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Corporate Reports

Arms manufacturer Rheinmetall logs lower profit but higher orders

Germany’s biggest arms maker, Rheinmetall, has defied weak defense spending in Europe in 2013 to surprise investors with higher-than-expected earnings. A massive order backlog for 2014 boosted company shares further.

Last year, Rheinmetall's performance had been stable, with consolidated sales of 4.6 billion euros ($6.3 billion). Before special items, Rheinmettal also boasted an operating profit of 213 million euros, the German defense and automotive industry conglomerate announced as it released figures for its 2013 fiscal year on Wednesday.

Rheinmetall's 2013 operating result was about 55 million euros lower than in 2012, but higher than forecast for 2013, the Düsseldorf-based company announced. The decrease was the result of restructuring measures to the tune of 86 million euros, as well as a further 15 million euros in expenses for strategic portfolio measures, Rheinmetall aannounced.

Annual sales also fell in 2013, however, with the 2 percent decline mainly being a result of unfavorable exchange rates for the euro.

Rheinmetall's defense business added sales worth 2.1 billion euros to the result, down by 8 percent compared with 2012. The company's automotive division - which manufactures, among other products, oil and coolant pumps as well as exhaust recirculation systems - garnered sales to the tune of 2.45 billion euros, up 4 percent.

The company did not provide an earnings guidance for the 2014 fiscal year, but announced that orders at the end of 2013 had reached 6.05 billion euros for the new year. The figure was 21 percent, or about 1 billion euros, higher than last year's orders. The company announced that order books were full as it had successfully internationalized its arms business in the face of reduced defense spending in Europe.

As a result of Rheinmetall's latest figures, shares in the company picked up about 5 percent in trading at the Frankfurt Stock Exchange, sending shares to a two-and-a-half-year high on Wednesday.

uhe/mkg (Reuters, dpa)

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