March 20 (Bloomberg) -- Rheinmetall AG fell the most in 17 months after the maker of armored military vehicles and artillery systems announced unexpected restructuring charges that will impair earnings this year.
Rheinmetall shares fell as much as 10 percent, the biggest intraday drop since October 2011, and traded down 7.8 percent at 37.75 euros as of 1:46 p.m. in Frankfurt on volume five times the three month daily average. The shares have risen 4 percent this year, valuing the Dusseldorf, Germany-based company at 1.5 billion euros ($1.9 billion).
Rheinmetall plans restructuring measures cutting 2013 profit by 60 million euros to 80 million euros as it tries to improve profitability and generate savings of 55 million euros to 70 million euros from 2015, the company said in a statement today. The restructuring plan, focused on the defense business, will also aim to boost cash flow to allow for acquisitions, Rheinmetall said.
“The additional restructuring costs are a big negative surprise,” Markus Turnwald, a Frankfurt-based analyst at DZ Bank with a buy recommendation on the shares, said in a note. The company’s 2013 outlook “disappoints substantially.”
Sales this year should reach 4.8 billion euros to 4.9 billion euros, after rising 6 percent to 4.7 billion euros last year, the company said.
“2013 will become a year of transition toward improved profitability,” Chief Executive Officer Armin Papperger said in the statement.
The company will continue to pursue more business abroad, he said. Order intake from Asia and the Middle East grew to 27 percent of group total last year, from 14 percent the year prior.
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