Russia's war brings record growth to Rheinmetall
Rheinmetall is one of the world's largest ammunition producers. Demand from Ukraine and the armament of its allies are driving orders at the Düsseldorf-based company upwards. The company expects further increases.
The armament following the Russian attack on Ukraine is bringing Rheinmetall new records. "We've never grown this strongly," said Rheinmetall CEO Armin Papperger. In the second quarter, as already reported by Rheinmetall on a preliminary basis, sales rose by 49 percent to 2.2 billion euros. Operating profit increased by 110 percent to 270 million euros. Profit after tax was 79 million euros (previous year: 76 million euros).
Moreover, orders worth around 48.6 billion euros are on the books. Rheinmetall confirmed that the company aims to achieve "at least" its targets by 2024. "In the coming years, we expect annual sales increases of around two billion euros," Papperger emphasized. "Business with the armed forces in Germany and partner states in the EU and NATO, as well as support for Ukraine, continue to drive the positive business development," Rheinmetall said.
The Düsseldorf-based company is also diversifying in the face of the arms boom. Recently, the Düsseldorf-based company founded a joint venture with Italian defense company Leonardo to build tanks. "This is a first small step towards vehicle consolidation in Europe," Papperger said in early July. Rheinmetall is not only relying on multi-billion-dollar orders for the joint venture. Leonardo also saw double-digit growth in sales, orders, and profits in the first half of the year.
US tank order on the horizon
The Russian attack on Ukraine has brought a turning point for the Western arms industry. The industry is urgently needed to strengthen the troops of NATO countries. Ukraine also needs to be supplied with more ammunition, as stocks in Europe are running low. Rheinmetall is one of the world's largest ammunition producers. In June alone, Rheinmetall signed a framework agreement with the German army for the delivery of 155mm artillery ammunition worth up to 8.5 billion euros.
Papperger also sees growth in the medium term. The company expects sales of between 13 and 14 billion euros for the year 2026, which it has announced. In a few years, sales of 20 billion euros could also be possible. A major order from the US could also help. Rheinmetall is betting on winning the contract for the development of a successor to the US M2 Bradley Infantry Fighting Vehicle. The project could have a volume of more than 45 billion dollars.
The economic boom in the arms industry, spearheaded by Rheinmetall, is primarily driven by the demand for armament following Russia's attack on Ukraine. This surge in demand has significantly contributed to Rheinmetall's record-breaking sales and profits.
Furthermore, the economy of Rheinmettal is not only relying on increasing orders from its traditional markets but also diversifying through strategic partnerships, such as the recent joint venture with Leonardo to build tanks.
