Rheinmetall Defence saw three percent growth in 2017, an increase of €90 million ($109.7 million) in sales compared to the previous year’s figures, the company said in preliminary earnings figures released on Thursday.
The defense division reported €2.963 billion in sales for the fiscal year, compared to €2.946 billion in 2016. Operating margins rose to 5.7 percent from 5 percent.
Defense sector earnings increased at a faster rate than sales growth, the company noted. Earnings before interest and taxes before special items improved 18 percent to €174 million from €27 million in 2016. Accounting for non-recurring expenses, EBIT was €172 million.
The order backlog was down slightly at €6.416 billion compared to €6.656 billion the previous year.
Rheinmetall will publish its final 2017 figures and outlook for 2018 on March 15.
Project delays
Sales and order intake for the fourth quarter were influenced by pending German government export decisions, which have not yet been made due to the delay in forming a government, Rheinmetall said.
On February 6, Rheinmetall and Lockheed Martin subsidiary Sikorsky signed a strategic teaming agreement to offer the CH-53K King Stallion helicopter in the German Air Force heavy lift helicopter competition, or Schwerer Transporthubschrauber. The German Bundeswehr plans to buy 45-60 new heavy-lift helicopters to replace its current CH-53G fleet beginning in 2023, a contract reportedly worth €4 billion.
In the earnings report, the company said other individual projects had been delayed until 2018.
In October, Rheinmetall CEO Armin Papperger said that ongoing tensions between Germany and Turkey had stalled a number of the company’s projects, including a plan to modernize Turkey’s Leopard tanks and provide ammunition for fighter jets.
Germany has approved 31 arms deals with Turkey in the last two weeks, The Region reported on Wednesday. The German magazine Stern reported that Rheinmetall and Turkish firm BMC finalized an agreement on January 9 to modernize the Leopard tanks. On January 25, Foreign Minister Sigmar Gabriel said Germany would postpone the upgrades after Leopard tanks were spotted crossing the border into Syria as part of the Turkey-led assault on Efrin.