Defense Giant Rheinmetall Achieves Double-Digit Growth in Q3 2023

Defense Giant Rheinmetall Achieves Double-Digit Growth in Q3 2023

(IN BRIEF) Rheinmetall AG, a German defense company, reported strong financial results for the third quarter of 2023, driven by robust sales growth in its military business. The company’s operating result significantly exceeded market expectations, reflecting the high demand for military equipment. Rheinmetall also confirmed its annual guidance for 2023, anticipating consolidated sales of €7.4 billion to €7.6 billion with an operating margin of around 12%. The company’s various divisions, including Vehicle Systems, Weapon and Ammunition, Electronic Solutions, and more, contributed to its positive performance. Rheinmetall’s backlog also showed substantial growth, and the company is committed to delivering on its projects and supporting defense needs globally.

(PRESS RELEASE) DÜSSELDORF, 9-Nov-2023 — /EuropaWire/ — Rheinmetall AG (ETR: RHM), a German integrated technology group active in the automotive and defence industries, concluded the third quarter of fiscal 2023 with robust sales growth and significantly improved income. This growth was primarily attributed to the strong demand in military business, particularly with Germany and its EU and NATO partners. The Group achieved double-digit sales growth, reflecting the dynamic market conditions.

The exceptional increase in the third-quarter operating result, which exceeded market expectations, led the Group to release a preliminary statement on October 25, 2023. Rheinmetall anticipated an operating result of €191 million for Q3 2023 (Q3 2022: €120 million), including the profit contribution from the recent acquisition of the munitions manufacturer Expal in Spain.

Based on the favorable market conditions and solid order backlog, the management reaffirms the Group’s sales growth and operating margin guidance.

Armin Papperger, CEO of Rheinmetall AG, emphasized, “We are well on track to achieve our ambitious annual targets for sustainable and profitable growth. Many countries need Rheinmetall in order to meet the dramatically increased demand for military equipment – this is demonstrated by record figures for new orders and orders on hand. We accept the resulting responsibility to deliver and bring the projects to a successful conclusion.

“The integration of our latest acquisition, the Spanish munitions manufacturer Expal Systems, has got off to a successful start. Furthermore, we have massively increased our additional capacities. As one of the world’s leading ammunition producers, we can make a considerable contribution in this set-up to ensuring Ukraine’s ability to defend itself in this area and to replenishing the supplies of NATO partners.

“We are grateful for the opportunity to provide Ukraine with effective aid for its defence in close coordination with the German government. Now we are also operating directly within the country: The joint venture that we recently established with Ukrainian Defense Industry (UDI) in Kyiv has picked up pace. It will initially perform servicing and maintenance for Ukraine before we begin producing and developing military vehicles there.

Rheinmetall Group: 13% Sales Growth – Nomination Rises by 130% Consolidated sales for the first three quarters of 2023 reached €4,618 million, a 13% increase from the previous year (€4,089 million). Adjusted for currency effects, sales were up more than 14% year-on-year. International sales accounted for 75% of total sales, up from around 71% in the previous year.

The operating result for the period ended September 30, 2023, amounted to €387 million, a 17% increase from the previous year (€331 million¹). The improvement was primarily driven by the security technology market’s performance, leading to favorable margin effects and a more profitable product mix. The Group’s operating margin improved to 8.4% in Q3 2023, compared to 8.1% in the previous year.

Rheinmetall’s backlog grew by approximately 42%, reaching €36.5 billion as of September 30, 2023. This backlog includes orders on hand and expected call-offs from framework agreements with military customers and potential contracts with civilian clients.

Vehicle Systems: Fivefold Increase in Order Intake The Vehicle Systems division reported a sales increase of 27%, reaching €1,671 million in the first nine months of 2023. The division benefited from significant projects for tactical vehicles.

Rheinmetall’s nomination, comprising order intake and volume from new framework agreements with military customers, reached €4,889 million, a significant increase compared to the previous year. The division’s backlog, including orders on hand and expected call-offs from framework agreements, amounted to €15.0 billion as of September 30, 2023.

Weapon and Ammunition: Backlog More than Doubles Sales in the Weapon and Ammunition division increased by 22%, reaching €1,035 million in the first three quarters of 2023. The division’s nomination amounted to €7,026 million, well over double the previous year’s figure.

Rheinmetall’s backlog in the division more than doubled, reaching €11.3 billion as of September 30, 2023, compared to the previous year’s figure of €4.8 billion.

Electronic Solutions: 14% Sales Growth The Electronic Solutions division, focused on armed forces digitalization and infantry equipment, reported sales of €729 million, reflecting growth of around 14%.

Sensors and Actuators: Nominated Backlog Up 18% The Sensors and Actuators division reported sales of €1,057 million in the first nine months of 2023, with a nominated backlog up approximately 18% to €8.3 billion as of September 30, 2023.

Materials and Trade: Downturn in Sales Due to Cyberattacks Sales in the Materials and Trade division decreased by around 2% to €550 million in the first three quarters of 2023. The division experienced lower sales volume in the Bearings business unit and the consequences of cyberattacks in April 2023.

Outlook: Confirmed Annual Guidance Rheinmetall reaffirms its full-year guidance for 2023, with consolidated sales expected to be between €7.4 billion and €7.6 billion and an operating margin of around 12%. The sales forecast for Rheinmetall Expal Munitions is now above €190 million, with an operating margin expected to be above 25%.

Forward-looking statements and forecasts

This press release contains forward-looking statements. These statements are based on Rheinmetall AG’s current estimates and forecasts and the information available at the time. Forward-looking statements are not a guarantee of future performance or the results indicated. Rather, they are dependent on a number of factors, entail various risks and uncertainties, and are based on assumptions that may prove to be incorrect. Rheinmetall is under no obligation to update the forward-looking statements in this press release.

¹The definition of the key performance indicator operating result was adjusted retrospectively in the third quarter of 2023. From the third quarter of 2023, operating earnings will therefore be calculated as earnings before interest and taxes (EBIT) adjusted for special effects from corporate transactions, effects from revaluation as part of purchase price allocations, restructuring and other significant non-operating and non-period items. The comparative figures have been adjusted accordingly.

Media contact:

Dr. Philipp von Brandenstein
Head of Corporate Communications

SOURCE: RHEINMETALL AG