(Reuters) -Rheinmetall reported a bigger-than-expected decline first-quarter operating earnings on Thursday, which the German defence contractor attributed to negative earnings contributions from its Chinese joint venture and inflation-compensation payments to staff.
The Duesseldorf-based firm achieved operating earnings of 73 million euros ($80.9 million) in the three months through March, below analysts' average expectations for 81.4 million, according to a poll by Vara research.
The firm's stock, that recently joined Germany's blue chip index fell 1.7% in early Frankfurt trade following the results.
Rheinmetall's consolidated sales, however, grew by about 7.6% to reach 1.36 billion euros. Its order backlog stood at 28 billion euros in the first quarter, rising by 8% year-on-year.
Armament companies such as Rheinmetall have seen their sales rise following Russia's invasion of Ukraine, as European countries increase spending on military equipment, and due to deliveries of weapons and battle tanks to Ukraine.
The German arms maker confirmed its 2023 guidance, aiming at sales within a range of 7.4 to 7.6 billion euros, as well as an operating margin of around 12%.
($1 = 0.9023 euros)