Good afternoon, together. So Dagmar Steinert and myself will give you an overview about the information and the only information about fiscal year 2023. We start with page number 3, and on that we see the tensions. Everybody of us know that we have increasingly globally tensions from U.S. election where nobody knows what's going on about the budget here in Europe, via the Gaza conflict and for sure the war in Ukraine, down to the South China Sea conflict. With that conflicts, we see that the need for defense and especially the need of the products that Rheinmetall has will grow over the next years. The next page will show us the figures of the year 2023. On the sales side, we have EUR 7.176 billion. We didn't book about EUR 420 million, where we had goods ready in 2023, especially again trucks and ammunition.
We will make the sales, and we skip the scales to 2024. The EBIT pre-PPA is on a level of EUR 968 million, not what we wanted to reach, the EUR 1 billion, but very near. Operating margins is growing up to EUR 918 million and an EBIT ROS of 12.8%. Operational free cash flow is EUR 356 million, and there is also about EUR 250 million came in also on the 3rd of January, so that the real operational free cash flow is still better. Very positive is Rheinmetall nomination, so we booked businesses of nearly EUR 20 billion. This is doubling the nominations from 2022- 2023. The Rheinmetall backlog is growing from EUR 26 billion- EUR 38 billion, and I think very positive is we can pay much higher dividend, and the dividend will be EUR 5.70.
If you have a look at the next slide, we see that, especially the Chancellor, but also the coalition in Germany, is very clear and had a lot of discussions with different European governments that we said, "We Europeans, we must do more for our security. We have to invest more, and we have to do something to create our future." The Chancellor is really with us, and if you see what is expected and a very clear Minister of Finance, Vice Chancellor, and Chancellor said, "We have to reach the 2% target," so that over the next years we expect that there will be spending of about EUR 80 billion from the German side year by year for defense. So what are the big tickets now for Rheinmetall, and what is the future, and how—what, what do we see over the next 5-10 years?
We want to give you an overview about the big tickets of Rheinmetall. The number one for sure is artillery and artillery ammunition. Artillery systems will grow and artillery ammunitions. Here, we will grow up this year to 700,000 rounds, but with new factories, especially in Ukraine and also Lithuania, our new target is that we are end of 2026 ready to produce 1,000,000 projectiles per year. If you count that the mean value of a projectile is EUR 3,500, and if you see that we need propulsion systems, the mean value is 4 modular charges, or 4 modules, per 1 projectile, we have the possibility to grow up to EUR 3.5 billion if the customer is ordering full shots more than 3.5, so it could be EUR 4.5 billion or EUR 5 billion per year.
This is then the capacity that we have, and it's by far the biggest producer—we are then the biggest producer of artillery ammunition worldwide, and we are able to produce also the products like RDX and also the propulsion systems by ourselves, so that we have 100% vertical integration. Next slide, page number 7, will show you that. Let me start with Australia. So we double the capacity at the moment from the shell production. We go via South Africa. Here we triple the capacity of propulsion systems and also double the capacity of projectile production. So we will grow up on the projectile side to 150,000 rounds from 70,000 and from 1,000 tons propulsion system to 3,000 tons. Let's go to Spain.
After acquiring Expal, we also, in some times, triple the production of powder, and we grow up between 350,000 and 400,000 rounds of on the projectile side. Very strong growth in Germany because we create now in Germany our plant Niedersachsen, and this Niedersachsen plant will have a capacity of 200,000 rounds projectiles, plus 1,900 tons of explosives and 3,000 rocket engines and warheads and other components for that. So the biggest investment at the moment. Hungary, the Hungarian side is now nearly ready. This year the first ammunition will go out. On the Italian side we increase our capacity, especially on Sardinia, for the warheads and for filling of artillery.
There is a decision now also from the European Union that also the plant in Romania there will be some grants from the European Union for that factory, and we will make a decision, hopefully tomorrow, in Romania, to make the first step to build up this factory where we also create another 1,000-1,500 tons of propulsion systems. There are two new factories, and with this factories I told you we are able to make this 700,000 and this 11,000 tons of propulsions. And now Ukraine, where we signed an MOU on the Munich Security Conference, is coming up with a capacity also of 150,000 and Lithuania with maximum 100,000, so that we grow up to more than 1,000,000 rounds if that is ready.
It will be ready after 12-15 months after T-Zero, so that we are at the moment that this is our planning, but I think that the governments go that way and go forward with us. So artillery ammunition, absolutely number one for us. On the next slide you see that the Chancellor and Defense Minister and the Prime Minister of Denmark was also with us, made the first steps to build up the factory. On the next page, you see that we have also targets on the rocket artillery, so not only a distance of 40 or maximum 60-70 kilometer, which is barrel-based artillery, is on a good way in Rheinmetall, but also the rocket side. And on the rocket side we have a medium sales potential of EUR 1 billion-EUR 1.5 billion.
So we are at the moment in cooperation with U.S. partners for the HIMARS systems, but also with Israeli partners as for the PULS system, and we booked also the first EUR 300 million in Spain for the PULS systems, for rockets. And I think it will continue. The need of long-range artillery is huge, a really huge need about that, so that we see that is a great potential also for us. Next page shows the midterm sales potential on the medium caliber. We made all investments in medium caliber. There are some smaller investments now in Spain to enlarge the case production, but we see a potential of EUR 800 million per year on the medium caliber.
We have a very good big booked business, and it will continue, and it will hurry up because of the air defense business, and you need this medium caliber ammunition and this special ammunition from Rheinmetall, which Airburst t echnology, and we are at the moment the only producer in the world for that ammunition, and we see a huge potential in the future. Next slide shows that there is an opportunity, and the potential of EUR 1 billion. We have the capacity. It's a done deal. Everything is invested, and we can make this billion without any more investments. Also, all investments are done on the infantry side on the next page, page number 12, and we see EUR 300 million-EUR 400 million per year.
Also, good order book and a very strong need from Ukraine, but also for restocking on the infantry ammunition so that there is also a good chance for us to grow in that area. On the next page we see now the key technology, and the key technology is not the projectile. It's also good technology, which is here inside, but the powder is really the key technology. And the plants that we have in Aschau, South Africa, Spain, but also in Switzerland are outstanding factories, and we are able now with the investments that I told before to build up this powder capacity of up to 11,000 tons. This is enough to fill these artillery rounds. If there are more contracts will come, then we will invest again, but the huge investments are done before.
