Rheinmetall Foreign Orders Rise as Jobs Cut in TurnaroundRobert Wall
Rheinmetall AG, the German armored vehicle maker, said a plan to cut about 1,000 jobs and focus on winning overseas business is showing success as the proportion of orders outside Europe rose in the first half.
Defense share of orders booked outside Europe rose to 66 percent in the first six months from 46 percent a year earlier, the Dusseldorf-based company said in a statement today. Orders included a 475 million-euro ($636 million) deal to provide Leopard 2 tanks and self-propelled howitzers to Qatar, and a military truck sale to New Zealand worth 70 million euros.
Rheinmetall is looking to cut about 500 to 550 employees from its defense business and 470 in its automotive unit in a plan to make annual savings of 60 million euros to 75 million euros from 2015. The company said on July 29 that full-year earnings would miss forecasts as the defense unit would fall short of sales and profit targets, causing the company’s shares to drop 11 percent in a day.
“2013 is a year of transition for us, in which we will set the course for profitable growth in the future,” Chief Executive Officer Armin Papperger said in the statement. “We are making good progress in the implementation of our ‘Rheinmetall 2015’ strategy program.”
Rheinmetall shares rose 1.8 percent to 36.55 euros at 9:22 a.m. in Frankfurt trading.
The company has started reducing headcount, with 94 fewer employees at the end of June than a year earlier.
The turnaround plan has “internationalization” as a priority along with cost control and product innovation. Rheinmetall booked a 1.1 billion-euro order from Australia for military vehicles in July. Deliveries of the 2,500 medium and heavy logistics vehicles are to start from 2016, it said.
Sales declined 8 percent to 2.1 billion euros for the first six months. The company had a loss before interest and tax of 18 million euros compared with an operating profit a year earlier.
Revenue at the automotive division fell about 1 percent to 1.2 billion euros.