Rheinmetall AG CEO Armin Papperger stated that any peace agreement in Ukraine will not change the picture of future demand for weapons, as Europe is entering a prolonged period of rearmament after decades of reducing its defense capabilities. This was reported by Bloomberg, writes UNN.
Details
"We see absolutely no impact," Papperger said in an interview with Bloomberg TV at the German defense contractor's headquarters in Düsseldorf.
Rheinmetall has contracts with NATO partners and is negotiating to conclude them, Papperger said on Friday. Business in Ukraine could amount to about 1 billion euros ($1.17 billion), which is still small compared to the entire NATO, which is growing faster, he added.
The German manufacturer of 155mm artillery ammunition, armored vehicles, and other military equipment is expected to benefit from increased European and German defense spending by the end of the decade. Investors have rewarded the stock with huge returns, with Rheinmetall's value more than doubling annually in three of the last four years.
Shares have been under pressure in recent weeks as talks continue between representatives of the US, Ukraine, Russia, and the European Union to end the multi-year conflict, although no breakthrough has occurred.
Papperger said Europe needs to build a defense capability strong enough to deter potential adversaries. For too long, countries like Germany have neglected their defense spending, and US President Donald Trump was right to push Europe to invest more, he said.
"If NATO and European countries work together, we are very strong," Papperger said. "What we should do is prepare so that no one attacks us."
On Friday, Rheinmetall shares fell by as much as 1.8%. Although the company's shares have lost about 11% over the month, they still have the best performance this year on the German DAX index.
The EU's SAFE mechanism, which helps states pay for defense procurement, is ideal, he said, adding that he supports ASAP 2, a program to provide direct assistance to defense companies. Papperger also said that the seizure of Russian assets in Europe could become an "accelerator" for the continent's defense industry.
In November, the defense company announced that it plans to achieve 50 billion euros in sales by 2030 with an operating margin of over 20%, which will be facilitated by the sale of less profitable civilian industrial businesses.
Papperger called the stability of supply chains the biggest challenge for his company in the future. Rheinmetall has enough rare earth materials to ensure 12 months of production, and enough cotton linters — a critical precursor for explosives — for four years.
Rheinmetall is expanding production across the continent, especially in Eastern Europe. The company plans to start construction of an ammunition and gunpowder plant in Ukraine early next year after delays and already operates a technical maintenance center for equipment in the country. The German defense giant is also entering new areas, such as satellites and warships, having acquired the NVL shipyard in September.