Rheinmetall, Europe's largest munitions manufacturer based in Düsseldorf, Germany, has reported significant growth in its defence sector, aligning with a broader trend of increased military spending across Europe.

The company attributes much of its success to geopolitical shifts, particularly following the onset of the conflict in Ukraine and changes in US foreign policy under President Donald Trump.

Since the beginning of the war in Ukraine, Rheinmetall's defence business has expanded by 30%, contributing to overall sales of €9.8 billion ($16.9 billion) in the past year.

Projections indicate that sales could increase by as much as 40% in 2025, driven by commitments from European leaders to bolster military budgets in response to reduced US support for European defence.

Rheinmetall's stock has seen a dramatic rise, soaring over 1,000% since Russia's invasion of Ukraine in 2022. The company plans to distribute a dividend of €8.10 per share to shareholders for the year 2024, an increase from €5.70 the previous year.

Approximately half of its shareholders are located in the United States or the United Kingdom.

As a key supplier to Ukraine, Rheinmetall is expanding production capabilities by establishing new facilities not only in Ukraine but also in several Eastern European nations, including Lithuania, Hungary, and Romania.

The company produces a variety of military equipment, such as the 155 mm munitions standard to NATO forces, armoured vehicles, drones, and the 120 mm gun used in the Leopard 2 tank.

Despite the focus on European markets, the United States remains a vital market for Rheinmetall.

The company’s subsidiary, American Rheinmetall Defense, operates in Reston, Virginia, and has eight manufacturing locations nationwide.

The independence of its US operations mitigates the impact of tariffs that might affect trade more broadly amid fluctuating political relations.

Rheinmetall's CEO, Armin Papperger, has communicated with officials from the Pentagon and Ukraine, emphasizing the importance of maintaining trans-Atlantic relationships despite recent political tensions.

He acknowledged the uncertainty surrounding potential ceasefire negotiations in Ukraine, suggesting that the company's outlook may be adjusted based on the outcomes of these discussions.

The German government is in the process of deliberating a proposed defence-spending bill, the approval of which would be critical for further investments by Rheinmetall into national defence capabilities.

The company recently completed the construction of a new factory in Unterluss in only 13 months, marking a significant reduction from the typical wait time for such projects in Germany.

In exploring options for further expansion, Rheinmetall may consider acquiring facilities from the automotive sector that are at risk of closure.

For instance, there has been speculation about the potential takeover of a Volkswagen plant near Osnabrück, which narrowly avoided shutdown last year.

However, Papperger indicated that any plans for acquisition would depend on an increase in defence contracts from the German government.

The current growth trajectory of Rheinmetall coincides with a notable shift in public sentiment in Germany regarding military expenditure.

Following decades of pacifism, there is a growing recognition among the German populace of the need to invest in national defence to safeguard the post-World War II democratic framework that underpins their prosperity.

Rheinmetall's involvement in popular culture, such as sponsoring the Borussia Dortmund soccer team, has drawn mixed reactions, but Papperger noted that public attitudes are evolving.

Amidst this rapid transformation, he also has faced personal risks, including the discovery of an assassination plot attributed to Russian operatives targeting him, resulting in increased security measures to protect his well-being.