Army Technology

Daily Newsletter

10 August 2023

Daily Newsletter

Rheinmetall Group achieves first-half growth exceeding €30bn in orders

Strong sales growth and expanding backlog propel Rheinmetall's ascending trajectory.

The German technology group Rheinmetall AG demonstrates robust growth in the first half of 2023, with a 12% surge in its security business sales.

Bolstered by an order backlog that has surpassed the €30bn ($33bn) mark and consolidated operating earnings of €191m reflecting an earnings margin of 6.7%, the company maintains a steadfast trajectory toward its projected 2023 goals, even as it faces a dynamic market landscape and geopolitical challenges.

Solid sales growth and earnings margin

Rheinmetall reports a strong growth trajectory in its consolidated sales, boasting a year-on-year increase of 7% to an impressive €2.9bn.

Armin Papperger, CEO of Rheinmetall AG, expresses optimism regarding the company's performance and growth prospects: "We are still on track to achieve our ambitious targets for sustainable, profitable growth in 2023.

Implementing these decisions is the next step, and this is reflected in the first major orders we have received. We recently signed contracts with an order volume of over €7 billion in a single week – a new record for us."

Papperger also underscores Rheinmetall's commitment to global security: "In a changing world, we remain committed to meeting our responsibility, not least with a view to the war in Ukraine.

We are grateful to be able to provide the country with effective aid for its defence in the form of our products – from air defence, main battle tanks, and infantry fighting vehicles to military trucks, sensors, and mobile field hospitals."

Segment performance highlights

Rheinmetall's Vehicle Systems division achieved a fivefold increase in order intake, primarily driven by significant orders for tactical and infantry fighting vehicles. This success contributes to the division's growth and improved operating margin.

The Weapon and Ammunition division demonstrates its resilience with a rise in sales and an increase in backlog. The division focuses on ammunition orders for various military vehicles and systems and ship protection systems.

With a 10% growth in sales, the Electronic Solutions division solidifies its role in armed forces digitalisation, air defence, and simulation. Major orders for infantry fighting vehicles further showed the division's contribution to Rheinmetall's success.

Despite challenges, the Sensors and Actuators division maintains its relevance, with notable sales growth in industrial applications and electric mobility. The division had an increase in nominated backlog, reflecting strong customer demand.

Despite encountering challenges such as cyberattacks, the Materials and Trade division remains focused on its global aftermarket business. The division has been putting efforts towards mitigating disruptions' impact on raw materials and primary products.

Firm guidance and future prospects

Rheinmetall's first-half performance aligns with its projected annual guidance. The company expects sales growth to range between €7.4bn and €7.6bn, demonstrating its confidence in its operational capabilities.

Additionally, the recent acquisition of the Spanish munitions manufacturer Expal Systems further strengthens Rheinmetall's position and will contribute to the company's growth prospects.

Rheinmetall AG's remarkable growth in the first half of 2023 shows its focus on commitment to customer needs and a strong order backlog. The company remains on an upward trajectory towards achieving its ambitious targets for sustainable and profitable growth.

Combat UGV is expected to remain the dominant market segment followed by the logistics UGV segment

As the global appetite for unmanned systems continues to grow, the market for unmanned ground vehicles (UGV) has expanded significantly since 2015. While insufficient technological maturity had previously stymied the wider development and procurement of UGVs, continued investment within the defense industry has produced notable advancements in autonomous navigation, modularity, and endurance over the last several years. Modern UGVs are now suitable for a wider variety of defense and security applications beyond the traditionally limited scope of explosive ordnance disposal (EOD), with nations including China, France, India, Russia, the UK, and the US developing logistics, ISR, and combat-capable UGV platforms. Despite the significant untapped potential of compact and miniaturized UGV platforms, defense procurement officials worldwide are increasingly expressing interest in the development of larger, heavier UGV platforms designed to support and eventually replace certain ground forces and platforms on future battlefields. Per GlobalData analysis, over the next decade, the combat UGV segment is expected to remain the dominant market segment, primarily driven by procurement programs in countries such as the US, the UAE, Russia, Turkey, Italy, and Ukraine.