Rheinmetall, KMW Gain Due To Increased German Military Spends

German defense manufacturers are gaining due to increased spending by German military in the wake of Russia’s incursions in Ukraine and its military stance on the NATO’s eastern border.

Most equipment orders for new equipment and upgrades of existing armor are going to Rheinmetall and Krauss-Maffei Wegmann, Fox Business reported Monday.

German military spending is rising more than at any time since the Cold War. Of the largest orders on the table, an agreement involving Rheinmetall and KMW will be EUR800 million ($858 million) to modernize 100 ‘Leopard 2’ main battle tanks.

The agreement is yet to be signed.  Modernization of the MBTs will involve adding new armor to protect against roadside bombs, high-tech communication systems and night-vision capabilities. The upgraded tanks could be used against Russian ground attack and would be similar to the Leopard 2s, Canada deployed in Afghanistan, the news daily reported quoting unnamed experts.

KMW Chief Executive Frank Haun credits the general uptick in business to a 2014 NATO summit in Wales -- just months after Russia annexed the Ukrainian peninsula of Crimea -- at which members broadly committed to increase spending to 2% of gross domestic product.

"I think there is a need for refurbishment, as there is a need for new equipment without a doubt," said Haun.