European defence stocks gain as Rheinmetall signs new contract for 155mm ammunition with Ukraine 📈

The Defense Procurement Agency of the Ministry of Defense of Ukraine has signed a new contract with German arms company Rheinmetall (RHM.DE) for the supply of 155mm cal. artillery ammunition. The company's shares are rising almost 2% today, and deliveries are expected to begin in the first half of 2025; the purchase is fully financed by Ukraine's budget.

• The value and quantity of ammunition in the contract were not disclosed. The recently signed contract between Rheinmetall and the Ukrainian Armed Forces covered tens of thousands of different propelling modules for 155mm caliber projectiles; deliveries are scheduled for January 2025.
• Rheinmetall has pledged to establish an ammunition plant in Ukraine; operations are expected to begin in the second half of 2026, i.e. after about two years from the start of its construction. Four factories are also to be established in Ukraine for the production of Fuchs armored vehicles.
• The German company conveyed today that it will supply Ukraine with an additional 20 Marder 1A3 infantry fighting vehicles (IFVs); they are scheduled for delivery in the first half of 2025. The estimated value of each is appx. of 15 million euros; the German government is financing this order. They are equipped with an additional laser rangefinder for precise targeting.

The gains today are not only for Rheinmetall, but for the broad European defense sector. Italian Leonardo (LEO.IT) and British BAE Systems (BAE.UK) are trading higher. Donald Trump has announced that he will expect min. 5% financing of the arms sector in GDP among NATO member countries. As a result, the market rightly expects that contracts for many companies in this segment could prove much more lucrative than in previous years. Rheinmetall shares gained nearly 4% today, but nearly half of today's gains were erased in the second half of the session.

Source: xStation5