in engine components and systems
Sales: € 2.3 billion Sales: € 2.4 billion
Employees: 9,600 Employees: 12,000
All figures FY 2012
Company presentation | October 2013 © Rheinmetall 2013 1
Rheinmetall Group
H1 2013
Financial highlights
Rheinmetall Group H1 2012* H1 2013 ∆ H1 2013/
in € million H1 2012
Sales 2,253 2,062 - 191
Operational earnings (EBIT before special items) 92 29 - 63
Special items (one-offs, restructuring costs) 31 - 47 - 78
EBIT (reported) 123 - 18 - 141
Group net income 72 - 45 - 117
Earnings per share in € 1.94 - 0.66 - 2.60
Cash flow 162 46 - 116
Free cash flow from operations - 297 - 174 + 123
Employees 21,690 21,596 - 94
Less sales and low EBIT due to Defence
Free cash flow from operations improved due to lower working capital
Restructuring program in progress: costs of € 47 million booked
* 2012 figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011)
Company presentation | October 2013 © Rheinmetall 2013 2
Rheinmetall Group
H1 2013
Operational highlights
Defence Automotive
Again strong order intake, e.g. Leopard 2 Stable sales despite a shrinking European
and tank howitzer components for Qatar market
Australian order for military trucks recently Regarding sales and operational earnings,
received with a volume of € 1.1 billion, Q2 2013 at a high level
booked in Q3 2013
Operational results improved in Q2 vs. Q1:
Operational results improved in Q2 vs. Q1: sales increased by € 30 million,
sales increased by € 108 million, operational earnings* by € 15 million
operational earnings* by € 38 million
Restructuring program on schedule,
Restructuring program on schedule, expenses of € 21 million booked in H1
expenses of € 26 million booked in H1
Mechatronics: Large frame contract for
US LV engines, worth more than € 400 million
* EBIT before special items
Company presentation | October 2013 © Rheinmetall 2013 3
Rheinmetall Group
Update on restructuring programs
Reducing capacities in order to handle changed market environment
Costs Costs 2013 Total Expected Full annual
2012 reduction of savings savings
H1 H2e employees 2014 from 2015
until 2015
Combat Systems (esp. Tracked Vehicles) 17 1 150 - 170
Electronic Solutions (esp. Air Defence Zurich) 3 0 100 - 130
Wheeled Vehicles (esp. Logistic Vehicles) 0 25 250
Total Defence 20 26 14 - 24 500 - 550 ∼15 40 - 50
Hardparts
0 14 370
(esp. Pistons Thionville/Neckarsulm)
Mechatronics (esp. merging Neuss/Nettetal) 0 7 100
Total Automotive 0 21 14 470 ∼10 20 - 25
Costs and savings in € million
Company presentation | October 2013 © Rheinmetall 2013 4
Rheinmetall Group
Outlook 2013 updated
Defence reduced, Automotive confirmed
Sales EBIT
in € billion in € million
Original Updated Original Updated
Defence 2.4 2.3 130** 60 - 70**
Restructuring costs 40 - 50 40 - 50
Automotive 2.4 - 2.5 2.4 - 2.5 140** 140**
Restructuring costs 20 - 30 35
* Including holding costs, before restructuring costs ** Before restructuring costs
Company presentation | October 2013 © Rheinmetall 2013 5
DEFENCE
© Rheinmetall 2013
Rheinmetall Defence
The divisional structure of Defence
Broad range of technologically leading products
Sales (FY 2012): € 2.3 billion
Combat Systems Electronic Solutions Wheeled Vehicles
€ 1.1 billion € 0.7 billion € 0.6 billion
Combat Platforms Air Defence Systems Logistic Vehicles
Infantry Defence Electronics Tactical Vehicles
