Monday, May 5, 2008

Rheinmetall: profitability again strengthened


Rheinmetall: profitability again strengthened

Solid start into fiscal 2008
Sales rising by €11 million to €922 million
EBIT lifted by 10 percent to €49 million
Net income improving from €22 million to €26 million
EpS boosted from €0.60 to €0.71

Düsseldorf-based Rheinmetall AG got off to a good start in fiscal 2008 and again strengthened profitability within the Group. Compared with Q1/2007, group sales in the first three months of 2008 climbed €11 million to €922 million. EBIT mounted 10 percent to €49 million, the EBIT margin jumping accordingly from 4.8 to 5.3 percent.

Earnings before taxes (EBT) improved 13 percent from €31 million to €36 million, net income rose from €22 million to €26 million, an 18-percent advance. Rheinmetall has thus laid the foundations for achieving the forecasted improvements in both sales and EBIT for all of 2008.

Klaus Eberhardt, Rheinmetall AG CEO: "Fiscal 2008 has got off to a good start. The Defence sector has managed to seamlessly continue its very good year-earlier performance and at Automotive, given an altogether stable development, we have managed to slightly boost profitability. We are therefore confident that 2008 will be another successful year for the Rheinmetall Group."

Order intake outgrowing sales
At €941 million, Q1/2008 order intake again exceeded sales. The high order intake of €1,135 million in Q1/2007 had been largely influenced by one contract worth around €200 million alone for the Air Defence division. At March 31, 2008, order backlog was still very high at €3,275 million.

Automotive with a generally stable performance
The Automotive sector generated sales of €576 million in Q1/2008, around the year-earlier level of €583 million. The €12 million decline in sales at the US production plants of Rheinmetall Automotive due to the weak US market, and the fewer number of working days versus Q1/2007, were almost offset through organic growth.

Q1/2008 EBIT matched the year-earlier level; the EBIT margin climbed slightly to 5.9 percent. Good progress was shown by the Pistons division, which in the United States reported sales of €41 million and an EBIT of €2 million.

Defence with appreciable EBIT hike
The Defence sector managed to continue its very good year-earlier performance in the period January to March 2008; sales climbed €18 million or 5 percent to €346 million.

Defence's EBIT showed a significant improvement of €7 million to €18 million; the EBIT margin jumped accordingly from 3.4 to 5.2 percent.

Important strategic moves taken at Defence
During the period, Rheinmetall initiated a number of important strategic moves in order to expand internationally its Defence sector. February 2008 saw an agreement for the intended 51-percent stake in South Africa's Denel Munitions (Pty) Ltd., which will not only expand the product range in Weapon and Munitions but will also facilitate access into new markets worldwide. With the complete takeover of the Dutch tank builder Stork PWV B.V., Defence has extended its leadership role in the production of ordnance for Europe's armies. Rheinmetall is thus acquiring the majority stake in the presently biggest cross-border military vehicle program in Europe encompassing 472 Boxer armoured vehicles to be delivered to the German and Dutch armed forces starting from 2010.

Prospects: growth and earnings targets for 2008 reaffirmed
Following the solid start into 2008, Rheinmetall is reaffirming its forecasts for all of the fiscal year. Assuming a sustainably strong operating performance and against the background of the present economic and industry prospects Rheinmetall for the rest of the year expects to show organic growth and an EBIT of between €280 million and €290 million (2007: €270 million).

The medium-term goals of a 9-percent EBIT margin and a 20-percent ROCE by not later than 2010 are reconfirmed.

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