By Cecilia Butini
Shares in German defense company Rheinmetall AG fell in opening trade on Friday after the company reported a guidance cut in its defense business, despite posting higher earnings and sales for the first half of the year.
At 0800 GMT, Rheinmetall traded 2.3% lower at EUR184.75.
The company posted operating profit of 206 million euros ($211.1 million), up from EUR191 million the year prior and sales of EUR2.67 billion from EUR2.58 billion the previous year.
It said that it expects sales to come in at the lower end of a previously-given forecast that projected growth of between 15% and 20%, reflecting challenges in global automotive production. Defense order intake is expected to come in 20% lower in 2022, and defense revenue is foreseen as about 4% lower in 2023. This translates into a 3% cut to group profit in 2023, Berenberg analysts said in a note.
“While the lowered defense guidance is due to timing delays rather than to a reduced order opportunity pipeline, we expect the shares to react negatively,” the analysts said, noting that the defense outlook has been the driver of Rheinmetall’s share price year-to- date.
Write to Cecilia Butini at [email protected]
Credit: www.marketwatch.com /