Protection Systems Electro-optics Services
Propulsion Systems Simulation and Training
Combat International
Inter-company sales not eliminated
Company presentation | October 2013 © Rheinmetall 2013 7
Rheinmetall Defence
“Rheinmetall 2015” – Defence
Defence budgets are stabilizing
Defence budgets CAGR
The global financial crisis has forced many
’13-’15e
in US$ billion +0.0%
European countries to make large cuts in defence
292 285 277 277 277 spending
Europe
Defence budgets are expected to stabilize from
2013 onwards
2011 2012 2013e 2014e 2015e
Overseas contingency CAGR
operations (OCO) ’13-’15e
Defence spending has been cut amongst budget
+1.3%* pressures during the past years
Base
687 645 615 616 n.a. Further downside risks as sequestration remains
US 159 115 87 89 real risk
528 530 528 527 541
2011 2012 2013e 2014e 2015e
CAGR Unlike defence budgets in many other regions,
’13-’15e
+8.2% Asian defence spending continues to increase
Asia/ 363 387 425 459 Many Asian countries experienced relatively low
341
Pacific fiscal distress during the crisis and continued to
increase their defence spending
2011 2012 2013e 2014e 2015e
Sources: European Defence Budget as per Frost & Sullivan; US Defence Budget as per US Defence Budget as per DoD
* CAGR based on Base figures, OCO not available for 2015 Fiscal Year 2014 Budget Request as of April 2013; APAC Defence Spending as per Marketline as of August 2013
Company presentation | October 2013 © Rheinmetall 2013 8
Rheinmetall Defence
Order intake
Increasing share received from growth regions
Order intake by region in € million resp. %
2,933
Germany
24%
46%
Europe*
22%
+13%
1,282
Asia/Middle East 1,138 Germany
27% Germany 22% 34%
Europe*
31%
54% 54% Asia/Middle East
12%
Europe*
57%
23%
Rest of the World Asia/Middle East thereof: Qatar 66%
27% 31% 46% 37%
Rest of the World Rest of the World
15% 9%
FY 2012 H1 2012 H1 2013
* Excluding Germany
Company presentation | October 2013 © Rheinmetall 2013 9
Rheinmetall Defence
Weapon and ammunition business
Orders worth € 750 million from the MENA* region in the last 12 months
Project Received in € million
Naval ammunition contract 11/2012 320
Tank and artillery ammunition 06/2013 174
155mm & plant engineering (Rheinmetall Denel Munition) 05/2013 72
Weapons for Leopard 2 and self-propelled howitzer PzH 2000 06/2013 69
MK 83 bombs 12/2012 63
120mm ammunition (Rheinmetall Denel Munition) 07/2013 54
752
* MENA = Middle East and North Africa
Company presentation | October 2013 © Rheinmetall 2013 10
Rheinmetall Defence
Weapon and ammunition business
Sales development by product category 2008 – 2016e
Sales ammunition business in € million
750-800
700-750 RWM Italia
RDM
665 682
675 650-670
643 Propellants
600
Mun. Protection
531
Platforms Med. Cal.
Platforms Art./Mortar
Platforms Tank
Infantry Mortar
Infantry Live
Infantry Training
Weapons
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e
Company presentation | October 2013 © Rheinmetall 2013 11
Rheinmetall Defence
Order backlog
Backbone for topline growth in the medium term
Order backlog July 2013… in € million …turning into sales in € million Rest of Defence
Top 10 projects
6,427
3,094
Rest of Defence 40% 18%
+24%
1,242
1,090 82%
60% 1,002
Top 10 projects 64% 36%
81%
64%
36%
19%
July 2013 Aug-Dec 2013 2014 2015 2016ff.
