Rheinmetall's €300 Million Frigate Setback Meets a Record €80.5 Billion Backlog
Published on 08/08/2026 at 04:51 | Redaktion boerse-global.de
The arithmetic of defense contracting can be unforgiving: one cancelled naval program, and a carefully calibrated revenue forecast needs a rewrite. That is precisely the position Rheinmetall finds itself in after Berlin's June decision to scrap the F126 frigate project. The Düsseldorf-based group now guides to sales of €13.7 billion to €14.2 billion for 2026, trimming roughly €300 million from its earlier ambitions. The original F126 program, valued at €15 billion, ranked among the Bundeswehr's largest maritime undertakings.
Yet the headline cut tells only part of the story. Strip away the frigate's impact, and the underlying momentum remains formidable. First-half revenue expanded 39 percent to €5.227 billion, while operating profit surged 74 percent to €786 million, up from €453 million in the prior-year period. The operating margin improved from 12.1 percent to 15.0 percent. The second quarter alone delivered operating earnings of €562 million, comfortably ahead of the roughly €470 million consensus, with quarterly sales climbing nearly 70 percent year-on-year to approximately €3.3 billion.
The Backlog That Keeps Growing
What cushions the F126 blow is the sheer scale of Rheinmetall's order book. At the end of June, the backlog stood at a record €80.5 billion, a dramatic leap from €56.0 billion a year earlier. New orders booked in the second quarter alone reached €11.4 billion. And that figure may already be outdated: media reports from Thursday indicated Rheinmetall has secured contracts to build four naval vessels as part of a Romanian defense package valued at €5.7 billion, a deal not yet reflected in the reported backlog numbers.
Management has also signaled that a potential Boxer armored vehicle order, codenamed Arminius, could serve as a natural replacement for the lost frigate revenue. Reports suggest the firm order could be worth around €12.4 billion, with the total package, including options, potentially exceeding €14 billion. Should the contract materialize, it would more than offset the F126 gap over time.
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A Cautionary Note on Drones
The forecast revision came alongside a separate warning about a different future capability. Rheinmetall cautioned that the initial procurement of twelve deep-strike drones for the Bundeswehr could slip beyond 2030. The company, which is developing the MQ-28 Ghost Bat with Boeing — a program into which Australia has already poured €3 billion — argues that without German participation in the Australian effort, no operational platform would be available before 2035. Germany has instead launched an open competition featuring Airbus with the Kratos XQ-58A, Helsing, and General Atomics with the FQ-42A. Rheinmetall warns of a capability gap that, for now, could only be bridged with Tomahawk cruise missiles.
Analysts Hold Their Ground
The sell-side has largely looked past the guidance cut. Goldman Sachs reaffirmed its buy rating on Friday with a price target of €2,300, describing the quarterly results as strong. Deutsche Bank, which trimmed its target from €2,100 to €1,800 in early July — more than a month before the latest results — maintained its "Buy" stance.
The market's response on Friday was muted. Shares closed at €1,145.40, down 0.40 percent on the day. Over the past month, however, the stock has gained 7.71 percent, suggesting investors are weighing the operational strength of the half-year more heavily than the one-off frigate revenue loss. Year-to-date, the shares remain down 26.22 percent, and at 42.93 percent below the 52-week high of €2,007.00 reached on October 3, 2025, the defense rally of the past year has clearly cooled.
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Management has held firm on its full-year operating margin guidance of roughly 19 percent despite the revenue cut. The next checkpoint arrives on November 7, when third-quarter results are due — an opportunity to demonstrate whether the record backlog can indeed translate the lost frigate momentum into sustained growth.
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