Powder production is a minimum investment of EUR 400 million, but everything is there, and the only thing that we have to invest is in Romania, but the Romanian government will do that, so very positive also for our cash flow. If you go now to the page number 14, this is another point where we see huge opportunities. Now let's go to the vehicles. On the vehicle side we have now the opportunity that we have that we are in all programs. We have a good contract of Challenger 3 that will continue. We have the good contract on Panther KF-51, to make it this product ready for serial production, and I expect also that very soon the first bigger contracts are coming there.
We are part of the Main Ground Combat System, especially about that where we have a very special know-how, Leopard 2 upgrade, and I call it Leopard 3 because I believe that between Main Ground Combat System and Leopard 2, Leopard 3 can come and will create also a lot of opportunities for us. We are part of the European defense funds where we have a 50/50, 50/50 agreement with our friends from Munich, and so we see a mid-term sales potential of EUR 2 billion per year with all these programs, which are running. Next page gives you an overview about the increasing for infantry fighting vehicle 8x8, 6xx, 6x6 and 4x4 platforms. So the infantry fighting vehicle over the next 10 years there is a huge need, and there is not only the U.S. program, but it's a very important program. And without the U.S.
We see a midterm potential of EUR 2 billion per year. With the U.S., it's for sure much higher. It could double, because the United States needs between 150-200 vehicles per year, which is for sure also a minimum EUR 2 billion. But the EUR 2 billion without U.S. per year is possible, and we booked Caracal. We booked a lot of Boxer contracts. Heavy weapon carrier will come now. We are expecting new infantry fighting vehicle contracts on the Lynx side, and also for the second lot Puma there is a chance to book more products. On the next page you see the acquisition we did last year, and on the acquisition side, we acquired 72.5% of Automecanica Mediaș in Romania, and this acquisition gives us a potential of another EUR 300 million sales. What is the reason for that?
Because it is a huge factory, but they had not a lot of contracts. We fill this factory now, and we filled it with the first contract before Christmas of EUR 350 million from the air defense side. We expect some vehicle programs. We expect maintenance, and we can produce a lot of components for the Rheinmetall group inside Romania. In Romania, because the wages are very low, our expectation is that we are able to reach an EBITDA ROS of 20% so that with a very small investment because we were able to get this company with an investment of less than EUR 20 million. I think over the next years it is possible to make between EUR 40 million and EUR 60 million profit per year. Page number 17 shows us that there is a huge need of logistic vehicles.
Logistic vehicles are the backbone of the Bundeswehr. We have a lot of old vehicles. We delivered in between some 1,000 UTFs and also WLS, but there is a huge need of thousands or 10,000 vehicles over the next years. The capacity that we have in Vienna is growing up now to 4,500 vehicles, and the price of a WLS is about EUR 500,000, between EUR 500 million and EUR 600 million, so we expect that the midterm sales potential, and we will reach it I think this year, is EUR 1.5 billion per year without the United States of America. If U.S. will come again, we are able to double that, I think.
Page number 18 shows that Rheinmetall is the European V-SHORAD system house, and on the V-SHORAD side we are the number one in the world, more than 40 customers using our technologies. With the European Sky Shield Initiative, where 21 users, European countries are inside this initiative, we see a multi-billion potential. The first orders came in, and the orders are usually between EUR 500 million and EUR 1 billion, and the SkyRanger 30 for me is a huge opportunity and also the Skynex, SkyGuard next generation. If the 21 users are inside our books, we have 60 customers around the world, and only the ammunition need that they have over the next years is absolutely huge so that we see a midterm sales potential inclusive ammunition of EUR 2.5 billion per year.
Page number 19 is the importance of digitization, and on the digitization and Rheinmetall more and more is going into this digitization area. So we started with the Soldier System, and with the Soldier System, we stepped now into the middleware together with Blackned, and that gives us the opportunity to make the digitization for D-LBO, for the land-based operations. Here is a multi-billion opportunity. The first contracts will be signed now this year, or the first contract is signed. Second, digitization of the Hungarian armed forces and also TaWAN, the tactical wide area network, is where Rheinmetall is inside. We have here cooperation with Airbus. On D-LBO we have a cooperation with KMW so that we are in all these programs, and let me say we have minimum 50% of all that programs.
There is also great potential in the Air Force sector, especially if we are able to make the sustainment on the F-35. I think there is a huge opportunity also in the Air Force side, and also on the civilian side we see opportunities. Midterm sales potential is EUR 2 billion per year. And aviation, as you know, the trigger point for us was the F-35 but also some other sustainments for helicopters and other things. Our target in the field of aviation is sales potential of EUR 1 billion per year, and we think it is possible very soon. Page 21 gives you now an overview about the American defense market, and on the defense market I'm positive after some meetings in the United States. I'm very positive that the U.S. boys are doing a great job there. For Rheinmetall Vehicle Systems USA is very successful.
They are very innovative, and the customer love them. So that I see it the final award decision will be end of 2026 or 2027, and I believe there is a good chance, so we will see. It's nothing at the moment in our calculations, but if it comes I think we have a huge opportunity to create the next booster for Rheinmetall. The same for the CTT program. There is a need for more than 40,000 trucks, and the final award decision is in 2026 so that very soon we have a clear picture about the story going forward into the USA. We have very dominant business at the moment on security, but there is also some civilian business.
It's shrinking and shrinking, and it's not a strong growing business, and if you see that we have growth rates of up to 40% in the defense side and the growth rate on the civilian business is maybe 1% or 2%, so you see that this business is going down, and our expectation is that in 2026, we have less than 20% civilian business, less than 10% automotive business. So there is no longer a dependence on that area, and what we did is I think we brought our people on the piston business into a good new home, people who take care about that, and on the Rheinmetall side we can no longer pay attention to that thing, so we found good people and good companies who took over the large bore and also the small bore pistons.
We sold the one on the Riken JV. We closed it in Q2 2023, and we sold all the Riken shares, and the last shares we sold in February 2024. So at the end of the day, we are very happy that our people have a good new home. So on the next page on 2023 you see that Rheinmetall has to take responsibility, and our mission, our commitment, and our purpose is very clear. We have to serve our customers. This is the most important thing we have to deliver. That is the reason that we are investing a lot, and, as you know, we have still firepower, but we invested EUR 1.2 billion in the acquisition of Expal, and we have now valuable stocks of EUR 3.2 billion which is very, very important for us to deliver.
Over the last two years we have also CapEx of more than EUR 1 billion, which is good to grow and which is very reachable because our customers give us cash and in down payments. Later, Dagmar will give you an overview about that things. We empower governments, and that's also important, to empower governments to protect the population, to protect the people. That's the number one what governments have to do. We are investing a lot, and we develop also new technologies, and also there is a huge investment program from the Rheinmetall side. Now I'm happy to take over Dagmar. She takes care about the financials.
