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Rheinmetall’s profit doubles as defence spending surges
Global Banking & Finance Review®
Company
By Miranda Murray
BERLIN (Reuters) -German arms manufacturer Rheinmetall more than doubled operating profit in the second quarter, driven by a surge in defence spending as a result of Russia’s invasion of Ukraine.
The company has been one of the main beneficiaries of the defence boom since the Ukraine war began in 2022. Its chief executive, Armin Papperger, was reportedly the target of a Russian assassination plot. The Kremlin denied the reports.
The maker of the Leopard 2 tank said that during the second quarter it received 11.4 billion euros in orders and in new framework deals that could later translate into firm orders.
The company said this was mainly due to orders from the German army using funds from a 100-billion-euro special fund created after the invasion of Ukraine to bolster the country’s armed forces.
The German company also said it had received an order from the Ukrainian government for the construction of an ammunition factory in Ukraine.
Operating earnings in April-June rose 111% year-on-year to 271 million euros ($293 million) beating expectations for 226 million, while the operating profit margin rose to 12.1%, above the consensus for 11.0%, based on the preliminary numbers, the German company said.
Rheinmetall shares were up 2.15% by 0925 GMT.
Sales rose 49% to 2.23 billion euros, above market expectations of 2.06 billion.
The second-quarter sales figures were boosted by early sales recognition in its weapons and munitions division, as well as a higher sales contribution from its Madrid-based ammunitions subsidiary Expal Munitions, Rheinmetall said.
Rheinmetall confirmed its guidance for record sales of 10 billion euros and an operating profit margin of 14-15% this year, up from 12.8% in 2023.
The company will report the full financial results on Aug. 8.
($1 = 0.9222 euros)
(Reporting by Miranda MurrayEditing by Kirsti Knolle and Jane Merriman)
Operating profit is the income generated from a company's core business operations, excluding deductions of interest and taxes. It reflects the efficiency of a company's operations.
Financial results are the summary of a company's financial performance over a specific period, typically including revenue, expenses, and profit or loss.
Sales growth is the increase in sales revenue over a specific period, often expressed as a percentage. It indicates how well a company is performing in generating sales.
Profit margin is a financial metric that shows the percentage of revenue that exceeds the costs of goods sold. It indicates how much profit a company makes for every dollar of sales.
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