German Rheinmetall MAN tactical navy transport automobiles parked within the Edvard Peperko navy barracks.
Luka Dakskobler | Lightrocket | Getty Photos
German arms maker Rheinmetall stated it sees this 12 months’s gross sales rising by as a lot as 45% because it reported 2025 income rising 29% year-over-year, lacking expectations.
It additionally stated it was in a “prime place to assist the US replenish their missile stockpiles” used within the conflict in Iran, reminiscent of supplying important stable rocket motors.
In a presentation to accompany earnings on Wednesday, the corporate stated “larger spend for missile restocking and air defence” was “inevitable.”
It comes as protection corporations are anticipated to be on the receiving finish of governments’ hiked spending on navy capabilities, amid elevated demand because of the wars in Ukraine and Iran. Rheinmetall expects its order backlog to greater than double to 135 billion euros this 12 months.
“The tense safety state of affairs underpins the promising place of the Group, whose merchandise are taking part in an more and more essential function for the rise in defence capabilities in Germany and its companion international locations,” Rheinmetall stated.
The protection large, Germany’s seventh-largest firm by market worth, issued its 2026 outlook, which it had hinted at throughout a preclose name in early February.
Group gross sales are anticipated to develop by between 40% and 45% to between 14 billion ($16.26 billion) and 14.5 billion euros. Working outcome margin is predicted to be round 19%, up from 18.5% in 2025. Jefferies analysts known as the steering “reasonable however mushy.”
“The world is altering quickly, and Rheinmetall is nicely ready,” stated CEO Armin Papperger in a press release.
“With our merchandise, we could have a major share within the growing tools spend of the armed forces and ship what trendy armed forces want within the twenty first century.”
Shares fell 5.2% in early buying and selling on Wednesday whereas the pan-European Stoxx 600 index was down 0.7%.
Shares of protection shares have risen over the previous 12 months.
Gross sales grew by 29% over the total 12 months to 9.94 billion euros ($11.56 billion), lacking expectations of 10.53 billion euros, in accordance LSEG estimates.
Earnings earlier than tax and curiosity got here in at 1.68 billion euros, in contrast with estimates of 1.75 billion euros, whereas the order backlog reached a file excessive of 63.8 billion euros, a 36% bounce from the earlier 12 months.
“As price range approvals resumed towards 12 months‑finish and defence spending picked up throughout Europe – significantly in Germany – we anticipate delayed programmes to transform into contracts, supporting a rebound in nominations and reinforcing the corporate’s already elevated backlog,” famous Morningstar analyst Loredana Muharremi forward of the print.
In February, the corporate indicated gross sales for this 12 months would are available at between 13.2 billion and 14.1 billion euros, and EBIT between 2.4 billion and a couple of.8 billion euros, each greater than 10% under expectations. Shares subsequently fell 6.5%.
Barclays analysts in February known as the share transfer following the indicated steering “a marked over-reaction,” saying that “expectations are excessive, and shares proceed to be very delicate to any data that comes out.”
Noting some confusion over the like-for-like numbers this 12 months, given latest modifications to the enterprise construction, the analysts stated that weapon and ammunition development will stay elevated, and there’s scope for its naval enterprise to be resilient, too.
“From a structural perspective we predict nothing has actually modified right here: the backlog development in 2026 might be materials.”
Rheinmetall shares have risen about 540% over the previous three years, as a number one supplier of land programs and ammunition in Europe.
Positive factors, nevertheless, have moderated over the previous 12 months as some traders query whether or not shares have reached their full worth and if development may be sustained long-term. Coming into Wednesday buying and selling, the inventory was up simply 3.4% year-to-date.
Rheinmetall and different protection companies like Britain’s Bae Techniques and Italy’s Leonardo are considered as well-placed to capitalize on hiked spending by European governments over the following 5 years towards a backdrop of the Russia-Ukraine conflict.
Elevated demand
Rheinmetall is trying to promote its civilian automotive to focus purely on assembly demand for its defence enterprise. It is also now lively within the naval sector following its acquisition of shipbuilder Naval Vessels Lürssen, which closed in February.
Shares of protection corporations, together with Rheinmetall, initially spiked after the U.S. and Israel launched assaults on Iran on Feb. 28, killing its Supreme Chief, Ayatollah Ali Khamenei. It raised fears that the assaults would develop right into a full-blown conflict engulfing your complete Center East area, which might finally result in extra demand for navy tools.
Positive factors later pared some good points, and whereas massive European protection shares are up on common between 5% and 10% for the reason that first strikes, Rheinmetall was largely flat over that interval, coming into Wednesday buying and selling.
Smaller country-peer Renk’s CEO Alexander Sagel stated earlier this month that the Iran conflict may drive growing demand for protection capabilities within the Gulf area.
In November final 12 months, Rheinmetall predicted its gross sales would quintuple over the following 5 years, boosted by strong demand for its weapons programs amid geopolitical tensions and the conflict in Ukraine. The majority of the estimated 50 billion euros in income by 2030 will come from its car programs and weapon and ammunition companies, the corporate forecasted. It additionally sees working margin increasing to about 20%, up from 15.2% in 2024.
In 2025, the Weapon and Ammunition enterprise grew 27% to three.53 billion euros. Its largest unit, Automobile Techniques, which makes tanks and navy vans, grew 32% to 4.99 billion euros over the 12 months.
It proposed a dividend of 11.50 euros per share, up from 8.10 euros final 12 months, on the again of the rising gross sales and earnings.
