Ad-hoc: Rheinmetall Adjusts Group Forecasts: Automotive Stronger, Defence Weaker
Rheinmetall AG is lowering its 2014 forecast for the Group operating result (EBIT before special items) to €150 million. The previous forecast for the Group operating result in the current fiscal year was between €200 million and €220 million. This adjustment is based on earnings in the Defence sector that are considerably weaker than expected and an increase in the previous forecast for the Automotive sector.
In the Automotive sector, an operating result of €180 million is now expected from continuing operations, i.e. not including the Aluminium-Technologie business unit, which is being contributed to a joint venture. Previously, the corresponding forecast was between €155 million and €165 million. According to the new forecast for the Automotive sector, Rheinmetall expects to achieve annual sales of around €2.4 billion, which would correspond to the upper end of its previous sales forecast of €2.3 billion to €2.4 billion. The Automotive sector, which will therefore generate more than half of the Group’s sales once again, is also growing faster than global automotive production in the current fiscal year. The sector is benefiting from the high level of demand for products for reducing fuel consumption and emissions and from rising profitability following the restructuring measures that were successfully conducted last year.
For the Defence sector, Rheinmetall is lowering its previous sales forecast for 2014 from €2.3 billion to around €2.2 billion, largely due to the delays in the export business and the weak overall performance of the market. In terms of the operating result in the Defence sector, Rheinmetall is now anticipating a moderate loss of €-10 million before special items. A positive operating result of between €65 million and €75 million had previously been forecast for the Defence sector. Around half of the adjustment to the earnings forecast is due to lower sales as a result of export licenses that have been delayed or not granted and the generally weaker state of the market. Unexpected cost overruns in development projects at a Scandinavian subsidiary, the provision for potential warranty claims from a deal with naval weapons and a deterioration in the product mix were also factors in the adjustment of the operating earnings forecast for fiscal 2014.
In addition, Rheinmetall is currently expecting non-operating special items to amount to €20 million in 2014, having previously forecast negative special items of €10 million. As well as subsequent expenses from the restructuring program in the previous year, these special items include unplanned expenditure in connection with the final contractual step in the sale of the Unmanned Aerial Systems product unit that took place in 2012. Not yet included in this figure are the potential negative financial effects expected as a result of administrative offense proceedings against a Rheinmetall subsidiary in Bremen in connection with corruption inquiries in Greece.
In the first three quarters of 2014, Rheinmetall increased its consolidated sales by around 9% to €3,215 million. Earnings before interest and taxes (EBIT) improved by €25 million to €23 million in the first nine months of the year. Rheinmetall will publish its confirmed figures for the third quarter of 2014 on November 6, 2014.
Rheinmetall AGDr. Philipp von Brandenstein
Head of Corporate Communications
Rheinmetall Platz 1
Phone: +49 211 473-01
Fax: +49 211 473-4158