Ammunition and Weapons Required: Good business for arms companies

Status: 05/06/2022 14:07

Against the backdrop of the war in Ukraine, the Rheinmetall armaments group expects business to increase significantly this year. At the competitor Heckler & Koch, the figures were already on the rise at the beginning of the year.

Arms group and automotive supplier Rheinmetall expects a successful fiscal year. In the first quarter, the company experienced a minimal decline in sales, but at around € 1.3 billion it was roughly the same as the same period last year. The operating result rose eight to 92 million euros. Net profit increased by three million to 61 million euros.

However, the order book was filled: in the artillery and ammunition division, for example, incoming orders quintupled to 1.1 billion euros. In this case, an order worth several hundred million euros from Hungary for ammunition played a key role.

For the full year, CEO, Armin Papperger, still expects sales growth of 15-20 percent across the group. The assumption is that Germany, as expected, will provide the investment package of 100 billion euros for the Bundeswehr announced by Chancellor Olaf Scholz (SPD).

Growth of over 20% in Heckler & Koch

Competitor Heckler & Koch already did a lot more business in the first quarter. Compared to the same period last year, sales increased by 22% to 77.5 million euros. Net income more than doubled from 3.3 to 8.1 million euros. CFO Björn Krönert cited a generally high demand for more efficient weapons and work processes as reasons.

The consequences of the war in Ukraine are not yet included in the quarterly figures, so no country ordered weapons on short notice in response to the Russian attack and received them in March. Such additional deals, which H&K does not discuss in detail, would not affect sales no earlier than fall due to production and delivery times.

Company chief Jens Bodo Koch said that demand from Russia’s neighbors has increased since the annexation of Crimea in 2014 – this already high demand is likely to increase even more. “States on NATO’s eastern flank are stockpiling or upgrading their weapons, investing in equipment to ensure defense capability.”

According to reports, the business of privately sold rifles and pistols in the United States continues to develop robustly. For the full year, CEO Koch expects the result to be the same or slightly higher than in 2021. “The start of the year included special effects, so the numbers can’t be quadrupled to get the full-year data. “Some deliveries have been postponed from late 2021 to early 2022, so a lot more cash went into cash this quarter than initially anticipated.

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