The weapon manufacturing company, Heckler & Koch, is benefitting financially due to its order inflows.
Business is thriving at Heckler & Koch, the company known for producing assault rifles and other firearms. They've reported impressive first-half results and secured a new contract for sniper rifles with a German special forces unit. However, there's a catch.
Amidst the ongoing conflict in Ukraine, the order books of Heckler & Koch, situated in Oberndorf, Germany, are overflowing. In the initial six months of the year, they received orders worth 197.8 million euros, a significant 39% increase compared to the same period last year.
These orders often require years of completion, ensuring a bright future for the manufacturer of assault rifles, machine guns, grenade launchers, and pistols. Earlier this week, they also secured an order for up to 500 sniper rifles for the Kommando Spezialkräfte (KSK) of the German armed forces.
The revenue also saw an uptick in the first half of the year, reaching 171.4 million euros, a 14% improvement over the first half of 2024. They supplied weapons to various nations including Spain, Latvia, Norway, Japan, and the German armed forces. Competitors like Beretta (Italy), CZ with its US subsidiary Colt (Czech Republic), and FN (Belgium) also pose a challenge.
As the CEO, Jens Bodo Koch, put it, "We mirror the global security scenario, and the demand for our products is currently sky-high." He assured that they will continue to supply weapons only to NATO countries, Europe, and Germany's security allies - nations committed to peace, liberty, and security. Heckler & Koch weapons are also being used in Ukraine, provided by European armies to the country under attack by Russia.
Profitability dips
On the financial front, Heckler & Koch experienced a dip in profitability. The operating result (EBIT) declined by nearly 11% to reach 23.2 million euros. CEO Jens Bodo Koch attributed this to an increase in "system business": now, they not only sell weapons but also accessories like silencers and laser-light modules. These supplementary materials are procured from other companies, which reduces profitability compared to in-house production.
For the entire year of 2024, the CEO anticipates the operating result to remain at the same level as the previous year.
In Europe, Heckler & Koch estimates its market share for military and police handguns to be approximately two-thirds. In the USA, the world's largest weapons market, they hold a minor role but have recently recorded successful sales with the police and military, for instance, supplying weapons to the Texas Rangers.
Despite the dip in profitability due to increased system business, Heckler & Koch continues to manufacture a vast array of military equipment, including assault rifles, machine guns, grenade launchers, pistols, and sniper rifles. In fact, they recently secured a contract for up to 500 sniper rifles for the German special forces unit, the Kommando Spezialkräfte (KSK).
