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.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
N+1 Singer - Small-cap quantitative research - Momentum screen refresh + 10 focus stocks
12 Jan 17
We have refreshed our momentum style screen for the first time since inception on 26 July 2016. As before, the screen selects the 25 stocks exhibiting the most extreme momentum characteristics, according to our measurement method. From these we have selected 10 to focus on. Since inception the screen has underperformed both the main small-cap and micro-cap indices against a background of generally rising momentum. We have noted a subset of the basket, where decelerating momentum at the time of measurement appears correlated with significant share price falls since selection. We shall monitor this factor with the new screen, albeit there are only two such stocks showing this pattern, namely Lamprell (not rated) and Gear4music (not rated).
N+1 Singer - Morning Song 12-01-2017
12 Jan 17
As anticipated, the second half has again been stronger than H1 and results will be broadly in line with expectations. In line with this, the order book has continued to grow and is at record levels. This confirms that significant progress has been made in the Group’s shift towards its Technology Products division which, as targeted, contributed c.60% of group revenue in FY16. The small acquisition of Cable Power also gives a complementary boost to the product range. It is also worth noting the significant reduction in net debt, £1.0m ahead of our forecast. We remain supportive of the Group’s strategy and continue to see a bright future as this transition towards a design led technology solutions business continues. We look forward to more detail in March at the final results.
23% profit growth in FY16 and a positive outlook in FY17 and FY18
18 Jan 17
FY16 results show a strong performance with 9.3% increase in revenue to £267.0m leading to a 23% increase in profitability as adj PBT increased to £40.2m (FY15 £32.8m). The 220bp improvement in gross margin underpinned the increase in profitability as legacy low margin projects continued to fall out of the mix. The 20.2% gross margin was ahead of the 19.5% forecast and in line with Group’s target of generating a through the cycle 20% margin. The forward sale announcements of five developments since the year end provide an increasing level of visibility on both FY17 and FY18, we estimate c. 70% of FY17 gross profit is currently derived from forward sold projects. The announcement on Duncan Road Stratford means the forward sold pipeline is already building into FY19. Current valuation does not reflect the forecast certainty with the shares trading on 9.0x FY17 earnings and yielding a prospective 5.1%.
N+1 Singer - Morning Song 16-01-2017
16 Jan 17
As the birthplace of Stephenson, Armstrong and Swan, the North East of England has a proud history of industrial and technological innovation. Despite local economic challenges, the region’s industrial heritage lives on through continuing success in high end engineering and technology. The recent takeovers of private equity backed SMD (subsea robotics) and Nomad Digital (wi-fi on the railways) are testament to this. The North East has also emerged as a leader in genetics and genomics with an enviable life sciences and healthcare infrastructure. Against this backdrop, we expect the region to continue to throw up attractive IPO candidates to build on the six new listings in the past three years. We expect 2017 to be far kinder to the existing portfolio of North East plcs than 2016 (a year to forget) with recent management changes one important theme for the new year. Our top picks are Hargreaves Services, Quantum Pharma and Zytronic (all N+1 Singer Corporate clients) and we are Buyers of Northgate and Grainger.