Here is SalkunRakentaja’s article about Rheinmetall, quoting analyst Adrien Rabierin.
The company’s CEO Armin Papperger recently stated to the German newspaper Handelsblatt that a peace agreement in Ukraine would not significantly alter the demand outlook.
According to him, Europe has entered an “era of long-term rearmament” as countries make up for decades of underinvestment in their own security.
This view reflects a broader trend, where defense companies’ revenues are already growing by double-digit percentages in several European countries, and order books extend well into the 2030s.
Rheinmetall updated its outlook and slightly lowered its defense business growth expectations as the Power Systems unit is being sold.
Growth is estimated to be strong regardless, at around 30–35 percent, and the company also believes profitability will remain high. Some projects are delayed, but cash flow is expected to be strong.
Rheinmetall AG (ETR:RHMG) on Wednesday updated its 2025 guidance, trimming expected defense growth after excluding its Power Systems unit from continuing operations as talks with potential buyers progress.
As already mentioned in the thread, Rheinmetall intends to sell its Power Systems unit. Consequently, the company plans to focus entirely on the defense industry, which clarifies its corporate structure and investment case.
Following the transaction, according to the article below, the company will become a nearly pure-play defense player, supported by an order backlog of over €64 billion. The stock has declined, but Europe’s rising defense spending, improved margins, and strong cash flow support long-term growth and make the company an attractive option for investors according to the text… furthermore, defense orders continue to increase rapidly and visibility for the coming years has clearly improved.
I wonder what will happen to Rheinmetall and other defense industry companies if and when peace is achieved in Ukraine on such poor Russian terms that neither NATO nor EU troops are allowed in Ukraine. And what will happen to joint factories, like those between Ukraine and Rheinmetall, operating in Ukraine?
If and when a “bad peace” comes, it should instead be a call for Germany in particular to quickly pour money into the arms industry. This is at least what Merz has been promising. Admittedly, some European leaders already made major mistakes in the past by ending conscription and slashing their defense budgets, so who knows if any decisions will be reached this time either.
Rheinmetall estimates its revenue will grow by up to 45 percent this year, even though last year’s results fell short of expectations.
The company believes it will benefit from growing defense spending in Europe and the United States and is well-positioned to replenish, among other things, U.S. missile stockpiles depleted in the war in Iran.
“The world is changing rapidly, and Rheinmetall is well prepared,” said CEO Armin Papperger in a statement.
“With our products, we will have a significant share in the increasing equipment spend of the armed forces and deliver what modern armed forces need in the 21st century.”
Key Points
German arms maker Rheinmetall reported full-year sales of 9.94 billion euros and profits of 1.68 billion euros, missing LSEG estimates.
“The world is changing rapidly, and Rheinmetall is well prepared,” said CEO Armin Papperger.
Defense companies are expected to be on the receiving end of governments’ hiked spending on military capabilities.
Defense stocks plummeted on Wednesday after a report that Germany will abandon plans to build six warships, fuelling investor fears that the boost to defense contractors from increased government spending may not fully materialize.
