German Rheinmetall MAN tactical army transport automobiles parked within the Edvard Peperko army barracks.
Luka Dakskobler | Lightrocket | Getty Pictures
German arms maker Rheinmetall stated it sees this yr’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 battle in Iran, corresponding to supplying vital 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 army capabilities, amid elevated demand as a result of wars in Ukraine and Iran. Rheinmetall expects its order backlog to greater than double to 135 billion euros this yr.
“The tense safety state of affairs underpins the promising place of the Group, whose merchandise are taking part in an more and more vital function for the rise in defence capabilities in Germany and its accomplice international locations,” Rheinmetall stated.
The protection big, 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 consequence margin is anticipated to be round 19%, up from 18.5% in 2025. Jefferies analysts referred to as the steerage “life like however delicate.”
“The world is altering quickly, and Rheinmetall is nicely ready,” stated CEO Armin Papperger in a press release.
“With our merchandise, we can have a major share within the rising gear spend of the armed forces and ship what fashionable 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 yr.
Gross sales grew by 29% over the complete yr 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 document excessive of 63.8 billion euros, a 36% leap from the earlier yr.
“As funds approvals resumed towards yr‑finish and defence spending picked up throughout Europe – notably 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 yr would are available at between 13.2 billion and 14.1 billion euros, and EBIT between 2.4 billion and a pair of.8 billion euros, each greater than 10% beneath expectations. Shares subsequently fell 6.5%.
Barclays analysts in February referred to as the share transfer following the indicated steerage “a marked over-reaction,” saying that “expectations are excessive, and shares proceed to be very delicate to any info that comes out.”
Noting some confusion over the like-for-like numbers this yr, given latest adjustments to the enterprise construction, the analysts stated that weapon and ammunition progress will stay elevated, and there may be scope for its naval enterprise to be resilient, too.
“From a structural perspective we predict nothing has actually modified right here: the backlog progress in 2026 will probably be materials.”
Rheinmetall shares have risen about 540% over the previous three years, as a number one supplier of land techniques and ammunition in Europe.
Positive aspects, nonetheless, have moderated over the previous yr as some traders query whether or not shares have reached their full worth and if progress could be sustained long-term. Coming into Wednesday buying and selling, the inventory was up simply 3.4% year-to-date.
Rheinmetall and different protection corporations like Britain’s Bae Techniques and Italy’s Leonardo are seen as well-placed to capitalize on hiked spending by European governments over the following 5 years towards a backdrop of the Russia-Ukraine battle.
Elevated demand
Rheinmetall is seeking to promote its civilian automotive to focus purely on assembly demand for its defence enterprise. It is also now energetic 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 battle engulfing the whole Center East area, which might finally result in extra demand for army gear.
Positive aspects later pared some positive factors, and whereas giant 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 battle may drive rising demand for protection capabilities within the Gulf area.
In November final yr, Rheinmetall predicted its gross sales would quintuple over the following 5 years, boosted by strong demand for its weapons techniques amid geopolitical tensions and the battle in Ukraine. The majority of the estimated 50 billion euros in income by 2030 will come from its car techniques 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, Car Techniques, which makes tanks and army vehicles, grew 32% to 4.99 billion euros over the yr.
It proposed a dividend of 11.50 euros per share, up from 8.10 euros final yr, on the again of the rising gross sales and earnings.
