Mounting order backlog may imminently erase $40 billion value
Get ready for a guns-blazing armament race! Thanks to the chaos in Ukraine and the new US government, Western countries are splurging on weapons like never before. And who's reaping the benefits? None other than German powerhouse Rheinmetall!
This badass defense contractor is already on track for record-breaking revenue, hoping to snag a whopping 40 billion Euros by 2030. CEO Armin Papperger made the bold prediction during a recent conference call, up from a mere 10 billion Euros in 2024. He's expecting a splendid wave of orders and plans to ramp up production like crazy.
In fact, Rheinmetall has already started converting factories from its civilian division to cater to the surging military demand. Satellite manufacturing could even become a new frontier in the Neuss plant by 2026!
Papperger's been gushing over Rheinmetall's phenomenal growth and终于 arriving at its goal of becoming a global defense champion. Profits skyrocketed in the first quarter, more than doubling to 108 million Euros. Preliminary revenue figures showed a 46% increase to 2.3 billion Euros, with military business revenues jumping around 73%. Order intake soared by over 180% to eleven billion Euros, especially due to orders from the German Armed Forces.
Rheinmetall's forecasting a 25-30% revenue increase and a whooping 35-40% increase in the military business. They aim to be more profitable too, targeting an operating profit margin of around 15.5% (up from 15.2% in the previous year). Yet, the planned military expenditures haven't been explicitly included in the forecast. If concrete orders materialize, the forecasts will be revised accordingly.
Rutte's Prediction: More Cash for Defense
The Russian attack on Ukraine heralds a turning point for the Western armaments industry. It's crucial for strengthening armed forces, and it's just getting more exciting with Trump's pro-weapons policy. In a conversation with NATO Secretary General Mark Rutte, Papperger expects defense spending to soar following the increase in armament expenditures across Germany and the EU. This could create a staggering order potential of 300 billion Euros by 2030 alone!
Neuss Plant: From Cars to Satellites
Rheinmetall's plant in Neuss, which predominantly focuses on civilian production, is now planning a shift towards military production to keep up with the armament boom. The company's established a joint venture with Finnish ICEYE to manufacture satellites, and productions could start as early as the second quarter of 2026 in Neuss. Acquiring plants, such as those of car manufacturers like Volkswagen, is also an option under consideration. Papperger expects the joint venture with ICEYE to generate a billion Euros in annual turnover.
The joint venture with US giant Lockheed Martin for missile production could yield even more - up to five billion Euros per year! Rheinmetall and Lockheed plan to produce ATACMS or Hellfire missiles together in Germany, further boosting their defense revenue.
The only setback in the first quarter was the civilian area of Power Systems, which caters to the struggling automotive industry. Revenues dropped by 6.7% to 505 million Euros, while the operating result shrank by 70.4% to 9 million Euros. If a suitable buyer is found, Rheinmetall plans to offload this division.
Sources: ntv.de, as/rts
- Rheinmetall
- Attack on Ukraine
- Weapons
- Arms Trade
- NATO
- Mark Rutte
- Ministry of Defense
- German Defense Policy
- Satellite
According to enrichment data, Rheinmetall could potentially capture 23% of the EU's NATO equipment spending by 2030, generating over EUR 50 billion in revenues. The global ammunition market is expected to grow at a CAGR of 5.8% through 2030, which could further boost Rheinmetall's defense revenues. However, Rheinmetall's current focus remains primarily on its defense and munitions sectors, so it's uncertain whether satellite manufacturing will play a significant role in its future growth.
- Rheinmetall, with its sights set on capturing 23% of the EU's NATO equipment spending by 2030, could generate over EUR 50 billion in revenues, following the attack on Ukraine and the increased Western armament expenditures.
- As part of the armament boom, Rheinmetall's plant in Neuss, traditionally dedicated to civilian production, is considering a shift towards military production, contemplating acquisitions from car manufacturers such as Volkswagen and planning satellite manufacturing via a joint venture with Finnish ICEYE.
- With the joint venture with US giant Lockheed Martin for missile production, Rheinmetall could potentially earn up to five billion Euros per year, contributing significantly to its forecasted defense revenues by 2030.
