Germany’s Rheinmetall plans to cut more than five hundred jobs at its battle tanks unit, as it restructures to increase profits at its defence business, a trade union official told Reuters on Wednesday.

Peter Seeger, IG Metall head in the northern city of Kiel, said more than 500 jobs at the production plants in Kiel and the central city of Kassel would be slashed.

The battle tanks business, which has annual sales of nearly 340 million euros ($427.26 million), employs around 1,300 staff.

It has manufacturing facilities in Kiel and Kassel as well as a plant in the southern city of Gersthofen, which Seeger said employed 50 staff and would be closed down.

A spokesman for the maker of defence equipment and automotive components, said job cuts were “inevitable”, without giving any further details.

Seeger said the union planned to present an alternative plan to management.

In August, Rheinmetall announced a revamp of Rheinmetall Landsysteme (RLS), which makes battle tanks, mine clearing systems and howitzers.

Operating profit at Rheinmetall’s defence division, which includes RLS, fell to 4 million euros from 38 million in the first three months of this year, partly on one-time effects and lower sales of its most profitable products. It does not publish figures for RLS.

MAIN FACTS:

-First half net profit came in at 84 million euros ($103 million), above EUR73 million in 2011.

-First half sales rose 9% from a year earlier to EUR2.25 billion, boosted by growth at the automotive unit.

-In the defense division, earnings before interest and taxes fell to EUR56 million from EUR62 million in the previous year, while automotive division's EBIT jumped 12% to EUR85 million.

-First half order intake was up around 17% at EUR2.35 billion, due to a sharp rise in orders at the defense division.

-Earnings per share for the period rose to EUR2.20 from EUR1.91 per share in 2011.

-The company confirmed 2012 sales guidance of EUR4.9 billion, driven by both the automotive and defense sectors, above 2011 sales of EUR4.45 billion.

MAIN FACTS:

-First half net profit came in at 84 million euros ($103 million), above EUR73 million in 2011.

-First half sales rose 9% from a year earlier to EUR2.25 billion, boosted by growth at the automotive unit.

-In the defense division, earnings before interest and taxes fell to EUR56 million from EUR62 million in the previous year, while automotive division's EBIT jumped 12% to EUR85 million.

-First half order intake was up around 17% at EUR2.35 billion, due to a sharp rise in orders at the defense division.

-Earnings per share for the period rose to EUR2.20 from EUR1.91 per share in 2011.

-The company confirmed 2012 sales guidance of EUR4.9 billion, driven by both the automotive and defense sectors, above 2011 sales of EUR4.45 billion.