02/11/2009
 

Rheinmetall AG shows strength

EBIT forecast of October 2008 almost met in spite of sharp decline in auto business in Q4

Thanks to a very good performance by its Defence sector Rheinmetall AG has managed to contain the reverberations of the auto industry's global production collapse. Despite the unexpectedly sharp plunge in auto demand in December 2008, Rheinmetall almost achieved by year-end 2008 its targeted EBIT of at least €250 million.

Provisional 2008 sales by the Group are €3,869 million or around 3 percent short of the prior-year €4,005 million. The Group's 2008 EBIT is estimated at around €246 million (previous year €270 million), corresponding to an EBIT margin of 6.3 percent (previous year 6.7). EBT is likely to reach €184 million (previous year €213 million).

Despite acquisitions in the defence business and the purchase of treasury stock a stringent project management lowered net financial debt by €31 million to €205 million. This net financial debt is the balance of financial liabilities of €408 million and cash and cash equivalents of €203 million.

The Defence sector lifted its 2008 sales by a good 3 percent to €1,814 million. Order intake at €1,725 million approximated the prior-year €1,804 million. In Q4 alone Defence contracted new orders valued at €600 million. Defence's EBIT advanced 21 percent, from €160 million to €194 million. As a consequence, the EBIT margin showed a clear improvement from 9.1 to a first time ever double-digit 10.7 percent. By this the Defence business achieved its medium target of an EBIT-margin of 10 percent two years earlier than planned.

For fiscal 2008, the Automotive sector reported sales of €2,055 million, a decline of €194 million or 9 percent. Most of the shortfall occurred in the October through December 2008. When compared with 2007 and in line with the slump in global auto production, Q4 sales shrank by around €150 million or 27 percent. Provisional EBIT at Automotive is €62 million (down from €120 million), equivalent to an EBIT margin of 3.0 percent.

This trend led Rheinmetall already last year to announce drastic cost reductions for its Automotive sector. Meanwhile around one-half of the sector's 11,700 employees worldwide are on short-time. Parallel to this, an austerity plan is being mapped out which will cut costs by €50 million this fiscal year; also, capital expenditures will be well short of amortization and depreciation.

The definitive figures for fiscal 2008 will be published by Rheinmetall at its annual accounts press conference planned for March 25, 2009.