By Miranda Murray and Matthias Inverardi
BERLIN (Reuters) -German arms manufacturer Rheinmetall is on track to achieve its full-year sales target, it said on Thursday, despite delayed orders denting third-quarter results.
One of the main beneficiaries of a boost in European defence spending, Rheinmetall reported a 20% rise in consolidated sales for the first nine months and expects a strong fourth quarter to help it to achieve the 25-30% growth targeted for 2025.
“The foundations have now been laid for a strong fourth quarter, especially as the German Armed Forces’ planned major programmes are now secured in the federal government’s financial planning,” said Chief Executive Armin Papperger.
Rheinmetall expects continued demand from European governments motivated by Russia’s war in Ukraine to bulk up their defences and has been working with capitals across the continent to build factories and boost production.
BUOYED BY ORDER BACKLOG
Order intake declined slightly owing to delayed order placements from the German government because of elections and a late budget. However, the backlog grew to about 64 billion euros by the end of September and is set to hit 80 billion euros by the end of the year.
Papperger told Reuters this week that the company is in the final stages of negotiating a multibillion-euro supply contract in the ammunition sector alone.
The company’s shares rose 1.5% after the results.
Analysts at Jefferies said the results were a relief because they did not lead to a feared change in guidance.
Quarterly sales were 2.78 billion euros ($3.24 billion), slightly below expectations of 2.82 billion euros in a poll of analysts provided by the company.
Operating profit for the nine months to September 30 was up 18% at 835 million euros, though expenses for the start of production of components for F-35 fighter jets slightly squeezed the operating profit margin to 11.1% from 11.3%.
Rheinmetall is targeting a margin of about 15.5% for 2025.
The civil automotive business, which has been put up for sale as the company focuses on defence, was the only part of the group to report a sales and profit dip.
($1 = 0.8575 euros)
(Reporting by Matthias Inverardi and Miranda MurrayEditing by Friederike Heine and David Goodman)
