Defense sector profits drop
February 19, 2015
Rheinmetall said Thursday that Germany's withdrawal of an export license for a fully-equipped military training center in Russia was partly to blame for its operating earnings falling 25 percent in 2014.
That contract was valued at 100 million euros ($114 million), according to the AFP news agency.
Rheinmetall's earnings before interest and tax were 160 million euros, down from 213 million euros a year ago, but the company was able to beat reduced profit forecasts thanks to robust growth in its automotive division.
The defense technology and automotive parts specialist also underlined in a statement that overall defense sales rose last year to 2.24 billion euros from 2.15 billion euros in 2013, "which - in a market environment that remains difficult - equates to growth of approximately 4 percent year on year."
Rheinmetall also boasted that its order backlog had risen by 466 million euros to 6.52 billion euros at the end of 2014.
The company was also hit by German government provisions for potential warranty claims from a naval gun project in the MENA region.
BAE forecasts slight income rise
Meanwhile, Britain's biggest defense company, BAE Systems, forecast a "marginal" rise in earnings thanks to a projected increase in US military spending.
Its earnings have been impacted by shrinking defense budgets in recent years in the United States and Britain, which together account for almost two-thirds of its sales.
The company said that in 2015 earnings per share were expected to be "marginally higher," a forecast which included some reliance on anticipated new orders for naval equipment and aircraft, such as the Eurofighter Typhoon jet.
bk/cjc (Reuters, AFP)