Rheinmetall announced reduced full-year guidance on Thursday, projecting sales between 13.7 billion euros and 14.2 billion euros, down 300 million euros from prior expectations. The revision followed Germany’s decision earlier in the year to cancel a major warship program for which the defense contractor was positioned as the primary contractor.
The company’s first-half performance remained solid, with sales reaching 5.2 billion euros and representing 39% growth compared to the prior year. Profit expanded 74% during the period, fueled by increased deliveries of military vehicles, ammunition, and air-defense systems. The company’s newly acquired naval division contributed 334 million euros to first-half revenues. Chief Executive Armin Papperger stated the organization had achieved record growth and remained on track to meet annual objectives.
Rheinmetall’s stock exhibited volatility during early trading, opening approximately 3% lower before reversing to trade up 2%, eventually settling near the flatline. The guidance reduction came despite the company securing new orders valued at 14.9 billion euros in the first half, bringing its order backlog to 80.5 billion euros. Cash flow turned negative at 1.6 million euros, which management attributed to shifts in advance payments, inventory increases, and elevated investment spending.
The F126 warship cancellation served as a broader reminder to investors that government defense spending commitments remain subject to policy reversals. The program’s scrapping had previously triggered a 19% decline in Rheinmetall shares when announced and created broader sector concerns. Peer companies including BAE Systems, Saab, and Thales experienced similar share declines in recent months as investors reassessed whether industry valuations had outpaced delivery capabilities amid lengthening order books and typical sector challenges including project delays and cost increases.
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