Gunsmith - Heckler & Koch: Downward trend in profits continues
Germany's largest manufacturer of handguns, Heckler & Koch, earned significantly less profit at the beginning of the year. According to a statement on the company's website, the net income in the first quarter of 2024 dropped to 2.4 million Euro and was only a quarter of the comparison value from the beginning of 2023 (10.0 million Euro). The revenue, however, increased by 1.8 million to 75.0 million Euro - the business was thus significantly less profitable than before.
A company spokesperson explained the development with seasonal fluctuations. With some orders, the deadlines and thus the sales and profit effects were outside of the first quarter. "In the second quarter, we were on a very positive growth path." No figures have been published for this yet.
The company, which invites shareholders to its annual general meeting in Rottweil on this Tuesday (10 am), manufactures assault rifles, machine guns, pistols, and grenade launchers - that is, weapons that a soldier can carry. The company does not produce larger military equipment. After the company was in crisis in the last decade, it went upwards again from 2018. In 2022, H&K had its best business year in history, in 2023 the turnover stagnated at around 300 million Euro and the net income fell by 43% to 28.7 million Euro. The executive board was still satisfied, as the business level was still high. However, it now appears that the downward trend in profits at the beginning of this year has continued.
Other arms manufacturers profit more from the Ukraine effect
While the Ukraine conflict triggered a strong demand surge at defense companies like Rheinmetall, the effects on Heckler & Koch remained within limits - the focus of support for western states for Ukraine was on large military equipment and ammunition, such as tanks, anti-aircraft defense, and 155-millimeter artillery shells. Small arms - that is, handguns - had a lower priority in deliveries.
An exception to this is Dynamit Nobel Defense (DND) from North Rhine-Westphalia, which has already delivered 13,000 RGW 90 hand grenades to Ukraine, according to a list of the German government. From Heckler & Koch, according to the list, came only 100 grenade machine guns, 100 machine guns (MG5), and 500 pistols. The small competitor C.G. Haenel from Thuringia delivered around 2,200 rifles.
Although H&K's share in direct German Ukraine aid is rather small, it has still benefited from the consequences of the Russian threat, which became visible in 2014 with the annexation of Crimea.
- Heckler & Koch, hailed as Germany's largest manufacturer of handguns, is located in the city of Rottweil, which is part of the federal state of Baden-Württemberg.
- Despite a decrease in net income at the beginning of 2024, Heckler & Koch, a key player in Germany's defense industry, reported an increase in revenue to 75.0 million Euro during the first quarter.
- Select defense companies in Germany, such as Rheinmetall, have witnessed a significant surge in demand due to the Ukraine conflict, focusing on large military equipment and ammunition like tanks, anti-aircraft defense, and 155-millimeter artillery shells. Conversely, Germany's handgun manufacturers like Heckler & Koch have faced a lower priority in deliveries.
- Although Heckler & Koch's direct contribution to German aid for Ukraine is relatively minor, the company has still experienced positive consequences resulting from the Russian threat, which was first made apparent in 2014 with the annexation of Crimea.