Yeah, thank you, Armin. So let's move on to page 25. As you can see, the year 2023 really set a new milestone regarding sales growth and profitability. We increased our sales by nearly 12% to EUR 7.2 billion with almost 36% of the sales volume resulting from the fourth quarter. Weapon and ammunition as well as vehicle systems were the driving forces behind that growth. Our operating result, which is reported excluding PPA effects, rose by around 20% including EUR 536 million in the fourth quarter to EUR 980 million. The high sales share of weapon and ammunition led our operating margin increase to 12.8%. The main driver for the higher EBIT pre-PPA is a divestment of the Shriram shares.
Let's move on to page 26 for the presentation of our earnings per share and dividend per share. The strong improvement of our operating result lifted the basic earnings per share for the continued operations pre-PPA to EUR 14.665. We proposed a dividend increase from EUR 4.30 to a record high of EUR 5.70 to the AGM.
This results in a payout ratio of around 39% which marks the top of the corridor that we gave you at our Capital Market Day in November last year. So please turn to page 27 for a look at Rheinmetall's operating free cash flow and, of course, the working capital development. The fourth quarter cash generation increased the operating free cash flow for the full year to EUR 356 million which reflects our highly seasonal business. Massive customer pre-payments in weapon and ammunition and vehicle systems helped to reach this significant improvement of EUR 508 million compared to the previous year. We had cash flipovers effects of around EUR 250 million as Armin already mentioned. Weapon and ammunition and vehicle systems mainly caused the increase of inventory levels by EUR 1.3 billion- EUR 3.2 billion in anticipation of the upcoming customer orders. Let us move to page 28.
Even after the acquisition of Expal, our balance sheet remains very strong and provides enough firepower for further inorganic growth. Our net financial position of EUR 1 billion came significantly down in the fourth quarter due to a high cash intake. Consequently, our equity ratio improved again to 31.1% in the fourth quarter 2023. In the third quarter it was 29.6%. The maturity profile is pretty relaxed until 2028 and 2030 when the convertible becomes due. Moving on to the next page, Rheinmetall nomination. Our Rheinmetall nomination doubled compared to the previous year to almost EUR 20 billion. A high number of fixed orders, large framework contracts that increased by EUR 7 billion against previous year, and a stable number of booked business from our civil divisions pushed our Rheinmetall backlog close to EUR 40 billion. Let's move to the next page for a detailed look into our backlog.
Weapon and ammunition and vehicle systems are the main drivers behind the strong backlog increase to almost EUR 40 billion. Two long-term ammunition framework contracts for tank and artillery ammunition from Germany and contracts from Ukraine helped weapon and ammunition to achieve a new record high of above EUR 11 billion. The Caracal framework contract for Germany and the Netherlands, a new framework contract for trucks in Austria, as well as the second lot Puma for the German Bundeswehr are only a few projects which are included in the vehicle systems backlog. Electronic solutions saw major orders for air defense from Austria and Romania. Over the midterm we expect more air defense orders within the European Sky Shield Initiative. The Rheinmetall backlog for our civil divisions remains stable. Our current backlog volume of almost EUR 40 billion results in a very high backlog coverage for the running year.
Please turn to page 31. Vehicle systems grew sales by almost 15% to EUR 2.6 billion with an operating margin of 12.4% in 2023. Main driver were the ramp-up of the Hungarian Lynx program and the contribution of the various swap agreements in the context of the Ukraine war. This is an outstanding performance, especially since the fourth quarter did not report any growth as sales were held back by customer agreed delays into 2024. Weapon and ammunition reported the strongest growth of 29% to almost EUR 1.8 billion and a great margin of 23%. Germany and Ukraine as well as other NATO countries created the highest growth momentum. Former Expal contributed with EUR 171 million, slightly short of the expected EUR 200 million sales due to sales delay into 2024.
The operating result increased by more than EUR 100 million to EUR 403 million, including a contribution from Expal of EUR 37 million. We reported various smaller one-off effects from the integration of Expal which had a slight impact on the margin. Increasing volumes and a more favorable product mix caused that development. The fourth quarter reported an impressive sales increase of 43% ending at EUR 817 million and an operating result of EUR 241 million. Main driver behind the sales growth were high deliveries to Germany and Ukraine, especially for 155 millimeter ammunition, and margin remained on a very high level of almost 30% but stayed a bit below previous year's level. Electronics Solutions reported an annual sales growth of around 13% to EUR 1.3 billion and a strong improvement of the operating result to EUR 150 million, lifting the operating margin to 11.4%.
Key sales drivers were the ramp-up of the Hungarian Lynx and the German Puma. Additional support came from the delivery of Skynex air defense systems, and leverage created the biggest momentum for the profit improvement. Our civil business recovered from the cyber attack in the second quarter of 2023 and reported a slight sales growth. However, margins were still impacted by cost increases that were not fully passed through to customers. The overall impact of the cyber incident was at the expected level of around EUR 10 million. The disposal of the Amprio business and the restructuring of our Chinese casting business supported our operating result with almost EUR 10 million. This closes my part of that presentation, and I'm happy to hand back to you, Armin, for the outlook.
Thanks, Dagmar. On the Outlook you can see, and I think very important is also in 2023, as I told before, that's important for you, we took EUR 420 million over ready products. These were EUR 360 million euro trucks which were 100% ready and also EUR 60 million euro ammunition sales. Dagmar told you something about the Spanish side in 2024. What does it mean? It means that we are able on the operations side to produce the products. So, we have the capacity. We are able to produce it. Sometimes you are in negotiation with customers to say, "Okay, we are not able to take it over." I tell you the point on the truck side.
The EUR 360 million we have to take over to 2024 because the inflation rate was higher and we were not happy with the inflation rate that was calculated five years ago. So we have an agreement now, and we made this agreement yesterday with the German government that we can add some costs on the inflation side, and at the end of the day we have higher prices. And for us it was better to get these higher prices than only to get this to get the sales and to reduce our profitability. So therefore, number one, we are able to produce. Number two, in 2024 on the sales, our because of the investments and the CapEx we made, very clear that we are able to produce for EUR 10 billion. The growth rate will come from the defense business.
It will be a very small growth from the civilian business, and that is the reason that the profitability also will grow and the operational margin is going up to 14%-15%, EBIT ROS. This usually is the target, as you know, that we wanted to reach in 2026. We are a little bit early now about that, but we take care about that we continuously improve our performance. And the other positive thing is that our cash conversion rate should be, even if we grow so strong, on a level of 40%. There is also another trigger point which is important for you.
