Defense: Rheinmetall lowers sales forecast after frigate debacle
After the cancellation of the F-126 frigate program, the Düsseldorf-based armaments company has revised its annual target downwards. Nevertheless, the company remains on a record course.
Düsseldorf - Germany's leading arms manufacturer Rheinmetall is lowering its sales forecast for the year due to the cancellation of the billion-euro Fregatten project F-126. Instead of anticipating up to 14.5 billion euros in revenue, Rheinmetall now expects 13.7 to 14.2 billion euros. Despite this setback, the company remains committed to its profit target.
For the current fiscal year, Rheinmetal forecasts an operating margin of 19 percent. The company had already released preliminary figures for the second quarter in the previous week, reporting strong increases in revenue and profit, as well as a negative cash flow, meaning outflows of funds. The free cash flow, i.e., the funds generated after accounting for expenses and investments, was minus 1.7 billion euros at the end of the first half of the year.
Rheinmetall attributes this negative result to delayed payments from key clients, with the strong dependence on a single German customer playing a decisive role. The inventory buildup further exacerbates the cash flow issue.
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