Defense budgets turbocharge the accounts of German Rheinmetall
The German arms and ammunition group closed its 2023 financial statements with record profits and orders. And for 2024 Rheinmetall expects sales and profitability to increase as the war in Ukraine increases defense budgets in NATO countries
Record orders and profits for German defense giant Rheinmetall.
The Dusseldorf arms and ammunition group closed 2023 with 7.17 billion in revenues (+12%) and an operating profit of 918 million, the highest ever (+19.8%). Over the course of the year – we read in the note – the group purchased numerous large orders from the German armed forces and from the armed forces of other countries in the ammunition, combat vehicles and air defense sectors.
For 2024 the German company estimates reaching 10 billion euros in revenues with a margin of 14-15% (12.8% in 2023).
“A new decade of security policy has begun,” said CEO Armin Papperger, adding that “it is very important for us to do everything we can to help Ukraine in its fight for survival.” As the Financial Times recently recalled, the German conglomerate's shares quadrupled over the period, catapulting the company into the German blue-chip Dax index.
All the details on Rheinmetall's 2023 results.
REVENUES
In 2023, consolidated sales increased 12% to just under 7.2 billion, with strong growth recorded in the Vehicle Systems and Weapons & Ammunition divisions. However, turnover failed to reach the target set by the company of between 7.4 and 7.6 billion euros. According to what was communicated by the same group, "since adjustments were made to the delivery dates in the individual projects, sales were partly postponed to 2024".
THE FOREIGN SHARE OF TURNOVER IS GROWING…
On the other hand, the foreign share of turnover recorded an increase to 76% from 71% in 2022. The 2023 financial year was "again characterized by significant increases in sales in the sectors of vehicle systems and weapons and ammunition". These sectors benefited "above all" from the growing demand due to the war waged by Russia against Ukraine, explains the company note.
…AND THE MILITARY BUSINESS
The group said its civilian businesses, which include car parts and airport baggage handlers, saw only “slight” revenue growth last year, adding that sales grew “mainly in business with military customers ”, reports the Financial Times , adding that in addition to ammunition – for which last year Rheinmetall signed multi-year contracts with the Bundeswehr worth 4.6 billion euros and with Ukraine for 1.7 billion euros – the company also sold combat vehicles, military trucks and drones.
THE ORDER PORTFOLIO
Driven by the doubling of orders in the weapons and ammunition division (to 8.2 billion) and the quadrupling of orders in the vehicle division (7.1 billion), as of 31 December 2023 the order book grew by 44% to 38.3 billion euro, new high after the 26.6 billion euro of the previous year. Last February, Rheinmetall announced an investment of 300 million euros in a new artillery shell factory in Germany .
USEFUL RECORDS
The consolidated operating result (Ebit before special effects) grew by 19%, reaching the record value of 918 million euros. This means that the 2022 figure of 769 million euros was widely exceeded, "the highest result in the company's recent history". Profit after tax rose to 586 million euros, exceeding the previous year's figure of 540 million euros by 9%.
MARGINS INCREASE
Operating margin reached 12.8%, an increase of 0.8 points year-on-year.
IMPROVES OPERATING CASH FLOW
Meanwhile, the operating cash flow generated by the group in 2023 reached 356 million euros, or 5% of sales. Therefore, the figure falls within the strategic objective of between 4 and 6% of turnover. After €151 million in 2022, operating free cash flow improved significantly to €356 million last year.
THE DIVIDEND
At the general meeting on May 14, Rheinmetall will propose to shareholders the distribution of a dividend of 5.70 euros on the 2023 results, up from the 4.30 distributed a year ago.
RHEINMETALL GUIDANCE
Finally, for 2024 Rheinmetall aims to exceed the threshold of 10 billion euros in sales for the first time in its history, according to a company forecast which also envisages an operating profit margin of 14-15%, compared to 12.8 % in 2023. The German defense conglomerate expects “continued strong growth in sales and earnings, given the security policy environment.”
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/i-budget-per-la-difesa-mettono-il-turbo-ai-conti-di-rheinmetall/ on Thu, 14 Mar 2024 11:49:20 +0000.