It is still, sorry, unofficial, but we get a grant from the European Union and the Rheinmetall Group for all the different factories will have a grant of around EUR 440 million which will help us in growth in cash and in also profitability because we did all that investments. All in all, in a nutshell, a very good year 2023, and we expect a better year 2024. Thank you for your attention.
Ladies and gentlemen, if you would like to ask a question, please press 9 and star on your phone. If you would like to withdraw your question, please press 9 and star a second time. Please press 9 and star now to register your question. The first question comes from Sebastian Growe from BNP Paribas. You have the stage.
Yeah, hi. Good afternoon, Steinert and also Mr. Papperger. The first one would be on the order pipeline. I understood that at earlier conferences this year you pointed to a total nomination potential of between EUR 28 billion and EUR 36 billion this year. However, when I look at the recent order announcements, it seems that this might have further increased beyond those ranges. So the first question that I then have is if you could provide an update, please, on the pipeline and especially also shed some light on how you would see firm orders in comparison with potential frame agreements. And if I may specifically also ask for an update around the EUR 8 billion-EUR 10 billion artillery contract from Germany, that would be the first part.
Yeah. So the order pipeline, our expectation is really very optimistic, and there is an opportunity. Is everything going right that only from Germany that we get Rheinmetall nominations up to EUR 30 billion only from the German side? And what is the reason for that? Number one, and the biggest thing is, as I said before also, is artillery ammunition, and we are at the moment in negotiation with the German government for 2.2 million rounds artillery. 2.2 million rounds, what does it mean?
Yeah, it means that we have only for the projectiles up to EUR 9 billion, but if they and they need also the charges and they need also the fuses, and if you see that one modular charge price is EUR 250, fuse price usually is about EUR 700, so we can expect that there is a double-digit billion contract only from the artillery side. Heavy weapon carrier, another EUR 2.5 billion, fixed contract.
From the artillery side, our expectation is that between EUR 1 billion and EUR 2 billion will be fixed, and if it is a EUR 10 billion or EUR 12 billion contract, the rest is frame contract and year by year booked. The reason for this frame contract is was that we produce now 200,000 in Germany because the Werk Niedersachsen is especially programmed also for this 10 or 11 years program where we can produce 200,000 rounds per year, and 2.2 million, what does it mean? More than 10 years work also there. This is exactly what the government wants. This is exactly what the Chancellor says. We have to have long-term contracts to go forward, and this helps us a lot. A very positive thing is also that all the frame contracts that we signed, that we fulfilled are over. It's an overfulfillment about that.
So most of the customers said, "Okay, we need the next frame contract," and this, for example, for the old, for if I say old, last year frame contract for artillery of EUR 1.5 billion, which was a much smaller one, we got it after 6 or 7 months. Yes, we got it from a frame contract to a fixed contract. So that my expectation is also for that, that maybe there is a possibility to get 2 or 3 years fixed from the 10 years frame contract. Vehicle from the vehicle side, Boxer, yeah, the medium weight class vehicles, this will be a fixed contract. Other ammunition will be fixed contract like tank ammunition. We ordered still some tank ammunition. Air defense is huge. These are fixed contracts. These are no frame contracts on the air defense side.
And if you have the for the first vehicles, if there is and the vehicle price, if you have SkyRanger, it's going up to, yeah, EUR 10 million-EUR 15 million. So if every country needs 30-40, as I said, it's always with ammunition between EUR 0.5 billion and EUR 1 billion. So multi-billion fixed contracts. So I'm at the moment, yeah, we are on a very good way. And you say maybe, maybe again, we are very conservative in this, what we told you last time.
Yeah, it sounds like that. I can spare you one question, and that is around the overall funding situation in Germany. So obviously, late last week we had some noise around a potential EUR 6 billion hole for the current discussions when it comes to the ordinary budget in Germany for the defense side. So can you help us understand how the contracts are structured at your end? So what's the risk eventually that the customer can walk away, kind of push it out? So if you could help us there, that would be much appreciated.
Yep. All these contracts I discussed at the moment are coming out of the EUR 100 billion budget. This is a point where we get really a big piece of them. And as I said, if I count up everything, it will be and maybe you remember two years ago where the people or where we discussed to say, "Okay, how can you tell us that you can EUR 35 billion or EUR 40 billion out of the EUR 100 billion you take?" It will happen. This is exactly the piece that that we will get.
So our calculation was not so bad, yeah, and we have a good hit rate in that area. But these all what I said, artillery ammunition, tank ammunition, Schwere Waffenträger, Boxer, etc., etc., but there is much more. There are now also for Ukraine, for example, out of this EUR 8 billion budget, are artillery stuff. This is Boxer with artillery where our friends from Munich and Rheinmetall share 50/50 on that. It's a multi-billion contract that will come up. So huge opportunities. But I only speak about the German side, but there is also huge opportunities on the international side. I will be tomorrow the Prime Minister in Romania, so we speak about vehicle programs. We speak about ammunition programs there. Hungary is something coming up. The whole Eastern European part is looking forward.
Spain, if you see what we booked now over the last two months and in the next two months, if I count everything up, there is more than EUR 1 billion that we book in Spain. Spain is a new market for us, but it hurries up a lot. So there are huge opportunities, and what we have at the moment to take care is really to bring it into the right direction and to deliver.
Okay. Thank you for this. And then the very last question, if I may, just around electronics solutions. I do recall that at the Capital Markets Day you had pointed to a potential of up to EUR 5 billion when it comes to air defense. You now also talked about the European Sky Shield Initiative and the related potential, and I've counted around EUR 3 billion of orders since December alone. So can you provide us also here with an update where this can go eventually? I've seen and noted obviously the EUR 2 billion that you put in the slide deck as a midterm sales potential.
And maybe this is also a relevant question, I guess, in this regard. Help us a bit at least to better understand the profitability around air defense because my impression is that there's very much deviation between the bits and pieces inside electronic solutions.
Yeah. So if you see long-term, my expectation is that, as I said, 50-60 countries will be our countries on air defense side. Only with ESSI, with more than 20 countries, and every country will. Something. And if I say it's very conservative, EUR 500 million, that and this is the minimum that they have to order, it's EUR 500 million. So then you see that there is a potential also conservative of EUR 20 billion. Yeah? That it's a very simple calculation, yeah? The point is that these are the systems. The point is that every nation needs ammunition.
