By Cristina Gallardo
Rheinmetall's sales growth slowed in the third quarter, dragged by delays in the German government's procurement decisions.
The German arms maker said that for the three months through Sept. 30, sales rose 13% to 2.78 billion euros ($3.19 billion), missing a company-provided consensus estimate of 2.815 billion euros.
Net profit was 173 million euros for the quarter, below a consensus estimate published by Alpha Value of 235.5 million euros.
The company's operating result--more closely watched by analysts and investors--rose to 360 million euros from 302 million euros a year earlier, above a consensus estimate of 355.1 million euros provided by Rheinmetall.
Delays to Germany approving its defense budget had led to some orders expected to be placed in the third quarter being postponed to the end of the year or early 2026.
"The foundations have now been laid for a strong fourth quarter, especially as the German Armed Forces' planned major programs are now secured in the federal government's financial planning and will be commissioned in the coming months," Chief Executive Armin Papperger said.
The company is well prepared for the future thanks to strong recruitment, the securing of supply chains and huge increases in manufacturing capacity, with 13 new plants in Europe being built and existing ones being expanded, he added.
Rheinmetall's acquisition of Naval Vessels Lurssen should take place no later than January 2026, Papperger told an earnings call Thursday. The two companies agreed on the transaction in September, enabling Rheinmetall to enter the shipbuilding business.
Over the next couple of years, Rheinmetall's acquisitions strategy will target companies that could strengthen its new naval business, as well as digital startups in which it may initially buy a minority stake, Papperger said.
The group is also looking for more U.S. companies to form joint ventures, he said, adding that naval missiles offer an opportunity for transatlantic collaboration.
The manufacturer's backlog rose to 63.80 billion euros as of Sept. 30 from 51.91 billion euros a year earlier, while its order intake came in at 2.72 billion euros, up from 2.36 billion euros.
The weapons and ammunitions segment posted a 38% jump in third-quarter sales to 691 million euros. Electronic solutions sales grew by 32%, while vehicle systems sales rose 8.1%. Sales of power systems, meanwhile, fell 3%.
Rheinmetall backed its 2025 guidance and said it expects to at least meet its previous forecasts of consolidated sales growth at between 25% and 30% and an operating result margin at around 15.5%.
The reiteration of the guidance should reassure investors for this year, some of whom had feared a cut, and push up the shares on Thursday, Bernstein analysts said.
The real catalyst for an increase in the stock is likely to come at the company's capital markets day on Nov. 18, when Rheinmetall is expected to lift its medium-term targets, Bernstein added.
Write to Cristina Gallardo at cristina.gallardo@wsj.com
(END) Dow Jones Newswires
11-06-25 0948ET
