Rheinmetall Ag Unsp/Adr

Good afternoon, everybody, and thank you for joining us for the Q3 results call today. With me on the call is our CFO, Klaus Neumann. Klaus will walk you through the financials. Before we start, please be reminded of our legal disclaimer on page two. Now let's move on to page number three. On page number three, you see that on the sales side, and I focus very strong on the defense side, we have a growth rate of 17% on the defense, up to $2.3 billion. The total sales is $2.78 billion. The operating results on the defense side is 361, a plus of 7%. And it's 360 in total of plus 19. Operating margin is on the defense side 15.7%. And it's lower on the total sales operating margin is 12.9%. The people still want to come to Ramital. So we have more than 200,000 applications. Operational free cash flow is going down on the defense side, minus 286, total minus 168 million. And CapEx is growing because of all the new factories that we built up at the moment to 8.9%. And Rimetal nomination and the issue that we have a minus of 36% is, as you know, the election period that we had in Germany, so that we had delayed order intakes, but that's very normal because the government was not able to give these order intakes to us. But Rheinmetall backlog is still very healthy, with 63.8, that's nearly 64 billion, we have a plus of 23%. Let's have a look to slide number four, and here we have shown some innovations. We presented the innovations on the DSI in London, and we have shown, together with Lockheed Martin, the Jagam Tank Hunter on a new Fox mobile, but it can be implemented also on other Then we have a growing family of our Skyrangers, the Mission Master, which is Skyranger 762, and the next generation ship protection with the MAS Nova II. There are a lot of more innovations that we have shown on the DSA. It's a small overview about that, what we did in London. On the right side you see the Telford Gun Shop groundbreaking ceremony and we will invest in total about 100 million and we will create 100 highly skilled shops and it's important for us to produce the caliber range of 120 to 155 on the large caliber side but we are also able to produce medium caliber. The need for that guns over the next years is huge and we create up a capacity of more than 150 large-caliber guns per year in the United Kingdom. Let's have a look to page number five. And here you can see that the Parliament made good decisions. So at the end of the day, 2025, finally we will have a budget of 95 billion. There is a growth rate of 23%. And in 26, the draft, and we expect nearly 120 billion, where 83 billion is coming out of Einzelplan 14, EPL 14, then the Special Fund and the Ukraine Relief Fund. So the decision on the budget in 26 budget has to be passed in November. so that we are able to plan really fix then for the next years. Let's have a look to slide number six. On slide number six, you see two new activities that we have inside the Rheumatoid Group. One activity is that we reached an agreement with Lurssen family and to take over the naval vessels from Lurssen, so we had the signing. And we expect that the closing is latest end of January in 2026. The potential sales that we see in 2030 is up to five billion. Next year, the expectation is that we can grow up to around 2.5 billion, but then double the sales. And the order intake potential that we see over the next five years is between 20 and 30 billion euros because there are huge programs also from the German Navy, but also international navies. On the right side, you see our ISI Corporation. We formed a 40-60 joint venture between ISAI and Rheinmetall. So Rheinmetall has the majority. And we signed it on the 23rd of September in 25. The first market is Germany, but we look for more markets. And the immediate need we see is at the moment 40 satellites. And Rheinmetall, the expectation on nomination is about 2 billion euro. And if everything is working well, we can have an order intake also this year of that 2 billion, so the first big contract on satellites for Rheinmetall. Now let's have a look to page 7. And here you see how Rheinmetall Weapon and Ammunition is creating this European ecosystem. And the expansion of existing capacities in Spain, doubling or in some areas, tripling capacities in Spain, the same in South Africa and in Australia are in progress. In Germany, we started the trial production for the 155 projectiles, and we are also on a good way, and the first stage is ready on the powder production in Bavaria. And we will double and in some areas triple also the productions in Bavaria on the powder side. So we are on a very good way in that area. We had the groundbreaking in Lithuania for artillery ammunition. And we signed an MAU also for propellant to create a center of competence of propellants in Lithuania, signed also where the president of Lithuania was with us. A new ammunition plant in Latvia is signed. Bulgaria, joint venture for powder and 155 millimeter is established. And in Romania, a joint venture for powder production is also established. And on the Romanian side, we plan at the moment, and it can be also very fast in the first quarter next year, a package deal with the Romanian government, not only about ammunition, but also about tanks and other equipment for the Romanian army. Now let's have a look to page number eight. Here you see what happens now with the power systems. The process of selling our automotive business is going forward. And submission of final offers will be in quarter four. We expect over the next four weeks that we get binding offers. And if everything is running well, we can finalize the process in the first, latest in the second quarter of next year. Now I take over to my colleague, to Klaus, and he will give you an overview about the financials.

