Home » Rheinmetall: armaments group experiences record week ALT armaments group: Legendary order boom at Rheinmetall

Rheinmetall: armaments group experiences record week ALT armaments group: Legendary order boom at Rheinmetall

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Rheinmetall: armaments group experiences record week ALT armaments group: Legendary order boom at Rheinmetall

economy flood of orders

Exceptional week at Rheinmetall

As of: 7:37 p.m. | Reading time: 3 minutes

Rheinmetall’s Lynx KF41 tank at a security fair in the Czech Republic

Quelle: picture alliance/dpa/CTK/Vaclav Salek

Never before has Rheinmetall received so many orders in such a short time. As was announced when the half-year figures were presented, the order backlog rose to over EUR 30 billion for the first time. One business area is apparently particularly profitable for the Dax group.

The start of Russia’s war of aggression in Ukraine 17 months ago initially meant bright business prospects for the Düsseldorf-based company Rheinmetall. However, apart from great expectations, there were hardly any firm orders last year. That is changing now. Rheinmetall has never received so many armaments orders in such a short time as in the past few months.

Recently, orders for more than seven billion euros were signed within a week, announced Rheinmetall boss Armin Papperger when presenting the half-year figures. To put this into perspective: This roughly corresponds to the sales volume that Rheinmetall expects for 2023 as a whole.

The armaments group, which has been promoted to the DAX, is a major beneficiary of the Ukraine war and the associated 100 billion euro special budget for the Bundeswehr. This is also reflected in the stock market. The share price has climbed from around EUR 80 at the end of 2021 to around EUR 260.

More on armor and military

Rheinmetall boss Papperger sees bright prospects for the group, even if some hopes have burst, such as a large order from Australia recently for an infantry fighting vehicle. The company is in the final round for a new infantry fighting vehicle in the USA with a potential order volume of 45 billion dollars.

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Rheinmetall receives momentum from Federal Defense Minister Boris Pistorius, who wants to procure armaments as quickly as possible. The SPD minister wants to procure ammunition for over 20 billion euros by 2031 alone – Rheinmetall sees itself as the world market leader in this area. And is even expanding its ammo capacity. The purchase of the ammunition manufacturer Expal is sealed, the Spanish group is expected to generate sales of up to 190 million euros in the remaining months of the year alone.

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Rheinmetall also sees itself as a strategic partner for Ukraine, for example through a joint venture for tank maintenance, ammunition supplies and air defense. Incoming orders from the Ukraine are already estimated at more than one billion euros.

As previously announced and now confirmed once again, group sales are expected to climb from EUR 6.4 billion to between EUR 7.4 and 7.6 billion this year. The operating profit margin should improve slightly to twelve percent. A statement about how many orders are firmly booked or expected is more complex.

Ammunition business particularly profitable

Here, Rheinmetall has introduced new designations (nomination/backlog) because these are often framework agreements from which annual orders are then retrieved. The classic incoming orders almost doubled – in the first half of the year compared to the same period of the previous year from 2.6 to 4.9 billion euros.

The order backlog in a broader definition climbed to over 30 billion euros for the first time. The ammunition business is obviously particularly profitable for Rheinmetall with rising margins. The operating profit margin in the second quarter of 2023 is estimated at a good 18 percent; a year ago it was almost 13 percent.

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Each round of modern ammunition for tanks or artillery costs several thousand euros. A shot of high-tech ammunition from a modern Leopard 2 tank is valued at around 7,500 euros, according to an analyst report from the major bank UBS.

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