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Rheinmetall AG Earnings Release 2014

Aug 7, 2014

356_ip_2014-08-07_a1e1feb5-d704-4ed2-8926-f2f9c2076d30.pdf

Earnings Release

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THE TECHNOLOGY GROUPFOR SECURITY AND MOBILITY

Conference Call Q2 2014

Düsseldorf |August 7, 2014

H1 2014 at a glance

  • Introductory remark: Accounting adjustments due to the new Castings JV (IFRS 5 Discontinued Operations) and due to IFRS 11 (Joint Arrangements)
  • Sales increased by 8% to € 2,131 million (+ 11% adjusted for FX effects)
  • Operational earnings improved by € 4 million to € 32 million, EBT by € 45 million to € - 9 million, EPS positive at € 0.01 after € - 0.66 in H1 2013
  • Headcount reduced by 2% to 20,338 employees
  • Outlook updated due to the cancellation of the export permit for the Russian order and due to the intended formation of the new Castings JV

H1 2014 in detail

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Cash flow statement

Free cash flow from operations low due to increase of working capital in Defence

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Restructuring program on track

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© RHEINMETALL AG | H1 2014

H1 2014 at a glance

  • Strong order intake of € 1,074 million, slightly lower than previous year's H1 which contained the Qatar order of € 475 million
  • Sales increased by 7% to € 895 million (+ 9% adjusted for FX effects)
  • Operational earnings still not satisfying, reflecting
  • theramp-up of low-margin projects, e.g. Puma, Boxer NL
  • the further decrease of ammunition sales H1 2014 vs. H1 2013
  • the seasonal structure of sales and earnings, strongly back-end loaded to Q4, comparable to previous year

H1 2014 in detail

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Strong order intakeLarge-scale contract with Norway and Sweden for military vehicles

  • ― Contract with Norway for military trucks of more than € 100 million, booked in Q1 ―
  • Swedish order of military trucks with a volume of roughly € 100 million, booked in Q2
  • Long-term frame contract for delivery of military trucks until 2026 and logistic support over three decades, total potential of up to € 2 billion

Order backlogBackbone for top line growth in the medium term

Weapon and ammunition businessDespite a weak market order intake gap was reduced

Sales weapon and ammunition business (as of June 30, 2014) in € million

Sales and earnings by divisionGrowth in sales, but unfavorable product mix effects

© RHEINMETALL AG | H1 2014

H1 2014 at a glance

  • Sales up by 8% to € 1,236 million (+ 12% adjusted for FX effects), whereas global market grew by 3.5%
  • Headcount reduced by 2% to 10,967 employees
  • Operational earnings improved by 22% to € 93 million with an operational margin of 7.5%, compared to 6.7% in H1 2013
  • Sound growth in Chinese JV activities increasing by 22%, while market grew by 10%
  • Strong Chinese partner for the German castings business, which will be continued as a 50/50 joint venture

Long-term partnership with HASCO*

New joint venture for commonly developing the castings business

© RHEINMETALL AG | H1 2014

H1 2014 in detail

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Sales and earnings by divisionGrowth in sales and better operational performance

Sales by region and by divisionMechatronics benefits from growth in European markets

Market environment of the two segments

D EF EN CE

  • ― Shrinking budgets in traditional markets, strong growth potential in emerging markets
  • ― Beginning public discussion in Germany on restrictive export license policy, which could affect our operations
  • ― Global ammunition market remains challenging
  • ― Contract with Russia: Rheinmetall will utilize all available legal options for minimizing the financial burden

AU TOMOTI VE

  • ―Global growth in LV production (+ 3%)
  • ― Strong growth in large markets China (+ 9%) and North America (+ 5%)
  • ― Slightly increasing European market (+ 2%)
  • ― Weak Latin American markets (e.g. Brazil - 8%)

Due to the cancellation of export permit and the formation of new Castings JVOutlook 2014 updated

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  • If the global Automotive production in H2 develops similar to H1, the original outlook for Automotive's FY earnings is achievable
  • Further non-operational expenses of € 10 million expected, i.e. expected Group EBIT of € 190 - 210 million
  • Outlook based on key assumptions:
  • macroeconomic environment stable, global automotive industry growing
  • ammunition markets stabilizing, risks of further key large projects in Defence not materializing

Appendix: Rheinmetall Group

APPENDIX

© RHEINMETALL AG | H1 2014

Quarterly development

Key figures Defence by division (operational before special items)

Figures before intrasegmental consolidation

© RHEINMETALL AG | H1 2014

Quarterly development

Cash flow statement

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-

+25H1 2013 H1 2014 448 473 +75H1 2014665H1 2013590H1 2014135H1 2013136-133 22+11H1 2013 H1 2014 38 50 +12H1 2013 H1 2014 15-2H1 201413H1 20132.1ppH1 20147.0%H1 20134.9%+1.1ppH1 20147.5%H1 20136.4%-1.4ppH1 20149.6%H1 201311.0%+95H1 20141,1411,236H1 2013+1776H1 2013 H1 2014 93+0.8ppH1 20147.5%H1 20136.7%Hardparts Mechatronics Aftermarket SalesEBIT before special itemsOperationalmarginContinuing operations

