‘Era of rearmament’: German arms maker looks to cash in on Trump turmoil

German defence contractor Rheinmetall, Europe’s largest producer of munitions, says it’s positioned to profit from the region’s willingness to increase military spending as President Donald Trump shifts the United States away from its support of Europe.

Defying the malaise that has plagued the German economy for the past two years, Rheinmetall has reported record growth since the start of the war in Ukraine, building new factories in just months, leading digitisation efforts and creating thousands of jobs.

“An era of rearmament has begun,” Armin Papperger, Rheinmetall’s chief executive, said on Wednesday during an earnings call with analysts. “It brings us growth prospects for the coming years that we have never experienced before.”

The Rheinmetall Boxer tank: The German arms contractor’s defence business grew 30 per cent last year.Credit: Rheinmetall

The company, which is based in Düsseldorf, Germany, reported that its defence business grew 30 per cent last year, contributing to sales that reached 9.8 billion euros ($16.9 billion).

Rheinmetall is projecting that sales in 2025 will grow by as much as 40 per cent, driven by a pledge from European leaders to increase military spending, after the Trump administration made clear that defending Europe was no longer a priority.

Rheinmetall’s stock has soared more than 1000 per cent since Russia invaded Ukraine in 2022. Shareholders, roughly half of whom are based in the United States or Britain, will receive a dividend of 8.10 euros a share for 2024, compared with 5.70 euros the year before, the company said.

‘An era of rearmament has begun. It brings us growth prospects for the coming years that we have never experienced before.’

Rheinmetall chief executive Armin Papperger

The company is a key supplier of arms to Ukraine and is building plants there and in countries such as Lithuania, Hungary and Romania to satisfy rising demand for its arms and ammunition. In addition to the standard 155mm munitions used by NATO members, Rheinmetall makes battlefield equipment, from armoured trucks and drones to the Leopard 2 tank’s 120mm gun.

Even with the upswing in military spending in Europe, the United States remains a key market, Papperger said, calling it a “pillar of stability” for the defence industry. Rheinmetall’s US subsidiary, American Rheinmetall Defense, is in Reston, Virginia, and operates eight factories across the United States.

The independence of its US operations means the company is not directly affected by the tariffs. Papperger said co-operation with US partners had remained friendly and collegial despite the political upheaval of the past weeks.

Papperger – who has spoken recently with leaders in the Pentagon and President Volodymyr Zelensky of Ukraine – stressed the importance of trans-Atlantic ties. “I caution against breaking completely with the United States, even if the tone has become more rough lately,” he said.

The potential ceasefire in Ukraine presents uncertainty for Rheinmetall, and Papperger said the company’s outlook would be adjusted after it became clear what the outcome of the talks might be.

Rheinmetall is also waiting to find out whether a defence-spending bill proposed by the new German government will win approval in parliament next week.

The company built a factory in Unterluss, Germany, in just 13 months – record time in a country where it was typical for firms to wait up to two years for permits to put up a new sign beside a public road – and an increase in military spending could spur further expansion at home.

The record expansion has come at a personal price for Rheinmetall chief executive Armin Papperger. Last year, the US uncovered a Russian assassination plot targeting him.Credit: Bloomberg

One option would be to take over factories that are no longer needed by carmakers and their suppliers. Such a move would also benefit local communities dependent on industry to provide jobs for hundreds of engineers and technicians with skills that could transfer easily to defence.

For example, one option that has been floated is for Rheinmetall to take over a plant operated by Volkswagen near Osnabrück, which only barely survived the threat of closure last year. But until the German government orders more armaments, Papperger said he would not move ahead with such plans.

The company’s growth has coincided with a shift away from decades of deeply rooted pacifism in Germany, as more citizens realise that preservation of Europe’s post-World War II democratic order, which has served as a bedrock of its prosperity, means paying to defend it.

Last year, the company became a sponsor of one of the country’s top soccer clubs, Borussia Dortmund, provoking a backlash from within the team’s fan block. But Papperger said on Wednesday that fans greeted him warmly at a match this week.

“It’s not like five years ago,” he said. “Germans have understood that it was a mistake not to spend on defence.”

The record expansion has come at a personal price for Papperger. Last year, the United States uncovered a Russian assassination plot targeting him. Since then, he has been assigned a security detail equivalent to that of the German chancellor.

This article originally appeared in The New York Times.

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