Rheinmetall's Record Growth: Ukraine War Fuels Potential €40 Billion Revenue
Massive order backlog threatens to erase $40 billion worth of earnings
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Theongoing Russian invasion of Ukraine and the new US administration are triggering a massive rise in defense spending among Western nations, propelling Rheinmetall to astronomical heights. The German defense conglomerate aims for a record-breaking revenue and even an entry into the space sector.
Rheinmetall, the DAX-listed powerhouse based in Düsseldorf, is bracing for exponential growth, as boldly stated by CEO Armin Papperger. With the right conditions met, Rheinmetall could potentially reach a breathtaking €40 billion in revenue by 2030, a staggering leap from the 2024 figure of €10 billion (ten billion). Papperger anticipates an overflow of orders, intending to significantly expand production facilities. Moreover, the company plans to repurpose factories from their civilian sector, with space technology production set to commence in Neuss.
Rheinmetall has been experiencing an unprecedented growth spurt, and the company's sights are set on becoming a "global defense champion." During the presentation of the first-quarter figures, the company's profit after tax almost doubled from January to March, totaling €108 million (one hundred eight million euros). The company declared a 46% increase in revenue to €2.3 billion (two billion, three hundred million euros) at the end of April, a figure now confirmed. Defence-focused revenue soared by approximately 73%, while orders, particularly from the German military, skyrocketed by over 180% to €11 billion (eleven billion euros).
Rheinmetall is sticking to its annual targets, with revenue anticipated to increase by 25-30%, with the military business growing by 35-40%. The company aims to operate more profitably, targeting an operating margin of around 15.5% (compared to 15.2% in the previous year). Defense spending figures yet to be concretized are not included in the forecast, but should they become clearer, the forecasts will be updated, said Papperger.
Rutte: Prepare for Higher Defense Spending
The Russian attack on Ukraine has been the catalyst for a seismic shift in the Western defense industry. With arms and global security being increasingly crucial, demand for fortification of military forces is surging. Additional impetus is being generated by US President Donald Trump's policy of urging NATO countries to significantly increase their defense expenditure and his questionable attitude towards democratic alliances in Europe.
Papperger predicts a rapid increase in defense spending in NATO countries following a conversation with NATO Secretary-General Mark Rutte. Rutte hinted in a recent conversation that NATO countries should increase their defense spending to 3.5% of their respective GDP, surpassing the current target of 2%. Papperger estimates a potential €300 billion in orders from planned defense spending hikes in Germany and the EU by 2030.
Production of satellites in Neuss is slated to commence in 2026.
Rheinmetall Switching Gears: Rerouting Civilian Output to Military Manufacturing
In an attempt to capitalize on the booming military manufacturing sector, Rheinmetall plans to reroute some of its civilian production for the automotive industry towards defense production. This shift will impact the Neuss plant, which employs around 1,500 people and previously focused on civilian production. The company has already founded a joint venture with Finnish company ICEYE for satellite production, with satellite manufacturing expected to commence in Neuss from the second quarter of 2026.
Papperger also hinted that the company could potentially acquire plants from automakers like Volkswagen under favorable circumstances. This shift, along with strategic acquisitions and partnerships, is seen as a gateway for further growth. The joint venture with ICEYE is expected to generate an annual turnover of €1 billion (one billion euros).
It's a different story for Rheinmetall's civilian Power Systems division, which supplies the struggling automotive industry. In the first quarter of 2025, this division reported a 7% decline in revenue, totalling €505 million (five hundred five million euros), and a 70.4% decrease in operating result to €9 million (nine million euros). Rheinmetall may consider divesting this division if an ideal buyer is found, according to Papperger.
Source: ntv.de, als/rts
- Rheinmetall
- Russian Invasion of Ukraine
- Arms
- Arms Trade
- NATO
- Mark Rutte
- Ministry of Defense
- German Defense Policy
- Satellite
Enrichment Data:
Financial Highlights
- Q1 2025 Revenue: €2.305 billion, a 46% YoY increase.
- Defense Revenue: €1.795 billion, a 33% increase.
- Order Backlog: €62.56 billion, a 56% increase.
- Forecasted Revenue Growth for Fiscal 2025: 25-30% annually.
Rheinmetall's revenue growth is predominantly driven by its defense division, making it a significant beneficiary of global military modernization efforts. The defense-focused sales increased by 33% in the first quarter of 2025, contributing to a 46% increase in group sales. The company anticipates a potential €300 billion in orders from planned defense spending hikes in Europe by 2030. These strong demand and positive projections expect to fuel long-term revenue growth for Rheinmetall.
- The community policy should include provisions for increased investment in vocational training, given Rheinmetall's aim to expand production facilities and repurpose factories for space technology production.
- As the Ukraine conflict heightens demand for defense spending, it is essential for policymakers to consider the GDP implications of such spending increases, particularly in relation to ventures like Rheinmetall's missile production.
- With Rheinmetall anticipating a significant increase in revenue from defense-focused projects and potential acquisitions, sports organizations may consider partnering with the company for sponsorships, as the company's growth could lead to increased corporate social responsibility initiatives.
