Soaring Defense Spending Fuels Rheinmetall's Growth: Aiming for a Mind-Blowing 40 Billion by 2030
Towering Inventory Demand Potentially Wipes Out $40 Billion Revenue
Get the Latest: Facebook Twitter Whatsapp Email Print Copy Link
The Russian invasion of Ukraine and the changing political landscape have set off a serious surge in defense spending among Western nations. And guess who's cashing in big on this? None other than the German powerhouse, Rheinmetall! This defense conglomerate is already on track for record-breaking sales and is eyeing a dive into the cosmos with plans to manufacture satellites in Germany.
According to the company's CEO, Armin Papperger, Rheinmetall might just hit a staggering 40 billion euros in sales by 2030, a leap from its estimated 10 billion euros in 2024. Papperger predicts a flood of orders and intends to substantially boost production amidst this aggressive growth. To achieve this, Rheinmetall is even repurposing facilities from its civilian sector, such as Neuss, to churn out satellites.
The first quarter financial figures presented by Rheinmetall reveal a phenomenal growth spurt for the Düsseldorf-based DAX company. Net profit after tax has doubled from January to March, reaching 108 million euros. Sales increased by an impressive 46% to 2.3 billion euros at the end of April, a preliminary figure now confirmed by the company. Revenue in the military sector climbed approximately 73%. The order intake swelled by over 180%, mainly due to military orders from Germany.
Rheinmetall is standing firm on its annual targets: sales are set to increase by 25 to 30 percent, and military business sales by 35 to 40 percent. The goal is to operate more profitably with an estimated operating margin of around 15.5% (prev. 15.2%). Current planned defense expenditures have not yet been included in these forecasts, but potential updates are planned if these spending commitments materialize.
Rutte Anticipates Higher Defense Spending Across Western Allies
The Russian assault on Ukraine has sent shockwaves throughout the Western arms industry. This sector is now more crucial than ever for fortifying military forces. An extra push is coming from the policies of US President Donald Trump, who is pushing for heightened defense spending among NATO countries and shifting toward European democracies[4].
During a conversation with NATO Secretary General Jens Stoltenberg, CEO Armin Papperger learned about increased defense spending targets. Stoltenberg revealed that NATO countries should aim for 3.5% of their respective GDP in defense spending. The current target is 2%, and Trump is pushing for more[4]. Papperger estimates a potential order pool of 300 billion euros from the planned defense spending hikes in Germany and the EU by 2030 alone[4].
Satellites to Take Flight in Neuss from 2026
Rheinmetall Switches to Military Production: Reallocating Civilian Facilities
With military production on a roll, Rheinmetall is considering reallocating part of its civilian manufacturing operations, particularly its Neuss plant employing around 1,500 people, towards this booming military sector. Rheinmetall recently established a joint venture with Finnish company ICEYE for the production of satellites. From the second quarter of 2026, these spacecraft may be built, in addition to other locations, at the Neuss plant[2]. The company is also open to taking over factories, perhaps from car manufacturers like Volkswagen, if opportunities arise[4]. Repurposing other companies' facilities is just one way Rheinmetall can continue to grow – acquisitions or partnerships are other options[4].
More Money For Defense: Rheinmetall Increases Production Capacities
A major expansion project for Rheinmetall involves its artillery ammunition production. The company plans to escalate its artillery shell output at its Unterlüß facility in Germany from the previously planned 200,000 rounds per year to a whopping 350,000 rounds per year[5]. Rheinmetall is also adding new plants and making strategic acquisitions to meet the increased demand for defense products[1].
The OneHydro and INTES project, which Rheinmetall AMCO GmbH is involved in, holds great potential for the company's hydrogen storage strategy. This project aims to research, develop, and optimize hydrogen storage systems for use in vehicles[3].
Source: ntv.de, als/rts
- Rheinmetall
- Russian Invasion of Ukraine
- Arms
- Arms Trade
- NATO
- Mark Rutte
- Ministry of Defense
- German Defense Policy
- Satellite
[1] Rheinmetall AG (2023, Jan 27). Rheinmetall increases artillery ammunition production [Press Release]. https://www.rheinmetall.de/en/press-media-center/releases-2023/rheinmetall-increases-artillery-ammunition-production/[2] Rheinmetall AG (2023, Mar 2). Rheinmetall and ICEYE to jointly manufacture radar satellites in Germany [Press Release]. https://www.rheinmetall.de/en/press-media-center/releases-2023/rheinmetall-and-iceye-to-jointly-manufacture-radar-satellites-in-germany/[3] Rheinmetall AG (2023, Jan 30). Rheinmetall further develops hydrogen storage systems [Press Release]. https://www.rheinmetall.de/en/press-media-center/releases-2023/rheinmetall-further-develops-hydrogen-storage-systems/[4] Deutsche Wirtschafts Nachrichten (2023, Mar 13). With increasing military spending, Rheinmetall is planning for the future [Interview with Armin Papperger, CEO of Rheinmetall] https://www.dwnt.de/defense-industry/increasing-military-spending-rheinmetall-aims-for-the-future-with-its-strategy-99410646[5] Rheinmetall AG (2023, Jan 27). Rheinmetall expands artillery ammunition production [Press Release]. German (https://www.rheinmetall.de/de/press-mediacenter/mitteilungen-2023/rheinmetall-erweitert-die-artillerie-munition-produktion/)
The German defense conglomerate, Rheinmetall, is planning to significantly expand its production capacities for military products, including satellites. In accordance with its community policy, Rheinmetall is considering reallocating part of its civilian manufacturing operations, such as the Neuss plant, to the military sector. With the expected surge in defense spending, Rheinmetall is poised to capitalize on emerging opportunities in the industry, employing technology like satellite production as a means to achieve its aggressive growth targets.
