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Key takeaways

  • Rheinmetall recorded a record growth in revenue (+20 percent) and operating profit (+18 percent) in the first nine months of the year.
  • Despite a strong financial performance, Rheinmetall's new orders declined year-on-year, suggesting a potential slowdown in future growth.
  • While NATO members signal their intention to increase military spending, the actual orders are being executed more slowly.

Rheinmetall, Germany's largest arms manufacturer, is achieving record results due to the war in Ukraine. In the first nine months of the year, sales rose by 20 percent to 7.5 billion euros. Operating profit climbed by 18 percent to 835 million euros. For the company, these are unprecedented figures for this period.

Despite this success, Rheinmetall’s financial segment—which reflects new orders and future contracts—declined. It amounted to 17.6 billion euros, roughly four billion less than a year ago. Although this figure is lower than last year, it is still historically high.

NATO intentions

The gap between revenue growth and order intake reveals a clear trend. NATO member state governments want to increase their military spending in response to Russian aggression, but the implementation of these plans is progressing slowly.

Rheinmetall’s largest customer is the German Bundeswehr. Delays in the approval process of the federal budget have limited the government’s procurement capacity. Nevertheless, Rheinmetall remains optimistic about its future prospects, as Bundeswehr spending is largely exempt from the German debt brake.

CEO remains optimistic

CEO Armin Papperger expressed confidence in Rheinmetall’s trajectory: “We have achieved robust growth and are on track to reach our ambitious annual targets.” He further noted that the conditions are in place for a strong fourth quarter. Key Bundeswehr programs are now secured under the federal budget and will be rolled out in the coming months.

Rheinmetall has a diversified product portfolio encompassing tanks, artillery, air defense systems, military trucks, drones, and ammunition. The company is the largest producer of artillery shells in the Western world and recently commissioned a new production facility in Unterlüss, Germany, to meet growing demand.

Expansion in Europe

To increase production capacity, Rheinmetall is expanding existing facilities and building new ones across Europe. Recent developments include an opening ceremony for a new plant in Lithuania, plans for a facility in Latvia, and agreements with the Bulgarian government to build two ammunition factories in the NATO country. (jv)

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