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Rheinmetall started 2021 with sales growth and significantly improved earnings in the first three months. In terms of sales, Rheinmetall benefited in the first quarter from the continuing economic recovery of the automotive industry and from ammunition deliveries that had originally been expected in the second quarter of 2021, but were moved forward by the customers, the company said in a press release. In addition to the sales growth, the increase in earnings resulted particularly from the cost reduction measures initiated in 2020 in response to the production declines in the automotive industry due to the pandemic.

The company is confirming its forecast from March this year for the sales and margin development in the current fiscal year, but is adjusting the figures to the changed reporting structure, in which the pistons business will be recognised as a discontinued operation from the second quarter of 2021 onward.

In the first quarter of 2021, Rheinmetall is reporting for the first time on the basis of a new group structure that the company has established as part of a strategic realignment and that discontinues the previous organisational separation into the Automotive and Defence sectors. The new structure is made up of five divisions plus the non-core business with pistons, which is not yet classified here as a discontinued operation. With this new positioning, Rheinmetall intends to focus more on forward-looking technologies and support business areas with high potential for a sustained increase in value.

Strong Start Examined

Rheinmetall increased its consolidated sales by €47M or 3.5 per cent year-on-year to €1,405M in the first quarter of 2021 (previous year: €1,358M). Adjusted for currency effects, sales growth was 5.1 per cent.

The order backlog in the Rheinmetall Group came to around €13.3Bn on 31 March 2021. After €10.3Bn at the end of the first quarter of 2020, this corresponds to an increase of 29 per cent. On top of this order backlog, there are also anticipated sales from existing framework agreements with military customers on a scale of around €3.5Bn at present.
The operating result increased from €34M to €87M in the first quarter of 2021, corresponding to growth of €53M or 157 per cent. The operating margin of 6.2 per cent also significantly exceeded the previous year’s level of 2.5 per cent.

Consolidated earnings after taxes increased to €58M in the first quarter of 2021 after €18M in the same quarter of the previous year. Earnings per share also increased accordingly, improving from €0.30 in the previous year to €1.14. Operating free cash flow in the Group improved by €129M or 69 per cent year-on-year to €-59M in the first quarter of 2021. This positive development mainly resulted from the improved earnings situation, a comparatively lower increase in working capital, and lower allocations to the Contractual Trust Agreement (CTA) in Germany.

Jack Richardson