Rheinmetall announces organisational restructure

Germany’s Rheinmetall announced an organisational restructuring as part of the company’s strategic realignment on 5 February, in a move that will see the firm reduce its exposure to the automotive market and target greater defence sales.

Under the new ONE Rheinmetall strategy, the company will merge the existing Automotive and Defence units and replace them with five business divisions: Weapon & Ammunition, Electronic Solutions, Vehicle Systems, Sensors & Actuators, and Materials & Trade.

The company’s Pistons business unit will be run as a non-core business, and ultimately divested. The intermediate holding company Rheinmetall AG will be dissolved and integrated into the Group structure, that will be run directly by the company’s executive board.

Rheinmetall also revealed some ambitious targets for 2025, including a 10% operating margin on profits across all its business units. The company is also pursuing sales growth from an estimated EUR5.8 billion (USD6.9 billion) in 2020 to EUR8.5 billion by 2025, with a free operating cash flow of 3-5% of sales anticipated. In an investor presentation on 4 February, the company revealed that revenue splits by 2025 are anticipated to have grown from 63% for defence to 70%.

As part of this growth, the company is pinning its plans on substantial growth in the military vehicles market, with the Puma and Lynx platforms offering a potential EUR15-40 billion in orders over the next decade, and military trucks also offering a potential EUR7-8 billion. The company’s success in Hungary with the Lynx is being set as a benchmark for other potential markets, such as the Australia, the Czech Republic, Slovakia, Slovenia, and the United States.