German defense contractor Rheinmetall reduced its full-year 2026 financial guidance late Wednesday, attributing the revision to delays affecting military contracts and ammunition deliveries. The company now projects sales of approximately 13.2 billion euros, down from its prior guidance range of 13.7 billion to 14.2 billion euros, while expected operating margin fell to around 18.5% from the previously anticipated 19%.
The guidance cut marks the second reduction since August, when Germany abandoned plans for a major warship construction project that would have represented Rheinmetall’s largest contract since World War II. Specific challenges cited included postponements in the German military’s Arminius program, a significant procurement initiative for Boxer armored vehicles produced through ARTEC, a joint venture between Rheinmetall and Franco-German defense group KNDS. The company also disclosed setbacks in artillery ammunition acceptance testing.
Rheinmetall stock declined 16.1% on Thursday, bringing cumulative year-to-date losses to approximately 50%. This stood in contrast to the company’s strong historical performance, having delivered average annual gains of 119% over the previous four years as European governments increased military spending following Russia’s 2022 invasion of Ukraine. RBC analysts characterized the announcement as “clearly negative,” expressing concerns about the Boxer program’s timing and scope, warning the development could intensify broader investor debate about traditional defense technology versus emerging alternatives.
Despite the disappointing guidance, third-quarter results showed operational improvements, with sales rising 32% year-on-year to 3.15 billion euros and operating profit surging 62% to 553 million euros. New order intake totaled 2.89 billion euros, bringing the company’s backlog to 78 billion euros by quarter end. Citi analysts noted the quarterly results represented “a strong set of Q3 results,” though this positive assessment was overshadowed by the forward guidance reduction and associated concerns about cash conversion targets and delayed revenue from new business initiatives, particularly involving Dutch technology firm Destinus.
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