LAND 400 contender poised for profit growth

Prime defence provider posts growth and earnings increase
Rheinmetall Defence Australia's Boxer APC

Rheinmetall Group, parent company to LAND 400 contender Rheinmetall Defence Australia, has announced it is expecting organic sales growth and earnings to increase for fiscal 2017 in both of its corporate sectors, automotive and defence.

Rheinmetall's defence sector grew by double figures in 2016, as in the previous year. The sector generated revenue of  €2.95 billion ($4.17 billion) in fiscal 2016, equating to growth of 14 per cent (2015: €2.59 billion).

The order intake in Rheinmetall's defence sector continues to rise and exceeded the €3 billion mark for the first time with a volume of €3.05 billion. Compared with the previous year’s figure of €2.69 billion, this represents an increase of €357 million or 13 per cent. Order intake was heavily influenced by the acquisition of several major projects.

Armin Papperger, CEO of Rheinmetall AG, said, "We remain on course for success. With our presence in the major markets and growth regions of the world, we are in an ideal position with both sectors.

"We will continue to grow and increase earnings. In defence, major programs from our order backlog, which will boost our growth significantly from 2018 in particular, are about to get started. In addition, we are benefitting from the general trend toward greater security precautions, both within NATO and in other customer nations."

The Defence sector saw robust growth in its earnings before interest and taxes (EBIT). In the past fiscal year, it generated EBIT of €147 million, equating to an increase of €57 million or 63 per cent on the previous year (EBIT 2015: €90 million).

This significant improvement in results was due in particular to the positive performance of the Weapon and Ammunition and Vehicle Systems divisions.

Notable factors included high-margin ammunition sales as well as increased capacity utilisation in the Vehicle Systems business, primarily as a result of the start of series production in a high-volume truck order for Australia.

Rheinmetall also anticipates that earnings will continue to improve in the defence sector in 2017 and expects an operating EBIT margin of between 5.0 per cent and 5.5 per cent.

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