Rheinmetall has lowered its full year earnings forecast on the back of falling sales at its automotive business.

The German supplier, whilst reporting a slight rise in its nine-month performance, said: "In response to the Q4 drop in call orders by auto industry customers worldwide Rheinmetall no longer expects its automotive sector to achieve its original sales and EBIT forecasts for this year."

Rheinmetall said it is now expecting an EBIT of around EUR80m for the automotive segment and an EBIT of at least EUR180m from its defence segment, together yielding a revised consolidated EBIT of between EUR250m and EUR260m as opposed to an original forecast of EUR280m to EUR290m. This revised estimate compares with 2007's total of EUR270m.

The company added that the outlook in 2009 remained unpredictable.

"On the basis of the estimates so far publicly announced by its auto industry customers, Rheinmetall assumes that 2009 will prove to be a tough year for the industry with special challenges. The highly uncertain situation makes it presently impossible for automotive to submit a reliable forecast for 2009 and hence reaffirm its medium-term goals."

For the first nine months of 2008, Düsseldorf-based Rheinmetall reported results slightly up from last year's level. But, whilst its defence segment, largely insulated from economic cycles, made solid progress, the automotive segment did not escape the general downturn in the industry.

With sales of EUR2.827bn, the group's EBIT rose to EUR163m from EUR157m, in the same period last year.

CEO Klaus Eberhardt said: "Rheinmetall is showing stability even in these rather unsettled times. Although we cannot escape the difficult situation in the global auto business, we have already responded to these challenges with cost-cutting measures and across-the-board use of our flexible working hour arrangements."

The automotive sector generated sales of EUR1.65bn, a drop of 3% due to sharp production cutbacks in the US.