German Defense Industry Sees Trump Win Adding to Order Surge
(Bloomberg) -- Germany’s defense industry sees Donald Trump’s return to the White House pushing Europe’s military spending higher and adding to an already massive surge in orders.
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Results of the US election this week coincided with third-quarter reports from Rheinmetall AG and Hensoldt AG that showed a surge in orders for armored vehicles, ammunition and air defense systems.
With Trump’s electoral win, Europe will face growing calls to build up its defenses and become less reliant on the US. During his first term as president, Trump repeatedly derided Europe’s lagging military spending and threatened to disrupt the decades old NATO alliance if members didn’t allocate more money to their armed forces.
“This is a call for action for Germany and Europe to take responsibility in defense spending,” Hensoldt Chief Executive Officer Oliver Dörre said in a Bloomberg TV interview.
Dörre added that European countries should now aim to spend 3% to 3.5% of gross domestic product on defense capabilities, exceeding the NATO benchmark of 2%.
Trump’s win will force European countries to ramp up defense spending, Rheinmetall CEO Armin Papperger said on a call with analysts Thursday. “At the end of the day, there will be big pressure and this pressure helps us to get budget,” he said.
Papperger played down concerns about the impact of the election result on Rheinmetall’s US operations. “We get feedback, for example from the Pentagon and Senators, that if we create jobs in the US, Trump will be happy,” he said.
Rheinmetall’s shares rose as much as 7.6% Thursday and are now up around 85% this year. Hensoldt’s stock has risen about a third in 2024. Both companies’ shares jumped on Wednesday following Trump’s victory.
Europe’s spending has increased substantially since Russia invaded Ukraine and the US intensified calls for Europe to be militarily self-sufficient.
Rheinmetall’s sales jumped more than a third to €2.45 billion ($2.6 billion) in the three months through September, the company said Thursday. Hensoldt, which reported a day earlier, said its orders increased 21% during the same period.
Dörre said he’s “very confident” that the growth will continue in 2025, citing orders for air defense technology, as part of the European Sky Shield Initiative, as well as its logistics and civil air surveillance products.
Rheinmetall confirmed its sales outlook for the year and extended Papperger’s contract for another five years.
(Updates with Rheinmetall CEO comments, updates shares.)
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