Rheinmetall’s Bavarian Powder Bet: A €350 Million Expansion Meets a Stock Searching for a Floor
Published on 07/24/2026 at 13:42 | Redaktion boerse-global.de
Rheinmetall has kicked off a major expansion of its powder production in southern Germany, betting that Europe’s insatiable demand for artillery ammunition will justify the investment even as its stock trades at roughly half its peak. The dual narrative — industrial ambition versus market skepticism — was on full display this week as the Düsseldorf-based defence group laid the cornerstone for a new powder facility in Aschau am Inn while its shares clawed back above the psychologically important €1,000 mark.
The Aschau Expansion: From 1,700 to 4,200 Tonnes
The ceremony on 22 July 2026 drew a who’s who of Bavarian and federal politics: Minister-President Markus Söder, State Secretary Nils Schmid, and Economy Minister Hubert Aiwanger all attended, alongside Rheinmetall CEO Armin Papperger. The company is funnelling €350 million into the Aschau site alone, part of a broader €650 million programme to expand powder production across the group.
The numbers are striking. Aschau currently produces around 1,700 tonnes of propellant powder and 300,000 propellant charge modules annually. By 2028, when the facility reaches full capacity, those figures are set to jump to 4,200 tonnes of powder, more than five million formed parts, and over one million modules per year. Production is expected to begin in 2027. The workforce will swell from 800 to 1,400 employees, making Rheinmetall the largest employer in the region, ahead of ZF Lifetech, according to local mayor Christian Weyrich.
The expansion is the centrepiece of Rheinmetall’s “Project Firepower”, a group-wide initiative to lift total propellant powder capacity to 20,000 tonnes annually by 2030. The logic is straightforward: NATO members are scrambling to rebuild ammunition stockpiles depleted by transfers to Ukraine, and 155-millimetre shells — the single biggest consumable in that conflict — require enormous volumes of propellant.
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Papperger framed the investment in stark geopolitical terms. The United States, he noted, has only 20 to 30 percent of its pre-war ammunition reserves remaining and is prioritising its own needs. Europe, he argued, has no choice but to build its own capacity. “Without this plant, NATO would not be combat-capable,” he said, according to multiple reports. State Secretary Schmid echoed the urgency, pointing to the acute shortage of 155-millimetre ammunition.
Raw Materials: A Bottleneck Eased
One critical constraint that had worried analysts — a shortage of nitrocellulose, the key raw material for propellant — now appears to be easing. Papperger told attendees that reserves of nitrocellulose now cover four years of production. The company is also exploring whether to replace the cotton linters it currently uses with wood pulp, a move that would reduce dependence on imports and further strengthen supply-chain resilience.
Beyond Aschau: A €100 Billion Order Backlog in Sight
The Aschau investment is just one piece of a much larger puzzle. Papperger expects the group’s total order book to surpass €100 billion by the end of 2026, describing the coming decade as one of sustained high production demands for the European defence industry. International expansion is also on the table: Rheinmetall has revived talks with Bulgaria about a joint munitions plant that would produce powder, 155-millimetre shells, and propellant modules. The project carries a price tag of roughly €1 billion and would create around 1,000 jobs, though a founding agreement and secured financing are still pending. Bulgaria is hoping for support from the EU’s SAFE programme.
Meanwhile, the company is also exploring a potential acquisition of German Naval Yards, the Kiel-based shipyard, adding a naval dimension to its growth ambitions. And a new digitalisation centre is also in the works, providing another narrative thread for investors to latch onto.
The Stock: Recovery from a Deep Hole
The share price reaction to all this activity has been muted at best. Rheinmetall’s stock closed at €1,032.20 on 24 July, up 1.0 percent on the day and 9.09 percent over the past 30 days — a welcome bounce after months of heavy selling. But the numbers tell a sobering story. The shares are down 34.34 percent year-to-date, and they remain 48.57 percent below the 52-week high of €2,007.00 reached on 3 October 2025.
The secondary article, published slightly earlier, put the closing price at €1,019.40, underscoring how recent the recovery above €1,000 is. That round number matters psychologically, but the distance to the peak is a reminder that the market has priced in considerable uncertainty — whether about execution risk, the pace of order conversion, or the broader political landscape.
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A Legal Distraction in Russia
One factor that may weigh on sentiment is a legal dispute in Russia. Moscow’s prosecutor’s office and a company called AG Garnison are demanding €47.2 million from Rheinmetall, alleging unjust enrichment related to a contract for the construction and equipping of a combat training centre in Mulino. The hearing is being held behind closed doors. While the sum is immaterial for a group of Rheinmetall’s size, the case is a reminder of the legal entanglements that can arise from past Russian operations.
The Earnings Catalyst
For investors, the next major inflection point is 6 August 2026, when Rheinmetall reports its quarterly results. The company is sticking to its full-year revenue growth forecast of 40 to 45 percent — an ambitious target that will require strong operational execution. The numbers will show whether the Aschau expansion and the broader order pipeline are translating into tangible financial performance, or whether the market’s caution is justified.
Thales, the French defence and electronics group, provided a useful benchmark: it reported a 21 percent jump in first-half defence orders and a 13 percent revenue increase in the same segment, confirming that European demand remains robust. Rheinmetall’s challenge is to convince investors that it can capture that demand efficiently — and that the share price, battered as it is, offers a buying opportunity rather than a value trap.
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