The shares of Rheinmetall and HENSOLDT continued their positive trend on Monday.
They continued to benefit from the prospect of abundant orders from Western states to strengthen defense forces and to support Ukraine in its defense against the Russian invasion. Rheinmetall recently rose in XETRA trading by 2.65 percent to 348.90 euros, HENSOLDT by 3.64 percent to 31.28 euros.
The Rheinmetall shares reached another record high – their increase in the still young year of 2024 increases to a good 20 percent, which means they have now almost caught up with the DAX leader and software group SAP SE. The HENSOLDT shares increased their annual gain to 27 percent and thus also took the lead in the MDAX.
Eyes remain on the USA, where the debate about further US military aid for Ukraine continues. After his conversation with US President Joe Biden in Washington on Friday (local time), Chancellor Olaf Scholz (SPD) expressed confidence that US military aid to Ukraine can be maintained.
There is also an interview with Rheinmetall boss Armin Papperger in the “Handelsblatt” in which he talks about the planned massive expansion of the production of artillery shells. “We are in the process of doubling or even tripling our powder capacities at individual locations, such as those needed for propellant charges for artillery shells,” said the manager. By next year, Rheinmetall will be able to produce enough to supply Europe. “All in all, we want to produce up to 700,000 artillery shells per year by 2025.”
The 61-year-old also expects an increase in the defense budget after the special fund for the Bundeswehr expires. “When the sum is used up, there will have to be a significant increase,” he said. Without an increase, it would be difficult to make Germany capable of defending itself. “There are only two ways to do this: that the defense budget is increased substantially or that there is a special fund.”
Rheinmetall is building a new ammunition factory in Lower Saxony
Germany and its allies need more ammunition for their own troops and to support Ukraine – the arms company Rheinmetall therefore wants to significantly expand its production. A new factory for artillery ammunition is to be built at the existing location in Unterlüß (Celle district) in the Lüneburg Heath. On Monday, Chancellor Olaf Scholz, together with Defense Minister Boris Pistorius (both SPD), company boss Armin Papperger and Danish Prime Minister Mette Frederiksen, held the symbolic groundbreaking ceremony for the plant, which is to be completed in just twelve months of construction. The defense company announced that production should start next year.
“With this investment, you are laying the foundation for independently and, above all, permanently supplying the Bundeswehr and our partners in Europe with artillery ammunition,” said Scholz in the direction of the arms company. This is particularly important with a view to Ukraine and its ammunition needs. “So far we have made do by delivering a lot of what we had,” explained the Chancellor. But this is becoming less and less possible. “It is important that we do everything we can to increase production worldwide.” Rheinmetall’s new plant is an important signal here.
Scholz calls for large-scale production of armaments
“For far too long, armaments policy in Germany has been pursued as if it were about buying a car,” complained Scholz. “But that’s not how arms production works! If nothing is ordered for years, then nothing will be produced.” This makes it all the more important to increase production quickly now. “We have to move away from manufacturing – towards large-scale production of armaments,” said Scholz. “This is the only way to plan and procure sustainably. This is the only way we can achieve our goal of making the Bundeswehr one of the most capable conventional armed forces in Europe again.”
Company boss Papperger explained that with the new plant, Rheinmetall wanted to help the Bundeswehr fill the empty warehouses when purchasing ammunition and become independent of deliveries from abroad. “We do this out of the responsibility and the will to make a significant contribution to the defense capability of our country and our NATO partners with our technologies,” he said. “This is of strategic importance not only for Rheinmetall, but also for the Federal Republic of Germany and Europe.” Ukraine’s enormous consumption of ammunition is making the situation even worse. And this is not just a German problem, added Denmark’s Prime Minister, who joined the meeting at short notice. “The war in Ukraine concerns us all.”
200,000 shells per year planned
In 2025, 50,000 artillery shells are expected to leave the new “Lower Saxony plant”, followed by 100,000 in 2026 and later 200,000 per year. It primarily produces 155-millimeter artillery shells, as well as explosives and components for rocket artillery. The group wants to invest 300 million euros in the new factory and 500 jobs will be created.
