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Investing.com -- Rheinmetall (ETR:RHMG) on Thursday reported a 73% jump in first-quarter sales and a near doubling of adjusted earnings, driven by strong demand across its defense divisions, while weakness in its civil business tempered overall results.
The company saw broad growth across its defense segments. Vehicle Systems led the gains with a 93% rise in sales and a 113% increase in adjusted EBIT.
Weapon and Ammunition sales grew 66%, with adjusted EBIT up 119%, and Electronic Solutions posted a 49% increase in sales and 59% growth in adjusted EBIT.
The company also identified approximately €140 million in pull-forward revenue, boosting results across defense units.
Even without this early revenue, underlying growth across defense was still strong at around 60%.
Margins reflected the strength of the defense business, with the group’s adjusted EBIT margin rising 20 basis points to 8.7%. Weapon and Ammunition contributed the most to this margin improvement.
However, the margin in Electronic Solutions was limited by production ramp-up costs related to the F-35.
On the civil side, Power Systems saw a 7% decline in sales, driven by delays in the automotive sector. This led to a 390 basis-point drop in its margin.
Free cash flow for the quarter stood at €266 million, exceeding expectations, primarily due to higher customer advance payments, especially from the TaWAN program with Germany.
Rheinmetall reaffirmed its full-year guidance, expecting group revenue growth of 25% to 30%, with defense sales rising 35% to 40%, and civil sales remaining flat. The company also reiterated an operating margin forecast of 15.5%.
While the company’s outlook for the first half is in line with its full-year expectations, it noted that its guidance does not yet reflect broader changes in global defense spending.
Analysts are focused on the potential for further early revenue recognition in upcoming quarters, Power Systems’ recovery, and how quickly Rheinmetall can ramp up capacity to meet growing defense demand.