Rheinmetall, a prominent German defense contractor, announced a reduction in its full-year sales guidance, now projecting revenues of approximately 13.2 billion euros ($14.9 billion) for 2026, down from a previous estimate of 13.7 to 14.2 billion euros.
This revision follows delays in key military projects, particularly the German military's Arminius Boxer program, which is now expected to be commissioned next year, and issues with artillery ammunition acceptance testing. The company's operating margin is also expected to decline to around 18.5%, compared to the earlier forecast of 19%.
Following this announcement, Rheinmetall's shares fell as much as 15% in early trading and are down about 35% year-to-date, a stark contrast to the 114% average annual return over the previous four years, driven by increased military spending in Europe due to the conflict in Ukraine.
Analysts from RBC described the outlook cut as 'clearly negative,' expressing concerns over the timing and scope of the Boxer program and its implications for medium-term guidance. They suggested that this news could exacerbate investor anxieties regarding traditional defense technologies amid a broader debate between 'new-tech vs old-tech' in the sector.
Despite these challenges, Rheinmetall reported a 32% year-on-year increase in third-quarter sales to 3.15 billion euros and a 62% rise in operating profit to 553 million euros, with new orders totaling 2.89 billion euros, resulting in a backlog of 78 billion euros by the end of the third quarter