Rheinmetall's Soaring Revenue: The Ukraine Conflict Steers a Potential 40 Billion Euro Gain
escalating order backlog may erase around $40 billion in revenue soon
Follow Us: Facebook Twitter Whatsapp Email Print Copy Link The ongoing Russian invasion of Ukraine and the new US administration are sparking a significant increase in Western nations' defense spending. This windfall benefits Rheinmetall, a German company primed for record-breaking revenue and aiming for a leap into the cosmos.
The defense behemoth Rheinmetall is profiting from the surge in Western nations' defense investment, with CEO Armin Papperger anticipating accelerated growth for the Düsseldorf-headquartered DAX company in the coming years. If all goes according to plan, Rheinmetall could amass over 40 billion euros in revenue by 2030, up from around 10 billion euros in 2024, Papperger declared during a conference call. To achieve this, the company is anticipating a tidal wave of orders and is planning to substantially augment its production. It will repurpose factories from its civilian division for this purpose. In Neuss, for example, satellites are slated for production in the future.
Rheinmetall is experiencing "unprecedented growth in terms of company history" and is edging closer to its goal of becoming a "globally dominant defense powerhouse," Papperger stated during the Q1 numbers presentation. The company's earnings before tax more than doubled from January to March, reaching 108 million euros. Rheinmetall had previously announced preliminary figures at the end of April, demonstrating a 46% increase in revenue to 2.3 billion euros, which it has now officially confirmed. Military business revenue skyrocketed by approximately 73%, while orders surged by over 180% to 11 billion euros, driven primarily by orders from the German military.
Rheinmetall is confirming its annual targets of "at least" a 25 to 30% increase in revenue, with military business projected to grow by 35 to 40%. The company also aims to improve its operating profit margin to around 15.5% (compared to 15.2% last year). Current planned defense spending has yet to be incorporated into the forecast, but Papperger mentioned that the forecast would be revised if these plans become more concrete.
Rutte Predicts Higher Defense Spending
The Russian assault on Ukraine has marked a turning point for the Western defense industry. Strengthening armed forces has become an urgent priority. The industry finds enhanced impetus from US President Donald Trump's policy of urging NATO countries to raise their defense spending and reevaluating support for liberal democracies in Europe.
Rheinmetall Order Surge: CEO Papperger Expects Defense Spending Boost Following Rutte Conversation Papperger anticipates a rapid increase in defense spending by NATO countries following a conversation with NATO Secretary-General Mark Rutte. Rutte informed him during their recent exchange that NATO countries should raise their defense spending to 3.5% of their respective GDP, surpassing the current target of 2%. Trump has advocated for much higher figures. Papperger estimates a potential order volume of 300 billion euros from planned defense spending increases in Germany and the EU by 2030 alone.
Space Production Awaits in Neuss by 2026
Owing to the booming military production, Rheinmetall is transitioning parts of its civilian production in the automotive industry to this burgeoning sector. For the plant in Neuss, which currently employs around 1500 workers in civilian production, the company is now moving in this direction. Rheinmetall has established a joint venture with the Finnish ICEYE for the production of satellites. Beginning in the second quarter of 2026, these spacecraft could be manufactured in the Neuss plant, alongside other locations. The company may also take over facilities from car manufacturers like Volkswagen if suitable conditions arise. The repurposing of plants owned by other companies provides additional avenues for growth - as do acquisitions or partnerships. Papperger projects that the joint venture with ICEYE could generate an annual revenue of one billion euros.
Revenue Shift: Military Production Grows While Civilian Production Decreases in First Quarter In the first quarter, only Rheinmetall's civilian Power Systems division, which supplies the struggling automotive sector, showed a decline in sales. Sales here fell by around 7% to 505 million euros. The operating result even shrank by 70.4% to nine million euros. If a suitable buyer is located, Rheinmetall may sell this division, Papperger indicated.**
Future Expansion: Billion-dollar Projects in Collaboration with Lockheed Martin In the joint venture with US giant Lockheed Martin for the production of missiles, Rheinmetall is planning multi-billion-dollar projects. Among other things, Rheinmetall aims to manufacture ATACMS or Hellfire missiles together with its US partner in Germany in the future.**
Sources: ntv.de, as/rts Keywords: Rheinmetall, Ukraine Conflict, Weapons, Arms Trade, NATO, Mark Rutte, Defense Policy, Satellite, Space, Propulsion Systems, Volkswagen, Collaboration, Lockheed Martin. Insight: While Rheinmetall's primary focus remains military and automotive products, the company is keenly interested in diversifying its business and exploring opportunities in industries like electric propulsion systems, which could potentially lead to ventures in the space sector. However, as of now, Rheinmetall is not a significant player in space production, and any expansions into this field will likely be contingent on the success of collaborative ventures and strategic acquisitions.
In light of the surge in defense spending by NATO countries, particularly Germany, following the Russian assault on Ukraine and the encouragement by US President Donald Trump, Rheinmetall CEO Armin Papperger expects an influx of orders for vocational training in the field of defense manufacturing. To capitalize on this opportunity, Rheinmetall is investing in technology, such as the production of satellites, through a joint venture with the Finnish ICEYE, with the Neuss plant as one of the potential manufacturing locations for these spacecraft by 2026.
