Rheinmetall, Germany’s largest arms company, expects strong growth in view of the armaments boom and continues to benefit greatly from the demand for military material as a result of the wars that are currently taking place in the world.
Rheinmetall continues to benefit greatly from the armaments boom resulting from the wars that are currently taking place around the world. Germany’s largest arms company is sitting on a record backlog of orders. At the end of June, this was valued at 48.6 billion euros. The demand for weapons and ammunition is currently particularly high. The company supplies not only Germany but also other NATO countries. Supporting Ukraine in its defensive war against Russia also plays an important role. The company delivers military goods there, such as modernised tanks and artillery ammunition. Rheinmetall, for example, is one of the world’s most important manufacturers of 155-millimeter artillery shells.
According to current estimates, Rheinmetall’s sales are expected to increase to around 20 billion euros by 2027, the DAX group announced recently on the occasion of a capital market day in Rome. For the current year, the defence company is targeting sales of around 10 billion euros. 15 per cent of this should remain as profit. In 2027 it should even be 18 per cent. Rheinmetall shares climbed to a record high after the announcement. As the leader in the DAX environment, the company recently gained 3.13 per cent to 600.60 euros. At the beginning of the Russian war of aggression against Ukraine in February 2022, the share was still trading at less than 100 euros. However, due to the high demand for armaments, Rheinmetall can hardly save itself from orders.
Regardless of the war in Ukraine, CEO Armin Papperger expects long-term high demand for ammunition and other military goods. Because even if the war were to end tomorrow – and every sensible person ultimately wants an end to this crazy war in Ukraine – the camps in Ukraine would still have to be filled. For this, the Ukrainians needed help from the EU and the USA. For the current year, company management is targeting sales of around 10 billion euros and an operating profit margin of 14 to 15 per cent.
Good results in the first half of the year
In the medium term, the aim is to increase the margin to over 15 per cent by 2026. Sales are expected to climb to 13 to 14 billion euros by then. Overall, Rheinmetall’s business figures were positive in the first half of the year. Sales climbed by a third to around 3.8 billion euros. The operating result almost doubled to 404 million euros. If we only look at the second quarter, growth was even stronger than at the start of the year due to the acquisition of Expal. The Spanish ammunition manufacturer was acquired on August 1st last year.
