Rheinmetall, a major German defense manufacturer, reduced its full-year 2026 guidance late Wednesday due to postponements in military contracts and ammunition deliveries. The company now projects sales of approximately 13.2 billion euros, down from its previous forecast range of 13.7 billion to 14.2 billion euros. Operating margin expectations also declined to around 18.5% from the previously anticipated 19%.
The revision represents the company’s second outlook adjustment since August, when Germany abandoned plans for a warship construction project that would have been Rheinmetall’s largest order since World War II. The most significant delays affect the Arminius program, Germany’s major military procurement initiative for Boxer armored vehicles manufactured through ARTEC, a joint venture between Rheinmetall and Franco-German defense group KNDS. Artillery ammunition acceptance testing has also encountered setbacks. The Arminius contract is now expected to be commissioned in the following year rather than as initially scheduled.
Rheinmetall’s stock declined 16.1% when trading closed on Thursday, bringing cumulative losses for the year to approximately 50%. This sharp decline contrasts sharply with the company’s recent performance trajectory, which saw average annual gains of 119% over the prior four years as European governments substantially increased military spending following Russia’s full-scale invasion of Ukraine in 2022. RBC analysts characterized the announcement as “clearly negative” and expressed concerns about the timing, scope, and medium-term implications of the Boxer program delays. They also noted potential broader investor apprehension regarding traditional defense technology relative to newer alternatives.
Despite the negative guidance revision, Rheinmetall’s third-quarter financial results showed improvement, with sales rising 32% year-on-year to 3.15 billion euros and operating profit increasing 62% to 553 million euros. New order intake totaled 2.89 billion euros, and the company’s order backlog reached 78 billion euros by quarter’s end. Citi analysts characterized the third-quarter performance as a strong financial result, though this assessment was overshadowed by the guidance reduction. The company indicated that Boxer contract delays would also defer advance payments into 2027, affecting its previous cash conversion target of over 40%, though positive operating free cash flow remained anticipated for the year.
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