The operating earnings for the first half of 2018 rose by €4 million or 2.8% to €133 million, which resulted in a slight improvement in the operating margin to 8.9% compared to the previous year’s 8.8%. As Rheinmetall Automotive chief executive Horst Binnig notes, “The continued positive trend in sales and earnings during the first half of the year shows that, despite current uncertainties regarding diesel technology and the newly introduced WLTP cycle, our product mix puts us in a strong position: We’ve clearly been focusing on the right activities when it comes to R&D”.
The Mechatronics division’s sales grew by 1.6% to €846 million in the first half of 2018 (+2.7% after adjustment for currency effects). The high demand from automotive manufacturers for solutions from the future-oriented product portfolio to reduce pollutant emissions continued. However, the growth was weakened by the decline of the diesel market. As in the previous year, operating earnings of Mechatronics amounted to €90 million after the first six months of 2018.
The Hardparts division generated sales growth of 0.8% to €504 million in the first half of 2018 (+5.5% after adjustment for currency effects). The division’s operating earnings increased by €2 million to €35 million.
The Aftermarket division increased its sales by 7.6% year-on-year to €189 million in the first six months of 2018 (+9.8% after adjustment for currency effects). Products of the Group’s Kolbenschmidt and Pierburg brands once again proved to be the main drivers of growth here. The division’s operating earnings amounted to €17 million in the first half of 2018, compared with €16 million in the same period of the previous year.
Joint ventures with Chinese partners grow faster than the market
The activities of the joint ventures in China have again performed better than the market there. While light vehicle production in China in the first half of 2018 grew by 2.8% year-on-year, the joint ventures in China increased their sales by 4.5% in the first half of 2018 (+7.9% after adjustment for currency effects) to €447 million.
Sales of the German joint venture KS HUAYU AluTech Group grew by 9.5% to €172 million in the first six months of the current fiscal year, mainly owing to increased sales of research and development as well as equipment and tools.
OUTLOOK
Sales performance at Rheinmetall Automotive is strongly influenced by economic development in global automotive markets and by external factors such as the adjustment of European test cycles. Based on current expert forecasts regarding trends in global automotive production this year, which predict growth of 2.1%, Rheinmetall still expects sales growth of 3% to 4% for the Automotive sector.
The growth forecast assumes that exchange rates for the remainder of fiscal 2018 will not change significantly compared to current levels.
Assuming stable economic development, Rheinmetall expects an absolute improvement in operating earnings and an operating margin of around 8.5% for the Automotive sector in fiscal 2018.