Company presentation | October 2013 © Rheinmetall 2013 12
Rheinmetall Defence
Turning orders into sales
Sales development for top projects per division
Puma series contract Leo2 / PzH 2000 Qatar
200 200
100 100
0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020
Ammunition MENA Training center Russia
200 200
100 100
0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020
Boxer Netherlands Land 121 Australia
200 200
100 100
0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020
Company presentation | October 2013 © Rheinmetall 2013 13
Rheinmetall Defence
“Rheinmetall 2015” – Defence
The drivers for improvement
Restructuring programs are important
Simulation
& Training
drivers and we are confident to bring the
affected units back on track
Protection
Combat Systems
International The expected market recovery in the
ammunition sector will raise profitability of
Electro-
optics the group
Tactical Propulsion
Volume driven
Vehicles Systems Capturing of new markets with established
growth
products like the Boxer will lead to profitable
growth
Infantry
Systems
Air Defence Platforms In addition we will focus on the
Ammunition
improvement of project management in the
Platforms
Vehicles
Defence
Electronics
systems business and especially in Tracked
Vehicles
Logistic
Vehicles
Combat Electronic Wheeled
Systems Solutions Vehicles
Cost efficient
set-up
Company presentation | October 2013 © Rheinmetall 2013 14
Rheinmetall Defence
“Rheinmetall 2015” – Defence
Growth and earnings targets continue to be achievable
Operational EBIT margin in %
10% ~10%
6%
Cost overruns and
higher acquisition costs
Dip down in markets for components,
especially in weapons and ammunition
Lower volume Air Defence and Logistic Vehicles
and poor structure Tracked Vehicles 3%
2011 2012 2013e 2014e 2015e
Company presentation | October 2013 © Rheinmetall 2013 15
Rheinmetall Defence
“Rheinmetall 2015” – Defence
Growth and earnings targets continue to be achievable
Operational EBIT margin in %
~10%
Improvement of
project management
6%
Capturing of new markets
with established products
Recovery of ammunition markets
Execution of restructuring programs
3%
2012 2013e 2014e 2015e
Company presentation | October 2013 © Rheinmetall 2013 16Rheinmetall Defence
New joint venture
Rheinmetall Defence and Ferrostaal complement each other very well
Contributing booked governmental projects, Contributing selected future defence projects
partly in realization phase with infrastructural requirements
50 : 50
Key facts: € c200-300 million sales p.a., c200 employees, domiciled near Wiesbaden (Germany)
Manageable risk: joint venture consolidated at equity, project prepayments usual
Expected start of business operations: January 2014
Company presentation | October 2013 © Rheinmetall 2013 17
Rheinmetall Defence
Strategic rationale
Rheinmetall strengthens its international large-scale project business
50 : 50
1 Accelerating the internationalization strategy of Rheinmetall Defence
Being able to capture new markets and regions to which Rheinmetall had no or only limited access
before and in which Ferrostaal has already done or is doing business, e.g. Brazil
2 Meeting the rapidly growing demand for local defence technology infrastructure
Single-source supply for international defence customers that are increasingly demanding for local
content and infrastructure (“one-stop shopping”), e.g. projects similar to Fox Algeria, also in the
simulation business (combat training centers) or ammunition business (local production facilities)
3 Improving project management
Adding the know-how of Ferrostaal’s experienced project managers and thus, enhancing the
execution of complex large-scale projects in the defence sector
Company presentation | October 2013 © Rheinmetall 2013 18AUTOMOTIVE
© Rheinmetall 2013
Rheinmetall Automotive
The divisional structure of Automotive
Focused on the attractive segment of powertrain technology
Sales (FY 2012): € 2.4 billion
Hardparts Mechatronics Motor Service
€ 1.1 billion € 1.1 billion € 0.3 billion
Pistons Pierburg International
Aluminum Technology Pierburg Pump Technology Domestic
Plain Bearings
Large Bore Pistons
Inter-company sales not eliminated
Company presentation | October 2013 © Rheinmetall 2013 20Rheinmetall Automotive
Automotive
Well-positioned with large product portfolio
Engine blocks Bushings for tailgates Recirculating water pumps
(residual heat, standby
Pistons heater, cooling system)
Exhaust-gas recirculation
Control valves
Pumps
(oil/water/vacuum)
Bearings for seat
Exhaust-gas mass flow adjusters/doors
sensors
Structural parts
Actuators/ throttle bodies
Turbo control valves/
divert-air valves
Cylinder heads
Engine bearings
Bearings for active engine Bushings for Bushings for
Secondary-air systems hoods (pedestrian protection) injection pumps shock absorbers
Color code: Mechatronics Hardparts
Company presentation | October 2013 © Rheinmetall 2013 21
Rheinmetall Automotive
Global automotive markets
Automotive market: Growth signals for LVs and components
Expected production of light vehicles per region Global automotive component market in € billion
in million units
CAGR ’12-’16e (in %) CAGR ’12e-’16e (in %)
94.1 4.2 612 4.9
World 79.7 81.3 9.2 ! 527
Brazil 5.8 5.7 !
