Rheinmetall Panther KF51 tank Rheinmetall Defence
Defense boom drives 33% sales surge for Rheinmetall
“We have never seen such growth,” says CEO of German company that recently opened a repair facility in Ukraine.
DUSSELDORF, Germany—Increased orders from the German armed forces and allied NATO and EU nations, including support for Ukraine, drove strong growth in Rheinmetall AG sales and revenue for the first half of 2024, company officials told investors.
Sales for the first half of 2024 rose to EUR3.8 billion, up 33 percent from sales of EUR2.9 billion in the first half of 2023. Operating income for the period rose to EUR404 million, up 91 percent from EUR212 million in the year-ago period.
“The supercycle is clearly accelerating. In the second quarter of 2024 alone, our sales increased around 50 percent and our result more than doubled.” said CEO Armin Papperger. “We have never seen such growth.”
“We also expect annual sales growth of around two billion euros in the coming years. This very positive development is only possible because we invested early and have been following a strategic plan since 2014 – when Crimea was invaded. We massively expanded capacities, made acquisitions and are now also additionally building new plants in countries like Lithuania, Hungary, Romania and Ukraine. Forward-looking partnerships in key markets are also bringing us closer to our goal of becoming a global defense industry champion,” Papperger said.
Rheinmetall is confirming its sales and result guidance for 2024, with Group sales of around EUR10 billion forecast for the year.
INDUSTRY SEGMENTS
Vehicle Systems
Rheinmetall’s Vehicle Systems division, which focuses on military wheeled and tracked vehicles, generated EUR1.3 billion in sales during the first half of 2024, a 28% increase compared to the same period last year. This growth was primarily driven by strong demand for tactical and logistical vehicles.
Rheinmetall has secured new orders and framework agreements totaling EUR3.114 billion in 2024, a EUR22 million increase over the previous year.
The company’s largest contracts to date include a EUR1.6 billion order to produce and deliver heavy weapon carriers based on the Boxer wheeled vehicle for the German armed forces. Additionally, Rheinmetall has been awarded a service contract for these vehicles worth over EUR620 million.
Backlog rose to EUR18,148 million as of June 30, 2024, an increase of EUR4,252 million or 31% from the previous year. The operating result improved in the first half of 2024 from EUR100 million to EUR119 million. The operating result margin was 9.2%, less than the previous year’s 9.9%.
Weapon and Ammunition
Rheinmetall’s Weapon and Ammunition segment experienced substantial growth in the first half of 2024, with sales surging 93% to EUR1.054 billion compared to the previous year. This significant increase was primarily driven by higher ammunition deliveries, including major artillery orders for both Germany and Ukraine. The recent acquisition of Rheinmetall Expal Munitions on July 31, 2023, contributed significantly to the overall growth, generating EUR230 million in sales during this period.
Rheinmetall’s order intake surged to EUR8.828 billion in the first half of 2024, a dramatic increase from the previous year’s EUR1.543 billion. This significant growth was primarily driven by a massive EUR8.5 billion framework contract with the German government. Additional sales came from indirect fire and medium-caliber products sold to customers in Germany and the Middle East.
Backlog more than tripled, reaching about EUR19 billion as of June 30, 2024. Compared to the previous year (June 30, 2023: EUR5.8 billion), growth totaled EUR13 billion or 229%. The driving factors here were the conclusion of two multi-year ammunition framework contracts in the second half of 2023 and the subsequent increase in the artillery framework contract by the German customer in June 2024.
The operating result in the first half of 2024 more than doubled, growing by EUR117 million or 131% to EUR206 million (previous year: EUR89 million). Operating result margin increased substantially from 16.3% to 19.5% despite rising labor and material costs. This margin includes a profit contribution of EUR73 million by Rheinmetall Expal Munitions.
Electronic Solutions
Electronic Solutions, which focuses on armed forces digitalization, infantry equipment, air defense, and simulation technologies, saw a 28% increase in sales, reaching EUR647 million in the first half of 2024 (previous year: EUR504 million). This growth was primarily driven by a significant order for the Skyranger 30 mobile air defense system from the German armed forces. Additional contributions came from the Puma infantry fighting vehicle and an upgrade to an existing air defense system for a European customer.
Order intake surged by more than 400% to EUR3.02 billion in the first half of 2024, compared to EUR671 million in the previous year. Key contributors to this growth include a development contract and a delivery agreement for air defense systems, as well as a framework contract for communication and hearing protection headsets, all secured with the German government.
Backlog as of June 30, 2024 was EUR6,609 million, a significant increase of EUR2,924 million compared to the previous year (previous year: EUR3,685 million).
The operating result improved in the first half of 2024 to EUR53 million, up from EUR32 million in the previous year. The operating margin increased to 8.3% (previous year: 6.3%) due to sales.
Power Systems
Rheinmetall’s Power Systems division, which bundles technological expertise in civilian markets, reported slightly increased sales of EUR1.056 billion in the first half of 2024 compared to the previous year’s EUR1.026 billion. Growth in the US market offset declining sales in Europe. However, new orders for the division totaled EUR1.357 billion, a significant decrease from the EUR1.775 billion booked in the same period last year.
Backlog as of June 30, 2024 dropped 9.9% to EUR7,938 million (previous year: EUR8,806 million).
Operating results rose in the first six months of 2024 compared to the previous year by 54% to EUR57 million (previous year: EUR37 million). The comparative 2023 figure was affected by an IT incident resulting in additional costs that encumbered the operating margin for this period. The improved at-equity result of a Chinese joint venture had a positive effect on operating result. The operating margin was subsequently 5.4% (previous year: 3.6%).