By Matthias Inverardi
DUESSELDORF (Reuters) -Rheinmetall floated the idea of a European arms consortium to better compete with U.S. rivals as the German defence group set out its global ambitions in a booming industry.
The company, a major beneficiary of rising defence spending since Russia's full-scale invasion of Ukraine in 2022, is forecasting record revenue of more than 10 billion euros ($11 billion) this year and its order book to reach 60 billion euros.
"We want to become a worldwide player and we can currently do that on our own thanks to our good cash flow," CEO Armin Papperger told a gathering of the WPV business reporters association in Duesseldorf late on Thursday.
He said Rheinmetall would look to push on with its own acquisitions in the United States, but also suggested creating a "large consortium" of European defence companies.
"I believe that it would make sense to found a European system house that has a turnover of around 30, 35 billion (euros) so that we can compete with the Americans, that is definitely possible," Papperger said.
He said other major players in Europe included Leonardo, which has a significantly lower market capitalisation than Rheinmetall, and KNDS from France, but gave no indication of any talks to create a possible consortium.
Papperger added there were currently no discussions between Rheinmetall and Germany's Thyssenkrupp (ETR:TKAG), which has been scouting for investment into its navy division.
TURNING POINT
Pushing into the United States, Papperger believes Rheinmetall has a good chance to win a contract to develop a successor to the Bradley fighting vehicle in a project that could be worth more than $45 billion.
But he suggested the bulk of orders to equip Germany's own military with new fighting vehicles would go to Finland, where the Patria defence company is leading the development of a 6x6 armoured vehicle that will also be used by Finland, Sweden and Latvia.
German Chancellor Olaf Scholz's government launched a 100 billion euro special defence fund in 2022 in what it described as a "Zeitenwende" or turning point to increase its military spending after Russia's attack on Ukraine.
However, Papperger said an additional 30 billion euros a year was needed.
"If these 30 billion euros are not invested ... then the (Zeitenwende) will fail,” he said.
Papperger said Rheinmetall was working more profitably and predicted its market value could rise to about 50 billion euros from 22 billion now, though he didn't give a timeframe.
Rheinmetall shares were up 2.4% at 1055 GMT.
($1 = 0.9313 euros)