India 9.1
Rest of World China 9.9 Powertrain
4.2
0.7 Chassis
NAFTA + USA 4.5 4.5
Japan Mexico 7.1 Exterior
Japan -4.9
4.4
2.3 Interior
Europe
Infotainment 3.7
2012 2013 2016e 2012e 2016e
Long-term global growth especially driven by Powertrain segment with strongest growth
emerging markets
Source: IHS Automotive (September 2013) Source: IHS AutoInsight 2012
Company presentation | October 2013 © Rheinmetall 2013 22Rheinmetall Automotive
Growth by products and innovations
Megatrends: reduction of fuel consumption and emission
Strong growth through increasingly stringent emission regulations* Growing powertrain technology
(g/km) content per vehicle**
PM Europe PM USA
Powertrain costs per mid-size gasoline vehicle
0.06 0.06 (in €)
USA EPA 04
EU 3
0.04 0.04
3,000
EU 4
0.02 0.02
EU 6 EU 5 EPA 07
NOx NOx
Trend 0.1 0.2 0.3 0.4 0.1 0.2 0.3 0.4
+36%
+
Substantial reduction of fuel consumption and therefore CO2 emissions** 2,200
CO2 fleet emission targets (g/km)
Origins of CO2 emissions in
EU U.S. China
mid class segment cars
(41)% (27)% (29)%
216 Other
187
160 157 140 8%
130 132 Weight
95 10% Engine
Drag 46%
11%
Actual Target Target Actual Target Target Actual Target Roll resistance
2006 2015 2020 2006 2015 2020 2006 2015 12% Powertrain
Transmission
13%
2010 2020E
Source: Daimler
* Source: DieselNet; PM (particulate matter): g/km; NOx (nitrogenous oxide): g/km ** Source: Roland Berger (2010/I), Roland Berger (2011)
Company presentation | October 2013 © Rheinmetall 2013 23
Rheinmetall Automotive
Growth by products and innovations
Stricter emission regulations drive the Mechatronics business
Company presentation | October 2013 © Rheinmetall 2013 24Rheinmetall Automotive
Growth by products and innovations
Truck business – significant growth with commercial diesel systems
Sales in € million
x3
48
22 22
2011 2012 2013e 2016e
Company presentation | October 2013 © Rheinmetall 2013 25
Rheinmetall Automotive
Slight decrease of sales in Europe partially compensated by other markets
Automotive benefits from balanced customer base
Sales by region in € million Sales by customer in %
-1%
1,243 1,228 Trucks/
Others VW/Porsche/Audi
Germany Germany 19% 16%
284 285
Ships/
73% 72%
Power plants/ Ford
Europe* Europe* 7% 12%
MIR**
618 597 2012
Asia
(w/o
China JVs) 11% 8% Renault/
Americas Americas Aftermarket Nissan
Rest of 222 27% 229 28% 7%
the world 4%
106 105 4% 6% PSA
13 12 Fiat 6%
Daimler BMW
H1 2012 H1 2013 GM
* Excluding Germany ** Marine, Industry, Recreation
Company presentation | October 2013 © Rheinmetall 2013 26Rheinmetall Automotive
Internationalization
Automotive network in China
3 Joint Ventures (50 : 50)
3 Wholly Foreign-Owned Enterprises (WFOEs) 12 sites in 3 cities
1 Subsidiary of a Joint Venture • Shanghai
• Kunshan (Shandong province )
• Yantai (Jiangsu province )
Peking
Yantai
• Fushan
Kunshan Shanghai
• Anting
• Loutang
• Waigang
• Waigaoqiao
Hongkong
• Yuepuzhen
• Zhangjiang
Company presentation | October 2013 © Rheinmetall 2013 27
Rheinmetall Automotive
Internationalization
Automotive network in China – Sites and products
Joint Ventures (50 : 50)
KPSNC KPSNC KPSNC KPSNC KSSP PHP
Shanghai Kunshan Yantai Shanghai Shanghai Shanghai
Loutang (Head office) Cylinder heads and Fushan Waigang Anting Yuepuzhen
Cylinder heads, engine blocks Cylinder heads Machining of Pistons Electrical &
engine blocks and engine blocks mechanical pumps
structural body parts SOP 2014
Wholly Foreign-owned Enterprises Subsidiary of a Joint Venture KSPG House
Pierburg China KS Large-bore MS Motor Service Asia Pierburg Mikuni Pump Head office
Kunshan pistons Pacific Technology Shanghai
AGR modules, Kunshan Shanghai Waigaoqiao, Shanghai Zhangjiang
Electric throttle bodies SOP 2013 Kunshan Zhangjiang HO for all wholly-owned
in free-trade area Water- & oil pumps subsidiaries
Company presentation | October 2013 © Rheinmetall 2013 28Rheinmetall Automotive
