Rheinmetall reported a strong increase in defense orders in the first half of 2012, but saw sales in the sector fall back before companies consolidated for the first time were included.

The German automobile and defense systems manufacturer said overall sales were up 9%, to 2.25 billion Euros ($2.76 billion), for the first half of the year.

Defense generated 1.01 billion Euros in sales, a 106 million euro improvement on the same period last year.

In a statement, though, Rheinmetall said growth resulting from companies consolidated into overall sales figures for the first time accounted for 137 million Euros in first-half sales.

The company said it is forecasting defense sales of about 2.5 billion Euros for the year.

Defense sector earnings for the first six months fell to 56 million Euros from 62 million Euros. The 2012 figures were boosted by the sale of Rheinmetall’s share of an unmanned air vehicle business to EADS Cassidian.

Rheinmetall’s defense order book was in better shape than six-month sales and earnings. New orders increased to 1.13 billion Euros, a 33% increase compared to the same period last year.

The company said the highlights included an order for its Gladius soldier system for the German military, and two air defense orders from the Middle East and Asia.