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Rheinmetall’s profit doubles as defence spending surges

Published by Uma Rajagopal

Posted on July 24, 2024

Featured image for article about Top Stories

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)