DÜSSELDORF (dpa-AFX) - The defense contractor and automotive supplier Rheinmetall continued to grow in the first quarter. Thanks to the armaments boom, the DAX-listed company can hardly save itself from orders. The ammunition business in particular continues to grow strongly. The Group confirmed its forecast for the year as a whole. However, Rheinmetall was not quite able to meet analysts' high expectations at the start of the year. As a result, the shares fell significantly on Tuesday.

In early trading, the shares lost around 5.8 percent to 505.00 euros. This put a damper on the recent record-breaking run on the stock market. At the beginning of April, Rheinmetall shares had risen to 571.80 euros and were thus worth more than ever before. Despite the recent slump, the stock market value has risen by around 80 percent this year and has even increased more than fivefold since Russia's attack on Ukraine in February 2022.

Berenberg analyst George McWhirter described the quarterly results as mixed. While the order intake was convincing, the business figures were below market expectations. However, delayed deliveries are likely to be made up for. The first quarter is Rheinmetall's weakest quarter in seasonal terms anyway. However, there are signs of accelerated growth in the current quarter, McWhirter wrote.

Rheinmetall's sales rose by 16 percent to 1.58 billion euros from January to the end of March compared to the same period last year, as the defense contractor announced in Düsseldorf on Tuesday. Rheinmetall generated more than three quarters of its revenue abroad. New orders, on the other hand, came mainly from Germany, the Middle East and Australia. Incoming orders, including newly concluded framework agreements, climbed by a good quarter to 3.93 billion euros.

The positive development continues to be largely driven by business with the armed forces in Germany and partner countries as well as activities in support of Ukraine. "We also expect to receive orders from further important projects from the German armed forces and NATO partners in the future," said Rheinmetall CEO Armin Papperger according to the press release. The company is now sitting on an order backlog of more than 40 billion euros.

The operating result soared by 60 percent to 134 million euros at the start of the year. However, as with turnover, analysts had hoped for even more. The improvement in the operating result is primarily due to the high contribution from Expal. Rheinmetall took over the Spanish ammunition manufacturer on August 1 last year. The operating margin at the start of the year was 8.5 percent.

Rheinmetall sees particularly high growth potential in the ammunition business and is significantly expanding production. In mid-February, the armaments group began expanding the plant in Unterlüß, Lower Saxony. Further plants are to be built in Ukraine and Lithuania. The integration of Expal is also proceeding successfully and is enabling significantly higher capacity. The order backlog in the ammunition business doubled in the first quarter.

The operating free cash flow deteriorated significantly by 82 million euros to minus 187 million euros. This was due to the increase in inventories and investments. The bottom line for the shareholders was a result of 48 million euros, a good 14 percent less than in the previous year.

Rheinmetall intends to continue to increase sales to around ten billion euros in the current year - this would correspond to an increase of around 40 percent compared to 2023. The operating margin is expected to be between 14 and 15 percent. By 2026, sales should then rise to between 13 and 14 billion euros, and the armaments group aims to drive the margin above 15 percent by then./niw/lew/jha/