Rheinmetall's CEO aims for a doubling of earnings by the year 2027.
Revised Article:
Armin Papperger, Rheinmetall's CEO, views the Ukraine conflict and escalating geopolitical tensions as a continuous boon for revenue and profit growth in the defense giant. Achieving a revenue target of 20 billion euros by 2027 is feasible, says Papperger, and if hit, doubling profits by that time could also be a reality. "If the multiples don't make sense, then it's not," he states in an interview with the Börsen-Zeitung. Russia is on Rheinmetall's radar, and Papperger openly considers it a potential market.
However, progress on the German-French defense project, Main Ground Combat System, hasn't been as swift as expected. "To put it bluntly, we're moving at a snail's pace. Not much has happened in the last five years," admits Papperger, acknowledging that Rheinmetall's battle tank is a stopgap solution for now.
Papperger remains hopeful about the 500 billion euro defense fund that's under discussion in Europe. "I'm all for such a fund - especially if it brings more unity among European states. I think that could lead to substantial opportunities for Rheinmetall," he says, focusing on the US market and its fierce competition. He's confident Rheinmetall can hold its own with its superior technology.
Trump-inspired trade policies in multiple industries don't faze Papperger in terms of his own business. "You gotta invest in the US. You can't serve the US from Europe," he declares. A future acquisition in the US, following the purchase of H.I, is something he doesn't rule out. "We've got more up our sleeve. But we only discuss it when we're ready."
The joint venture with Italian defense conglomerate, Leonardo, is, in Papperger's eyes, a "sizeable nucleus" for consolidation in land systems, i.e., tanks. Over the next decade, he anticipates the joint venture to generate 50 billion euros in orders. "That's no small change," he comments.
Papperger sees the potential for significant expansion of production in Rheinmetall's own factories, although not for tanks, but for ammunition. With the ongoing conventional war in Ukraine and rising security concerns in neighboring states like Lithuania, he anticipates increased demand. "We've grown from 70,000 rounds to 700,000 and then to 1.4 million," says Papperger.
Rheinmetall's growth strategy encompasses expanding artillery shell production, diversifying defense solutions, and pursuing green energy initiatives. The ongoing war in Ukraine has solidified Rheinmetall's role as a cornerstone of NATO's artillery supply chain, with a focus on meeting Europe's long-term military needs. The company is also expanding maintenance operations in Northern Australia and endeavoring to replace fossil fuels in defense applications with green hydrogen, in line with broader European decarbonization goals.
- Armin Papperger, CEO of Rheinmetall, views the increased geopolitical tensions, including the Ukraine conflict, as a continuous boon for revenue growth in the defense industry.
- In an interview with the Börsen-Zeitung, Papperger states that achieving a revenue target of 20 billion euros by 2027 is feasible, and if hit, doubling profits by that time could also be a reality.
- Papperger considers Russia as a potential market and remains hopeful about a 500 billion euro defense fund under discussion in Europe that he believes could lead to substantial opportunities for Rheinmetall.
- Confident about his own business, Papperger declares that investing in the US market is necessary, and a future acquisition in the US is not ruled out.
- Papperger anticipates the joint venture with Italian defense conglomerate, Leonardo, to generate 50 billion euros in orders over the next decade in the land systems sector, particularly in tanks.