Internationalization
Automotive in China – Sales and EBIT
Sales in € million EBIT in € million
x2.5 x2.5
WFOEs WFOEs
~25
12 JVs JVs
8 0
6 ~470
388 0 31 ~34
258 298 22
15
-1Rheinmetall Automotive
“Rheinmetall 2015” – Automotive
Automotive expects an EBIT margin of 8%
EBIT margin after restructuring costs in %
+1.7pp
Internationalization Growth by products Cost efficiency
• Expanding and innovations • Rightsizing of 8.0%
business activities • Realization of European
in growth markets growth potential capacities
outside Europe driven by • Optimization of
• Further powertrain global production
strengthening of megatrends footprint
production base • Further
6.3% in low-cost development of
countries service centers
worldwide
Portfolio shift Portfolio shift Optimization of
towards BIC towards worldwide cost
markets and low- Mechatronics structures
cost production
H1 2013 2015
Company presentation | October 2013 © Rheinmetall 2013 31
SUMMARY
© Rheinmetall 2013Rheinmetall Group
“Rheinmetall 2015”
Key takeaways
Organic growth of 3-5% p.a. from 2015 in both segments
Further internationalization is of great importance for both sectors
Technological leadership and product innovations are decisive growth factors
Assuming a stable market environment,
Rheinmetall Automotive envisages an EBIT margin of 8% from 2015
After the successful termination of restructuring and the recovery of the ammunition
business, Rheinmetall Defence expects an EBIT margin of 10%
Rheinmetall is the international partner for security and mobility
Company presentation | October 2013 © Rheinmetall 2013 33
APPENDIX: GROUP
© Rheinmetall 2013Appendix: Rheinmetall Group
Finance
Solid equity ratio
Equity (at year-end) in € million Rheinmetall – own shares (at year-end) in %
Equity ratio in %
1,546
1,461
1,355
4.8
4.5
1,080 1,134
3.5 3.3 3.4
32%
30% 30% 30% 30%
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
Company presentation | October 2013 © Rheinmetall 2013 35
Appendix: Rheinmetall Group
Solid balance sheet
High cash credit facilities and low financial debt
Cash credit facilities (as of July 31, 2013) Net financial debt (at year-end) in € million
in € million Net gearing in %
∼1,400
Bilateral bank facilities
(up to 1 year) ∼400
205
Syndicated loan 5-year-Ø net financial
(due December 2016) 500
debt as of quarter end
19% 130
Promissory notes
(due 2014) 16 98
76
Bond
500 501 548 8%
(4% coupon, due 2017) 389 6% 7%
93 -44
Financing Q1 Q2 Q3 Q4 2008 -4% 2010 2011 2012
frame 2009
* Net debt in % of equity
Company presentation | October 2013 © Rheinmetall 2013 36Appendix: Rheinmetall Group
Solid balance sheet
Rising pension liabilities, but current expenses stable
Pension liabilities and discount rate* Domestic pension payments in € million
in € million resp. %
6.00
5.50 920
5.25 5.25 883
729
677
610
577 3.25
3.50 31 33 32
31 31
15
2008 2009 2010 2011 2012 H1 2013 2008 2009 2010 2011 2012 H1 2013
Discount rate Cum. actuarial gains and losses
Pension provisions (foreign) Pension liabilities (domestic)
* Discount rate for German pension liabilities of Rheinmetall
Company presentation | October 2013 © Rheinmetall 2013 37
APPENDIX: DEFENCE
© Rheinmetall 2013Appendix: Rheinmetall Defence
Key figures Defence by division (operational before special items)
Combat Systems Electronic Solutions Wheeled Vehicles
-176 -119 -19
324
-60
Sales Drones 1,010 834 477 Drones
(divested 358 (divested 302 305 265
30 June) 30 June) 205
22 22
H1 2012 H1 2013 H1 2012 H1 2013
H1 2012 H1 2013 H1 2012 H1 2013
EBIT -73 -10
Drones Drones
25 -49 (divested 10
before (divested
30 June) 23 22 30 June) 0
-14
special 2 2 8 -8
-48 -27 -22
items* H1 2012 H1 2013
H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013
-8.3pp -12.1pp -3.1pp
Opera- 2.5% -7.7pp
tional 4.6% +3.1%
-5.8% 0.0%
margin* -7.5% -3.0% -10.7%
H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013
