What happened?
Rheinmetall''s Q3 orders/ sales/ adj. EBITA are -61%/ -7%/ -5% vs. BBG cons. est. FCF is below on NWC build up.
Guidance for FY25 was reiterated, which we take positively given that the restart in Spain is still uncertain atm:
. Sales: EUR 12.2-12.6bn (BBG: EUR 12.6bn | LTM Q3: EUR 11.0bn); Defence/Civil: +35-40%/flat confirmed
. Adj. EBITA: c. EUR 1.9-2.0bn (BBG: EUR 2.03bn | LTM: EUR 1.61bn); margin target: ~15.5% (BBG: 16.1%)
. Op. FCF: EUR 0.7-0.8bn as per a 40% EBITA-FCF conversion target (BBG: EUR 0.96bn | LTM: EUR (0.35)bn)
BNPP Exane View:
Firm orders are light at EUR 2.7bn (-61% vs. BBG cons), however, in a small quarter vs. a particularly strong Q4 as per the confirmed EUR80bn order backlog target at YE25 implying new orders of c. EUR21bn in Q4 (Q3: EUR64bn, ie 5x ''25 sales). Execution was solid, in our view, with sales of EUR 2.78bn (-7% vs. BBG; driver: VS) and adj. EBITA at EUR 360m (5% below) as cons. appears to have under-estimated the later start in truck deliveries (VS) and high comps at WA due to a provision release at Expal in Q324. Q3 FCF of EUR (200)m suffered from a further NWC build-up (trucks related) / low orders as per a guided EUR2bn sales uptick q/q in Q4. ''25 guidance has been confirmed; implied Q4 contributes 50% to FY adj. EBITA. What really matters though is whether RHM can deliver on the envisaged c. 50% hit rate in Germany to back up the (verbal) sales target of min. EUR 40bn by 2030; our ''27/30e EBITA is broadly in line with cons. with an update due at the CMD on 17/18 Nov.
Defence orders were +15% y/y, yet, 61% Cons.; the backlog is EUR 63.8bn, RHM Nominations are EUR 3.9bn. As ~80 EUR25m-proposals are due for approval in German Parliament in Q4, RHM expects an OB of EUR80bn at YE25.
Execution: Q3 sales at EUR 2.78bn (-7% vs. BBG) were held back by the well flagged back-end loaded truck deliveries as the German customer was unable to take over all trucks in Q3 (VS segment | only +8% y/y...
