Rheinmetall CEO Anticipates 450% Increase in Orders Due to Germany's Military Expansion
As 2024 came to an end, the German arms contractor Rheinmetall acknowledged an order book that had reached €55 billion ($63 billion). In five years’ time, that sum may increase significantly, if its CEO’s ambitions are realized.
Rheinmetall AG is a German automotive and arms manufacturer, headquartered in Düsseldorf, Germany. The group was promoted to the DAX, Germany's leading stock market index, in March 2023. It is the largest German and fifth largest European arms manufacturer, and produces a variety of armored fighting vehicles and armored personnel carriers, in both wheeled and tracked versions
Armin Papperger, Rheinmetall’s CEO, has a positive outlook on the company’s future as it benefits from European rearmament. Speaking to German outlet Handelsblatt, Papperger estimated orders to reach €300 billion ($340 billion) in the next five years, indicating a 450% increase. He also forecasts U.S. sales to double from €1 billion ($1.1 billion) over that period.
Papperger’s spending outlook depends on Europe increasing defense expenditure. The bloc recently committed to spend around €800 billion ($910 billion) on defense, although Papperger believes this figure could be closer to €1 trillion ($1.1 trillion).
Germany partially abandoned fiscal safeguards in March, specifically excluding defense spending from its debt brake aimed at keeping the annual budget deficit below 0.35% of GDP. Alongside a €500 billion infrastructure investment pledge, Germany's commitment to defense spending could lead to more than €1 trillion ($1.3 trillion) of spending in the coming years.
Due to Germany’s commitment to defense spending, Papperger expects Rheinmetall to play a larger role in European rearmament. Historically, Rheinmetall has accounted for 18% of defense orders across Europe. Papperger anticipates this share will rise to 25%, supporting his prediction regarding Rheinmetall’s order book.
Market reactions to Papperger’s comments to Handelsblatt were minimal, likely due to already having priced in future backlog figures into Rheinmetall’s value. Shares in the company have increased by over 140% this year, following a 1,000% increase since Russia’s invasion of Ukraine.
In addition to fresh demand across Europe, Rheinmetall may aim to replace imports of U.S.-manufactured arms. More than 60% of European NATO members’ weapons imports between 2020 and 2024 came from the United States. In March, MBDA CEO Eric Béranger mentioned to the Financial Times that European militaries are increasingly seeking non-U.S.-made weapons. Rheinmetall has been increasing its production goals to meet Europe’s defense demands. Papperger projects Rheinmetall to enhance its production capacity through acquiring new space and reaffirmed interest in buying one of Volkswagen’s unused German factories.
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