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“We know how to scale production quickly because we know how to manage a cyclical business,” Eva Scherer says. (Daimler Truck)

Daimler Truck Holding AG has all the tools to benefit from rising defense spending in Europe, Chief Financial Officer Eva Scherer said.

The manufacturer’s defense business, which makes��logistics vehicles, is developing positively, Scherer told Bloomberg Television on March 13.

Countries including Germany and France have vowed to bolster their militaries in response to the Ukraine war.

“We are well positioned for defense growth,” Scherer said. “We know how to scale production quickly because we know how to manage a cyclical business.”

Daimler Truck expects to reach 1 billion euros�� ($1.14 billion) in defense revenue by 2028. The company has been cutting costs to come back from a period of muted truck demand and a costly transition to zero-emission technologies.

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Its home market Germany has eased borrowing rules to fund a massive expansion of its military. The government’s pledges to spend more on infrastructure and defense have been slow to translate into actual orders, Scherer said, though she added that there has been positive momentum in the country in recent weeks.

Daimler Truck, which reported solid earnings on March 12, is closely monitoring the Middle East war’s impact on its supply chains, the CFO said. She added that the region represents just 1% to 2% of the company’s global revenues.

“The biggest risk we see if the crisis prolongs is the macroeconomic environment,” Scherer said.