War as a business model: Heckler & Koch’s profits have soared amid record defense budgets and the bloodshed in Ukraine

The German small arms manufacturer Heckler & Koch continues to benefit from the sharp increase in NATO countries’ military spending against the backdrop of Russia’s war against Ukraine.

In the first nine months of 2025, the company’s net profit rose by almost 50% to 25.4 million euros, and its order backlog reached a record 460.9 million euros.

The key driver was a major Bundeswehr contract for the supply of 120,000 new G95A1 assault rifles based on the HK416, whose serial production began in May 2025. Revenue for the three quarters increased to 279.1 million euros, and EBITDA reached 52.6 million euros. Against this background, the management approved investments of 85 million euros in the Oberndorf facility for production modernization and digital transformation.

The company’s growth is directly linked to the expansion of defense budgets in Europe: NATO countries intend to raise defense spending to 3.5% of GDP by 2035, and Germany to 152.83 billion euros by 2029. These funds are also being used to strengthen the alliance’s eastern flank and support Ukraine, which keeps demand for small arms high and reinforces Heckler & Koch’s position as Germany’s largest manufacturer of such weapons.