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12 May 16. Rheinmetall had a good start to fiscal 2016: High order intake and increased earnings in the first quarter
– Consolidated sales up 2% to €1,180m in the first quarter when adjusted for currency effects
– Operating earnings for the Group improve by €9m to €31m
– Strong order intake in Defence of around €950m and significantly improved earnings
– Automotive maintains profitability at high level of 8%
– Order backlog reaches new high of €7.3bn
– Rating outlook improved from “negative” to “stable”
The Düsseldorf-based Rheinmetall Group started the new fiscal year with a slight increase in sales and a sharper rise in earnings. The Group’s order backlog has reached a new high.
The Düsseldorf technology group has confirmed its annual forecast for 2016 and continues to target consolidated sales of roughly €5.5bn and an operating margin of around 6 % for the fiscal year.
Armin Papperger, CEO of Rheinmetall AG: “Having obtained important orders and performed successfully overall, we are on track to achieve our targets for 2016. In the first quarter, which is typically rather weak in this industry, the Defence sector impressed with a high order intake, increased sales and a further improvement in operating earnings. Automotive still shows high profitability and has maintained sales and earnings at the good level of the previous year.”
In the first quarter of 2016, Rheinmetall generated consolidated sales of €1,180m, a slight increase of 1% (same quarter of the previous year: €1,173m). Adjusted for currency effects, the growth was 2%, with the proportion of business activities abroad increasing to 76% after 74% in the first quarter of 2015.
Earnings before interest and taxes (EBIT) increased from €22m to €31m, growing by €9m or approximately 40%. This positive development resulted from the good business performance of the Defence sector.
At the end of the first quarter, the order backlog in the Rheinmetall Group amounted to €7.3bn, which represents growth of €247m on the comparative figure for the previous year.
In April 2016, the rating agency Moody’s raised its outlook for Rheinmetall’s Ba1 rating from “negative” to “stable.” This improvement was made possible by the positive development of the earning situation, Rheinmetall’s conservative financial policy and good liquidity profile, and signs of increasing defense budgets.
Defence: strong order intake and recovery of operating earnings
At €526m, the Defence sector’s sales rose by €17m or 3% in the first quarter compared to €509m in the previous year. Adjusted for currency effects, the growth was 6%. Operating earnings improved by €11m year on year to €-17m.
Rheinmetall Defense posted a high order intake of €948m in the first quarter of 2016, exceeding the prior-year figure of €542m by 75 %. The sector’s order backlog reached a new record value of €6,865m at the end of the quarter. The Electronic Solutions division acquired the largest single order with a volume of €390m. It was commissioned by an international customer to modernize air defense systems, delivery of which is expected between 2017 and 2020.
Rheinmetall won another strategically important, high-volume order in Poland, where the Group was awarded a contract for the comprehensive modernization of 128 Leopard 2 battle tanks. For Rheinmetall, the project entails a total order volume of around €220m. €130m of this was posted in the first quarter of 2016.
Rheinmetall formed the Vehicle Systems division as of January 1, 2016, thus creating a leading military vehicle manufacturer in Europe, which is expected to generate sales of €1.4bn in 2016. For this purpose, existing activities in the field of military tracked and wheeled vehicles were brought