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Rheinmetall self-propelled howitzers of the Bundeswehr before being transported to Lithuania in mid-February
Photo: Philipp Schulze / dpa
Against the background of growing defense budgets in Germany and other countries, the Düsseldorf-based armaments group Rheinmetall is preparing for an order boom.
So far, a 10 percent increase in sales of military goods has been expected for 2022 compared to the previous year, said CEO Armin Papperger.
Now let's assume 20 percent.
By the middle of next year, 1,500 to 3,000 additional employees should be recruited in Germany, England and Australia in order to process the expected flood of orders.
Although the orders still have to be wrapped up, it is to be expected that a large proportion of the employees will be hired by the end of the year.
"There are already 700 to 800 job advertisements," says Papperger.
But new factories would not be needed.
Rheinmetall, which currently has around 24,000 employees, has five plants in Germany and also produces in Canada, the USA, Great Britain, Austria, Switzerland, Italy, Hungary, South Africa and Australia.
Because of Russia's invasion of Ukraine, several EU countries have announced that they will increase their defense budgets.
The federal government wants to create a special fund of 100 billion euros for the equipment of the Bundeswehr.
According to Papperger, 20 billion euros are planned for ammunition alone.
There are already "considerable inquiries" from Germany.
After the start of the war in Ukraine, Rheinmetall offered the federal government a long-term product package worth 42 billion euros.
It's about tanks, ammunition, military trucks and other goods.
»The ammunition stocks of the Bundeswehr are very low«
Papperger said that Rheinmetall could deliver ammunition worth twelve billion euros within six to twelve months.
"The Bundeswehr's ammunition inventory is very low." The delivery times for trucks are around twelve months, for the Boxer wheeled armored vehicle up to 18 months and for the Puma infantry fighting vehicle 24 months.
Roughly speaking, Rheinmetall makes two-thirds of its sales with armaments.
The company generates a third of its business as an automotive supplier.
In addition to ammunition, tanks and armored transport vehicles, the company also produces weapons and anti-aircraft systems.
Rheinmetall currently has a record order backlog of around 24.5 billion euros, the lion's share of which is in the armaments sector.
That makes Papperger optimistic: Sales should increase organically by 15 to 20 percent, the operating return on sales should climb to over eleven (previous year: 10.5) percent.
According to Papperger, the plans already include the first income from the federal government's planned additional military spending.
Share price hits record high
In 2021, the armaments and technology group achieved an increase in sales of 4.7 percent to 5.7 billion euros and an increase in operating profit (EBIT) by 33 percent to 594 million euros.
The net result jumped from one million euros in the previous year to 332 million euros.
The dividend is to increase by almost two thirds to EUR 3.30 per share.
The growth plans of the traditional group, whose profit maker used to be the car supplier, were well received on the stock exchange.
With an increase of five percent, the share marked a record high of EUR 164.10.
Since the outbreak of war in the Ukraine, the stocks listed in the MDax small-cap index have gained almost 70 percent in value.
kig/Reuters/dpa