High-Rolling Rheinmetall: Set to Clinch a 40 Billion Euro Grab Amid Globetrotting Defense Boom
Unaligned Order Inventory Threatens $40 Billion Wipeout
The societal turmoil sparked by Russia's invasion of Ukraine and the new administration in the U.S. have ignited a spending spree in the defense sector across Western nations. And, it's German colossus, Rheinmetall, that stands to profit from this wave, boasting record sales and a bold leap into the cosmos.
CEO Armin Papperger envisions Rheinmetall's DAX titan from Düsseldorf hitting an impressive 40 billion euros in sales by 2030—a dramatic spike from the 9.6 billion euros achieved in 2024. Such a surge is predicated on an anticipated influx of orders, prompting a significant increase in production with factories repurposed to meet this demand.
Now, with Rheinmetall's horizons expanding into the skies, satellites are slated for production in Neuss by 2026. This ambitious move comes as the company shifts focus from the subsiding automotive sector, actively recalibrating factories to bolster their military production capabilities.
Rheinmetall reported a remarkable 108 million euros in profit after tax for the first quarter of 2022, a striking double from the previous year, and a confirmed 2.3 billion euros in sales—a 46 percent increase from the end of April. Revenue in the military sector skyrocketed by roughly 73 percent.
The company affirmed its annual objectives, aiming for sales increases of 25-30 percent and a military business surge of 35-40 percent. To maximize efficiency, the company plans to raise its operating margin to around 15.5 percent, matching last year's at 15.2 percent before unspecified defense expenditures are factored in.
Rutte's Prophecy: Greater Defense Spending Ahead
The Russian aggression against Ukraine has ushered in a new era for the global defense industry, which is now essential for fortifying military forces. A further boost comes from U.S. President Donald Trump, who is encouraging higher defense spending among NATO members while scaling back support for European democracies.
According to Papperger, after a conversation with NATO Secretary General Mark Rutte, NATO countries should increase their defense spending to 3.5 percent of their respective GDP—a significant leap from the current 2 percent— generating an estimated 300 billion euros in potential orders for Rheinmetall and other defense giants by 2030.
The Push for Space Conquest
Rheinmetall: Redirecting Civilian Production to the Military Ahead of Booming Demand
Faced with the lucrative prospects of escalating military demands, Rheinmetall is contemplating a strategic shift, channeling a portion of its civilian automotive sector's production towards its burgeoning military arm.
Leveraging a joint venture with the Finnish ICEYE, Rheinmetall aims to manufacture satellites, starting in the second quarter of 2026 at its Neuss facilities. Moreover, the company considers the acquisition of factories from manufacturers like Volkswagen, if the right conditions present themselves, as another avenue for growth.
The joint venture with ICEYE is projected to generate one billion euros in annual revenue, whereas Rheinmetall's recent collaboration with U.S. giant Lockheed Martin could yield a whopping five billion euros per year. The two conglomerates are planning to manufacture ATACMS and Hellfire missiles in Germany.
The sole decline in revenue in the first quarter was recorded in the civilian Power Systems division, which caters to the ailing automotive industry. Revenue here dropped by around seven percent to 505 million euros, with the operating result shrinking by 70.4 percent to nine million euros. If a suitable buyer is found, Rheinmetall might divest this segment.
Sources: ntv.de, als/rts
- Rheinmetall
- Russian Invasion of Ukraine
- Arms
- Arms Trade
- NATO
- Mark Rutte
- Ministry of Defense
- German Defense Policy
- Satellite
- To bolster its military production capabilities, Rheinmetall is recalibrating factories previously utilized in the automotive sector, with a focus on producing satellites starting in 2026.
- Rheinmetall is expecting a significant surge in its sales, aiming to reach 40 billion euros by 2030, as a result of an anticipated influx of orders from NATO countries, following a conversation between CEO Armin Papperger and NATO Secretary General Mark Rutte.
- In collaboration with U.S. giant Lockheed Martin, Rheinmetall plans to manufacture ATACMS and Hellfire missiles in Germany, with potential annual revenue from this venture reaching five billion euros.
