Rheinmetall expects sales growth amid rising European defense spending

Rheinmetall forecasts revenue growth of 25-30%. In its core defense business, sales growth will reach 40%.

"It’s a good sign for European politics and industry to become more independent," said CEO Armin Papperger.

Rheinmetall is poised to be a major beneficiary of the European arms boom, which was triggered by the war against Ukraine and recent threats by America to abandon its security commitments on the continent. The new German government plans to unlock hundreds of billions of euros in military spending and is pushing EU leaders to follow suit.

Rheinmetall's shares have more than doubled over the past year as the company has expanded production and built up a huge order book for its ammunition and military vehicles.

Source: Bloomberg

Last year, consolidated sales increased by 36% to approximately €9.75 billion. The defense contractor also posted a record order backlog of €55 billion, up from €38.3 billion in the previous year.

Rheinmetall produces everything from armored trucks and drones to the 120-mm smoothbore gun of the Leopard 2 tank. The company is building new factories in countries such as Lithuania, Hungary, Romania, and Ukraine to meet the growing demand for its weapons and ammunition.

The company's shares have risen more than 1000% since Russia invaded Ukraine in February 2022. Shares of rivals BAE Systems, Thales and Leonardo have also soared. Leonardo said it expects orders worth €118 billion over the next five years as Europe increases defense spending to fill the perceived void left by the United States.

Last month, Papperger met with Ukrainian President Volodymyr Zelenskyy to discuss expanding the company's presence in Ukraine. Papperger and Zelensky discussed joint projects, including those related to the production of 155mm ammunition in Ukraine.

Currently, Papperger is under the same level of protection as the German Chancellor after the US uncovered a Russian plot to assassinate him.