The investment is part of Rheinmetall’s plan to significantly increase ammunition production. Before Russia’s attack on Ukraine almost two years ago, the arms company only produced a total of 70,000 artillery shells per year in Germany, Spain, South Africa and Australia, a spokesman said. There are now 400,000, and next year it should be 700,000.
Unterlüß is already the arms company’s largest production site; in addition to ammunition, military vehicles such as the Puma infantry fighting vehicle are also manufactured here. Rheinmetall currently has 2,500 employees at the site. Artillery ammunition is also already being manufactured here, but on a much smaller scale of 30,000 to 40,000 shells per year and only as a final assembly from delivered parts.
The federal government guarantees acceptance
A company spokesman said there was already an acceptance guarantee from the federal government for the new plant, which is expected to deliver five to six times as many grenades. “Otherwise no one would make such an investment.” Rheinmetall bears the construction costs alone. In his speech, Scholz referred to his commitment to spend two percent of gross domestic product on defense. “The Bundeswehr and industry can rely on this promise.”
Protests against Rheinmetall’s planned new arms factory
Around 400 people protested on Monday around the planned new ammunition factory of the arms company Rheinmetall in Lower Saxony. Farmers with around 300 tractors were involved, a police spokesman said. The demonstrators blocked access to the arms company in Unterlüß. Some sections of the road are closed, there are obstructions, but: “You can get through the town,” said the spokesman. According to the rural population of Lower Saxony, the farmers demonstrated primarily against cuts in agricultural diesel and against the policies of the traffic light government in Berlin.
The Südheide peace campaign also protested peacefully against “armament and war policy” with a vigil with around ten people, as its spokesman said: “We expect the government to have a de-escalating effect.”
Federal Chancellor Olaf Scholz and Defense Minister Boris Pistorius (both SPD) are expected in the Lüneburg Heath on Monday for the official groundbreaking ceremony for the new ammunition factory in Unterlüß. The new “Lower Saxony Plant” will, among other things, produce artillery ammunition. Unterlüß is the arms company’s largest production site; in addition to ammunition, military vehicles such as the Puma infantry fighting vehicle are also manufactured there.
Rheinmetall is confident of increasing sales in the medium term – expanding production
The German defense company Rheinmetall is becoming a little more optimistic about its medium-term sales expectations. In an interview with the “Handelsblatt” at the weekend, CEO Armin Papperger expressed confidence about the expansion of production: “This year there should already be ten billion euros in sales, in two years it should be towards 15 billion.” Almost three months ago, the company’s leader still saw sales in 2026 at 13 to 14 billion euros.
Papperger is aiming for up to 20 billion euros in seven to eight years. The share of sales attributable to Germany is expected to rise to over 40 percent in the medium term. Before the Russian attack on Ukraine it was less than 20 percent. Rheinmetall can make the necessary investments on its own. “At the moment it also looks like our cash flow is very good,” says Papperger. This also creates scope for acquisitions.
The fact that Rheinmetall expects to achieve more sales in the medium term is also due to the flourishing ammunition business – which the arms company is expanding significantly. The groundbreaking ceremony for the expansion of the plant in Unterlüß will take place on Monday, to which Federal Chancellor Olaf Scholz (SPD) has also been invited. By 2025, Rheinmetall plans to produce up to 700,000 artillery shells per year. “We will now produce at full speed in this area for five to seven years, including in three shifts,” said Papperger. Rheinmetall will then have sufficient capacity to supply Europe.
Papperger also expects an increase in the defense budget after the special fund for the Bundeswehr expires. “When the sum is used up, there will have to be a significant increase,” he said. Without an increase, it would be difficult to make Germany capable of defending itself. “There are only two ways to do this: that the defense budget is increased substantially or that there is a special fund.”
/tst/DP/men
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