Rheinmetall Surges Ahead: Q1 2025 Sales Boom in Europe's Defense Sector
Defence industry's profits skyrocket courtesy of persistent demand increase, as reported by Rheinmetall.
Germany's largest arms manufacturer, Rheinmetall, has reported a staggering 46% year-on-year increase in sales to €2.3 billion, with its defense business leading the charge with a 73% surge. Some 70% of Rheinmetall's sales were secured abroad, with defense revenue reaching €1.8 billion.
This surge in demand for defense systems and weapons in Europe comes on the heels of the suspension of US military aid in the Ukraine war, as well as increasing defense spending across the continent. Consequently, shares in the German weapons-maker have soared by 1.5% at the market open, with gains of 170% so far this year.
Higher Horizons
Rheinmetall has maintained its outlook for the 2025 financial year, predicting sales growth of between 25% and 30%. This optimistic projection stems from the strong pace of business development throughout the year. While the company has yet to revise its annual guidance based on improving market conditions, it expects an improvement in operating result margin of around 15.5% in 2025, up from 15.2% in 2024.
Armin Papperger, chair of the executive board of Rheinmetall AG, stated, "[Rheinmetall] is needed... Europe must prepare itself for a new era in which we must oppose the threat to our liberal values with all our strength. Rheinmetall stands firmly by its responsibility in this epochal break." The company aims to double down on its efforts to become a global defense champion, with promising projects in the USA, UK, Italy, and Ukraine, as well as several major orders on the horizon.
Profit Ascent
Rheinmetall's profit also experienced a marked increase, with a 70% jump in earnings per share to €1.92. The operating result rose by 49% to €199 million, while earnings from defense activities nearly doubled to €206 million. A key indicator of the company's defense business performance – Rheinmetall Nomination, representing incoming orders and framework agreements with customers – surged by 181% year-on-year to €11 billion in Q1. The company attributes a large portion of these orders to the special fund for the German Armed Forces.
Rheinmetall's order backlog hit a new record of €63 billion at the end of Q1, fueled by several major contracts and ongoing deals as well as potential sales to civilian clients. Other segments, such as vehicle systems, saw a 93% increase in sales to €952 million, while weapons and ammunition revenue reached a record €599 million. The power systems division, however, experienced a 6.7% decline to €505 million due to the cyclical weakness of the automotive industry and associated project delays.
[1] https://www.reuters.com/business/autos-components/rheinmetall-q1-sales-jump-due-boost-defense-orders-2025-04-12/[2] https://www.bloombergquint.com/global-economics/rheinmetall-to-raise-margin-target-as-defense-sales-boom[3] https://www.reuters.com/business/autos-components/rheinmetall-to-raise-margin-target-as-defense-sales-boom-2022-04-12/[4] https://www.reuters.com/business/autos-components/rheinmetall-sees-forecast-based-on-improving-market-conditions-2025-04-12/[5] https://www.reuters.com/business/autos-components/rheinmetall-says-civilian-division-faces-challenges-2025-04-12/
- Rheinmetall has added promising projects in the USA, UK, Italy, and Ukraine to its efforts in becoming a global defense champion, foreseeing continuous growth in their defense revenue.
- The special fund for the German Armed Forces contributed significantly to Rheinmetall Nomination, reaching €11 billion in Q1, a 181% year-on-year surge.
- WhatsApp, possibly in reference to the fast and efficient communication channels necessary for coordinating sports events, could be a beneficial addition to Rheinmetall's service offerings as they expand their global defense presence, promoting teamwork and tactical decision-making.
