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Rheinmetall AG Call Transcript 2014

May 8, 2014

356_ip_2014-05-08_ff1f4c90-a4cf-492d-92fa-da5a61bda9c2.pdf

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THE TECHNOLOGY GROUPFOR SECURITY AND MOBILITY

Conference Call Q1 2014

Düsseldorf |May 8, 2014

Q1 2014 at a glance

  • Order intake increased by € 343 million or 34%, leading to a higher order backlog of € 6,669 million, raised by € 1,249 million compared to Q1 2013
  • Sales up by 12% to € 1,080 million, growth in both divisions
  • Enhanced earnings: operational earnings improved by € 15 million, EBT better by € 21 million to € - 16 million, EPS up by € 0.42 to € - 0.19
  • Headcount reduced by 2% to 21,257 employees
  • Outlook confirmed

Q1 2014 in detail

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* 2013 Automotive figures restated according to IFRS 11 (Joint arrangements)

Cash flow statement

Free cash flow from operations significantly lower than previous year

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* 2013 Automotive figures restated according to IFRS 11 (Joint arrangements)

Q1 2014 at a glance

  • Order intake 62% higher than one year ago despite a challenging market environment
  • Sales increased by 14% to € 414 million
  • Business still impacted by continuously weak ammunition market
  • Operational performance not satisfying in spite of the expected seasonal effect
  • Concerning the further execution of the contract with Russia, Rheinmetall maintains a close contact to the German government

Q1 2014 in detail

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InternationalizationIncreasing share of order intake received from growth regions

Strong order intake continued

New orders strengthen order backlog of Logistic Vehicles and Air Defence

  • Long-term framework contract with Norway
  • Delivery of military trucks and logistic support
  • First lot: 120 protected and unprotected vehicles as well as R&D with a total volume of more than € 100 million

  • Booked in Q1

  • Contracts with three customers (Indonesia, South Africa, MENA country)

  • Modernization resp. expansion of existing air defence systems
  • Total volume: roughly € 200 million
  • Booked in Q1

Order backlogBackbone for top line growth in the medium term

Sales and earnings by divisionTop line improved, mixed picture in earnings

Q1 2014 at a glance

  • Good operational performance: sales increased by 11% to € 666 million
  • Significant improvement of operational earnings by 53% to € 47 million, operational margin raised from 5.1% to 7.1%
  • Business activities in China (+ 27%) outperformed the Chinese market (+ 10%) again, comparing Q1 2014 to Q1 2013

Q1 2014 in detail

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* 2013 figures restated according to IFRS 11 (Joint arrangements)

Sales and earnings by division

Earnings improved due to higher sales and better operational performance

2013 figures restated according to IFRS 11 (Joint arrangements)

Increasing sales due to growing European marketsEspecially Europe-based Mechatronics benefits from market development

© RHEINMETALL AG | Q1 201416

Outlook 2014 confirmed

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  • Further non-operational expenses of € 10 million expected, i.e. expected Group EBIT of € 220 - 240 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

Appendix: Rheinmetall Group

APPENDIX

Quarterly development

Salesin € million

Operational earnings in € million

2013 Automotive figures restated according to IFRS 11 (Joint arrangements)

Key figures Defence by division (operational before special items)

Figures before intrasegmental consolidation

Quarterly development

Sales Defence

Cash flow statement

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+22Q1 2014287Q1 2013265+44Q1 2014332Q1 2013288 66 67 +1Q1 2013 Q1 2014 17 10+7Q1 2013 Q1 2014 25 16+9Q1 2013 Q1 2014 7+2Q1 2013 Q1 2014 5+2.1ppQ1 20145.9%Q1 20133.8%+1.9ppQ1 20147.5%Q1 20135.6%10.4%Q1 20137.6%+2.8ppQ1 2014+64Q1 2014666Q1 201360231 47 +16Q1 2013 Q1 2014 Q1 2014+2.0pp7.1%Q1 20135.1%Hardparts Mechatronics MotorserviceSalesEBIT before special itemsOperationalmargin

Key figures Automotive by division (operational before special items)

Figures before intrasegmental consolidation

2013 figures restated according to IFRS 11 (Joint arrangements)

Quarterly development

Sales Automotive

2013 figures restated according to IFRS 11 (Joint arrangements)

Cash flow statement

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* 2013 figures restated according to IFRS 11 (Joint arrangements)

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 2014.

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.

140508 Q1 2014

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