Defence expands into growth regions

As a leading European systems supplier for military technology, Rheinmetall Defence continues to operate in a growth market – even though national defence budgets are increasingly subject to fluctuations. The strategic priority of Rheinmetall is therefore expanding its presence in high-growth regions. The company sees particular potential in markets outside Europe such as in Asia and Australia. Rheinmetall will consolidate its local presence in international growth regions and systematically pursue the internationalization strategy that has been successfully implemented in recent years. From 2015, around 50% of sales are expected to be generated with customers outside Europe.

Defence will continue to benefit from the ongoing need for substantial technical modernization of a number of armed forces. Therefore, Rheinmetall will also expand its service and systems business. The aim is to create a broad product portfolio with a balanced mix of highly-profitable components business and long-term, large-volume project business. In order to secure profitability and competitiveness on a sustainable basis, Rheinmetall will optimize its location structures and adjust capacity to the order situation in the specific divisions. These measures will bring about further restructuring costs in the current year of between €40 million and €50 million. Non-recurring expenses of €20 million were already incurred in 2012. Rheinmetall anticipates that these measures will result in annual savings of €40 million to €50 million from 2015 onwards. The Defence sector will then return to an EBIT margin of 10%.