By 
Berlin — Germany’s Rheinmetall, one of the main gainers from a boost in European defence spending sparked by the Ukraine war, said on Thursday it was on course for record sales growth and its US prospects were unchanged by the election result.
European defence stocks rose on Wednesday after Donald Trump won the US presidential election, which analysts say could prompt higher spending on weapons in Europe.
“We are experiencing growth like we have never seen before,” said CEO Armin Papperger, adding that Rheinmetall, the biggest ammunition producer in Europe, was on its way to becoming a “global champion in the defence industry”, citing projects in the US, Britain, Italy and Ukraine.
JPMorgan analysts warned, however, that while Rheinmetall will be a long-term winner, it faces “more near-term uncertainty than other European defence stocks due to a potential Russia-Ukraine ceasefire under Trump” and German political uncertainty.
Rheinmetall said in a presentation on Thursday that its growth prospects in the US are intact after the election.
Papperger signed a deal last month with Italy’s Leonardo in a key step for consolidation in the sector and has repeatedly made clear his high hopes for the US market.
Rheinmetall extended Papperger’s contract for another five years on Wednesday and created a new chief operation officer role as part of a reshuffle to respond better to demand.
High demand
Incoming orders rose 48% to over €21bn from January to September due to contracts from the German army and those related to Ukraine aid, and as a result, Rheinmetall’s backlog hit a new record at €52bn.
Rheinmetall said it expects to reach the threshold of about €10bn in annual sales for the first time in 2024 after sales rose 36% from January to September to €6.3bn, with German customers making up almost a third of sales.
With the order backlog expected to grow to about €60bn by the end of the year, the group is preparing to double annual sales to about €20bnin just a few years.
Rheinmetall narrowed its full-year operating margin guidance and is now aiming for the upper end of the guidance for 14%-15% this year, after hitting 11.3% in the first nine months.
Reuters
Comments