Discussion underway for Rheinmetall to transfer its civil power division
Dropping Power Systems: Rheinmetall Mulls Divesting Civilian Division
Let's get straight to the point: defense titan Rheinmetall may be ditching its struggling civilian unit Power Systems. In a recent exclusive for their virtual annual general meeting on May 13, CEO Armin Papperger announced, "There've been some heavy hitters interested in scooping up Power Systems and we're in talks with them." He went on to add, "Every inquiry is getting the royal treatment around here," pouring cold water on any hopes Power Systems might've had for another chance.
So, what's the lowdown on this civil-to-defense transformation? Turns out, Power Systems isn't Rheinmetall's top priority anymore. The company's been cranking out parts for the automotive sector, but it's time to move on, according to Papperger.
Rheinmetall's got its eyes on converting individual plants of the Power Systems division to defense production, securing a more stable future for its employees. At least, that's the plan for the Neuss and Berlin plants as of now.
The Neuss plant, currently churning out parts for the struggling automotive market and hosting around 1,500 employees, is already making moves to join the defense bracket. Rheinmetall's formed a joint venture with Finnish company ICEYE to manufacture satellites at the Neuss plant, effective from the second quarter of 2026.
While Rheinmetall's defense sector is enjoying a 46% surge in sales, with defense business accounting for a 73% rise, Power Systems took a hostile 6.7% sales hit, totalling €505 million. But don't be too down about it - when viewed alongside the impressive defense sector growth, Power Systems' struggles can be seen as merely a speed bump.
As geopolitical tension and increasing defense budgets continue to drive demand for defense solutions in Europe, Rheinmetall's well-positioned to maintain its growth trajectory. Sales are expected to soar by 25-30%, with a 15.5% operating result margin, setting Rheinmetall up for continued success.
As of now, there's no smoking gun evidence of imminent plans to divest Power Systems or convert more plants to defense production, but things are definitely starting to heat up in the Rheinmetall world. Keep your eyes peeled for updates!
- Rheinmetall's CEO, Armin Papperger, confirmed the company's interest in divesting the struggling civilian division, Power Systems, during the virtual annual general meeting on May 13.
- In the industry, finance, and business sectors, the proposed move by Rheinmetall to sell Power Systems could lead to a potential employment policy shift, affecting numerous employees.
- Despite the potential sale, Rheinmetall plans to convert individual plants of the Power Systems division, such as the Neuss and Berlin plants, to defense production, ensuring employment opportunities for its workers.
- The WhatsApp group for Rheinmetall's employees might be buzzing with discussions about the possible community policy changes, as the future of Power Systems and its associated workforce remains uncertain.
