Rheinmetall chief calls for more investment in low-cost anti-drone capabilities
Top German defence group is ready to supply Poland with air defence systems if asked, says Armin Papperger
The chief executive of Rheinmetall, Germany’s biggest defence contractor, said Europe needed to step up its investment in low-cost air-defence systems to counter the increasing threat from Russian drones.
Speaking after the Russian drone raid into Polish airspace on Wednesday, Armin Papperger also said the company was ready to supply Warsaw with air defence capabilities to help the country protect itself if asked.
Europe needed to develop counter-drone systems “in a very cheap way” while also boosting its production capacity, Papperger told the Financial Times at the DSEI defence show in London.
“I think that Ukraine needs double the size of what they have at the moment, but we have to invest in Europe because Europe has nearly nothing,” he said.
Nevertheless, the production capacity was growing. Rheinmetall had scaled up its own capacity and wanted to produce 200 a year of its mobile air defence Skyranger systems.
The “capabilities are there, the technology is there and the capacity will build up”, he said.
Rheinmetall was ready to ship its systems to Poland if it secured a contract, added Papperger, noting that he had met with Polish officials after the Russian drone raid to discuss “what can we do immediately to protect also something on the Polish border”. The company expected to deliver Skyranger systems to Ukraine starting at the end of the year, said Papperger.
Building up Europe’s air defence capabilities has taken on greater urgency as Russia has stepped up its drone assaults on Ukraine. EU nations have in recent weeks agreed to send air defence systems and munitions to Kyiv from their own stocks. Russia’s drone incursion into Poland’s air space is widely seen as a test of Nato’s defences.
Papperger said traditional missile-based air-defence systems were expensive relative to the production cost of drones.
“To fire a $200,000 or $500,000 weapon against a $20,000 drone makes absolutely no sense,” he said. The price of drones were likely to fall further, and “we have a system that counters drones for $5,000 and that economically makes a lot of sense”.
Rheinmetall has become a key partner for Ukraine since Russia’s full-scale invasion in February 2022 and one of the biggest corporate winners from the surge in European military spending.
Papperger said he was confident of meeting the company’s ambitious profitability and revenue targets. Rheinmetall aims to deliver a 20 per cent profit margin on projected sales of €40bn-€50bn in 2030.
Rheinmetall is seen as a key player in Europe’s drive to consolidate its defence activities and Papperger has pursued an aggressive growth strategy, rapidly expanding from ammunition and tanks to air defence and satellites. The company is closing in on a deal to purchase privately owned naval shipbuilder Naval Vessels Luerssen.
Rheinmetall has also deepened its ties with US peers in Europe, including a partnership with Lockheed Martin to build the centre fuselage for the F-35 fighter jet in Germany. Papperger, however, said the company was not interested in taking on Europe’s aerospace champion Airbus by moving into planemaking.
The company’s shares have soared in the past three years, making it the best performer in Germany’s blue-chip Dax index and giving it a market value of more than €85bn — not far off from the €90bn market cap of Lockheed Martin, the world’s biggest pure-defence group.
Papperger, however, has his sights on the top spot.
“At the moment, Lockheed Martin is number one, we are number two. So it’s not so bad. I know that . . . nobody wants to be a number two, but it must not be forever.”