Figures before intrasegmental consolidation * 2012 figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011)
Company presentation | October 2013 © Rheinmetall 2013 39
Appendix: Rheinmetall Defence
H1 2013 - Defence in a transition year
Encouraging order situation, but earnings squeezed
Rheinmetall Defence H1 2012* H1 2013 ∆ H1 2013/
in € million H1 2012
Order intake 1,138 1,282 + 144
Order backlog 4,589 5,383 + 794
Sales 1,010 834 - 176
Operational earnings (EBIT before special items) 25 - 48 - 73
Special items (one-offs, restructuring costs) 31 - 26 - 57
EBIT (reported) 56 - 74 - 130
Employees 9,690 9,411 - 279
Order backlog very strong
Weak sales in all three divisions, but Q2 improved compared to Q1
H2 2013e: no major changes in sales to be seen in Q3, strongly back-end loaded performance
expected, further large-scale orders in the pipeline
* 2012 figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011)
Company presentation | October 2013 © Rheinmetall 2013 40Appendix: Rheinmetall Defence
Looking at the markets – 2013
Reduced defence spending determines market environment
Defence spending by region in US$ billion
Still a challenging market environment
-2%
1,592 1,568 Global defence spending is expected to
Rest of the World 109 109 decrease in 2013
+5%
Asia 392 Lower procurement spending in the
414
+9% Western world due to troops with-
MENA 128 drawals and budgets under pressure
139
Important customer countries of
-7%
Rheinmetall affected, e.g. UK (- 4%)
North America 677 626 and the US (- 8%)
-2%
Ongoing growth prospects in
Europe 286 280
Middle East and Asia
FY 2012 FY 2013e
Source: IHS Jane’s (July 2013)
Company presentation | October 2013 © Rheinmetall 2013 41
Appendix: Rheinmetall Defence
H1 2013 - Weak operational performance
Decline in earnings mainly caused by lower sales
Sales Defence in € million Operational earnings Defence in € million
-176 -73 Combat Systems
1.010 25 Electronic Solutions
22* 2* Wheeled Vehicles
Consolidation/Others
834 22
477 Reasons for weaker earnings
358 8
1 1 Combat Systems:
-8
Lower sales in tracked
-27 vehicles and ammunition
302 Project cost overruns
305
0 Electronic Solutions:
Lower sales in Air Defence
265 -22
205 Wheeled Vehicles:
Lower sales and overcapacity
-56 -34 -48 Vienna plant
H1 2012 H1 2013 H1 2012 H1 2013
* 51% of drone business divested in Q2 2012
Company presentation | October 2013 © Rheinmetall 2013 42Appendix: Rheinmetall Defence
Development Q2 2013
Operational earnings benefit from higher sales
Sales Defence in € million Operational earnings Defence in € million
+108
471 +38
7
1
363 210 -4
-9
-23
148
-5
176 -7
129
-13
98 107 0
-12 -22 -43
Q1 2013 Q2 2013 Q1 2013 Q2 2013
Combat Systems Electronic Solutions Wheeled Vehicles Consolidation/Others
Company presentation | October 2013 © Rheinmetall 2013 43
Appendix: Rheinmetall Defence
“Rheinmetall 2015”
Acquisition of new markets by hub strategy
Nordic
Region
Russian Federation
North Europe
America
Gulf Region
(GCC)
South America Africa
Australia
Company presentation | October 2013 © Rheinmetall 2013 44Appendix: Rheinmetall Defence
High order backlog of almost € 5 billion
Strong backbone for future sales
Combat Systems Electronic Solutions Wheeled Vehicles
Puma: roll-out at the end of 2013 Air Defence equipment for Asian Boxer Netherlands: roll-out
(order volume > € 1 billion) customers (order volume € 284 (order volume ~ € 500 million)
Large ammunition order from million) and Brazil Fox Algeria: continuation of
a MENA country (order volume Weapon stations for CROWS III the order (booked order of
€ 320 million) (USA) (sales potential up to US$ € 200 million)
Preparation TAPV-order Canada 100 million) and for Germany
(order volume € 160 million) (€ 55 million)
Company presentation | October 2013 © Rheinmetall 2013 45
Appendix: Rheinmetall Defence
“Rheinmetall 2015”
