Rheinmetall shares jump as core profit doubles

Rheinmetall shares rose on Wednesday after the German armsmaker reported record second-quarter core profit that roughly doubled from a year earlier.

The company said core profit reached 562 million euros, or $639.5 million, beating analyst expectations by about 20%. Revenue rose almost 70% to 3.3 billion euros.

Rheinmetall said growth was broad-based and that all segments contributed to the year-on-year improvement. Its shares were up almost 9% at 1310 GMT before paring gains.

The tank gun and ammunition maker has benefited from increased European defence spending. Its shares have risen 13-fold since before Russia's full-scale invasion of Ukraine in February 2022.

Germany's defence budget is planned to rise 33% by next year to almost 110 billion euros as Berlin rearms to face the threat from Moscow and compensate for wavering American commitment to European security.

Rheinmetall shares have nevertheless fallen about 40% since a peak last October. The decline was partly linked to investor concerns that the defence spending boom might prove less durable than expected and that the company might not be best placed to produce newer equipment including drones and missiles.

Rheinmetall said it would present full results on August 6.