Rheinmetall cuts 2026 outlook as German military contracts stall, shares drop 17%
German defense company lowers sales and margin targets after delays to Boxer vehicle program and ammunition testing, wiping out nearly half its value this year.
At a glance
- Rheinmetall cut its 2026 sales forecast to €13.2 billion and operating margin to 18.5% due to delays in German military contracts.
- Shares fell over 17% in early trading, extending year-to-date losses to about 46% after a four-year rally.
- Despite the outlook cut, third-quarter sales rose 32% to €3.15 billion and the order backlog reached €78 billion.
German defense giant Rheinmetall cut its full-year guidance late Wednesday, citing delays to military contracts and ammunition deliveries. The move marks the company's second outlook reduction since August, when Germany scrapped plans to build warships in what would have been Rheinmetall's largest order since World War II.
Guidance cut details The company now expects 2026 sales of around €13.2 billion ($14.9 billion), down from a previous range of €13.7 billion to €14.2 billion. Its operating margin forecast was lowered to about 18.5% from 19%. Rheinmetall blamed delays in the German military's Arminius project — a major procurement program for Boxer armored vehicles built by the ARTEC joint venture with KNDS — and setbacks in artillery ammunition acceptance testing. The Arminius contract is now expected to be commissioned next year, pushing advance payments into 2027 and jeopardizing a cash conversion target above 40%, though the firm still anticipates positive operating free cash flow for 2026.
Share reaction Rheinmetall shares fell more than 17% in early trading, extending year-to-date losses to roughly 46%. The decline follows an average annual gain of 119% over the prior four years, during which the company became a primary beneficiary of increased European military spending after Russia's full-scale invasion of Ukraine in 2022.
Analyst views RBC analysts called the announcement "clearly negative," citing concerns over the Boxer program's timing, scope and impact on medium-term guidance. They warned the news could fuel broader investor worries about traditional defense technology versus newer entrants. Meanwhile, Citi analysts described the third-quarter results as "a strong set of Q3 results" despite the outlook cut.
Strong quarterly results Third-quarter sales rose 32% year-on-year to €3.15 billion, while operating profit jumped 62% to €553 million. New order intake reached €2.89 billion, bringing the total backlog to €78 billion at the end of September. The company also flagged delays in expected fourth-quarter revenue from new business activities, particularly its partnership with Dutch defense technology firm Destinus.
Source: CNBC Top News.
Questions and answers
- Why did Rheinmetall cut its 2026 outlook?
- The company cited delays in the German military's Arminius Boxer vehicle program and setbacks in artillery ammunition acceptance testing, which push advance payments into 2027.
- How did Rheinmetall shares react to the guidance cut?
- Shares fell more than 17% in early trading, bringing year-to-date losses to roughly 46%.
- What were Rheinmetall's third-quarter financial results?
- Third-quarter sales increased 32% year-on-year to €3.15 billion, operating profit jumped 62% to €553 million, and the order backlog stood at €78 billion.
Original reporting: CNBC Top News (cnbc.com)
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