As of: February 12, 2024, 8:32 p.m
By: Bona Hyun
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Business is in full swing: The German arms industry is benefiting from the war in Ukraine.
Companies' sales could continue to grow strongly.
Berlin - The war in Ukraine is making defense companies ever richer: German companies are recording high profits - including the defense giant Rheinmetall.
The war in Ukraine brought the company billions in sales.
This enables Rheinmetall to further expand production capacities.
However, the demand for orders for weapons construction was not always so high.
Arms business is flourishing because of the war in Ukraine: Rheinmetall triples production
German defense companies recorded an increase in sales in 2022 and took in $9.1 billion.
Only the Essen-based company ThyssenKrupp recorded a decline.
Airbus' defense revenue rose by almost $1.7 billion to a good $12 billion.
That was an increase of 17 percent, as the Stockholm International Peace Research Institute (Sipri) reported at the end of 2023.
The war in Ukraine is causing the arms business of companies like Rheinmetall to flourish.
© Julian Stratenschulte/dpa
The reason: Due to the Russian invasion of Ukraine and global tensions, demand for weapons and military equipment has skyrocketed in 2022.
However, Sipri notes in the report published in 2023 that the companies have too little capacity.
“Many defense companies have encountered obstacles in converting production to high-intensity warfare,” Sipri defense expert Lucie Béraud-Sudreau said at the time.
Demand for weapons has increased due to the war in Ukraine – Rheinmetall is expanding locations
This is where companies like Rheinmetall apparently want to start and optimize, which is why production capacity is now being expanded.
Despite protests, the company wants to expand a new ammunition factory in Lower Saxony.
With the new ammunition factory in Unterlüß, production could be increased to 200,000 bullets per year.
Before the Ukraine war, Rheinmetall produced around 70,000 rounds of artillery ammunition per year.
“We have massively increased capacity and will reach up to 700,000 shots in 2025,” said Rheinmetall boss Armin Papperger to the
Tagesspiegel
on Monday (February 12, 2024).
By next year, Rheinmetall will be able to produce enough to supply Europe.
“We are in the process of doubling or even tripling our powder capacities, such as those needed for the propellant charges of artillery shells, at individual locations,” Papperger told the
Handelsblatt
on Sunday (February 11, 2024).
Meanwhile, Economics Minister Robert Habeck is promoting a European armaments project.
“We have to fight for Europe’s competitiveness in the world,” said the Green politician on Monday.
“This explicitly includes the military complex.”
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Rheinmetall shares at record high: profits could double
A look at the Rheinmetall share also confirms an upward trend: the share has reached another record high.
After the Rheinmetall share fell to 313.40 euros at the end of January 2024, it has since set course for an all-time high of 344.80 euros, reports
finanzen.net.
The plus increases to a good 20 percent, which means they have now almost caught up with the DAX 40 leader and software group SAP SE.
The Ukraine war and Germany's rearmament program are making Rheinmetall the darling of the stock market, writes
Focus
.
The share price has risen by 93 percent since the beginning of the war.
Analysts expect Rheinmetall to achieve sales of 6.6 billion euros this year.
It is expected to grow to 8.7 billion euros by 2024, and net profit could more than double.
According to insiders, it was previously said that Rheinmetall earned at least 3,600 euros per projectile of the large-caliber artillery ammunition.
The shares of the Munich-based Hensoldt group also rose by almost three percent to 31.08 euros.
Among other things, Hensoldt is involved in the “Sky Shield” project – an initiative that is intended to expand air defense.
Because of the Ukraine war: Profits for European defense companies - USA is lagging behind
European defense companies also sensed golden times.
According to
Focus
, the company Leonardo from Italy rose the furthest after Rheinmetall , with its share price up 36 percent, shortly after the outbreak of the war in Ukraine.
The French Thales Group achieved an increase of 33 percent.
US defense companies, on the other hand, are lagging behind.
In 2022, according to Sipri, the war in Ukraine had virtually no impact on the revenues of the largest US defense companies.
US defense companies recorded a total of 302 billion dollars.
This corresponded to a decline of 7.9 percent.
Russian companies had to cope with a decline of 12 percent.
(bohy)