2024-03-14 19:47:54
Whether tanks, artillery or large-caliber ammunition: Rheinmetall plays an important role in the arms business. Business is expected to continue to increase in the future.
Germany’s largest arms company Rheinmetall is about to increase its production of artillery ammunition tenfold. Before the Ukraine war, around 70,000 bullets were sold per year, but demand has now increased massively, said CEO Armin Papperger in Düsseldorf and, with a view to the intended production capacities at the end of 2024, added: “We are in the order of 700,000 bullets.”
It shouldn’t stay that way, with a new production facility in Unterlüß in Lower Saxony and further planned plants in Ukraine and Lithuania, this figure is expected to rise to 1.1 million by 2027. Initially, two plants in Ukraine were reported, but the company has now announced four of them, as the French news agency AFP reports.
Rheinmetall: Are the largest manufacturer of artillery ammunition in the West
Referring to the weak demand for the 155-millimeter projectiles before the war, he said: “Nobody filled any warehouses because at that time it was believed that artillery ammunition could not be used very effectively because there were nuclear weapons. ” This assumption was outdated by the war in Ukraine. “Fortunately, no one uses nuclear weapons.”
Rheinmetall claims to be the largest manufacturer of artillery ammunition in the Western world; its competitors include the Norwegian company Nammo. Ukraine currently urgently needs artillery ammunition to be able to defend itself against the Russian aggressor. Kiev also relies on Rheinmetall. When asked about the delivery volume for Ukraine, Papperger said: “Several hundred thousand shots from Rheinmetall are going to Ukraine.” He didn’t get any more specific.
Rheinmetall will probably soon announce a new major order from the federal government in the large-caliber ammunition business. “The Federal Republic of Germany wants to give Rheinmetall a framework contract for 2.2 million rounds of artillery,” said the manager. A period of ten years is planned for delivery.
Rheinmetall sells tanks, artillery, anti-aircraft defense, military trucks and ammunition. The administrative headquarters is in Düsseldorf and the largest factory is in Unterlüß, Lower Saxony. The group employs around 23,000 people.
Shiny years
Papperger presented annual figures for 2023, which were positive. Sales increased by 12 percent to around 7.2 billion euros, while net profit increased by nine percent to 0.6 billion euros. This year, Rheinmetall is targeting sales “in the order of 10 billion euros” – that would be an increase of around 40 percent. Papperger is convinced that growth will continue afterwards. “Whether it’s five or seven or eight years – I see the potential for us to have a turnover of 20 billion euros.”
How good the gunsmith’s prospects are can also be seen in the order backlog, which shot up from 26.6 billion euros to 38.3 billion euros within a year, making it higher than ever before in the company’s history.
The CEO justified the positive outlook with a changed attitude in politics, which now believes “that we have to do a lot because there is too much uncertainty in the world.” He cited not only the Ukraine war as examples of this, but also the Gaza conflict and the Houthi attacks on the Red Sea. In his opinion, this makes it clear that Western democracies must be more defensive and therefore have to invest more money in their defense. The figures were well received on the stock market, the share price rose significantly and reached a record level. A paper is now worth more than four times as much as it was before the outbreak of the war in Ukraine.
Industry criticism of politics
In response to the Russian war of aggression, the federal government launched a special fund of 100 billion euros in 2022 to modernize the Bundeswehr and fill warehouses. Rheinmetall benefited from this pot of money. But the mood in the industry is different: While Papperger is full of praise for the federal government, other company representatives are dissatisfied. The head of the tank gear manufacturer Renk, Susanne Wiegand, recently told the “Handelsblatt” that Germany orders comparatively little. “This has nothing to do with a return to full equipment for the Bundeswehr,” said Wiegand. Other industry representatives make similar statements.
Papperger does not want to join in with such criticism from the industry. Last year the Bundeswehr received orders worth more than 10 billion euros and this year there will probably be more, he said. In contrast to other defense companies, Rheinmetall has the right product portfolio. “If I don’t have any anti-aircraft systems, if I don’t have any ammunition and if I only build transmissions, for example, then I’m dependent on these tanks being bought,” said the Rheinmetall boss.
He understands that Defense Minister Boris Pistorius (SPD) also has to set priorities with a view to supporting Kiev. “The federal government is really trying to help Ukraine at the moment.” That’s why we order what can be delivered at short notice and not what will only be ready in three years. “All this complaining is of no use,” said the head of Germany’s largest arms company. There are companies “that have a product portfolio that doesn’t fit right now.”