Rheinmetall expects German ammunition order worth billions soon -CEO

By Sabine Siebold

BRUSSELS (Reuters) -Rheinmetall expects to strike an ammunition deal worth billions of euros with the German government in the coming weeks and will deliver the first 35mm rounds for Gepard anti-aircraft guns to Ukraine in July, CEO Armin Papperger said.

"Germany is about to seal a large framework contract with us," Papperger told Reuters in an interview on Thursday evening in Brussels, where he took part in a first-ever joint session of NATO defence ministers and some 20 defence industry bosses.

Shares were up 3.6% at 0800GMT on Friday following Papperger's comments.

Papperger said the deal would be worth several billion euros, and he hoped that Rheinmetall, one of the biggest producers of artillery and tank shells in the world, could announce it in the next six weeks.

For the entire year, Papperger said he expects defence orders worth a "double-digit billion euros" sum.

"It will certainly be our best year ever as regards order intake," he said, adding he anticipated a whole variety of deals - on vehicles, ammunition, electronics and radar systems.

The talks in Brussels were meant to focus on ways to ramp up supplies of artillery shells, air defences and precision-guided, deep-strike ammunition, missiles with a range of hundreds of kilometres such as the British Storm Shadow.

Demand for 155mm artillery rounds has soared in the wake of the invasion of Ukraine in February 2022. But allies' supplies for their own defence have been run down as they have rushed shells to Kyiv, which fires thousands of rounds per day.

Papperger did not detail any results of the Brussels discussions, but said NATO would issue very precise figures in the coming months on how much more industrial capacity will be needed "so that we are safe in Europe and NATO over the next 10 years".

He said Rheinmetall had received orders worth several billions of euros for ammunition alone since the start of the war in Ukraine, and expected additional deals for several more billion euros.

"We are producing artillery (shells) almost at full capacity because the demand is there, the international demand is very high," he said, confirming past remarks that Rheinmetall will boost production to 600,000 rounds in 2024 from 450,000.

"We expect to work at full capacity next year."

Asked about NATO's push for a shift towards common standards in the production of artillery and other shells, Papperger said he was open for such a move should countries agree on standards.

Common standards would ease the flow of munitions supplies and drive down prices, experts say.

In July, Rheinmetall will deliver the first 35mm rounds produced at a new production line in Germany to Ukraine for use in the country's Gepard anti-aircraft guns, Papperger said.

"The government has ordered 300,000 rounds. ... We will certainly deliver some 40,000 to 60,000 rounds this year," he added.

Rheinmetall set up the production line after Switzerland refused to allow the export of 35mm Gepard ammunition to Kyiv.

(Reporting by Sabine Siebold; Editing by Leslie Adler and Conor Humphries)