Rheinmetall Earnings: Robust Start to 2024 With Guidance Confirmed

Rheinmetall started 2024 on a strong note with a significant backlog surpassing EUR 40 billion. The firm reported double-digit sales growth and substantial margin expansion. Its sales surged 16% year over year with weapons and ammunition up by 70% year on year, followed by a 26% increase in electronic solutions. The operating result rose 60% year on year, expanding the margin to 8.5% from 6.1%, primarily due to high-margin weapons and ammunition, especially from Expal, which we estimate to have a stand-alone margin between 28% and 30%. Weapons and ammunition show strong seasonality with over 40% of sales expected in the fourth quarter. Electronic solutions sales grew 26% with a margin increase from 5.4% to 6%, driven by substantial deliveries in Germany, particularly for the Skyranger air defense system.