Rheinmetall builds munitions factory in Ukraine
Rheinmetall to Produce Artillery Ammunition in Ukraine, Production to Begin in Two Years
Rheinmetall will produce artillery ammunition in Ukraine starting in two years, the defense contractor announced. The Ukrainian government has given the corresponding order, Rheinmetall stated. The project was already announced in February, and the next step is now being taken. The contract volume lies in the low triple-digit million Euro range, and the machines and other equipment are to be delivered shortly.
The ammunition production is expected to begin within 24 months, with a six-figure number of artillery ammunition pieces to be produced annually - the focus is primarily on the 155-millimeter caliber used by Western countries, but other ammunition types are also planned. The factory will be operated by a joint venture that Rheinmetall intends to establish with a state-owned Ukrainian company - the founding of which is imminent.
"We are putting our words into action and creating a Ukrainian competence center for ammunition" with our partner, Rheinmetall CEO Armin Papperger said. The largest German arms manufacturer is one of the most important suppliers of military equipment to Ukraine. The Duesseldorf-based company, with its largest plant in Lower Saxony, has already delivered tanks, anti-aircraft weapons, ammunition, and other equipment.
With the new ammunition factory in place, Rheinmetall's Ukraine business will be strengthened in the long term. Rheinmetall also operates a tank factory in western Ukraine in partnership with a Ukrainian partner. Papperger and Ukrainian Industry Minister Oleksandr Kamyschin opened it in June.
Quarterly Earnings Surge
Rheinmetall's engagement in Ukraine reportedly drew the attention of Russia, according to a CNN report. The Russian government allegedly planned an attack on the CEO, Papperger, at the beginning of the year. However, this was reportedly thwarted by the US and Germany.
The Ukraine conflict has boosted demand for military equipment and led to a doubling of Rheinmetall's quarterly earnings. With an increase in sales of 49% to €2.23 billion, the operating result was projected to rise by 111% to €271 million, according to the company. Orders from the German military, financed from the special fund, caused the order intake at Rheinmetall Nominations to reach €11.4 billion.
Given this background and the expected business development in the second half of the year, the board confirmed its targets "at least" to be met. These targets include a turnover of around ten billion Euro and an operational profit margin between 14 and 15%. The full quarterly report is expected to be released on August 8.
In response to the 'Attack on Ukraine', Rheinmetall's involvement has led to increased demand in the armament industry, resulting in a significant surge in their quarterly earnings, with earnings doubling and sales reaching €2.23 billion. With the production of artillery ammunition set to commence in Ukraine within two years, Rheinmetall's strategic partnership with a Ukrainian company will strengthen their presence in the Ukrainian economy through the establishment of a joint venture ammunition factory, contributing to the production of a six-figure number of artillery ammunition pieces annually.
