WELT AM SONNTAG: The public is puzzled about Russian war capabilities. What do you know about Russia’s true weapon potential?

ARMIN PAPPERGER: Moscow’s capacities are much greater than those of the West. They can produce four to five million artillery rounds per year. For them, it’s about quantity, not technology. This makes continuous barrages, like in the Second World War, possible. Russian President Vladimir Putin has been increasing production capacities for years in preparation for the war. On the other hand, we don’t need as much capacity because we use better technology. In Europe, by the end of 2026, we will have a capacity of around 2.2 million rounds, with approximately 1.1 million of that at Rheinmetall.

WAMS: The Bundeswehr is one of your major clients, and they are urgently looking for soldiers. What is your stance on conscription?

PAPPERGER: I have always supported it. Even today, I stand by conscription or something similar to serve the country. Service, even with weapons, wouldn’t hurt young people.

WAMS: The turnaround includes a re-evaluation of the defense industry in public debate. This must please you.

PAPPERGER: In the past, many wanted to put us in the “dirty corner,” but I never saw us there. I always knew what we were doing was right. I’m pleased with the image change for the industry, especially for my employees.

WAMS: Assassination plans against you allegedly by Russian agents came to light in the summer. Since then, you’ve been accompanied by bodyguards, enjoying the same level of protection as the Chancellor. That must be an uncomfortable life.

PAPPERGER: By now, it feels completely normal to me. I always have a few protectors with me now. Our family has practically grown a bit. However, many details of my protection are confidential.

WAMS: Since the outbreak of the Ukraine war, Rheinmetall’s share price has risen by around 450 percent. Twenty years ago, the price was around 20 euros, currently about 500 euros. Are the employees also benefiting from this?

PAPPERGER: Yes, of course. We have a stock purchase program where employees can buy discounted shares with a 30 percent reduction – up to 400 euros per month. Last year, around 15,500 employees were eligible, and about 4,000 participated. There are also profit-sharing options in the form of shares for the senior management. Those who have been with us for many years and have kept their shares could now be millionaires.

WAMS: Your business is growing, but in Germany, there is a great shortage of applicants for technical jobs. Are you able to find enough personnel?

PAPPERGER: We’re being practically flooded with applications. By the end of this year, we expect over 200,000 unsolicited applications, 160,000 of which are from Germany alone. In 2023, the company hired over 5,300 new employees. This year and next, we expect around 6,000 hires each.

WAMS: The Ukraine war brings your company billion-dollar contracts. You are opening tank maintenance halls in Ukraine, building a powder and ammunition plant on-site, supplying and producing the Lynx infantry fighting vehicle, and Ukraine is receiving the Skynex air defense system. Why is Rheinmetall so much more present than the competitors?

PAPPERGER: I was one of the first in Ukraine, even before most politicians. I had a meeting with Volodymyr Zelensky in Kyiv. Our business is based on trust, and he first and foremost wanted as much ammunition as possible. In addition, there was a request for vehicle planning and cooperation with the Ukrainian industry. At the meeting, we discussed deals worth a total of 6.5 billion euros. The decisive point was that we had exactly what was needed and could deliver quickly. President Zelensky is satisfied with our services.

WAMS: Initially, you delivered Marder infantry fighting vehicles from your own stocks; in the future, it will be the modern Lynx model. How large will the delivery volume be?

PAPPERGER: The first delivery includes ten units. In reality, Ukraine would need 3,000 Lynx infantry fighting vehicles, but there’s no budget for that. The exact number has yet to be determined.

WAMS: Recently, President Zelensky presented a concept for a peaceful resolution of the war, described as a victory plan. What would a peace agreement mean for Rheinmetall’s business?

PAPPERGER: Initially, nothing at all. The decisive point is that we have a substantial order book. Currently, it’s over 50 billion euros, and by the end of the year, we expect over 60 billion. This year, we expect about 10 billion euros in revenue, up from 7.2 billion in 2023.

WAMS: And after that?

PAPPERGER: Next year, it could be 12 or 13 billion euros in revenue, then 15 billion, and by the end of the decade, about 20 billion. These revenues are covered by already existing orders, and our military clients in Europe and NATO still have enormous backlogs.

WAMS: A large part of your revenue comes from ammunition manufacturing. This part of your Ukraine business could collapse with a peaceful resolution.

PAPPERGER: Not at all. Ukraine currently lives “hand-to-mouth” when it comes to ammunition. About four million artillery rounds are needed to restock the depots. Ukraine will already be preparing for a possible next invasion in the event of peace. The country is not as naive as we in Germany have long been, where we thought eternal peace was here.

WAMS: But the enormous sums from the West might no longer flow, and perhaps a kind of war fatigue could set in among the public.

PAPPERGER: Even with a peace in Ukraine, we have other large orders in the pipeline, such as the recently agreed cooperation with the Italian Leonardo company, worth around 24 billion euros, of which 50 percent is for us. Next year, 2 to 4 billion euros could be booked from this, 9 billion euros the following year, and about 10 billion in 2027. In addition, there are opportunities from major U.S. programs. Recently, we entered the U.S. vehicle specialist Loc Performance. This means we can manufacture thousands of trucks and up to 300 infantry fighting vehicles per year in the U.S.

WAMS: What further plans do you have in the lucrative U.S. market?

PAPPERGER: For example, with the consortium led by our U.S. subsidiary, we’re in the final selection for the new U.S. infantry fighting vehicle to replace the Bradley. This involves approximately 4,000 new infantry fighting vehicles worth around 40 billion euros.

WAMS: According to your statement, you aim to rise as a European champion into the global top league of defense companies and are targeting 40 billion euros in revenue. This seems extremely ambitious.

PAPPERGER: For that, further consolidation in the industry is needed. At the moment, I can imagine anything and nothing. A strategy can only be implemented with the industry and always together with politics. A turnover of 40 billion euros can only be achieved if something bigger happens. I can’t talk about that today.

WAMS: Strangely, Rheinmetall is already being classified as a major player in the industry by the stock market.

PAPPERGER: We are currently the most profitable defense company in the world. So we can already compete with the “big boys” from the U.S. There are analyses that see our share price at 800 euros in the coming years if the growth continues. We have increased our market value by more than 1,300 percent over the past ten years.

WAMS: This has led to Rheinmetall being valued at over 20 billion euros on the stock exchange. America’s largest defense company, Lockheed Martin, is worth more than 130 billion euros. How close can you come to closing this gap?

PAPPERGER: At around 50 billion euros, we would also be one of the “big boys.” But one must remain realistic. However, it’s also a fact that the growth curve of other major U.S. defense companies is relatively flat. So we’re catching up quickly.

WAMS: Future weapons systems talk about the use of artificial intelligence.

PAPPERGER: Predictions that the future of war would be a cyber war without the need for tanks have proven wrong. What’s coming is the networking of sensors with artificial intelligence, the so-called Sensor Fusion. Large amounts of data and images, even from space, are processed. We see ourselves as pioneers in this. We’re not a hardware company; we’re essentially a software company, with hundreds of IT developers.

WAMS: You mainly build tanks and produce ammunition. That hardly sounds like software.

PAPPERGER: We manufacture soldier systems and develop command systems. The tanks produced in Italy with Leonardo will also include artificial intelligence. Even in the Lynx infantry fighting vehicle for Hungary, Rheinmetall’s software suggests a priority list of targets to be attacked first. We have developed and tested network-based applications well ahead of the competition. We can already do what others still have to prove. Many companies and our industry are experiencing a hype because they use the buzzword “artificial intelligence” for themselves. This huge bubble will soon burst.