And on the ammunition side, we are the only producer of the so-called AHEAD ammunition of that, and they need and if there is a conflict, yeah, they have to fire that ammunition. So at the end of the day, there is a huge potential also from the ammunition side which is going forward.
I agree with you that we were on the Capital Markets Day conservative, but at the end of the day and you see we booked now, really, you are right, yeah, we booked some EUR billions and we will book much more. But if we grow up and the big ticket has shown a year by year to EUR 2.5 billion or EUR 3 billion, it's good. Profitability, there will be a leverage effect also. At the moment, we are on a level of 15% on profitability on the air defense side. There will be a leverage effect, and I think on with the leverage effect, maybe it can be a little bit more.
All right. Looking forward to it. Thank you.
Thank you. The next question comes from Sven Weier from UBS. Mr. Weier, the floor is yours.
Yeah. Thanks for taking my questions. Good afternoon, everybody. The first one, Mr. Papperger, just to follow up on the introductory remarks you mentioned about the different businesses and the midterm sales potential. I was just wondering if you could reconfirm that you had those projects in mind when you talked about reaching EUR 15 billion of sales in '26 and EUR 20 billion in the next seven to eight years, if these are still the right numbers or if we should even see higher than that? That's the first one. Thank you.
Yeah, Mr. Weier, I love to be higher in that area, but first of all, I want to reach it. The 10-year EUR 10 billion this year, EUR 15 billion, and I think we are very looking forward over the years if we say, "Okay, we want to grow over the next seven years to 20 billion." So if it is more, I appreciate that, but first of all, this is what I want to reach. This is our internal targets. And as you know, if it is going better, I'm happy. I'm very happy about that, but I can tell you at the moment, no other figures. And this is where we shape the whole organization.
If the order pipeline and if the order backlog is growing stronger and stronger and stronger, and if we have another EUR 10 billion which we not expected because we are so successful, then we have to invest a little bit more also into the capacities, and then we have to grow stronger. But at the moment, I think we have to deliver.
And I mean, you already said earlier you will almost achieve the margin target for 2026, the 15% at the high end. I mean, what margin does go alongside the EUR 15 billion then? Are we talking 16%-17%, or what do you have in mind for this?
The point is, I think it's a very simple calculation. The civilian business, which is less than 10%, will be lower and lower and will be and will be, let me say, a very small amount of our of our sales. I expect that on the defense side that we are able, and that must be our target, that on the defense side we are able to make 18%-19% EBIT ROS.
Okay. Very clear. And then I just wanted to make sure I understood your previous comment regarding Sebastian's questions about the pipeline that you said EUR 30 billion potential in Germany or EUR 13 billion this year. 30, 13. And because, you know what, I'm wondering in I think in the same report that Sebastian mentioned, there was also mentioned that the special fund is already overbooked with stuff, right, because everything has gotten much more expensive. Also the weapon carrier, the F-35. So how does it square if the EUR 30 billion are taken from the special fund?
It's not overbooked. It's not overbooked. The only thing what they have is that these programs are financed. There are some things where which cost more, but there are some huge programs which are, let me say, at the moment out of priority. And that is the reason that it is not overbooked. That is number one. Number two, and in all the discussions I have, and this is crystal clear, the budget, the regular budget, yeah, must grow up to EUR 80 billion of EPL 14, number one, or they need a second Sondervermögen or Sondervermögen, however you call it. And I personally believe that it is much easier to bring the second thing to a second Sondervermögen to create security for national security for Germany.
That has to happen, I think, next year because otherwise they are running out of VAEs, Verpflichtungsermächtigungen, and I believe it will happen.
Is it a risk for us?
No, because we booked all that things. So we are happy for this year. And Dagmar has you have seen what we have coverage, the order coverage for this year. It's nearly 100%. So everything which is and we book a lot of business also for this year, so there is even potential for to have to grow, to grow more. But next year, it's also 80% done and without all these bookings that we have in 2025. And in 2026 is also huge. So up to I can see up to 2026, 2027 that our growth story continues. And that gives me confidence that, first of all, we have time.
Even if there is a delay of half a year, a political delay to make decisions in Germany and elections, etc., etc., it doesn't hurt us. And the second point is that there is a need, and all the discussions we have with the opposition, with the Christian Democrats, Social Democrats, Green Party, and Liberals, all of them said, "We have to invest in our security and national security is so important. We have to spend the money." Full stop.
The final question I have for you, Mr. Papperger, on the U.S. projects you talked about, right? And you know, you mentioned the decisions are likely falling into a period with a new president. So how able, how willing would you be to team up with your competitors to have maybe a shared project at the end of the day and a joint project with those you compete against at the moment?
Yeah. If the customer likes that, I'm always open. For me, it's not a problem to share, but this is a decision from the customer. The point from my side is, first of all, we will fight hard. There is a two-year period where we fight hard, and we can fight hard because we got nearly $800 million from the U.S. government to fight. And they want to they want to see us to fight to give the best technologies into the United States and to show them that the prototypes that we are delivering are great things to make America great again. So this is exactly what we what we want.
That is the reason, and we do it with our U.S. boys. There are no European boys inside, only U.S. boys. And we are a U.S. company. And this is exactly what the both parties, Democrats and also the Republicans from President Trump, if he is president or former President Trump sees. He don't like imports from Europe to the U.S. We will produce every small screw in the United States, and I think this is the right thing to go forward. And we have, at the moment, good R&D centers, very good R&D centers, and the American customers like it. And when I was last there, I had some meetings with secretaries in Pentagon, and they are very positive. But you never know at the end of the day what happens.
But for us, it is a really great experience what we see, and we have a I think we have a good chance.
Understood. Very clear. Thank you, Mr. Papperger.
The next questioner is Sash Tusa from Agency Partners. Mr. Tusa, the stage is yours.
Thank you very much indeed. Good afternoon. I have two questions. The first, your guidance of around EUR 10 billion of revenues for the current year. Given that you have 89% order cover and around over EUR 400 million of product already made, which you should presumably deliver in the first half, it doesn't actually seem a particularly aggressive target. Are you expecting or are you concerned that there might be some more cutoff effect at the end of this year and hence that there may be some deliveries that slip into next year? Are you putting a bit of risk into your forecast?
And then the second question, which is a rather wider one, could you talk about the supply chain for ammunition and particularly for explosives and where you see the pinch points being and where you see the supplies being most favorable at present?
Yeah, Sash. So the point is that this is the calculation that we have, and as you said, the first quarter will you will see in the first quarter that we are on a very, very good way in the growth. We will have a very good growth in the first quarter and a very profitable first quarter. We never, ever it's not the Q1 call today, but we never, ever have seen such a quarter like we see now. This is number one. The second point is, I'm an entrepreneur. And as an entrepreneur, I'm looking on the profitability.
