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Rheinmetall Slips To H1 Loss, Despite Higher Defence Results; Lifts FY20 Defence View

German defence contractor Rheinmetall AG (RNMBF.PK) reported Wednesday that its first-half earnings before interest and taxes or EBIT was negative 232 million euros, 402 million euros lower than in the previous year.

Coronavirus crisis caused a decline in consolidated operating earnings to 70 million euros from 163 million euros last year.

Half-year sales fell 7.7 percent from last year to 2.60 billion euros. Adjusted for currency effects, the sales decline was 7 percent. The drop in sales was entirely due to the Automotive sector,

The Defence sector continued to grow and sales climbed 19 percent, and operating earnings climbed 75 percent to 122 million euros. Automotive sales declined 34 percent and reported a loss.

Looking ahead for fiscal 2020, the company confirmed and specified forecast from March of this year for the expected business performance of the Defence sector. In 2020 as a whole, sales growth is currently expected to be between 6 percent and 7 percent, compared to previous view of 5 percent and 7 percent. The company now targets around 10 percent operating margin, i.e. the upper end of the annual forecast of 9 percent to 10 percent.

Further, in the Automotive sector, the effects of the coronavirus crisis on end-customer demand, automotive manufacturers' production figures and global supply chains still cannot be reliably forecast.

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