Rheinmetall's Two-Speed Reality: Half-Year Records Mask the F126 Hangover
Published on 08/10/2026 at 19:50 | Redaktion boerse-global.de
The arithmetic at Rheinmetall is getting harder to ignore. Strip out the failed F126 frigate programme, and the Düsseldorf-based defence group is compounding at a pace most industrial companies can only dream of. Leave it in, and the 2026 guidance picture looks distinctly less heroic — a 13.7 to 14.2 billion euro revenue range, with the lower end cut by 300 million euros precisely because of Berlin's decision to walk away from the frigate contract.
That tension played out in public on Friday, when the company's chief executive made no secret of his frustration over the naval setback, even as Rheinmetall announced two fresh pieces of business that soften the blow. Germany and the Netherlands have ordered Boxer armoured vehicles from a Rheinmetall-KNDS pairing, while the company simultaneously deepened its relationship with Boeing on the MQ-28 Ghost Bat, an unmanned combat aircraft designed to fly alongside manned jets. Rheinmetall will handle German system integration for the drone — a foothold in the collaborative combat aircraft space that reaches well beyond its traditional land-systems franchise.
The timing is convenient. The Ghost Bat tie-up and the Boxer order give the market something to focus on besides the naval disappointment, and the analyst community has largely chosen to look through the noise. Deutsche Bank Research reiterated its "Buy" rating on Friday, as did Warburg Research, which attached a 1,500 euro price target — a level that implies meaningful upside from the current share price of around 1,143 euros, where the stock was trading nearly flat on the day.
A Half-Year Report That Tells Two Stories
The interim numbers released on Thursday paint a picture of a group firing on most cylinders. Group revenue climbed 39 percent to 5.227 billion euros in the first half, while operating profit jumped 74 percent to 786 million euros. The margin expanded from 12.1 to 15.0 percent, and earnings per share from continuing operations nearly doubled to 8.43 euros. The order book swelled to 80.5 billion euros as of June 30, up 43.6 percent year-on-year — a backlog that would take most companies years to work through.
The divisional breakdown, however, reveals just how lopsided the growth story has become. Weapon & Ammunition led the charge with a 33 percent revenue increase to 1.8 billion euros and a doubling of operating profit, while its order backlog grew by half to 3.1 billion euros. Vehicle Systems, the group's largest division, delivered a 28 percent revenue gain to 2.431 billion euros, with operating profit up 96 million euros to 275 million euros on a 6.7 billion euro backlog.
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Air Defence, the smallest of the growth engines, produced the most spectacular numbers: revenue surged 62 percent to 478 million euros, operating profit doubled to 76 million euros, and the division's order backlog multiplied sixfold. Digital Systems grew more modestly at 23 percent to 820 million euros, though its backlog more than halved — a consequence of an unusually high comparison base set by major contracts in 2025.
Naval Systems is the outlier. The division generated just 334 million euros in first-half revenue, weighed down by the F126 cancellation. A 920 million euro order from Romania lifted the division's total order intake to roughly one billion euros, providing at least partial compensation for the frigate loss. But the 300 million euro revenue hit for the current year is a reminder that not all segments are participating equally in the defence supercycle.
The Cash Question Lingers
For all the operational vigour, the balance sheet tells a more sobering story. Operating free cash flow came in at negative 1.616 billion euros in the first half — a substantial outflow that raises legitimate questions about how quickly the group's mountainous backlog can be converted into cash, particularly as capacity constraints begin to bite. Rheinmetall itself acknowledged as much when it noted that ramping up ATACMS missile production for US ammunition replenishment efforts will take time, a candid admission that even booming order books run into physical limits.
Market observers point to potential execution risks if the growth pace outstrips what individual divisions can actually deliver. The company's guidance for a full-year operating margin of around 19 percent implies continued momentum, but the path from order intake to invoiced revenue is rarely smooth, and the working capital demands of scaling up production are evidently substantial.
A Stock Caught Between Momentum and Skepticism
The share price has been remarkably unbothered by the mixed signals. After a 30-trading-day gain of roughly 15 percent from its June trough, the stock sits about 3.87 percent above its 50-day moving average of 1,098.66 euros. Yet the year-to-date picture remains painful: the shares are still down around 26 percent from the start of 2025, a long way from the 52-week high of 2,007.00 euros reached last October.
That divergence — operational strength on one side, persistent share-price weakness on the other — defines the current investment debate. The Ghost Bat integration and the Boxer order reinforce the long-term growth narrative, while the F126 loss and its guidance implications continue to weigh on sentiment. Investors will get another opportunity to gauge the company's strategic direction on August 27, when Rheinmetall appears at the DZ Bank Expert Day. Whether the market chooses to focus on the record backlog or the cash burn will likely determine the next leg of the trade.
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