I can make a bet with you that the profitability will be between EUR 1.4 billion and EUR 1.5 billion. If it is EUR 10 billion, EUR 9.5 billion or EUR 10.2 billion, this is what we have minimum. And that is for me the importance. That is for me the important stuff. Are we profitable? Can we create cash? And the other thing is also cash. We don't lose cash. And as you know, if you have a company which is growing 40%, usually, yes, you have to invest such a lot of money that you have no positive cash flow. We will get a positive cash flow again because we get good down payments in this area.
So is it so that we make exactly EUR 10 billion? I must say I don't know. But is it so that we make minimum EUR 1.4 billion profit? Then I say yes. I will bet with you.
I definitely would expect it. . I certainly won't take that bet then. Thank you. And supply chain?
On the supply chain side, at the moment, we have no big problems. And the reason for that is, as I said, we have EUR 3.2 billion valuable goods in our stocks. So we take care about that to buy in early. This maybe is not the optimum for the cash flow. That's for sure. But at the end of the day, it's the optimum for us to deliver. And this is the right way. I believe it is the right way to especially if we have war in Europe to deliver and not to make an optimization on the cash side, but we have no problems at the moment on the supply from our subs. And we have no problem at the moment also on the human resource side.
This is the next point to say we get people. The people love us at the moment, and the people want to come to Rheinmetall.
Okay. Thank you very much.
It's a pleasure.
The next question comes from Michael Raab from Kepler Cheuvreux. Mr. Raab, the line is now open for you.
Yeah. Hi everyone. Mike Raab, Kepler Cheuvreux. I'd like to place two questions here. First of all, Mr. Papperger, when I look at the sales potential that you depicted for the individual product groups for the midterm, just doing the simple math, adding them all up, you get to a corridor of between EUR 17.6 billion and EUR 18.2 billion, to be precise. Now, you're indicating this is for the midterm. What is specifically your definition for midterm, if one could say so?
It's longer than 2025, as we said on the Capital Markets Day. And the question before was also, yeah, is this EUR 14 billion-EUR 15 billion enough? Yes. We won't, first of all, reach the EUR 15 billion. If everything this is a potential. If everything which is in the potential is coming up, your calculation is absolutely right. There is more in. But 100% hit rate, yeah, usually is not possible.
Yeah. Yeah. Absolutely. That's why I'm asking. Okay. Cool. Thank you. Then the second question I'm having, and then I'm already done, is why would the Panther not qualify as Leopard 3?
Because he has the wrong name, as you know. Yeah. It's exactly the point. Sorry to say that, but.
Okay. But from a technological standpoint, you could rebrand, rename, whatever. So technologically, is there any obstacle?
No. This is a fantastic product, and I can tell you also one, it's not a secret because it will be very soon in the newspapers. We signed now the R&D programs in Germany also for the 130 and for the 130 ammunition. So this is one technological milestone that the Panther has also inside. But that is what I mean. We have the Panther. The Panther is a medium midterm tank. And I personally believe that there will be a decision also in Germany because the main ground combat system, we need up to 2040, 2045 that we have in between. I call it Leopard 3, however the German government will call it, maybe Leopard 2 plus or whatever. I call it Leopard 3. And I believe that a lot of technologies that we have in the Panther will be implemented also in the Leopard 3.
Okay. Back to the Panther gap. Thank you.
Thanks.
The next question comes from Christoph Laskawi from Deutsche Bank. Mr. Laskawi, the stage is yours.
Good afternoon. Thank you for taking my questions. There will be three. The first one will be on vertical integration in the U.S. You expect announcements relatively soon. Would you need to increase your vertical integration before any announcement in the U.S.? So do you need to buy there? Second question then, what's the ammo share that's in the air defense business of EUR 2.5 billion? And then a technical question just in Q4. If I understood it correctly, you moved business from ammo to electronics solutions. Could you just remind us what that was and why you did it? Thank you.
I didn't get the last question. Say it again, please. I got the last question. You got it? Okay. Then I take the first two, and Dagmar takes the last one. So vertical integration, very clever question because you are totally right. We are looking at the moment for acquisitions also in the United States. We want to do that, and we have to do that because at the end of the day, we must be a bigger player if you get such big contracts. We need bigger factories, and we are looking for that. And this is one of our targets to have a decision this year. Second point is ammunition share.
So we expect that we have to produce 500,000 rounds per year continuously. And the price of one round will be between EUR 1,100 and EUR 1,200. So you see that we have, yeah, between EUR 500 million and EUR 700 million on ammunition. Dagmar?
Okay. Yeah. The reorganization of the divisions, we moved from the division weapon and ammunition, Rheinmetall Canada, to electronic solution. And there we are talking about a sales volume of EUR 110 million.
Thank you. Follow up, if I may, just on the vertical integration in the U.S. Is there any potential size that you are looking at, or could it be very small up to very big? Any comments there?
It will be not very big, but also not small.
Understood. Thank you.
The next question comes from Carlos Iranzo Peyrelongue. Mr. Iranzo Peyrelongue, the stage is yours.
Thanks for taking my questions. And good afternoon. First one, in the presentation, you have updated the midterm sales target within weapons and ammo, and all these artillery numbers are up to roughly EUR 7 billion. So this compares to the 2023 CMD guidance of around EUR 4 billion. So could you please help us to understand this material growth post-2026 and the timeline to achieve this? Thank you.
So yeah, the first thing is that up to 2026, only the artillery ammunition, as I said, if the full package artillery with propulsion systems and also with fuses will come, there is a potential up to EUR 5 billion only on artillery ammunition. It's EUR 1 billion for tank ammunition, and the rest is the rest. But it's, I think, a very good figure, and we can reach that in 2026.
Okay. Very clear. Thank you.
Spain will be an important driver for that, yeah? So as you know, Madrid is the center of competence for indirect fire. So it's the headquarters of indirect fire is in Madrid. And so this will be by far the biggest center of competence worldwide for indirect fire, Madrid, because we guide from Madrid the Spanish factories, but also South Africa and Australia.
Super clear. Thank you. And I have a follow-up on weapons and ammo as well. On the margin side, you are guiding for margins of 25%-26% in 2024. And at the CMD, you guided for margins of 26% in 2026. So that implies very little operating leverage in 2025-2026. So why is that?
