RNMBF - Rheinmetall AG (RNMBF) Q4 2023 Earnings Call Transcript
2024-03-14 14:44:05 ET
Rheinmetall AG (RNMBF)
Q4 2023 Earnings Conference Call
March 14, 2024 9:00 am ET
Corporate Participants
Armin Papperger - Chief Executive Officer
Dagmar Steinert - Chief Financial Officer
Conference Call Participants
Sebastian Growe - BNP Paribas
Sven Weier - UBS
Sash Tusa - Agency Partners
Michael Raab - Kepler
Christoph Laskawi - Deutsche Bank
George McWhirter - Berenberg
Christian Cohrs - Warburg Research
Ben Heelan - Bank of America
Dario Dickmann - HSBC
Presentation
Operator
Good afternoon, ladies and gentlemen, and welcome to the Rheinmetall AG conference call regarding Fiscal Year 2023 Report. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation.
Let me now turn the floor over to your host, Armin Papperger, CEO of Rheinmetall AG.
Armin Papperger
Thank you very much. Good afternoon together. So Dagmar Steinert and myself will give you an overflow about the information and the only information about fiscal year 2023.
We start with page number three, and on that we see the tensions. And everybody of us know that we have increasingly globally tensions from U.S. election, when nobody knows what's going on about the budget here in Europe via the Gaza conflict, and for sure the war in Ukraine, down to the South China Sea conflict. And with that conflict, we see that the need for defense and especially the need of the products that Rheinmetall has will grow over the next years.
The next page will show us the figures of the year 2023. On the sales side, we have $7.176 billion. We didn't book about $420 million where we had goods ready in 2023, especially, again, trucks and ammunitions. And we will make the sales and we skip the scales to 2024. The EBIT pre-PPA is on a level of 968, not what we wanted to reach 1 billion, but very near. And operating margins is growing up to €918 million and EBIT ROS of 12.8%. Operational free cash flow is 356 and there is also about 250 million came in also on the 3 January, so that the real operational free cash flow is still better. Very positive is Rheinmetall nomination, so we booked businesses of nearly 20 billion. This is doubling the nominations from 2022 to 2023.
The Rheinmetall backlog is growing from 26 billion to 38 billion. And I think very positive is, we can pay much higher dividend and the dividend will be €5.70. If you have a look to the next slide, we see that especially the Chancellor, but also the coalition in Germany is very clear and a lot of discussions with different European governments that said we Europeans, we must do more for our security.
We have to invest more and we have to do something to create our future. The Chancellor is really with us and if you see what is expected and a very clear Minister of Finance, Vice-Chancellor and Chancellor said we have to reach 2% target, so that over the next years we expect that there will be spendings of about 80 billion from the German side year-by-year for defense.
So what are the big tickets now for Rheinmetall? And what is the future and what do we see over the next 5 to 10 years? And we want to give you an overview about the big tickets of Rheinmetall. The number one for sure is auxiliary and auxiliary ammunition.
Auxiliary systems will grow and auxiliary ammunition. And here we will grow up this year to 700,000 rounds, but with new factories, especially in Ukraine and also Lithuania, our new target is that we are end of 26 ready to produce 1 million projectiles per year. If you count that the mean value of a projectile is €3,500 and if you see that we need propulsion systems and the mean value is 4 modular charges or 4 modules per one projectile, we have the possibility to grow up to 3.5 billion if the customer is ordering full shots more than 3.5, so it could be 4.5 billion or 5 billion per year....
Rheinmetall AG (RNMBF) Q4 2023 Earnings Call Transcript