Thank you, Armin. Yeah, we had a strong quarter in which our sales grew by 13%. Defense sales grew even stronger with which now make up 2.3 billion euros, or 83% of the total sales of 2.8 billion. Our operating result grew even stronger than sales to 360 million euros, with a margin of 12.9% for group and 15.7% for defense. M&A activities, as you can see on the slide, contributed. Contributed to the sales, but there was only limited impact to profitability because we still have some integration costs for some of the acquisitions we did this year. Please move on to page number 11. Let's have a look at the development of the different segments of our business. In vehicle systems, sales increased by 8%, quarter to quarter, to 1.3 billion euros. driven by more tactical vehicles, including services. As you know, there's some truck sales were slightly lower than in previous quarter because of the delayed deliveries to the German customers. There is a small negative mixed effect and different regional splits compared to the previous year, so we have a margin of 12.5 percent in this quarter compared to 13.1 in the previous year. Let's move on to weapon and ammunition. Again, we saw the highest growth rate in this segment. Sales grew by 38 percent to 691 million euros. Important sales relate to tank ammunition and medium caliber. As you know, artillery ammunition was held back to some extent by the delay of the new government permission for our production site in Murcia. The operating margin decreased by 3.3 percentage points to 23.2 percent in the third quarter. In electronic solutions, sales growth was very strong with 32 percent reaching 516 million euros. Main driver was the increasing contributions from multiple digitization programs as well as increased air defense sales. Operating margin went up to 11.0 percent after 10.9 percent in the previous year. Lastly, our power systems division showed slightly decreasing sales compared to the previous quarter. As you know, the auto market is a very difficult environment at the moment, and the division is fighting hard to basically keep its ground in that difficult market. Despite the sales decrease, operating results stayed stable compared to the previous year at €18 million, slightly increasing the margin from 3.6% to 3.9%. Let's turn to page number 12. As mentioned, I mean, our nomination was lower in Q3 2025 compared to previous year due to the delay in order placement, especially by the German customer. Also keep in mind that last year we booked a large framework frame contract for trucks of 2.9 million, just to give a bit of perspective of the development from year to year. Overall, everything is going as expected. And you might see in our press releases, we are gaining additional order momentum on several big tickets now in the current quarter Q4. More on this in the outlook section. Our backlog rose by 23% to 63.8 billion euros year over year. Let's move to page number 13 to look at our cash flow and our working capital development. As order intake in our amateur nomination was lower than in previous year, we also did not see the large prepayments that we enjoyed in 2024 so far. As a result, and also as a result of the buildup of inventory for upcoming sales in the fourth quarter and in 2026, our cash flow was negative at minus 813 million euros for the ninth month in 2025. The higher inventories, again, relate mostly to vehicle systems and are also impacted by the later truck deliveries compared to 2024. Let's move to page number 14. While we have a negative operating fee cash flow this year so far, we have strong support on the financing side. I just want to give you an update on the situation with our convertible. We had no conversions of the Series B convertible bond, and our total number of shares is now standing at 46 billion shares. Our equity ratio improved and is now at 32.9%. These conversions support our net liquidity position and strengthens our balance sheets. Due to the lower level of customer prepayments, National position, nevertheless, is now at minus 1.9 billion euros. And just to give you another example of our balance sheet situation, net debt to EBITDA ratio of 0.97 is still very strong and puts us in a very comfortable position to finance the upcoming M&A transactions. With this, I would like to hand over back to Armin.

Thank you, Klaus. So I want to give you on page 16 an outlook about the nominations and the expectations that we have in Q4 after having the German government machine running again. So we are in negotiations and we had the first success on the Chackal. Let's start on the vehicle system side. After nine months, so we had, as Klaus said, also nearly 64 billion backlog. Our expectation is on Jekyll, 3.4 is booked. The other point is Puma, and these are always net values that we have only for Rheinmetall, not in cooperation with others. The Puma, the expectation is that on the Puma side we have a potential of 1.4 billion. On the Lynx side, there is another potential that we have from the Italian side, but also maybe from Romania where everything is going good. Only the Italian side will be a level of about 400 million. On the Leopard side, we see half a billion, 500 million also. And the support vehicles on the Leopard is another 300 million. And there are negotiations on the trucks, but it can be that the trucks are also going into 26, into the first quarter, into the negotiations. On the truck side, we are in negotiations at the moment to enlarge the frame contracts, which are then fixed contracts of more than €4 billion. A very positive point is also, and maybe not in Q4, because it's a huge contract. This is a Boxer contract. The government calls it Arminius. This Arminius contract is a total contract number. There will be nominations of 40 billion euro. And from this 40 billion euro, we expect more than 22 billion euros also for Rheinmetall. But this will happen very safe in 26 and not longer in 25. But if it happens in Q1 or Q2, I will be very happy. Next point, let's go to weapon and ammunition. On the weapon and ammunition side, there are the final negotiations on the 155 fixed contracts. And there are different numbers at the moment in discussions. First of all, we discussed about 1.7 million rounds, then 1 million rounds, Maybe it's in this year a little bit reduced because they want to bring something to this year and to next year to create fixed contracts. But the expectation in total on the ammunition side is an expectation of around 6 billion. So if you counted up everything, it's 5.5 to 6 billion for the vehicles minimum, 6 billion on the ammunition. Then we go to electronic solutions. On the electronic solutions side, we see the satellite program, and the contract that we expect, this can be around $2 billion. The Sky Ranger is implemented in the program Arminius. And then we have LUX2 weapons and weapon stations. about 300 million laser light modules, 300 million loitering ammunition. This is what you have seen in the newspapers over the last two weeks, the first bigger contracts for drones, and also some other smaller contracts so that we see potential of 3 billion that we can reach The rest will be first quarter and second quarter and this is the big bunch then which is coming in the first and the second quarter next year. If you count up everything, so we are still in the range of around 80 billion euro, how we expected at the beginning of the year. Don't hit me if it is, let me say, $78 or $82, or if the big contract is coming early on, ammunition is a little bit more, but let me say around $80 billion is a fair value. Now let's go to page 17. On page 17 on the outlook, a positive signal is also that 95% or more than 95% of the backlog coverage we have, let me say, in our books. So we are confident about the full year guidance. On the sales side, we think that on the defense, we can grow between 35 and 40%. There is no growth rate on the civilian business, maybe a little bit shrinking business in that area. And the operating margin will be around 15.5%. And it depends a little bit for sure about the down payments because, as you say, at the moment the operational free cash flow on Q3 is very negative. But with the new German contracts, usually we expect between 20% and 30% down payment so that then the cash conversion rate would be positive. If the down payments are delayed, we will get the cash in the first quarter. So far, and now we can start the Q&A. Thank you very much.