Cristina Gallardo

Military Drones Could Be Defense Industry’s Big Bubble, Rheinmetall’s CEO Says EXCLUSIVE: Military drones are a crucial part of war in Ukraine and are rapidly expanding, but Armin Papperger is not convinced by their market foundations.

The business of making military drones could be the defence sector’s biggest bubble, Armin Papperger, the chief executive of rapidly growing arms giant Rheinmetall, said in an interview at #DSEI2025.

www.wsj.com/world/europe...

I’ll be at #DSEI2025 this week, reporting for Dow Jones and @wsj.com on the latest defence news.

Hit me with your tips by DM or 📧 at cristina.gallardo@wsj.com

Babcock Downplays Concerns Over U.S. Commitment to Aukus Security Pact The U.S. is reviewing its participation in the three-way alliance as the country stresses Trump’s “America First” agenda. Babcock’s CEO said the review wasn’t unusual.

NEW: Babcock International's CEO downplayed widespread concerns about the U.S. commitment toward the Aukus multi-billion dollar submarine deal with the U.K. and Australia, aimed at countering China's rise in the Indo-Pacific.

www.wsj.com/business/ear...

UK government announces that it will in fact buy F-35A and join NATO nuclear sharing. The UK will purchase 12 F-35As and join NATO’s nuclear mission. gov.uk/government/new…

Less than two weeks ago the SDR external reviewers had implied they were not keen on that choice (below).

Babcock Earnings Rise on Higher U.K. Defense, Nuclear-Power Spending The defense company reported revenue of £4.83 billion for the year ended March 31, compared with £4.39 billion the year before.

Babcock International reported higher revenue and underlying operating profit for its fiscal year amid growing demand in the U.K. for defence and civil nuclear-energy equipment.
www.wsj.com/business/ear...

Loving how descriptive and colourful you can be haha

SCOOP: Spain's Indra Sistemas is seeking to take part in a joint venture formed by Rheinmetall and Leonardo to produce tanks and armoured vehicles, people familiar with the talks said.

Full story on Dow Jones NewsPlus platform for subscribers - here you've got a snippet 👇

Eastern European countries aiming to strengthen their borders with Russia could boost growth, QinetiQ CEO Steve Wadey said.
“That gives us a really significant opportunity to build effectively ... an Eastern shield of persistent surveillance to protect that border.”

QinetiQ to Target NATO Countries for Future Growth After Posting Earnings Loss The U.K. defense company’s results took a hit from a slowdown in the award of British contracts and the uncertainty caused by the change in the U.S. administration.

UK defence company QinetiQ said it would launch a restructuring drive to bring down costs, refine its US strategy and focus on growing its business with NATO countries, after posting a loss in earnings for fiscal 2025.

www.wsj.com/business/ear...

Lockheed Martin Speeds Up European Defense Tie-Up Talks Amid EU Push to Buy Local The U.S. defense contractor is trying to expand its production and supply chains in Europe, a senior executive said.

US defence contractor Lockheed Martin is accelerating talks for new partnerships in Europe, a senior executive said, amid a continental push to reduce its military reliance on American arms makers.

www.wsj.com/business/loc...

Rheinmetall Expects Rapid Increase in NATO Military Spending Germany’s biggest arms manufacturer continues to expect an increase of 35% to 40% in sales, but said guidance could be upgraded if an expected surge in demand for military equipment was confirmed.

Rheinmetall CEO Armin Papperger says NATO chief Mark Rutte told him that the alliance’s 32 member states should increase their military spending to 3.5% of their GDP.
The company backed its 2025 guidance but left the door open for an upgrade this year.
www.wsj.com/business/ear...

IPOs Put On Ice By Tariff Uncertainty, EY Warns Some companies planning to list this year, especially those aiming at going public in the first quarter, have delayed their IPOs to as late as early 2026.

IPOs planned for the next few months have been put on ice due to the market volatility caused by the announced US tariffs.
But we could still see IPOs growth in the aerospace and defence sectors, EY says in a report.
www.wsj.com/finance/ipos...

Menaced by Trump, Canada Prepares to Join E.U. Military Industry Efforts Canada’s draft deal to participate in Europe’s defense industry will bring contracts to Canadian manufacturers and help lessen dependence on the United States.

“Canada is in advanced talks with the European Union to join the bloc’s new project to expand its military industry, a move that would allow Canada to be part of building European fighter jets and other military equipment” www.nytimes.com/2025/03/19/w... www.nytimes.com/2025/03/19/w...

U.S., U.K. Defense Companies Mostly Excluded From New EU Loans Only defense companies headquartered in the EU and those from third countries with defense pacts in place, such as Norway or Ukraine, would be able to receive orders financed with EU loans under the b...

Arms manufacturers from the U.S. and U.K. are set to be largely excluded from new European Union defence procurement loans unless their countries sign defence and security agreements with the bloc.

My latest article on the EU's package to boost defence 👇
www.wsj.com/world/europe...

