Rheinmetall Maintains Its Two-Pillar Strategy Düsseldorf

2013 The latest news from the Rheinmetall Group For maritime markets Searching for suitable managers worldwide Rostock-based MarineSoft is an internation- KSPG’s HR-International function established at the beginning of 2012 was created ally renowned maritime training and simu- to introduce central HR standards at the group’s foreign subsidiaries, and to promote lation software supplier with its main focus and underpin international networking between colleagues abroad. Angela Stoffers on ship machinery plants (see pages 6 + 7). has been entrusted with the challenging task of managing this job (see pages 12 + 13). 2012 successful despite diffi cult market environment Rheinmetall maintains its two-pillar strategy Düsseldorf. The Düsseldorf-based Rheinmetall group has set itself ambitious growth and earnings targets. Under its “Rheinmetall 2015” strategic program, which is primarily focused on internationalization, product innovations and cost, the company intends to expand its leading position in a range of markets on a sustainable basis. From 2015 onwards, the group also intends to generate average annual sales growth of between 3% and 5% combined with signifi cant- ly improved profi tability. These were the strategic targets set by Rheinmetall’s new CEO Armin Papperger on March 20, 2013, at the annual press conference on the group’s fi nancial statements in Düsseldorf. Talking to international me- dia representatives, 50-year-old Papper ger emphasized that the group intends to maintain its two-pillar strategy with its Automotive and Defence sectors. Some facts and fi gures: Despite the key regions in terms of sales volumes diffi cult market environment, the Rhein- were the German home market (28%), metall group closed the 2012 fi scal year Europe excluding Germany (40%), fol- successfully. With consolidated sales of lowed by Asia (16%) and North and E4,704 million, income exceeded that Central America (10%). At E301 million generated in the previous fi scal year (previous year: E354 million), earnings by E250 million or approximately 6% before interest and taxes (Ebit) remai- (previous year: E4,454 million). Both ned at a high level. The group has to sectors contributed to this growth. At date performed better only in the record 72%, the proportion of consolidated sa- year of 2011. The Ebit margin amounted les achieved abroad was once again up to 6.4% (previous year: 7.9%). on the previous year’s fi gure (70%). The (Continued on page 2) taxes (Ebit) of E240 million to E260 Fiscal 2013 is a million are forecast, not including restructuring costs. Before conside- ration of restructuring expenditure, year of transition the Automotive sector is expected to Düsseldorf. Fiscal 2013 will become achieve an operating result of around INTEGRATION: Rheinmetall formally a year of transition towards impro- E140 million and therefore a profi t transferred its new IdZ-ES future sol- ved profi tability for Rheinmetall due at the level of the previous year. The dier system to the German Bundeswehr to restructuring. According to CEO Defence sector is anticipated to ge- on 7 March 2013. The handover cere- Armin Papperger, the group expects nerate an operating result of around mony coincided with the 10th Armoured to achieve sales of between E4.8 E130 million in 2013. For fi scal 2014, Division’s traditional International billion and E4.9 billion. Both sectors Rheinmetall is assuming further sales Division Skiing Championship at Ruh- are expected to contribute to this growth in both sectors and expects to polding in Upper Bavaria (s. page 14). growth. Earnings before interest and see a clear improvement(Continued in on earnings. page 2) Düsseldorf. Despite stagnating de- its global network of locations and sa- fence budgets in many countries, Rhein- les and founded key joint ventures in re- metall Defence increased its sales by cent years. At E4,987 million, the order Focus on 9% in fiscal 2012 to E2,335 million (pre- backlog in the Defence sector is up 10% vious year: E2,141 million). This growth year-on-year (previous year: E4,541 mil- is the result of the first-time inclusion of lion). The order backlog includes a num- financials the Rhein metall MAN Military Vehicles ber of large-volume projects spanning joint venture. 67% of total revenue was several years, e.g. the contract for the rated abroad rose slightly to 77% (pre- generated abroad (previous year: 63%). series production of the Puma infantry vious year: 76%). While the Mecha- The order intake increased by E1,102 fighting vehicle and the series contract tronics and Motor Service divisions million to E2,933 million, which repre- for the Boxer armoured transport vehic- contributed to sales growth, sales in sented growth of 60% (previous year: le on behalf of the Netherlands. the Hardparts division remained at the E1,831 million). This positive develop- The Automotive sector increased its previous year’s level. The Mechatro- ment is the result of a successful inter- sales by E56 million toE2,369 million nics division benefited primarily from nationalization strategy. Rheinmetall in fiscal 2012 (previous year: