Defense giant Rheinmetall plunges over 13% after cutting outlook on stalled military contracts
Defense giant lowers sales and margin outlook following setbacks in Boxer project and ammunition testing
Quick Look
- German defense firm Rheinmetall has lowered its 2026 financial guidance, citing delays in the Arminius Boxer project and artillery ammunition testing.
- Shares dropped 13.7% following the announcement, marking the company's second outlook cut since August.
AI-generated summary
Why It Matters
Rheinmetall has seen significant growth since 2022 due to increased European military spending following the invasion of Ukraine. This is the company's second outlook cut since August.
German defense giant Rheinmetall cut its full-year guidance late Wednesday, citing delays to military contracts and ammunition deliveries.
It marks the company's second outlook cut since August, when Germany scrapped plans to build warships in what would have been Rheinmetall's biggest order since World War II.
The defense company now expects sales to rise to around 13.2 billion euros ($14.9 billion) in 2026, down from a prior outlook range of between 13.7 billion and 14.2 billion euros. It is expected to have an operating margin of around 18.5%, down from the previously expected 19%.
Rheinmetall said it's revising its 2026 guidance due to delays in the German military's Arminius Boxer project, now expected to be commissioned next year, and setbacks in artillery ammunition acceptance testing.
Shares fell 13.7% in early trading.
Coming into Thursday trading, shares are down roughly 35% year-to-date, following an average annual gain of 114% over the prior four years as it became one of the main beneficiaries of ramped-up military spending by European governments amid Russia's full-scale invasion of Ukraine in 2022.
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 concerns about traditional defense technology.
"We suspect bears will see this negatively as part of the ongoing 'new-tech vs old-tech' sector debate," they said.
The guidance cut came as the German company posted improving results, with third-quarter sales increasing 32% year-on-year to 3.15 billion euros and operating profit jumping 62% to 553 million euros.
New order intake was 2.89 billion euros, bringing its backlog to 78 billion euros by the end of the third quarter.
Open Questions
- What is the long-term impact on the Boxer program timeline?
- Will further defense contracts face similar testing delays?