Now, look, I think that's a very good margin. That is one point. And on the other point, we want to be very fair to our customers. And if there is a leverage, there is a leverage effect for sure also. But there are some investments, and we want to pay back also from that side. We don't want, let me say, to, yeah, to overweight these discussions that we have with our customers. Sometimes you have to give the customers also an effect. If he buys a lot for some years, you have to give them something. You have to give them some money back. And so therefore, I think if we are between 25% and 30% in this area, it's a very good margin, I think.
Very clear. Thank you.
Thank you.
The next question comes from George McWhirter from Berenberg. Mr. McWhirter, the stage is yours.
Good afternoon. Thank you for my question. Just on the aviation midterm guidance of about EUR 1 billion of revenue, it seems a bit higher than the F-35 contract that you recently signed. Please, can you comment on any additional opportunities that you see in the aviation sector just to get to that EUR 1 billion level? Thank you.
Yeah. So you are totally right. The F-35 will be half of them, about 50%. The others will be sustainment business, not only on the F-35, but also sustainment on helicopters and other things. And number three is that at the moment, different producers of airplanes are coming to us if we are with the technology and with everything that we learned now, if we can produce some other components for them. And that is the potential that we see.
Thank you.
It's a pleasure.
At the moment, there are no further questions. This is the chance for you. If you would like to ask a question, please press 9 and star on your phone. The next questioner is Christian Cohrs from Warburg Research. Mr. Cohrs, you can ask your question now.
Yes. Hello. Good afternoon. Two questions left for me. First, on CapEx, at the Capital Markets Day, I think you stated something like 7% of sales would be CapEx in 2024. Is this still valid? That would actually mean EUR 700 million compared to your EUR 10 billion guidance. And do we have also to take into account the EUR 300 million investment in Unterlüß? So then a total of EUR 1 billion. Maybe you can shed some light on that. And then lastly, looking at your minorities, all your fully consolidated earnings up massively, but looking at the minority line, RMMV, lower earnings, RDM, lower earnings, maybe you can provide a brief explanation for that. Thank you.
Yeah. I take the question with the minorities. And yes, we have lower earnings from RMMV. Of course, we are missing our trucks, which we didn't deliver in 2023. We see as well lower earnings from Rheinmetall Denel Munition, but they had extraordinary high earnings in 2022. And these are the both companies which lead to the fact that we have minorities of EUR 52 million in 2023 compared with EUR 66 million in 2022.
Second point of CapEx, yes, you are totally right. It will be in that area, about EUR 700 million. The positive thing, as I said, we will have a lot of down payments, number one. And maybe I didn't tell it right, but the positive thing, very positive thing is we'll get EUR 140 million from the European Union for investments. So this is a grant. This is, let me say, a present from Europe to Rheinmetall because of all the investments that we have. And that helps us a lot for sure to pay the bills.
Understood. Thank you.
And by the way, this is not in the calculations in between.
Thank you. The next question comes from Ben Heelan from Bank of America. Mr. Heelan, you can ask your question now.
Yeah. Thank you for adding me at the end. I wanted to ask Armin around some of the numbers in the presentation again because you talk about the midterm sales potential for artillery, rocket artillery, mid-caliber ammo, tank ammo, infantry ammo. And adding those all up, you get to around EUR 7 billion for that weapons and ammo as a midterm sales potential. Obviously, you've given us 2026 guidance in November of over EUR 4 billion. I think in one of the questions, you talked about that potentially being EUR 5 billion now.
So, if 7, where this business can go towards the end of this decade, I appreciate you probably don't want to give firm guidance for 2028, 2029, etc. But how should we think about that EUR 7 billion if we just simply add up all those numbers in the weapons and ammo? With EUR 7 billion, what that revenue line could be at some point, and how should we think about that? Thank you.
If you calculate up 100%, it's EUR 7 billion. I 100% agree. But if we go, let me say, to be sure, because we speak about potential and about operational planning, on the operational planning, if you see that we are on an area of EUR 5 billion-EUR 6 billion on the ammunition side, I think that would be very, very realistic. The potential is really EUR 7 billion.
But as I said before, you never, ever have a 100% hit rate in this area. So what we do is we go through all the countries, and these are the potentials, and this is the capacity that we build up. We have really a capacity if everything is going forward. If the crisis is going forward that the customers order more, we really can make EUR 7 billion. This is the potential that we have. This is a capacity also. But for my calculations, yes, I said between EUR 5 billion and EUR 6 billion is a fair value. But if you see that we said between EUR 5 billion and EUR 6 billion on the ammunition side, and if we make between 25% and 30% profit, it's a great value. It's not so bad.
Yep. Yep. No, that's very fair. And then a quick follow-on. Obviously, you did the Expal acquisition last year. It's been very successful. Is there more in the pipeline? How should we think about M&A 2024 and 2025?
Yeah. As you say, we make M&A year by year. And again, nobody at the moment has really calculated our Romanian business, which I tried to calculate that we will make EUR 40 million-EUR 60 million profit also per year over the next years after filling that company. And we try to go into acquisitions. One target is U.S., as we discussed before with Mr. Laskawi. But we also have other opportunities also on the weapon and on the ammunition side. But as I said, I cannot go into details about the M&A because we always have NDAs. And you will get the information as soon as possible. As we always do, if it is a big acquisition, we give you an extra call to inform the investors and the analysts about that.
Very clear. Thank you, Armin.
It's a pleasure.
The next question comes from Dario Dickmann from HSBC. Mr. Dickmann, the line is open for you.
Yes. Hello also from my side. Coming back to your comments on the next Leopard generation and the implemented technology, does this mean that your share inside of the new Leopard should be significantly higher compared to the Norwegian Leos, for example?
Yes.
Okay. Last one, at the CMD, when talking about potentials, you also mentioned mortar potentials of around EUR 600 million and weapons of EUR 1 billion. Do these have to come on top of the ones presented in your presentation?
There are some things which are not at the moment in the presentation. And I can tell you what happens also on the weapon side. And therefore, you see for sure and now you got me, yeah? There is for sure more potential also. So the weapon production only in Unterlüß, and the price of a weapon is between EUR 1 million and EUR 2 million if it is an artillery weapon or a tank weapon. Only on the weapon side, we will grow up to 250 weapons per year. So between EUR 300 million and EUR 500 million, we can produce weapons for artillery and also for tanks.
But I hope that you see that we want to give you an overview about the big tickets. And the EUR 250 million is not a real big ticket because this would be the smallest number of all of them. But we have to cut it sometimes. And otherwise, I for sure can give you a much better overview.
