OREANDA-NEWS. The Rheinmetall Group, based in Dusseldorf, closed the first half of the year with considerable sales growth and a strong increase in operating earnings. This upward trend was driven by both of the technology group’s sectors.

Based on the good business performance in the first half of 2017, Rheinmetall increased its forecast for the Group’s sales and operating margin.

Rheinmetall is now aiming for organic sales growth of around 6% in the fiscal year, based on annual sales of €5.6 billion in 2016. Growth of between 4% and 5% had been previously anticipated.

Armin Papperger, CEO of Rheinmetall AG: «We closed the first half of the year with success. As a result, we can now raise our targets somewhat and revise our forecast upwards. The large orders placed by the German armed forces and international customers show that we are benefiting from the global rise in demand for defence and security products with our Defence sector. Automotive is in the best position to continue achieving profitable growth with future-oriented technologies, optimized cost structures and a global network. In addition, it is also clear that we are highlighting our role as a leading supplier for the automotive sector with electromobility products.»

In the first half of 2017, Rheinmetall achieved a year-on-year increase in consolidated sales by €209 million or 8.0% to €2,808 million. The proportion of business activities abroad remained at a high level of 78%.

The Group’s operating earnings posted above-average growth by €31 million or 30% to €134 million. Automotive contributed €17 million to this improvement. In addition, €12 million of this increase in earnings relates to Defence, while another €2 million is attributable to Other/Consolidation.

The order backlog in the Rheinmetall Group remained at a record level. It amounted to €7.1 billion as at June 30, 2017, after €7.3 billion at the end of the reporting period in the previous year.

Automotive: Rise in sales, margin increases to 8.8%

Rheinmetall Automotive generated sales of €1,465 million in the first half of 2017, an increase of 8.6% from the previous year’s figure (€1,349 million). Operating earnings rose from €112 million to €129 million. As a result, the operating margin further improved to 8.8% after 8.3% in the same period of the previous year.

The Mechatronic division raised its sales by 10% to €832 million in the first half of the year. This increase led to a 30% rise in operating earnings to €90 million.

In the first half of 2017, the Hardparts division generated €500 million in sales and thus a year-on-year upturn of 5.5%. The large-bore piston business continued its recovery. The small-bore piston business in Europe saw a slight increase, while sales in Brazil benefited from currency effects. The division’s operating earnings amounted to €33 million in the first six months of the year (+14%).

Sales in the Aftermarket division grew by 12% to €176 million. This is mainly attributable to the products sold by the Group’s brands, Kolbenschmidt and Pierburg, in the sales regions of Western and Eastern Europe. The division’s operating earnings rose by €3 million to €16 million (+23%).

There were also expenses of -€10 million for additions to provisions for environmental risks and R&D projects in the area of electromobility.

Rheinmetall Automotive has already acquired orders in the area of electromobility that are worth almost €500 million altogether. Casings for electric motors, components for battery boxes, and a wide range of pumps and valves have already been ordered by various car manufacturers in Germany and China. These will be used for both electric vehicles and hybrid vehicles.