Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on RHEINMETALL AG. We currently have 7 research reports from 1 professional analysts.
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Defence division performance source of the raised guidance
03 Nov 16
Rheinmetall published a strong Q3 performance driven by the fast-improving Defence division. Indeed, sales reached €1,305m in Q3 (+9.8% yoy), continuing the good 2016 revenue performance (+9% ytd), while the operating result rose by 30% yoy driven by the Defence operating result growth (+88% yoy). As a consequence, the operating result margin reached 6.1% (+1% point yoy) and stands at 4.7% ytd. Finally, EPS rose to €0.97 (+13% yoy and +17% ytd). The sales distribution by geography shows strong growth in Other regions and Asia, meanwhile sales decreased in Germany in 2016 ytd. The joint ventures in China brought satisfaction, generating an EBIT of €30m (+20% ytd).
Q1 softness but guidance confirmed
16 May 16
Headline figures: • Order backlog reached a new high of €7.3bn with a very strong order intake in Defence in Q1 c.€950m. • Consolidated sales were up 2% to €1,180m in the first quarter when adjusted for currency effects. Automotive sales were down 1% reported (-2% organic growth) or down €10m to €654m. The fall in revenues is primarily explained by the economic weakness in the market for large-bore pistons, the continuing decline in automotive production in Brazil which declined by 28% compared to Q1 15, as well as the planned phase-out of a substantial contract with PSA concerning the Mechatronics division. The weakness in large-bore pistons, which came as a surprise to management and had not been budgeted, was related to non-light vehicle end markets including Transport customers, fracking-related markets, as well as marine-related customers. The decline in Brazil is being compensated through cost adjustments including a reduction in the workforce which has already been implemented (headcount down 16% or c.200 employees) and Rheinmetall is seeking to increase exports from its Brazilian plants to take advantage of the weakness in the real. Finally, the phase out of the PSA contract will be compensated by new contracts in Mechatronics over the course of Q2 and Q3. The Defence sector’s sales however rose by €17m, or 3% reported (+6% organic growth) to €526m. Higher sales from the Weapons and Ammunition business and Tracked vehicles compensated for lower sales of Air Defence products in the Electronic solutions segment. The division has changed its reporting segments to reflect the reorganisation of its operations surrounding military vehicles. • Operating earnings for the group improved by €9m to €31m resulting in an improved margin of 2.6% for the group. Automotive’s operating earnings of €52m were down from €55m in Q1 15, the margin target of 8% was however achieved and would have been exceeded but for a €3m cost related to the opening of a new plant in the Czech Republic. Defence operating earnings improved by €11m yoy to -€17m. Guidance confirmed: Group sales €5.5bn vs €5.2bn in 2015. Operating margin of 6% vs 5.5% in 2015. Automotive: c.€2.8bn vs €2.7bn in 2015. Operating margin of 8% still the target vs 8.3% in 2015. Defence: €2.8bn vs €2.6bn in 2015. Operating margin of 4.5-5%% vs 3.5% in 2015.
Overly cautious ahead of 2016 despite solid prospects?
18 Mar 16
Results: FY 2015 Rheinmetall presented FY results yesterday. The sales and EBIT came as no surprise given the release of preliminary results last month. As a reminder, consolidated sales grew by 11% to €5.2bn, above €5bn for the first time, and group earnings before interest and tax was up significantly to €287m as Rheinmetall did not record any exceptional items during the year. Automotive posted a record EBIT of €216m on the back of €2.59bn in sales, leading to a divisional EBIT margin of 8.3%. Defence achieved a turnaround to generate an EBIT of €90m. As a group, Rheinmetall returned to a positive FCF generation of €29m (significant negative outflow of €182m in 2014) as Automotive’s cash flow generation of €96m compensated for the outflow of -€38m from Defence and the -€29m from corporate structure. The group’s net debt stood at €81m with the November €230m equity raise having helped strengthen the balance sheet in view of a potential acquisition. Rheinmetall announced a proposed dividend of €1.10 per share. Guidance: Consolidated sales set to grow to €5.5bn – with a further improvement in the operating margin to 6%. Automotive expects further sales growth to €2.7bn and a margin of 8%, while Defence anticipates organic growth leading to revenues of €2.8bn and an improved margin of 4.5-5%. In addition, management mentioned that while Automotive would continue to generate positive FCF, Defence would return to at least a breakeven FCF generation situation in 2016 after significant outflows in 2014 and 2015.
