Rheinmetall Shares Climb After Strong Quarter as Defense Spending Stays Healthy — 2nd Update

By Mauro Orru

Rheinmetall shares jumped after the German arms maker said it had logged strong growth in second-quarter revenue and earnings, a sign that demand for military equipment remained solid amid high geopolitical tensions.

The group said preliminary figures showed that revenue jumped around 69% on year to roughly 3.29 billion euros, equivalent to $3.75 billion. Analysts had forecast 3.16 billion euros in revenue, according to Vara Research. Operating profit climbed to 562 million euros from 276 million euros, also above consensus of 469.9 million euros.

Robust growth shows that Rheinmetall continues to benefit from higher defense spending following Russia's invasion of Ukraine. Members of the North Atlantic Treaty Organization have placed a steady stream of orders for ammunition, air defenses and other military equipment in recent years as they seek to replenish their stockpiles after diverting weapons to Kyiv.

Rheinmetall shares in Frankfurt gained over 6% on Wednesday. However, the stock is down about 25% since January after Germany scrapped a large project to procure F126 frigates, while mentions of peace talks between Russia and Ukraine as well as in the Middle East also weighed on the stock.

Rheinmetall said it had booked 11.37 billion euros in orders for the quarter, lifting its backlog above the 80 billion-euro mark. The company had forecast bookings of 20 billion euros, but warned earlier this month that Berlin's cancellation of the F126 frigates project would dent orders.

In recent weeks, the group secured a contract valued at 5.7 billion euros to supply Romania with Lynx combat vehicles, Skyranger air-defense systems, medium-caliber ammunition for air defense and armored personnel carriers, two offshore patrol vessels and two diver-support vessels.

Earlier this month, Lockheed Martin and Rheinmetall signed a memorandum of understanding to establish a partnership to jointly produce American missiles in Europe, kickstarting a collaboration that is set to bolster Europe's defense capabilities.

Production of long-range Army Tactical Missile System, or ATACMS, will take place at Rheinmetall's Unterluess facility in Germany, one of its largest sites that makes weapon systems and ammunition and tracked vehicles. Rheinmetall said a rocket-motor facility there was nearing completion, with production slated to begin as early as next year.

The company said it expected significantly negative operating free cash flow in the second quarter, citing payments for capacity expansion plans. It is assessing whether the cancellation of the F126 frigates project would affect full-year guidance, and that it would provide more details when it reports second-quarter earnings on Aug. 6.

Rheinmetall is forecasting sales between 14 billion euros and 14.5 billion euros this year, warning of a hit of up to 300 million euros if it fails to mitigate the impact.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

July 29, 2026 09:23 ET (13:23 GMT)