This has now been contractually agreed in Brussels between representatives of both countries and the company, Rheinmetall AG announced. In addition to the Leopard 2 A4 tank variant, the order includes an ammunition package, integrated training and logistics services. And the Slovak Armed Forces, for their part, are delivering military equipment in support of Ukraine.
The vehicles provided are repaired Leopard 2 A4s from previous stocks in the various countries of use, which are owned by Rheinmetall. Delivery of the first vehicle is scheduled for December 2022 and delivery is expected to be completed by the end of 2023.
The Ring Exchange is intended to support Ukraine in its efforts against the Russian invasion. NATO partners deliver large ex-Soviet equipment to Ukraine and receive in return available Western-made systems.
Thanks to the arms boom, Rheinmetall plans to do significantly more work in 2025
The Rheinmetall arms group has set itself higher financial goals in the medium term due to the armaments of several NATO countries. In 2025, sales should have nearly doubled compared to 2021, the group announced Wednesday at an investor event in Vienna. There should also be a rise in profitability, so that net profit and dividends nearly double. And the stock rose slightly, which has risen sharply again in the past few days after a setback.
In 2025, the Dusseldorf Group wants to achieve sales of between 10 and 11 billion euros. For the current year, the company, listed on MDAX, has set its target of achieving a 15 percent growth in sales from its own resources compared to 5.7 billion euros in sales in the previous year.
The planned operating margin for the year at more than 11%, which Rheinmetall uses to measure its profitability, is expected to rise to around 13% by the middle of the decade. Analysts have so far estimated sales at less than 10 billion euros and a margin of around 13% for 2025.
Rheinmetall shares temporarily rose 0.39 percent on Wednesday via XETRA to 180.80 euros. The price rose to almost 190 euros at its peak and was thus higher than it had been since the beginning of August. Amid investors jubilating over the armaments ambitions of Germany and other NATO countries as a result of Russia’s attack on Ukraine, the newspaper rose to a record high of €227.90 in June. The fact that Rheinmetall has moderated somewhat higher expectations for incoming sales and orders in the summer means that investor expectations for the share price have diminished.
Goldman Sachs analyst Daniela Costa sees room to improve the market outlook given the new medium-term targets. The margin target could be considered cautious given the growth opportunities in the highly productive arms and ammunition division. The stock has outperformed the European industrial goods sector over the past three months.
A lot has happened since the previous Capital Markets Day in February 2021 – that is, before the outbreak of Russia’s war of aggression against Ukraine. At the time, medium-term targets for 2025 were significantly lower with sales of around 8.5 billion euros and a margin of 10 percent or more.
With the outbreak of war in February 2022, the security situation of NATO countries has changed dramatically. Rheinmetall, for example, hopes that the special fund for improving the equipment of the Bundeswehr in the amount of $ 100 billion will contribute significantly to its own orders. The company manufactures systems for tanks and other military vehicles, manufactures weapons and ammunition, and also supplies defense electronics.
In addition, the group is currently working to reduce its dependence on the automotive industry. The Düsseldorf-based company no longer operates with combustion pistons as part of its core business, sales agreements have already been concluded for parts, and the search for a solution for others is still in progress. The division with sensors and actuators remains in the range – primarily electronics for automotive engines, exhaust gas aftertreatment technology, pumps for engines and cooling applications as well as valves. This business is also set to grow thanks to parts for electric mobility.
Military vehicle revenue is expected to double by 2025 compared to 2021 to at least 4 to 5 billion euros – so the company should remain the largest division. In the particularly lucrative area of arms and ammunition, Rheinmetall chief Armin Papperger also plans to double sales to about 2.5 billion euros – with margins of more than 20 percent, and even higher profitability.
Frankfurt / Dusseldorf (Dow Jones / AWP International)