Booming Defense Orders: Ukraine Conflict Fuels Rheinmetall's Potential €40 Billion Earnings
Unfulfilled orders poised to erase $40 billion from the economy
In the wake of the Russian invasion of Ukraine and the shift in US defense policies, Western nations are beefing up their military spending. This surge is providing a significant boost to Rheinmetall, a German defense conglomerate on track for record growth and venturing into space manufacturing.
CEO Armin Papperger anticipates a remarkable expansion for Rheinmetall, the Düsseldorf-based DAX company, reaching approximately €40 billion in revenue by 2030 as compared to €10 billion in 2024. This growth is driven by a projected deluge of defense orders and ambitious manufacturing expansions. Some factories in Rheinmetall's civilian division are being repurposed, with satellite production scheduled to commence in Neuss.
Rheinmetall's impressive quarterly results reflect this growth. After-tax profit more than doubled from January to March, reaching €108 million. The company announced a 46 percent increase in revenue to €2.3 billion in late April, a figure they have now confirmed. Revenue in the military business skyrocketed by about 73 percent. Defense orders, predominantly from the German military, soared by over 180 percent to €11 billion.
Rheinmetall remains optimistic about achieving their annual targets, with revenue predicted to increase by 25 to 30 percent, and by 35 to 40 percent in the military business. The company aims to improve profitability, targeting an operating profit margin of around 15.5 percent (previously 15.2 percent). Current defense spending plans have yet to be integrated into the forecast, but updates will be made once they become more concrete.
Rutte Predicts Increased Defense Spending
The attack on Ukraine has catalyzed a turning point for the Western defense industry, as it strives to strengthen armed forces. Accelerated by US President Donald Trump's push for higher defense spending among NATO countries, the industry is gaining momentum. Papperger expects an order potential of €300 billion from the proposed increases in defense spending in Germany and the EU by 2030.
Neuss to Produce Satellites from 2026
With the automotive industry struggling, Rheinmetall is shifting some production from its civilian sector to its booming military production. The company plans to establish a joint venture with the Finnish company ICEYE for satellite production in Neuss, employing around 1500 people. Spacecraft production is set to commence in the second quarter of 2026 in Neuss and potentially other locations. Rheinmetall may also acquire plants from companies like Volkswagen if suitable opportunities arise. The reassignment of plants from other companies serves as an additional growth strategy, alongside acquisitions or collaborations. The joint venture with ICEYE is forecasted to generate €1 billion in annual turnover.
The joint venture with US giant Lockheed Martin for the production of missiles offers additional promising figures - up to €5 billion per year. Rheinmetall aims to produce ATACMS and Hellfire missiles with its US partner in Germany in the future.
The only decline in revenue in the first quarter was registered by the civilian Power Systems segment, which supplies the struggling automotive industry. Revenue here decreased by around seven percent to €505 million, and the operating result shrank by 70.4 percent to €9 million. If a suitable buyer is found, Rheinmetall may divest the division.
Sources: ntv.de, [als/rts]
- Rheinmetall
- Attack on Ukraine
- Weapons
- Arms Trade
- NATO
- Mark Rutte
- Ministry of Defense
- German Defense Policy
- Satellite
Insights:
The Russian invasion of Ukraine has caused a surge in defense spending across Western nations, driving Rheinmetall's growth and expansion. The company's military business experienced an astonishing 73 percent increase in revenue, with defense orders jumping by over 180 percent. Rheinmetall anticipates potential order value of €300 billion from increased defense spending in Germany and the EU by 2030. To capitalize on this growth, the company is venturing into satellite manufacturing and logistical support services, aiming to become a comprehensive defense partner.
- The surge in defense spending across Western nations, following the attack on Ukraine, has fueled Rheinmetall's growth, a German defense conglomerate aiming for record growth with ventures into space manufacturing.
- Rheinmetall's military business saw a remarkable 73 percent increase in revenue due to the influx of defense orders, with a whopping 180 percent rise in orders from the German military alone.
- In a strategic move, Rheinmetall plans to establish a joint venture with the Finnish company ICEYE for satellite production in Neuss, expecting to generate €1 billion in annual turnover from this venture.
- Ambitious plans at Rheinmetall include the production of ATACMS and Hellfire missiles with US partner Lockheed Martin in Germany, potentially generating up to €5 billion per year.