E2,313 the major trends towards reductions in Defence has systematically expanded million). The percentage of sales gene- CO2 and emissions. Rheinmetall group was successful in 2012 despite difficult market environment Maintaining its two-pillar strategy (Continued from page 1) side Europe such as in Asia and Aust- onwards. The Defence sector will then “2013 marks for us the beginning of ralia. Rheinmetall will consolidate its return to an Ebit margin of 10%. a strategic program which we will use local presence in international growth H Automotive: Rheinmetall still ex- to drive forward the development of regions and systematically pursue the pects a global growth trend in the in- our group into an international part- internationalization strategy that has ternational automotive market. Signi- ner for security and mobility. Both the been successfully implemented in re- ficant impetus for growth is primarily Defence and Automotive sectors still cent years.” From 2015, around 50% expected to come from the emerging harbor huge potential for profitable of sales are expected to be generated markets -where Rheinmetall is already growth. We are therefore maintaining with customers outside Europe. growing at a faster rate than the mar- both pillars,” exp- ket. Rheinmetall lained CEO Armin will therefore sys- Papperger. tematically pursue The company will its internationali- introduce restruc- zation strategy of turing measures recent years in the as part of “Rhein- Automotive sec- metall 2015” that tor, particularly in will impact the the Mechatronics income statement division. From for the current 2015, Automotive fiscal year by bet- intends to gene- ween E60 million rate over a third of and E80 million. Executive board: Dr. Gerd Kleinert, CEO Armin Papperger and Helmuth P. Merch. its sales outside The full saving ef- Europe. Particular fects of E55 million to E70 million each Defence will continue to benefit attention will be paid to the Chinese year will become apparent from 2015 from the ongoing need for substantial and Indian markets. onwards. The company also aims to technical modernization of a number Rheinmetall is benefiting greatly from improve free cash flow on a sustainable of armed forces. Therefore, Rhein- its focus on systems and components basis. metall will also expand its service to reduce fuel consumption and emis- H Defence: As a leading European and systems business. The aim is to sions. In particular, the mechatronics systems supplier for military techno- create a broad product portfolio with product business is growing due to logy, Rheinmetall Defence continues a balanced mix of highly-profitable emission regulations becoming stricter. to operate in a growth market – even components business and long-term, Rheinmetall will also be able to realize though national defence budgets are large-volume project business. Non- growth potential in the aftermarket busi- increasingly subject to fluctuations. recurring expenses of E20 million ness. Papperger: “However, cost structu- The strategic priority of Rheinmetall were already incurred in 2012. Rhein- res still need to be improved in the Auto- is therefore expanding its presence in metall anticipates that these mea- motive sector, particularly the European high-growth regions. Papperger: “We sures will result in annual savings of production and location structure of the see particular potential in markets out- E40 million to E50 million from 2015 Hardparts division.” (See page 3 to 5). Newsline is a summary of the most Publisher: Rheinmetall AG Responsible: important news articles published P.O. Box 10 42 61 Peter Rücker in “Das Profil”, the company news- D-40033 Düsseldorf Editor-in-chief: Issue: May 2013 paper of the Rheinmetall group [email protected] Rolf D. Schneider Newsline is a summary of the most important news articles published in “Das Profil”, the company news- paper of the Rheinmetall group Publisher: Rheinmetall AG P.O. Box 10 42 61, D-40033 Düsseldorf [email protected] Responsible: Peter Rücker Editor-in-chief: Rolf D. Schneider Issue: June 2012 Düsseldorf. In an interview with the newspa- per Frankfurter Allgemeine Zeitung (FAZ), Armin Papperger – who took over as CEO of Rheinmetall AG at the beginning of 2013 and remains responsible for the group’s Defence sector – admitted he is a car lover with a particular fascination for mechatronics. Talking to journalists at the time of the annual press conference on the group’s fi - nancial statements, Papperger recalled spending a lot of time fi xing cars as a young man – useful experience that now gives him a better insight into the product line of the Neckarsulm-based automotive supplier. “I believe KSPG offers huge potential, the innovation pipeline is fi lled to the brim and our chances of success with system technology all around the engine are excellent.” Interview with Rheinmetall CEO Armin Papperger The group’s potential for profi table growth is huge The change at the top of the Düsseldorf-based group is therefore a sure sign of continuity and development, all the more so as Bavarian-born CEO has been with Rheinmetall for many years.

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