Discussion underway for potential sale of Rheinmetall's civil power division
Rheinmetall Shifts Gears: Selling Civilian Power Systems Unit for Defense Focus
In a significant move, Rheinmetall, the booming defenseBusiness powerhouse, is contemplating selling its civilian unit Power Systems. According to Armin Papperger, Rheinmetall's CEO, talks with potential buyers are underway, and all inquiries are being given serious consideration[1][3].
The Power Systems division, previously part of Rheinmetall's core business, has struggled, with sales plummeting by 6.7% to €505 million, primarily due to challenges in the automotive market[1][4]. Meanwhile, Rheinmetall's defense sector has witnessed a substantial 73% surge in sales in Q1 2025, propelling a total group sales increase of 46% year-on-year to €2.3 billion. Defense sales alone reached €1.8 billion, powered by beaming demand for weapons and defense systems across Europe in the face of geopolitical turmoil, like the Ukraine war[1][2][4].
Anticipating growth in the range of 25%-30% and an operating margin improvement to approximately 15.5%, Rheinmetall remains bullish about its 2025 sales forecast, factoring in acquisitions and a rosy market outlook[1][2][3]. To cater to this expanding defense market, Rheinmetall is strategically shifting select plants from civilian production to the defense sector, paving the way for plants in Neuss and Berlin[4].
In Neuss, the former center of civilian production with approximately 1,500 employees, Rheinmetall is already making headway. The group recently established a joint venture with the Finnish company ICEYE for satellite production. From Q2 2026, production could commence in the Neuss plant, as announced by Rheinmetall on Thursday[5].
Sources:1. ntv.de2. rts3. The Edge Markets4. Defense News5. Rheinmetall Group press release
- Rheinmetall is considering selling its struggling Power Systems division, a move aimed at focusing more on its booming defense business.
- In light of the defense sector's substantial growth, Rheinmetall plans to shift selected plants from civilian production to defense, including plants in Neuss and Berlin.
- The Neuss plant, once a hub for civilian production with around 1,500 employees, is already witnessing change as Rheinmetall has established a joint venture with ICEYE for satellite production.
- In the defense industry, Rheinmetall expects an operating margin improvement and growth of 25%-30%, factors that contribute to their optimistic 2025 sales forecast.
- The shift in Rheinmetall's strategy aligns with the new community policy and employment policy, aiming to strengthen the company's position in the face of robust demand for defense systems and technology in the finance, business, and security sectors.