There is some potential in. This is also invested. So we produced earlier also up to 50 weapons per year. We do have now the capacity of 250. All the equipment is in place. We are on the way. We need it because we need now a long-term agreement also on the weapon side to help the Ukrainians. So Ukraine will need between 50-100 weapons per year because they fire such a lot that the weapons or the barrels for sure are destroyed sometimes. So there are smaller things. But these are not like the big tickets, like artillery, where we have between EUR 3.5 billion-EUR 5 billion.
Okay. Thank you. Last question maybe. You mentioned earlier the artillery system on the Boxer with your partner in Munich being shared 50/50. Is it right? So the RCH 155.
The reason for that is very clear because we have an agreement with KMW that everything which is coming on the Boxer now, starting from this year, all the contracts will be shared 50/50 between KMW and us. If there is our turret or if there is whatever is on, we share it 50/50, which is a good solution.
Okay. Great. Thank you very much.
Pleasure.
The next question comes from Sebastian Growe from BNP Paribas. Mr. Growe, the stage is yours.
Yeah. Me again. Thanks for taking my follow-up questions. Two quick ones, easy ones, and one more delicate one eventually. So the first one is just on M&A. And then just simply, there's no question. For the EUR 20 billion that you had put out in the sort of more longer term, is any M&A included here or not at all as we speak? The second question is okay.
No. No. It's not included.
Right. The second one would then on PPA be a question. I think, Steinert, you said before that you would expect something like EUR 80 million eventually for 2024, and then it would come down towards EUR 30 million or so, and then eventually even EUR 20 million by 2026 or so. Would you confirm that today?
I have to revise that number. In 2023, all in, we had EUR 70 million PPA. EUR 40 million was Expal, and EUR 20 million was for IG, 10% old acquisitions. In 2024, we expect, yeah, EUR 100 million. And then it comes down, 2025 to around EUR 70 million, 2026, EUR 40 million, around that.
Okay. Good stuff. And the last one is then on the infringement proceedings in Spain. Can you just provide us with an update or your view on the matter?
You think with cartel?
The legal case around yeah, exactly.
Yeah. We see not a real legal case about that. What happened is the following thing. So we had due diligence. And in the due diligence phase, the seller has to fill, as you know, the data. And there was a small company, civilian company, and they got some ingredients from the explosive side. And this was not on the list. They forgot it. And after the closing, the Kartellamt gave us, let me say, green lights. And after that, in that process, this smaller company said, "Okay. But we need also to protect that you give us whatever." It's not a lot. It's some 100 kilograms what is going on. And so we gave this information now to the commission, to the Monopoly Commission, Kartellamt. And we think that we can sort it out very soon. I see no bigger problems.
Okay. That's good. All right. Thank you.
Thank you. The next question comes once again from Sven Weier from UBS. Mr. Weier, you can ask your question now.
Yeah. Thank you. Just one on CapEx. To clarify, is the EUR 700 million already after the EUR 300 million down payment you get from the German government, or is that the gross CapEx? And also related to that, I was wondering about the leasing cash out. I think the total leasing cash out, including interest, for EUR 62 million. I was just wondering now with the new Weeze plant in Hungary, which I think are going to be leased, how that charge is going to develop in the coming years. Thank you.
Yeah. Well, regarding the CapEx, I start with the cash out for CapEx. In 2023, we had EUR 384 million cash out for CapEx and roughly EUR 700 million CapEx for 2024. They are, yeah, excluding our new production in Niedersachsen, our new plant. So it will be a higher number. But on the other hand, as Armin already mentioned, we get grants from the government. We will get additional down payments and so on. And of course, there's always a share of leasing CapEx. But that's not a cash out. You don't see it in the cash flow statement and so on. So that's why we start just reporting as the CapEx number, the cash out CapEx.
Yeah. I was just referring to the EUR 62 million you had in total of leasing payback and interest.
Yeah. That's, of course, including leasing and everything, leasing and, yeah, development and so on.
Cash out for factory in Niedersachsen will be for this year and for next year, yeah? So we have to pay something this year but not to next year because we will be ready next year, April. This is the idea. And as you know, if you have everything finished, then you pay the final bills. So this will be for this year and for next year. But you can see that this EUR 700 million is a very good figure. The positive thing is that for the ammunition contract, we are in negotiation with the German government at the moment that we get, yeah, a huge amount of down payment so that for the operational for the cash flow, it's very positive for us.
Understood. Thank you both.
Thank you.
The next question comes from Michael Raab from Kepler. Mr. Raab, the line is open for you.
Yeah. Hi. Thanks. Me again. CapEx is a really good buzzword. Sorry. I also have to ask for that again just to make really sure someone like me also got it right. This year's, say, EUR 600 million, EUR 700 million roundabout includes already a part of the investment for Unterlüß, or does that come on top of it?
No. It includes the EUR 700 million, includes a part of that. And if you see, there are three different stages of our investment. The total investment is EUR 300 million. From the EUR 300 million, you can see there is a forging. Then there is a filling plant. And there is an assembly plant. And then this will be on a level of EUR 200 million. And then there will be a missile plant and an RDX plant, which is then the other EUR 100 million. And so if you see that, the forging and the filling plant will be ready in April next year, then it should be, let me say, around it's a rough calculation. EUR 100 million will be this year in.
Okay. And then based on that, if we were to move forward on the timeline, would we extrapolate the 7% CapEx because you have more add-on projects coming? Or would the CapEx-to-sales ratio trail off again? And if so, to what levels?
5% is our target. But in such a strong growth rate that we have at the moment, I think it must be possible, yes? And if you build such big factories like Werk Niedersachsen, I think that is important that we invest also more. But as I said, at the end of the day, to be fair enough, 50% of Werk Niedersachsen is paid from the European Union if you count that in total. It's for the whole Rheinmetall Group. But at the end of the day, if I count that so this is a political decision that they want to go forward with that investment to protect Europe. So logically, we would presume that the absolute CapEx amount is bound for an increase in the next couple of years, say, mid-term.
But relative to sales, it's going to come down. Okay. Thank you. 5%-6% is my expectation. Between 5% and 6% is my expectation.
All right.
Yep.
Pretty good. Thank you.
There are no further questions. Thank you very much. I hand over to Armin Papperger for closing words.
Yeah. Thank you very much. Thanks for your time. Thanks for these very interesting questions. Hope I see you soon. I'm very happy to see all of you soon in the next Capital Markets Day because that is an international Capital Markets Day. I think I have a look now to Dirk. He will be very happy over the next months to give you information about that. Au revoir. Bye-bye.
Thank you for participating in the conference call. This call is now closed.