Maintaining high profitability
The Rheinmetall Group in Düsseldorf is forecasting continued growth in organic sales and a further increase in operating earnings in its Automotive division for fiscal 2018.
Rheinmetall Automotive tangibly increased its business volume in 2017, generating sales of €2,861 million, an increase of €205 million or 8% compared to the previous year. This increase is significantly higher than the growth in the global production of light vehicles of 2.1%.
All three divisions contributed to sales growth. Sales in Mechatronics rose by 9% to €1,621 million in the reporting year thanks to high demand for products that reduce emissions and fuel consumption. Sales by the Hardparts division increased by 5% to €968 million, due in particular to a recovery in demand in large-bore piston business. The Aftermarket division’s business expanded by 11% to €359 million.
The contributions to sales made by the segment’s three divisions were largely unchanged. Mechatronics again had the highest share of sales at 55% (previous year: 54%) in fiscal 2017. Hardparts contributed 33% of sales (previous year: 34%) with Aftermarket – as in the previous year – accounting for 12%.
Automotive’s operating earnings amounted to €249 million in the past fiscal year, a year-on-year increase of €26 million or 12%. Mechatronics made the strongest contribution to operating earnings at €176 million. With an operating margin of 8.7%, Automotive outperformed the previous year’s solid 8.4%. Including a non-recurring effect of €-22 million for the closure of the piston plant in France, reported EBIT amounted to €227 million.
Automotive’s 50/50 joint ventures in China, whose sales are not included in Rheinmetall’s consolidated figures, continued to develop well in fiscal 2017. The joint ventures’ income increased by 7% in local currency to CNY 6,447 million (2016: CNY 6,037 million), with general production growth in light vehicles in China of around 2%. The wholly owned subsidiaries in China that are included in consolidation enjoyed an even more dynamic performance, with sales surging by 21% in fiscal 2017 to CNY 969 million (2016: CNY 798 million). Translated into euro, the Chinese joint ventures’ income rose by 2% from €825 million to €845 million. The sales of the wholly owned subsidiaries expanded by 17% from €109 million to €127 million.
Sales performance in the Automotive segment is crucially influenced by economic developments on the key automotive markets of Europe, North and South America and Asia. Based on current expert forecasts for trends in global automotive production this year, which anticipate increases of around 2%, Rheinmetall Automotive expects to achieve sales growth of between 3% and 4%. Assuming stable economic developments, Rheinmetall anticipates an improvement in operating earnings in absolute terms and an operating margin of around 8.5% in Automotive in fiscal 2018.