Strong positive momentum
02 Mar 16
Rheinmetall released provisional figures for FY 2015 which highlighted strong sales and even stronger profit growth. Consolidated sales were up 11% to €5,183m, with Automotive revenues up 6% to €2,592m and Defence revenues up 16% to €2,591m. Group EBIT climbs by 181% to €287m thanks to the significant €167m swing in defence operating profit from -€67m in 2014. Automotive EBIT grew to €216m, resulting in a divisional margin of 8.3%. Defence returned to profitability with EBIT reaching €90m, resulting in a margin of 3.5%, at the very upper end of guidance.
Raising equity to fund growth
12 Nov 15
Rheinmetall today issued 3,959,850 new ordinary bearer shares, raising c. €230m. The new shares will carry full dividend rights as of 1 January 2015. The shares were offered exclusively to institutional investors by means of a private placement using an accelerated bookbuilding process. Rheinmetall suggests that the “net proceeds from the capital increase will be used to finance Rheinmetall's growth strategy in the defence and automotive sectors, to strengthen the financial position of the company and for general corporate purposes”. Rheinmetall has agreed to a 180-day lock-up period with respect to any transaction related to its shares.
Guidance raised and secure outlook
05 Nov 15
Rheinmetall saw revenues rise by 11% to €3.58bn with sales growing 7% in Automotive to €1.95bn and sales up 17% in Defence to €1,625m. With the solid momentum highlighted in Q3, especially in Defence (revenues for FY now expected to reach €2.5bn, a €100m increase) the group's revenue guidance has been raised to €5.1bn from €5bn. Group operational earnings were up 259% to €140m (EBIT also €140m as the group did not incur any exceptionals), with EBIT in the Automotive segment up 18% to €164m, and an €89m reduction in the losses from the Defence segment meaning that the Defence EBIT came in at -€11m, an improvement on the H1 loss of -€27m thanks to a positive contribution over Q3 of €16m. Rheinmetall's heavy weighting towards Q4 in Defence should result in the division posting an EBIT margin of slightly above 3% for the full year. We currently expect EBIT to reach €76m (3.1% margin from €2.46bn in revenues), marginally off the guidance upgrade.
09 Dec 16
Ideagen* (IDEA): Acquisition of IPI Solutions (CORP) | Lombard Risk Management* (LRM): Atos deal improves routes to German market (CORP) | Photo-Me* (PHTM): Upgrade to FY forecasts (CORP) In other news… Frontier Developments* (FDEV): ED coming to Xbox and Planet Coaster update (CORP) | LiDCO* (LID): Analyst interview (CORP) | Rude Health: Analyst interview
Product quality and management depth
07 Dec 16
Yesterday Focusrite held a capital markets day, designed to showcase the range and quality of products and introduce operational management, which shares a passion for music-making and has deep knowledge of the products. This contributes to excellent product support, software innovation and thus customer loyalty, which should sustain the company’s brand leadership.
Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
Civil: No Reflation here, only a Race to the Bottom
05 Dec 16
The strengthening of the US dollar since the election of Trump is adding to the headwinds in the airline industry: over-capacity and falling yields. The airline industry, which is expected to generate $8bn of free cashflow in 2016 on $600bn of capital employed, needs to spend $120bn annually to maintain current delivery rates. Deferrals and down-gauging is now spreading to narrow-bodies as more and more airlines review their capex plans. We expect acceleration of seat densification as airlines look to sweat their existing fleets. We now expect deliveries to fall by 5% over 2015-18 as opposed to our previous forecast of flat growth. Aftermarket may also suffer as seat densification helps cut number of flights. This leads to reduction in our EPS forecasts for key Civil Aerospace names: Rolls-Royce, Meggitt, GKN and Senior.