Olaf Scholz's government statement on Sunday, February 27, 2022 should go down in history.

In it, the Chancellor announced a special fund for the Bundeswehr with a volume of 100 billion euros as a reaction to the Russian attack on Ukraine.

This money is to be used, among other things, to finance new armaments projects.

In addition, the NATO goal of spending more than 2 percent of gross domestic product on defense is to be met year after year in the future.

The day after, the Rheinmetall share price rose sharply.

The shares of the Düsseldorf armaments group ended Xetra trading on Monday, February 28, 2022, with a price increase of almost 52 percent.

The shares of other armaments companies also benefited in the short term from Chancellor Scholz's statements and the prospect of higher armaments spending.

Accordingly, some investors began to debate whether investors should now benefit from the war and invest in armaments companies in times of conflict.

The one difficult question

Ultimately, everyone has to answer this question for themselves.

At least many can take some comfort from the fact that democracies also need a strong military to be able to defend themselves against despots.

On the other hand, of course, weapons end up in many different war zones and thus also in the hands of dictators.

Accordingly, armaments companies actually fall out of a selection of stocks and financial products that is considered sustainable.

Although the sustainability topic "Environment, Social, Governance (ESG)" is playing an increasingly important role in investments, the recent price movements of armaments stocks such as Rheinmetall show that many investors apparently still have no problem with such investments - even or especially in times of war.

Not just armorers

Of course, Rheinmetall was already able to post positive business before the outbreak of the Russia-Ukraine war, because the group is not only active in the armaments sector, but also as a direct supplier to the global automotive industry.

Rheinmetall is also active in the fuel cell systems segment and in this way ensures more diversification in the civil sector in addition to the armaments business.

In the past financial year, the operating result increased by 33 percent compared to the previous year to a record value of 594 million euros.

In this way, Rheinmetall achieved an operating profit margin of 10.5 percent in the group.

This was above the previously forecast margin of around 10 percent and the previous year's figure of 8.3 percent.

Management attributed the improved profitability essentially to strict cost management and an advantageous product mix.

There is also good news for the shareholders: the dividend of EUR 2.00 per share for 2020 is to increase to EUR 3.30.

Again and again sharp course corrections

So far, a commitment to Rheinmetall has paid off for long-standing shareholders.

Over a ten-year period, the price rose by an average of around 13 percent a year.

The price development is now better than that of the second-tier index M-Dax, to which Rheinmetall belongs.

The benchmark index recorded an average price gain of eleven percent annually over the same period.

However, investors in Rheinmetall shares should take into account interim, sometimes sharp price corrections, as the years 2018 and 2020 have shown, for example.

Despite everything, a 10,000 euro investment ten years ago has turned into more than 34,000 euros today.

In the medium to long term, it should be clear that Rheinmetall will benefit from the higher spending in the armaments sector due to the war in Ukraine – and not only on the part of the German federal government.

In the latest figures, it was said that the group sees itself in a promising position in the changed security policy situation to play an important role in Germany and in partner countries with military products in the upcoming increase in defense capability.

For 2022, Rheinmetall is forecasting sales growth of 15 to 20 percent, while the operating profit margin is expected to be over 11 percent.

However, it was once again pointed out that the group does not only want to grow in the armaments sector.