Extension of systems- and service business
Sales split
Components Systems
Turrets and weapon stations Tracked vehicles
Weapon and ammunition Wheeled vehicles
Active and passive protection Simulation and training
Propellants 35-45% 40-50% Air defence
Electro-optical components
10-15%
Sustainable business with small Large-scale project business
and medium-sized orders Long-running contracts
Low technological risk, but high Project risk management
margins
Mainly not affected by budget cuts
Service/Support Order volume and timing often
affected by budget situation
for systems and components
Profitable follow-up business
Independent of budget restraints
Company presentation | October 2013 © Rheinmetall 2013 46APPENDIX: AUTOMOTIVE
© Rheinmetall 2013
Appendix: Rheinmetall Automotive
Key figures Automotive by division (operational before special items)
Hardparts Mechatronics Motor Service
-15
-43 +25
1,243 1,228 -1
Sales 578 590
535 565
137 136
H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013
-4
EBIT -1
-12
before 81 +3
special 35 39 38
77 23 12 15
items*
H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013
+2.2pp
-0.2pp -0.5pp
-1.8pp
Opera-
tional 6.9% 6.4% 8.8% 11.0%
6.5% 6.3% 6.1%
margin* 4.3%
H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013
Figures before intrasegmental consolidation * 2012 figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011)
Company presentation | October 2013 © Rheinmetall 2013 48Appendix: Rheinmetall Automotive
2013 - Stable sales
EBIT mainly affected by lower sales in Hardparts and restructuring costs
Rheinmetall Automotive H1 2012* H1 2013 ∆ H1 2013/
in € million H1 2012
Sales 1,243 1,228 - 15
Operational earnings (EBIT before special items) 81 77 -4
Special items (one-offs, restructuring costs) 0 - 21 - 21
EBIT (reported) 81 56 - 25
Employees 11,861 12,042 + 181
Sales and operational earnings at a high level
Operational margin of Automotive in Q2 2013 raised to 7.3% (+ 2.1pp compared to Q1 2013,
+ 1.2pp compared to Q2 2012)
H2 2013e: based on current market forecasts, we expect a stable business performance
* 2012 figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011)
Company presentation | October 2013 © Rheinmetall 2013 49
Appendix: Rheinmetall Automotive
Looking at the markets – 2013
Recovery of global markets expected for H2 2013
Global and European production of light vehicles
in thousand units
Global LV production still on growth path
+1% +2%
40,803 41,403 81,303 Light vehicle (LV) production globally
79,734
increasing by 2% in 2013
30,559 31,469
-3% China and the Americas continue to be
10,244 9,934
main drivers of the growth
60,488 62,477
H1 2012 H1 2013
+2%
European market expected to decrease
38,931 39,900
in 2013
29,929 31,009 -2%
-1%
Important countries still suffering from
19,246 18,826
9,002 8,891
the crisis (e.g. France - 14%)
H2 2012 H2 2013e FY 2012 FY 2013e Germany also slightly shrinking by 2%
Rest of the World Europe
Source: IHS Automotive (September 2013)
Company presentation | October 2013 © Rheinmetall 2013 50Appendix: Rheinmetall Automotive
Looking at the markets – long-term
Global growth driven by emerging markets
Expected production of light vehicles by region 2012-2017 in thousand units Ø Growth p.a. (CAGR):
+22%
+2%
94,137 97,310 CAGR: +4.2%
90,242
81,303 85,198 Brazil: +5.8%
World 79,734 India: +8.7%
China: +9.1%
+6%
-0%
CAGR: +1.1%
Triad* 38,237 38,154 38,225 39,311 39,870 40,464 USA: +3.8%
Mexico: +6.4%
+14% Japan: -4.1%
-2%
Europe 19,246 18,826 19,475 20,243 21,102 21,930 CAGR: +2.6%
2012 2013e 2014e 2015e 2016e 2017e
* Triad = Western Europe + NAFTA + Japan Source: IHS Automotive (September 2013)
Company presentation | October 2013 © Rheinmetall 2013 51
Appendix: Rheinmetall Automotive
2013 - Stable operational performance
Earnings impacted by lower Hardparts sales
Sales Automotive in € million Operational earnings Automotive in € million
