Düsseldorf (Reuters) - The armaments group Rheinmetall is in the starting blocks for orders from the German armed forces.

CEO Armin Papperger called on politicians to speed up the awarding of contracts. "The entire German industry is ready. The resources are there, the people are there, we also have the know-how. What we need now is to join forces with politicians so that we have the ability to plan," said the Group CEO at a Handelsblatt conference on Tuesday. Rheinmetall had invested 700 million euros in capacity expansion last year and hired 2,000 people. But so far there have been no orders.

Papperger emphasized that there is a large deficit in ammunition stocks. "We are in a position to produce more artillery ammunition than the Americans," he emphasized. "But I don't have a single order for it yet." He does not have two billion euros to pre-finance. It's about huge quantities, not only for Ukraine, but also for the Bundeswehr. "We have no ammunition here, and the situation is the same in Europe." Papperger criticized the fact that it would take 30 years to increase the stock of ammunition to meet requirements if only around one billion euros were earmarked annually for ammunition in the defence budget.

The turnaround with the special fund of 100 billion euros for the Bundeswehr was overdue, said Papperger. However, the announced five and ten-year plans are still not in place. "In 2023, we really have to initiate the turnaround now," demanded the Rheinmetall CEO. However, this is not just about the special fund, but also about achieving the two percent target, i.e. two percent of the gross domestic product for the defense budget. This would have to be increased by 20 to 25 billion euros per year. "This is a huge responsibility for politicians, but I believe they have to take this step."

In June, the Bundestag passed a 100 billion euro special fund for the Bundeswehr in response to the Russian war of aggression against Ukraine.

TURNOVER ADDITIONALLY DRIVEN BY EXPAL TAKEOVER

Driven by the general increase in defense budgets in many countries, Rheinmetall is currently on a record course. Added to this is the recent takeover of Spanish ammunition manufacturer Expal. With the additional proceeds of 700 to 800 million euros, Group sales will reach eleven to twelve billion euros in 2025, said a Group spokesperson. Papperger had previously targeted ten to eleven billion euros. Meanwhile, the traditional Düsseldorf-based company, which is also active in the mobility sector in addition to armaments, is aiming for a turnover of 6.5 billion euros in 2022.

With regard to the Leopard battle tanks, Papperger told the magazine "Stern" that the company is aiming for a pre-tax return of at least ten percent. The delivery of Leopard 2 tanks to the Ukraine is currently being discussed in the EU. Rheinmetall has access to 139 tanks of the series in the short and medium term, said a company spokesperson. Some of these would have to be overhauled. However, the first could be delivered as early as spring.

Rheinmetall shares have rapidly increased in value since the beginning of the war in Ukraine. While the MDax shares were still trading at just under 89 euros in January 2022, they are currently trading at 223.50 euros, just below the record high of 227.90 euros in the summer of last year.

(Report by Anneli Palmen, edited by Ralf Banser. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).