German Rheinmetall MAN tactical military transport vehicle parked at the Edvard Peperko military barracks.
Luka Dakskovler | Light Rocket | Getty Images
german weapons manufacturer line metal reported a 29% year-on-year increase in sales in 2025, but said it expects sales to increase by up to 45% this year, lower than expected.
It also said it was in a “key position to support the replenishment of the U.S. missile stockpile” used in the Iran war, including by supplying critical solid rocket motors.
“Increased spending on missile replenishment and air defense” is “inevitable,” the company said in a presentation accompanying Wednesday’s earnings call.
The announcement comes as defense companies are expected to benefit from increased government military spending due to increased demand from the wars in Ukraine and Iran. Rheinmetall expects its order backlog to more than double this year to 135 billion euros.
“The tense security situation confirms the group’s promising position, and its products play an increasingly important role in improving the defense capabilities of Germany and its partner countries,” Rheinmetall said.
Germany’s seventh-largest defense company by market capitalization announced its outlook for 2026, which it hinted at in a preliminary press conference in early February.
Group sales are expected to increase by 40-45% to between 14 billion ($16.26 billion) and 14.5 billion euros. Operating profit margin is expected to be approximately 19%, up from 18.5% in 2025. Analysts at Jefferies called the guidance “realistic but soft.”
“The world is changing rapidly and Rheinmetall is well prepared,” CEO Armin Papperger said in a statement.
“With our products, we will make a significant contribution to increasing military equipment spending and provide what modern militaries need in the 21st century.”
Shares fell 5.2% in early trading on Wednesday, while stocks across Europe fell sharply. Stocks 600 The index fell by 0.7%.
Defense stocks have risen in value over the past year.
LSEG estimated full-year sales rose 29% to 9.94 billion euros ($11.56 billion), below expectations of 10.53 billion euros.
Pre-tax profit was 1.68 billion euros, compared to the expected 1.75 billion euros, and the order backlog reached a record high of 63.8 billion euros, an increase of 36% year-on-year.
“As budget approvals resume towards the end of the year and defense spending increases across Europe, particularly in Germany, we expect delayed projects to be converted into contracts, supporting a pick-up in picks and further strengthening the company’s already-building backlog,” Morningstar analyst Loredana Muharemi wrote ahead of print.
In February, the company said it expected sales of 13.2 billion to 14.1 billion euros and EBIT of 2.4 billion to 2.8 billion euros this year, both of which were more than 10% below expectations. The stock price has since fallen 6.5%.
Barclays analysts in February called the stock’s move in line with the guidance provided a “significant overreaction” and said “expectations are high and the stock remains highly sensitive to information that continues to emerge.”
Analysts noted confusion over this year’s comparable numbers given recent business structure changes, and said arms and ammunition growth will remain high going forward and the naval business also has room to be resilient.
“From a structural perspective, we don’t think anything has changed here. Backlog growth will be significant in 2026.”
Rheinmetall’s share price has increased by approximately 540% over the past three years as Europe’s leading provider of land systems and ammunition.
But the gains over the past year have slowed, with some investors questioning whether the stock is well worth its value and whether it can sustain growth over the long term. In Wednesday trading, the stock is up just 3.4% since the beginning of the year.
Other defense companies like Rheinmetall and UK bay systems and italian leonardo It is seen as well-placed to take advantage of increased spending by European governments over the next five years against the backdrop of the Russia-Ukraine war.
increase in demand
Rheinmetall is considering selling its civilian vehicles to focus solely on meeting the demands of its defense business. It is now also active in the naval sector after acquiring the shipbuilding company Naval Vessels Lürssen, which was completed in February.
Shares in defense companies, including Rheinmetall, initially soared after the United States and Israel launched an attack on Iran on February 28, killing Supreme Leader Ayatollah Khamenei. Concerns were raised that the attack could lead to a full-scale war involving the entire Middle East region, ultimately leading to increased demand for military equipment.
Some of the gains have since pared back, with large European defense stocks averaging 5% to 10% gains since the initial attack, while Rheinmetall was largely flat for the period heading into Wednesday’s trading.
small compatriots Lenk’s Chief Executive Officer Alexander Segel said earlier this month that the Iran war could increase demand for defense capabilities in the Gulf.
Rheinmetall predicted in November that its sales would increase fivefold over the next five years, driven by strong demand for weapons systems amid geopolitical tensions and the war in Ukraine. The company predicted that by 2030, the majority of its estimated 50 billion euros in revenue will come from its vehicle systems and arms and ammunition businesses. Additionally, the operating profit margin is expected to expand from 15.2% to approximately 20% in 2024.
In 2025, the arms and ammunition business increased by 27% to 3.53 billion euros. The company’s largest division, Vehicle Systems, which makes tanks and military trucks, rose 32% to 4.99 billion euros for the year.
On the back of growth in sales and profits, the company has proposed increasing the dividend to 11.50 euros per share, up from last year’s 8.10 euros.