Italian newspaper says it has published world’s first AI-generated edition Il Foglio says artificial intelligence used ‘for everything – the writing, the headlines, the quotes … even the irony’

Italian newspaper says it has published world’s first AI-generated edition

Il Foglio says artificial intelligence used ‘for everything – the writing, the headlines, the quotes … even the irony’

www.theguardian.com/technology/2...

Canada's Carney makes statement by choosing Europe, not US, for first foreign trip The prime minister hopes to achieve solid support as he visits the UK and France, writes Lyse Doucet.

'"We appreciate all the symbolic gestures but we need more public backing," a Canadian official told me in a voice which underlined the nervous disbelief shared by most Canadians' www.bbc.co.uk/news/article...

Papperger pointed out that Volkswagen’s Osnabrueck site, located in northwest Germany and whose future is up in air, could easily be transformed into a defence manufacturing plant.

The acquisition of Osnabrueck could take place very quickly if the deal was right, he added.

Rheinmetall is churning out 750,000 rounds of 155mmm ammunition a year, which should rise to 1.1 million rounds, its CEO said.

In order to expand production further, Rheinmetall is open to buying other ammunition manufacturers as well as plants from carmakers, he said.

Rheinmetall said it expects sales to grow by between 25% and 30% this year, and is likely to lift its guidance in the comings months to better capture the impact of Europe’s plans to rearm, as increasing defence budgets across the continent are still being fleshed out.

If Rheinmetall succeeds in attracting that level of European NATO spending, the German manufacturer could significantly beat even the highest of investor expectations for sales and Ebita in the coming five years, J.P. Morgan analysts David Perry and Lucy Fitzgerald said.

Rheinmetall Signals Booming Sales As Europe Enters ‘Era Of Rearmament’ While 2024 sales grew 35%, boosted by increased demand, there was a dip in sales at its power systems and trade divisions at the start of of the year.

Rheinmetall's CEO Armin Papperger estimates European NATO countries could increase their defence spending to a combined of almost 1 trillion euros by 2030.

The German arms maker could capture up to 20%-25% of this money, he said.

www.wsj.com/business/ear...

Leonardo Shares Drop Amid Lack of Details on Aerostructures Future, Profit Taking The stock fell after the company failed to provide expected details on its plan to rescue its troubled aerostructures division, amid profit taking in the defense sector.

Leonardo's shares fell Wednesday after the Italian company failed to provide much-expected details on its plan to rescue its troubled aerostructures division, and amid profit taking in the defence sector linked to a potential Ukraine-Russia ceasefire.

www.wsj.com/business/leo...

Rheinmetall Annual Sales Soar to Record $10.65 Billion, But Miss Target While 2024 sales grew 35%, boosted by increased demand, there was a dip in sales at its power systems and trade divisions at the start of of the year.

Rheinmetall's annual sales reached a record 9.75 billion euros, as Europe increased its reliance on the German arms maker to modernize its defence capabilities.

"An era of rearmament has begun in Europe that will demand a lot from all of us," CEO Armin Papperger said.
www.wsj.com/business/ear...

Leonardo to Launch Constellation of Military, Civil Satellites as Europe Beefs Up Defense Spending The Italian aerospace and defense group said it will launch 18 military satellites and 20 civil multi-sensor satellites between 2027 and 2028, which would provide European governments with an alternat...

Italian aerospace and defence company Leonardo said it plans to put nearly 40 satellites in orbit by 2028 to offer services for military and civilian purposes, which will compete with Elon Musk's Starlink.

www.wsj.com/business/ear...

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Leonardo, Baykar Technologies Team Up to Develop Unmanned Drones as Europe Rearms The first product from the alliance will likely be a military drone capable of carrying all the munitions currently used by fighter jets, with a prototype ready in about a year’s time.

Italy’s Leonardo and Turkey’s Baykar Technologies agreed to form a joint venture to develop unmanned drones, ahead of an expected increase in demand from Europe, as the continent rearms.

www.wsj.com/world/europe...

NATO armies unprepared for drone wars, Ukraine commander warns Kyiv is striving to stay ahead of the enemy, employing artificial intelligence, deploying more ground drones and testing lasers to bring down Russian unmanned aerial vehicles.

NATO armies unprepared for drone wars, Ukraine commander warns

www.reuters.com/world/nato-a...

Apple co-founder Wozniak criticizes Big Tech, Musk and AI STORY: :: Apple co-founder Wozniak criticizes Big Tech, Elon Musk and AI at the Mobile World Congress:: March 4, 2025:: Barcelona, Spain:: Steve Wozniak, Apple co-founder :: And all the big tech compa...

If you missed it, here are some good video nuggets courtesy of Reuters:

www.yahoo.com/news/apple-c...

Today I had the most fascinating time with Apple's co-founder Steve Wozniak on the stage of Talent Arena, linked to the tech trade show #MWC25 in Barcelona.

Very grateful for his insights on tech past and future, Elon Musk's pivot to politics, and the warm audience.