Sales set to grow up to 45% in 2026
German Rheinmetall MAN tactical military transport vehicles parked at the Edvard Peperko military barracks.
Luka Dakskobler | Light Rocket | Getty Images
German arms manufacturer Rheinmetall While it reported that 2025 revenue was up 29% from the previous year and expectations were not met, it said it sees this year’s sales growing by up to 45%.
It also said it was “in a prime position to help the United States replenish its stockpile of missiles” used in the war in Iran, such as the supply of critical solid rocket engines.
In a presentation to accompany earnings on Wednesday, the company said “higher spending on missile stockpiles and air defense” was “inevitable.”
This comes as defense companies are expected to be offset by increased government spending on military capabilities, amid rising demand due to wars in Ukraine and Iran. Rheinmetall expects the order backlog to more than double this year to 135 billion euros.
“The tense security situation underlies the promising position of the Group, whose products play an increasingly important role in increasing defense capabilities in Germany and partner countries,” Rheinmetall said. he said.
The defense giant, Germany’s seventh-largest company by market value, announced the 2026 outlook it hinted at in the pre-closing call in early February.
Group sales are expected to increase by 40% to 45%, reaching between 14 billion ($16.26 billion) and 14.5 billion euros. Operating margin is expected to be around 19%, down from 18.5% in 2025. Jefferies analysts called the guidance “realistic but soft.”
“The world is changing rapidly and Rheinmetall is well prepared,” CEO Armin Papperger said in a statement.
“With our products, we will have a significant share in the increasing equipment expenditure of the armed forces and will meet the needs of modern armed forces in the 21st century.”
The pan-European stock market fell 5.2% in early trading on Wednesday. Stoxx 600 The index fell 0.7 percent.
Shares of defense stocks rose last year.
Sales rose 29% for the full year to 9.94 billion euros ($11.56 billion), according to LSEG estimates, falling short of expectations of 10.53 billion euros.
Earnings before tax and interest amounted to 1.68 billion euros, compared to forecasts of 1.75 billion euros; Backlog of orders reached a record level of 63.8 billion euros, an increase of 36% compared to the previous year.
Morningstar analyst Loredana Muharremi said before press: “As budget approvals continue towards the end of the year and defense spending picks up across Europe – particularly in Germany – we expect delayed programs to translate into contracts, supporting a recovery in nominations and reinforcing the company’s already high backlog.”
In February, the company stated that this year’s sales would be between 13.2 billion and 14.1 billion euros, with EBIT between 2.4 billion and 2.8 billion euros; both were 10% below expectations. Shares later fell 6.5%.
In February, Barclays analysts described the share move following the stated guidance as a “marked overreaction”, saying “expectations remain high and shares remain very sensitive to any information that emerges”.
Arms and ammunition growth will remain high and there is room for maritime businesses to also be resilient, analysts said, noting some confusion about similar figures this year given recent changes in business structure.
“From a structural perspective, we think nothing has really changed here: the growth in the backlog in 2026 will be significant.”
Shares of Rheinmetall, Europe’s leading provider of land systems and munitions, have risen nearly 540% in the last three years.
But earnings slowed last year as some investors questioned whether shares had reached their full value and whether growth could be sustained over the long term. Entering Wednesday trading, the stock was up just 3.4% year-to-date.
Other defense firms such as Rheinmetall and Britain’s UAE Systems and Italy Leonardo Against the backdrop of a Russia-Ukraine war, they appear well positioned to benefit from increased spending by European governments over the next five years.
increasing demand
Rheinmetall is considering selling its civilian automotive business to focus entirely on meeting demand for its defense business. It is now also active in the maritime sector after purchasing shipbuilder Naval Vessels Lürssen, which closed in February.
Shares of defense companies, including Rheinmetall It started to rise after the USA and Israel attacked Iran on February 28 and killed Iran’s Supreme Leader Ayatollah Ali Khamenei. It has raised fears that the attacks will escalate into an all-out war spanning the entire Middle East region, which will eventually lead to increased demand for military equipment.
Earnings later pared some gains, with major European defense stocks up between 5% and 10% on average since the initial attacks, while Rheinmetall entered trading on Wednesday having been largely flat during the period.
Smaller country peer Renk’s CEO Alexander Sagel said earlier this month that the Iran war could lead to increased demand for defense capabilities in the Gulf region.
In November last year, Rheinmetall predicted that its sales would quintuple in the next five years, driven by strong demand for weapons systems due to geopolitical tensions and the war in Ukraine. The company estimates that most of its estimated 50 billion euros in revenue by 2030 will come from its vehicle systems and weapons and ammunition businesses. Additionally, operating margin is projected to increase from 15.2% in 2024 to approximately 20%.
The Weapons and Ammunition business will grow by 27% in 2025, reaching 3.53 billion euros. Its largest unit, Vehicle Systems, which produces tanks and military trucks, grew by 32% in the year to 4.99 billion euros.
He proposed increasing the dividend from 8.10 euros per share to 11.50 euros last year due to increased sales and profits.
