Rheinmetall's Order Book Keeps Swelling — But the Cash Question Is Getting Louder
Published on 08/01/2026 at 13:02 | Redaktion boerse-global.de
The defence contractor's pipeline has never looked healthier, with a record backlog now topping €80 billion and a fresh wave of contracts spanning naval modernisation, artillery production and autonomous vehicles. Yet the numbers that have investors most transfixed are the ones pointing in the opposite direction.
Rheinmetall's shares closed Friday at €1,145.00, up 10.74% over seven trading sessions — a solid rebound that still leaves the stock roughly 43% below its 52-week high of €2,007.00 reached in October 2025. The recovery has been fuelled by a barrage of announcements that arrived in quick succession, culminating in Thursday's blockbuster second-quarter results.
Revenue surged 69% year-on-year to €3.3 billion in the second quarter of 2026, while operating profit more than doubled to €562 million. New orders booked during the quarter reached €11.37 billion, helping push the total backlog past the €80 billion mark for the first time. Analysts currently pencil in average earnings per share of €37.84 for the full year.
A two-front European push
The latest contract flurry came on a single day, underscoring the breadth of demand. In Germany, Rheinmetall won the tender to modernise the frigate "Bayern", a 143-metre F123-class vessel of the German Navy. The work, valued in the mid-hundreds of millions of euros, will be carried out at the Neue Jadewerft shipyard in Wilhelmshaven — a facility the group only fully acquired in spring 2026. The upgrade covers the command and weapons deployment system as well as radar sensor technology, with completion slated for 2029 and the goal of keeping the frigate operational until at least 2035.
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Across the Channel, London has ordered 72 artillery systems of the 155mm L/52 RC type for its RCH 155 wheeled howitzers, a contract worth a low three-digit million euro sum. Production will take place at Rheinmetall's new gun manufacturing facility in Telford, with deliveries running between May 2028 and June 2031. The British order is aimed at replenishing artillery stocks depleted by weapons transfers to Ukraine.
The Bundeswehr, meanwhile, has placed an order for 56 heavy tractor units of the Elefant 2 type, valued at €60.5 million gross, with delivery through Rheinmetall MAN Military Vehicles scheduled for 2026 and 2027. The underlying framework agreement provides for up to 137 vehicles in total, of which 32 had already been ordered; call-offs worth €122 million had been fulfilled under the contract by early 2025.
Washington adds an autonomy angle
Across the Atlantic, subsidiary American Rheinmetall has secured an 18-month contract with the US Army for autonomous unmanned ground vehicles under the "Sustainment" project, working alongside partners Harbinger, Forterra and Primordial Labs. The deal extends the group's reach beyond traditional munitions and armoured vehicles into the fast-growing field of battlefield robotics.
The cash-flow caveat
For all the top-line momentum, management struck a cautious note alongside the results, warning of negative free cash flow. The warning reflects the capital-intensive nature of this growth spurt: ramping up production at this scale ties up substantial funds in advance payments and inventory before converting into cash inflows. Observers have flagged this as a potential risk to the valuation.
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Political headwinds add another layer of uncertainty. Germany's draft 2027 budget envisages ammunition spending falling from €11 billion to €9.6 billion — a segment that has been particularly important for Rheinmetall's recent performance. Should that plan materialise, it would hit one of the group's most lucrative product lines.
Despite these concerns, Bernstein analysts reaffirmed their "Outperform" rating with a price target of €1,900, signalling confidence that the order momentum will ultimately translate into shareholder value. The full half-year report, due on 6 August, will provide further detail on segment profitability and cash flow development — the two areas where questions remain most acute.
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