Rheinmetall expects defense orders to rise in final quarter of year

[German main battle tank Leopard 2A6 drives on a tactic demonstration]
huettenhoelscher/iStock Editorial via Getty Images

Rheinmetall (OTCPK:RNMBF [https://seekingalpha.com/symbol/RNMBF]) (OTCPK:RNMBY [https://seekingalpha.com/symbol/RNMBY]) said Thursday it remains on course to meet its full-year sales goals, despite order delays that weighed on third-quarter results. Chief Executive Armin Papperger expressed confidence that large defense contracts will be finalized early next year, following budget and administrative holdups in Berlin.

“The foundations have now been laid for a strong fourth quarter,” Papperger told analysts, noting that several major German army procurements are now moving forward after the late passage of the federal budget and the formation of a new government.

The German defense contractor, one of the biggest beneficiaries of Europe’s post-Ukraine-war military buildup, reported third-quarter revenue of €2.78 billion ($3.24 billion), just below analyst forecasts of €2.82 billion, but said nine-month sales were up 20% year over year. Rheinmetall expects full-year revenue growth of 25% to 30%.

While new order intake dipped slightly due to government delays, the company’s order backlog expanded to €64 billion as of September and is projected to reach €80 billion by year-end.

Papperger said Rheinmetall (OTCPK:RNMBF [https://seekingalpha.com/symbol/RNMBF]) (OTCPK:RNMBY [https://seekingalpha.com/symbol/RNMBY]) continues to see demand momentum across Europe as NATO countries ramp up defense spending. The company is investing in new factories and production partnerships, including ongoing collaboration with Lockheed Martin (LMT [https://seekingalpha.com/symbol/LMT]), and is in talks with Honeywell (HON [https://seekingalpha.com/symbol/HON]) and Raytheon (RTX [https://seekingalpha.com/symbol/RTX]) for additional joint ventures.

Rheinmetall (OTCPK:RNMBF [https://seekingalpha.com/symbol/RNMBF]) (OTCPK:RNMBY [https://seekingalpha.com/symbol/RNMBY]) aims to strengthen its position as a global defense leader, expanding its role in producing ammunition, armored vehicles and air-defense systems to meet rising security needs across Europe.

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