[1/2]An employee works on a Lynx fighting vehicle at a production line at the plant of German company Rheinmetall, which produces weapons and ammunition for tanks and artillery, during a media tour in Unterluess, Germany, June 6, 2023. REUTERS/Fabian Bimmer/File Photo Acquire Licensing Rights
BERLIN, Oct 25 (Reuters) – German defence contractor Rheinmetall (RHMG.DE) said on Wednesday its third-quarter profitability jumped on strong demand for weapons and ammunitions, with operating profit expected to top consensus estimates by 15%.
The company, which will report full results on Nov. 9, did not specify which orders helped it beat expectations, but Russia’s invasion of Ukraine has led to a dramatic increase in demand for munitions across the industry.
Rheinmetall said it expected third-quarter profit of 191 million euros ($201.89 million), above a consensus estimate of 165.4 million euros, and an operating profit margin of 10.9%, compared with a consensus of 9.4%, citing economies of scale from increased volumes.
It affirmed a full-year forecast of sales of 7.4 billion to 7.6 billion euros, with an operating profit margin of around 12%.
For the first time, the results included recently acquired Spanish munitions maker Expal.
“The significantly higher than expected operating profit is mainly due to strong market dynamics in the security technology business – especially in the division Weapon and Ammunition,” the company said in a statement.
Defence contractors have reaped windfall profits as European Union countries scramble to supply Ukraine for its defence against Russia, and replenish stocks of munitions allowed to diminish since the Cold War.
Several of Rheinmetall’s flagship systems have been deployed in Ukraine, while neighbouring countries have backfilled weapons systems they have donated to their eastern neighbour.
($1=0.9461 euros)
Reporting by Thomas Escritt; Editing by Richard Chang
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