-15 -4
1.243 1.228 81*
77 Reasons for weaker earnings
578 535 35
23 Hardparts:
Sales down by € 43 million
Mechatronics:
Higher sales of € 25 million
38
565 590 39 Additional R&D
Motor Service:
Improved earnings
137 136 12 15
-37 -33 1 Hardparts
-5 Mechatronics
H1 2012 H1 2013 Motor Service
H1 2012 H1 2013
Consolidation/Others
* 2012 figures restated for retrospective application of IAS 19 Employee Benefits (revised 2011)
Company presentation | October 2013 © Rheinmetall 2013 52Appendix: Rheinmetall Automotive
“Rheinmetall 2015”
Disproportionately high growth in emerging markets with local production
Expected change of LV production 2015 vs. 2012 in %
Sales Automotive 2012 in € million
Western Europe + 4% 400*
USA + 15%
59 China + 36%
42
Mexico + 20% Automotive
Automotive
Automotive India + 24%
Brazil + 24%
194
Automotive
* Including 100% of sales of Joint Ventures Source: IHS Automotive (September 2013)
Company presentation | October 2013 © Rheinmetall 2013 53
Appendix: Rheinmetall Automotive
2013 - China still a booming market for mobility
Joint ventures and subsidiaries with sustainable growth
Mechatronics:
New facility for the production of EGR valves
opened in Kunshan in 2013
New joint venture with Chinese SAIC (50%/50%) for
Yantai
pumps recently founded, start of production in 2014
Kunshan Shanghai Hardparts:
New 100% subsidiary (WFOE) for large-bore pistons
set up in Q2 2013, start of production in 2013
LV production China in thousand units Sales Automotive China in € million
+13% +28%
9,363 258
7,680 8,093 8,314 8,592 201 200
147 160
246 JVs*
155 196 192
143 WFOEs
4 5 5 8 12
H1 H2 H1 H2 H1 H1 H2 H1 H2 H1
2011 2012 2013 2011 2012 2013
Source: IHS Automotive (September 2013) * Rheinmetall Automotive owns 50% of the joint ventures, consolidated at equity
Company presentation | October 2013 © Rheinmetall 2013 54Appendix: Rheinmetall Automotive
“Rheinmetall 2015”
Automotive well-positioned with large product portfolio
Sales split 2012*
Mechatronics Hardparts
Exhaust gas recirculation LV- and truck pistons
Solenoid valves Large bore pistons
Actuators Bearings
45% 44%
Water-, oil- and vacuum pumps Continuous casting
Engine blocks
11%
Strict regulations as growth driver High degree of internationalization
Strong position in Europe, with strong position in growth
especially in Diesel markets Motor Service markets
High degree of innovation and well Good position in prospective
filled order pipeline Engine parts for own products and markets for gasoline engines
third parties Capital intensive business model in
mature product markets
Global presence in 130 countries
Large product portfolio with spare
parts and services
* Before consolidation
Company presentation | October 2013 © Rheinmetall 2013 55Rheinmetall Group Automotive – Segment report € million 2008 2009 2010 2011 2012 Sales 2,055 1,522 1,982 2,313 2,369 EBITDA 184 - 70 183 254 247 Amortization / depreciation 123 117 102 103 104 EBIT 61 - 187 81 151 143 EBIT margin (%) 3.0 - 12.3 4.1 6.5 6.0 Capital expenditures 146 70 96 104 148 Employees (Dec. 31) 11,682 10,339 10,816 11,548 12,003 Defence – Segment report € million 2008 2009 2010 2011 2012 Sales 1,814 1,898 2,007 2,141 2,335 Order intake 1,723 3,153 1,977 1,831 2,933 Order backlog (Dec. 31) 3,307 4,590 4,772 4,541 4,987 EBITDA 237 263 297 303 263 Amortization / depreciation 43 48 63 80 89 EBIT 194 215 234 223 174 EBIT margin (%) 10.7 11.3 11.6 10.4 7,4 Capital expenditures 53 74 93 102 90 Employees (Dec. 31) 9,217 9,304 9,037 9,833 9,623
Financial Diary November 8, 2013 Q3 2013 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 2013. 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 I Rheinmetall Platz 1 I 40476 Düsseldorf Tel. +49 211 473-4718 I Fax +49 211 473-4157 I www.rheinmetall.com 131015 Corporate Presentation
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