German defense giant Rheinmetall anticipates a substantial increase in sales for 2025 as European nations ramp up military expenditures in response to shifting U.S. security commitments. 

“An era of rearmament has begun in Europe, one that will require much from all of us,” said Rheinmetall CEO Armin Papperger in a statement accompanying the release of the company’s earnings report on Wednesday.

The company reported a 36% surge in consolidated sales for 2024, with defense-related revenues climbing 50%. 

Rheinmetall’s sales surge last year drove its operating profit to a record 1.48 billion euros ($1.61 billion), marking a 61% increase. The operating margin for the year reached 15.2%, up from 12.8% in 2023.

Rheinmetall expects defense sales to rise by an additional 35-40% in 2025 amid expectations of “high-volume orders from military customers.” 

European leaders are actively pushing for enhanced regional defense capabilities amid uncertainty over U.S. support. Germany’s likely next chancellor, Friedrich Merz of the Christian Democratic Union, along with prospective coalition partners, has proposed exempting defense spending from constitutional budgetary restrictions. If enacted, this measure could unlock tens of billions of euros in additional military funding annually.

The European Commission has also proposed mobilizing up to €800 billion ($863 billion) for defense efforts, including a plan to borrow up to €150 billion to lend to national governments for military upgrades.

Rheinmetall has become a key defense partner for Ukraine in its battle against Russian aggression, providing essential military equipment and logistical support. The company also supplies major armed forces, including those of Germany, the United States, the United Kingdom, and Australia.

With a sales growth expected in the defense business, Papperger said Rheinmetall “is on its way from being a European systems supplier to a global champion.”