German arms manufacturer Rheinmetall (RNMBY) on Wednesday said it expects 2025 sales to rise by 25% to 30% this year as it continues to benefit from Europe’s headlong rush to rearm itself amid pressure from Russia, arguments with President Donald Trump and fears about the apparent fracturing of the Nato alliance. Europe’s biggest ammunition maker reported a 36% rise in consolidated sales in 2024, with defense sales up 50% on the year. Looking ahead it sees defense sales up 35-40% this year.
Booming sales saw its operating profit hit a record high €1.48 billion ($1.61 billion) in 2024, up 61% on the year. The order backlog now stands at €55bn with the company anticipating “major high-volume orders from military customers” in the coming years.
Rheinmetall Leads European Defense Higher
Rheinmetall’s Frankfurt-listed stock (DE:RHM) rallied sharply to take its year-to-date gains to more than 100%, as investors have piled into the European rearmament trade, boosting a number of names in the sector such as the UK’s BAE Systems (GB:BA) and Rolls-Royce (GB:RR), Sweden’s Saab (SAABF), Italy’s Leonardo (DRS) and France’s Thales (FR:HO).
“An era of rearmament has begun in Europe that will demand a lot from all of us. However, it also brings us at Rheinmetall growth prospects for the coming years that we have never experienced before,” said CEO Armin Papperger.
It comes after Europe’s leaders outlined plans to mobilize upwards of €800 billion to boost defense spending over the coming years as it contends with Russian aggression and concerns that the U.S. will take a step back from its commitment to defending Nato allies.
ReArm Europe
The so-called “ReArm Europe plan” is made up of a two-pronged attack. Firstly, it will loosen EU fiscal rules to allow Member States to increase significantly their defense expenditures without breaching limits on how much they can spend. For example, if EU nations would increase their defense spending by 1.5% of GDP on average this could create fiscal space of close to €650 billion over a period of four years, said European Commision president Ursula von der Leyen The second part of the plan is a new set of €150 billion of loans to Member States for defense investment.
Germany’s new leaders are also looking at creating a special fund of €500bn for infrastructure and defense, which will require constitutional changes to amend its debt brake rule, which constrains fiscal spending.
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