Rheinmetall Relocates Skyranger Assembly to Germany, Taps €73 Billion Backlog to Drive Recovery After Q1 Miss

Rheinmetall is moving the core production of its Skyranger mobile air-defence system from Switzerland to Neuss, a strategic decision that tackles both a regulatory bottleneck and a capacity constraint. The Swiss facility at Oerlikon has struggled to keep pace with mounting orders, while strict Swiss export laws have complicated deliveries to certain partner countries. By shifting assembly to Germany, Europe’s largest defence manufacturer gains far more leeway in fulfilling contracts—especially as its order backlog has swollen to a record €73 billion.

That backlog, which now includes the Naval Systems division following the Lürssen shipyard acquisition, underscores the booming demand Rheinmetall faces. Yet converting that pile of paper into revenue has proved tricky in the near term. First-quarter sales came in at just under €1.94 billion, up eight percent from a year ago but well short of the €2.3 billion analysts had forecast. Management blamed delayed customer deliveries, which it promises to catch up in the second quarter.

Profitability improved nonetheless. Operating profit rose 17 percent to €224 million, pushing the margin to 11.6 percent. Earnings per share climbed to €2.18 against the prior year’s figure. Barclays analyst Afonso Osorio remains bullish, keeping an “overweight” rating with a price target of €2,035. The British bank expects Rheinmetall’s operating profit to jump 45 percent in 2026, more than double the 19 percent average forecast for the rest of the European defence sector.

Should investors sell immediately? Or is it worth buying Rheinmetall?

The stock bounced on Wednesday, climbing 2.4 percent to €1,233.40 by the afternoon, though earlier in the session it had only risen 1.41 percent to €1,222.00. Over the past seven days the shares have gained nearly 9.3 percent. Yet the longer-term picture is less rosy: the stock is still down about 23 percent since the start of the year and trades more than 25 percent below its 200-day moving average. Short-term momentum indicators flash extreme overbought territory, with the RSI above 93.

Shareholders received a bright spot at the annual general meeting on May 12. The dividend was raised to €11.50 per share, up sharply from €8.10 a year earlier. For the full year, management targets revenue of up to €14.5 billion and an operating margin of around 19 percent. Execution is the key: production ramp-ups in Spain, truck deliveries in Germany, and the Neuss Skyranger facility must all deliver to validate those targets.

Rheinmetall is also broadening its strategic footprint beyond traditional artillery and land systems. Chief executive Armin Papperger is steering the group toward cruise missiles, shifting the profile from component supplier to integrated system house. A partnership with Deutsche Telekom to develop a drone protection shield for civilian and military infrastructure combines hardware, sensors, and digital surveillance—exactly the kind of cross-domain offering that defence ministries are prioritising.

The next major test comes on August 6, when Rheinmetall publishes its half-year results. Investors will scrutinise whether the delayed Q1 deliveries have indeed been cleared and whether the €73 billion order stock is starting to convert into faster revenue growth. If Neuss can quickly scale Skyranger output, the gap between the record book and the profit line will narrow. For now, the market is willing to give the group the benefit of the doubt—but only just.

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