Rheinmetall AG: Roadshow Feedback: Visibility Improves Across Key Growth Programmes

Research evidence excerpt

Rheinmetall AG: Roadshow Feedback: Visibility Improves Across Key Growth Programmes

ble equipment levels across armed forces. The third phase

stretches to 2040+, with the objective of creating sufficient excess capacity and

force structure to meet long-term NATO readiness requirements. Additionally,

significant existing European vehicle programmes are ramping-up production and

should reach sustainable level by 2027. Key programmes include the German Heavy

Weapon Carrier produced in Australia, the Germany Puma upgrade, the UK

Challenger 3 and the Boxer MIV and the Hungarian's Lynx. Lastly, the recently signed

contract with Romania is expected to ramp-up from 2028, proving additional

visibility on sales growth. On expected orders, Rheinmetall expects further delivery

of its Lynx vehicle to Italy, as well as Panther vehicles, with a contract expected in

the coming months. The company is also in discussion with Portugal to equip its

armed forces. Finally, management highlighted the attractiveness of the aftermarket

opportunity embedded within the installed vehicle base. According to Rheinmetall,

every €1 of OE sales can generate ~€2 of aftermarket revenues over the lifetime of

the platform (up to 40 years). Given that most military vehicles require significant

upgrades and modernization every 5 years, management sees lifecycle revenues

becoming an increasingly important contributor to the business, with aftermarket

activities potentially accounting for ~20-30% of group revenues by the mid-2030s

with accretive margin.

Weapons & Ammunition Demand Is Driven by Continuous Orders, With

Automation Progress Reinforcing the LT 30% Margin Story. Management

continues to have a reassuring message around the investor debate that a potential