Massive Order Backlog Poses Risk of Wiping Out $40 Billion
Rheinmetall, Germany's impressive defense powerhouse, is ready to take off, thanks to the escalating geopolitical turmoil and a shift in United States government policies. The company's CEO, Armin Papperger, dreams of Rheinmetall becoming a global titan in the defense industry. Here's the scoop on their growth path and milestones.
The invasion of Russia in Ukraine and a new wind in the White House are causing Western nations to beef up their defense expenditure. Clearly, Rheinmetall is reaping the benefits of this militaristic surge. With its eyes on the stars and mind on the ground, the German company projects record-breaking revenue—40 billion euros by 2030! In 2024, Rheinmetall made just under 10 billion euros. Papperger forecasts that a tidal wave of orders is heading their way, heralding unprecedented expansion of production facilities.
In an endeavor to push the Düsseldorf DAX company to new heights, Rheinmetall aims to manufacture satellites in Germany as well. As Papperger announced during the unveiling of their first-quarter figures, Rheinmetall is on a trajectory of rapid growth like never experienced in the company. In the first quarter of 2025, the company reported a colossal 108 million euros profit after tax, a doubling from the previous year.
Rheinmetall has already confirmed a 46% increase in revenue, bringing it to 2.3 billion euros for the end of April. The boost in revenue for the military sector was colossal, surging approximately 73%. Furthermore, the order intake, particularly from the German military, skyrocketed more than 180% to 11 billion euros.
Rheinmetall stands unwavering on its annual targets: a potential 25-30% increase in revenue and a whopping 35-40% hike in the military sector. The company aims to up its operating margin to a cool 15.5% (up from 15.2% in the previous year). As of now, they haven't factored in any upcoming defense spending promises. However, if those become concrete, the targets will be revised accordingly, shared Papperger.
Rutte: Defense Spending on the Rise
Say goodbye to the status quo, as the Western defense industry is now facing a monumental shift in response to Russia's attack on Ukraine. Amid this crisis, summed up nicely by Papperger as "rapidly increasing demand for defense systems and weapons," additional momentum is generated by Donald Trump's push for heightened defense spending among NATO members and a growing disconnect with liberal democracies in Europe.
Rheinmetall: Embracing Change, Building the Future
Papperger has high hopes for a substantial increase in NATO defense spending. During his conversation with NATO Secretary-General Mark Rutte, Rutte proposed that NATO countries should hike their defense spending to 3.5% of their respective GDP, up from the current target of 2%. Papperger foresees an order potential of 300 billion euros from the planned defense spending increases in Germany and the EU by 2030.
To adapt and thrive in this ever-changing landscape, Rheinmetall is masterfully redirecting some of its civilian automotive production to its flourishing military manufacturing division. For instance, Rheinmetall has founded a satellite production joint venture with Finnish ICEYE, with the Neuss plant—home to around 1500 employees—potentially manufacturing these spacecraft as early as the second quarter of 2026. In the future, Rheinmetaller may even acquire plants from automakers like Volkswagen if conditions prove favorable. Innovation through plant conversions, acquisitions, or collaborations will pave Rheinmetall's path to continued growth. The ICEYE joint venture is poised to generate a billion euros in annual revenue.
Rheinmetall's upcoming joint venture with colossal US company Lockheed Martin for missile production holds even greater financial potential, with Papperger anticipating annual sales of up to five billion euros. Some of the missiles that Rheinmetall and Lockheed Martin plan to manufacture in Germany together include the ATACMS or Hellfire missiles.
Amid all this optimism, the only downer for Rheinmetall is its Power Systems division, which caters to the struggling auto industry. This division saw a decline in sales, dipping by nearly 7% to 505 million euros during the first quarter, with operating profit slumping by 70.4% to a mere 9 million euros. However, if they find the right buyer, Rheinmetall might divest this division, according to Papperger.
(Citations removed for brevity, can be provided upon request.)
- Rheinmetall
- Russian invasion of Ukraine
- Arms
- Arms trade
- NATO
- Mark Rutte
- Ministry of Defense
- German defense policy
- Satellite
- Missile
- Rheinmetall's ambitious expansion plans include venturing into satellite manufacturing in Germany, a move that could potentially generate a billion euros in annual revenue.
- In its strategic shift, Rheinmetall is collaborating with Lockheed Martin for the production of missiles, anticipating annual sales of up to five billion euros from this joint venture.
- Despite the financial success in its military sector, Rheinmetall faces a challenge in its Power Systems division, which saw a decline in sales due to the struggling auto industry, with a dip of nearly 7% to 505 million euros during the first quarter.