Key figures Automotive by division (operational before special items)

Figures before intrasegmental consolidation

Quarterly development

Cash flow statement

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n
e
p
r
e
c
a
o
n
z		 5
6		 5
9		 3
+
h
l
C
i
i
a
n
g
e
n
p
e
n
s
o
n
a
c
c
r
u
a
s		 4
-		 1 5
+
h
f
l
C
a
s
o
w		 8
6		 1
2
6		 4
0
+
h
k
l
d
h
i
i
i
i
C
t
t
t
a
n
g
e
s
n
o
r
n
g
c
a
p
a
a
n
o
e
r
e
m
s
w		 5
4
-		 1
1
2
-		 5
8
-
h
d
i
i
i
i
i
N
t
t
t
t
e
c
a
s
u
s
e
n
o
p
e
r
a
n
g
a
c
v
e
s		 3
2		 1
4		 1
8
-
f
f
h
l
d
d
b
l
d
C
i
i
i
t
t
t
t
a
s
o
u
o
w
o
r
a
o
n
s
o
a
n
g
e
a
n
b
l
i
i
t
t
n
a
n
g
e
a
s
s
e
s		 6
7
-		 7
9
-		 1
2
-
f
f
h
l
i
F
t
r
e
e
c
a
s
o
r
o
m
o
p
e
r
a
o
n
s
w		 3
5
-		 6
5
-		 3
0
-

Pro forma calculation going concern: Automotive and ATAG JV aggregatedH1 2014 in detail

i
i
d
d
i
i
d
i
C
t
t
t
o
n
n
n
g
a
n
s
c
o
n
n
e
o
p
e
r
a
o
n
s
u
u
l
l
i
€
i
i
n
m
o
n		 H
1
2
0
1
3		 H
1
2
0
1
4		 /
∆
H
1
2
0
1
4
H
1
2
0
1
3
l
S
a
e
s		 1,
2
3
6		 1,
3
4
8		 1
1
2
+
l
(
b
f
l
)
i
i
i
i
O
E
B
I
T
t
t
p
e
r
a
o
n
a
e
a
r
n
n
g
s
e
o
r
e
s
p
e
c
a
e
m
s		 7
7		 9
8		 2
1
+
(
)
l
f
f
S
i
i
i
t
t
t
t
p
e
c
a
e
m
s
o
n
e-
o
s,
r
e
s
r
u
c
u
r
n
g
c
o
s
s		 2
1
-		 7
-		 1
4
+
(
)
d
E
B
I
T
t
r
e
p
o
r
e		 5
6		 9
1		 3
5
+
l
E
m
p
o
y
e
e
s		 1
2,
1
0
4		 1
1,
8
4
2		 2
6
2
-

Pro forma calculation going concern: Group and ATAG JV aggregatedH1 2014 in detail

i
i
d
d
i
i
d
i
C
t
t
t
o
n
n
n
a
n
s
c
o
n
n
e
o
p
e
r
a
o
n
s
u
g
u
l
l
i
€
i
i
n
m
o
n		 *
H
1
2
0
1
3		 H
1
2
0
1
4		 /
∆
H
1
2
0
1
4
H
1
2
0
1
3
d
k
i
O
t
r
e
r
n
a
e		 2,
4
8
3		 2,
3
9
8		 8
5
-
d
b
k
l
O
r
e
r
a
c
o
g		 5,
7
6
9		 6,
5
8
0		 8
1
1
+
l
S
a
e
s		 2,
0
7
0		 2,
2
4
3		 1
7
3
+
l
(
b
f
l
)
O
i
i
i
i
E
B
I
T
t
t
p
e
r
a
o
n
a
e
a
r
n
n
g
s
e
o
r
e
s
p
e
c
a
e
m
s		 2
9		 3
7		 8
+
(
)
l
f
f
S
i
i
i
t
t
t
t
p
e
c
a
e
m
s
o
n
e-
o
s,
r
e
s
r
u
c
u
r
n
g
c
o
s
s		 4
7
-		 9
-		 3
8
+
(
d
)
E
B
I
T
t
r
e
p
o
r
e		 1
8
-		 2
8		 4
6
+
E
B
T		 5
4
-		 6
-		 4
8
+
i
G
t
r
o
p
n
e
n
c
o
m
e
u		 2
5
-		 2 2
7
+
h
i
E
i
€
a
r
n
n
g
s
p
e
r
s
a
r
e
n		 0
6
6
-		 0
0
5		 0
7
1
+
l
E
m
p
o
y
e
e
s		 2
1,
6
5
8		 2
1,
2
1
3		 4
4
5
-

* 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.

140807 Q2 2014

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