NAfter much hesitation, Germany is now supplying armored personnel carriers to the Ukraine, but it is still unclear how many there could be. Initially, 40 tanks of the Marder type are to be delivered, a proven system that has been around since the 1970s. The two Panzergrenadier companies of the Bundeswehr, which have been part of the NATO rapid reaction force that Germany is now leading since the beginning of the year, are also equipped with 28 Marder infantry fighting vehicles.
The armaments group Rheinmetall had already announced in the summer that it still had around 100 Marder tanks in stock, for which an export application was also made. In October, the M-Dax group then announced that it would deliver 40 of them to Greece via a ring exchange, which in turn would pass on military equipment to Ukraine.
60 pieces are still available from Rheinmetall
When asked, Rheinmetall did not comment on what the federal government’s initiative could mean for deliveries. From the industry, however, a figure of around 60 Marder tanks to be delivered can also be heard, and that it is now a matter of clarifying whether they come from the Bundeswehr or from the industry, or whether it will be a mixed calculation. Theoretically, it would also be possible that some of the 40 Marder tanks already ordered would be passed on directly by Greece, but that would possibly make the process even more complicated if a third party was involved.
In any case, the Marder delivery is a pleasant order for Rheinmetall, as it is about a kind of secondary use. With tanks in particular, it often happens that decommissioned military equipment goes back to the manufacturer to be made fit again for other export markets. Under certain circumstances, the tanks are also cannibalized, for example military support vehicles are also built from the chassis of old Leopard tanks. Nevertheless, sales should not be huge, in 2020 Rheinmetall received an order from the German armed forces for upgrading the drive trains of 71 Marder tanks in the amount of 110 million euros. A presentation to investors shows that the company expects sales of 450 million euros for all ring exchanges in the course of the Ukraine war. In addition to the Marder tanks for Greece, there were also 15 Leopard 2 main battle tanks for Slovakia and numerous military vice included.
Increased armor spending
In view of the rearmament in many NATO countries, Rheinmetall expects significantly higher sales and better earnings by 2025. In three years, the M-Dax company wants to achieve sales of between 10 and 11 billion euros. The operating profit margin should then be around 13 percent. At the Capital Markets Day in spring 2021, the board of directors headed by Armin Papperger still expected sales of around 8.5 billion euros and a margin of 10 percent or more – but that was before the outbreak of war in Ukraine.
Since then, many countries have increased or announced increases in their military budgets. Rheinmetall is hoping for a large number of orders from its home market of Germany thanks to the 100 billion euro special fund for the Bundeswehr. As recently as May 2022, at the Annual General Meeting, Papperger spoke of a sales potential of 40 billion euros – and that Rheinmetall wanted to double its sales with the Bundeswehr. However, the political realities of contracting and general budgeting have yielded few large contracts since then. Nevertheless, the company still expects possible orders of up to 30 billion euros.
According to preliminary figures published on Friday, the group achieved sales of 6.4 billion euros for the 2022 financial year. With organic sales growth of around 10 percent, this is below the expectations that the Management Board had put at up to 15 percent. But this is mainly due to the fact that some orders have been postponed to this year. In addition, revenues in the civil sector in particular have remained below expectations given the slower recovery in car production.
However, Rheinmetall expects a record year for the operating result with growth of more than a fifth, which is why the assumption for the operating margin has been increased slightly to at least 11.5 percent. Rheinmetall’s share price was up almost 2.5 percent on Friday. A year ago, the paper was still worth 86 euros; it is currently around 207 euros.
