By Matthias Inverardi and Miranda Murray
BERLIN (Reuters) -Germany’s Rheinmetall, one of the main gainers from a boost in European defence spending sparked by the Ukraine war, said on Thursday it was on course for record sales growth and its U.S. prospects were unchanged by the election result.
European defence stocks rose on Wednesday after Donald Trump won the U.S. presidential election, which analysts say could prompt higher spending on weapons in Europe.
“We are experiencing growth like we have never seen before,” said CEO Armin Papperger, adding that Rheinmetall, the biggest ammunition producer in Europe, is on its way to becoming a “global champion in the defence industry,” citing projects in the U.S., Britain, Italy and Ukraine.
JP Morgan analysts warned, however, that while Rheinmetall will be a long-term winner, it faces “more near-term uncertainty than other European defence stocks due to a potential Russia-Ukraine ceasefire under Trump” and German political uncertainty.
Rheinmetall said in a presentation on Thursday that its growth prospects in the U.S. are intact after the election.
Papperger signed a deal last month with Italy’s Leonardo in a key step for consolidation in the sector and has repeatedly made clear his high hopes for the U.S. market.
Rheinmetall extended Papperger’s contract for another five years on Wednesday and created a new chief operation officer role as part of a reshuffle to respond better to demand.
HIGH DEMAND
Incoming orders rose 48% to over 21 billion euros ($22.61 billion) from January to September due to contracts from the German army and those related to Ukraine aid, and as a result, Rheinmetall’s backlog hit a new record at 52 billion.
Rheinmetall said it expects to reach the threshold of about 10 billion euros in annual sales for the first time in 2024 after sales rose 36% from January to September to 6.3 billion euros, with German customers making up almost a third of sales.
With the order backlog expected to grow to around 60 billion euros by the end of the year, the group is preparing to double annual sales to around 20 billion euros in just a few years.
Rheinmetall narrowed its full-year operating margin guidance and is now aiming for the upper end of the guidance for 14-15% this year, after hitting 11.3% in the first nine months.
($1 = 0.9286 euros)
(Reporting by Miranda Murray and Matthias Inverardi; Editing by Rachel More, Tomasz Janowski and Alexander Smith)
