Rheinmetall anticipates "significant improvement" in business in Q2
Growth is expected to be mainly driven by the recognition of deferred deliveries and the full integration of its naval business. The German group, which has finalized its transformation into a pure-play defense contractor following the divestment of its automotive operations, saw its shares edge higher on the Frankfurt Stock Exchange.
During its conference call with investors, Rheinmetall stated that Q2 should mark a "significant acceleration compared to the first quarter." The group notably indicated that approximately €300m in revenue deferred from Q1 (comprising roughly €200m in military trucks and about €100m in ammunition deliveries) will be recognized in Q2, thereby supporting a more dynamic sales trajectory.
Furthermore, Q2 is expected to benefit from a full three-month contribution from the Naval business, whereas Q1 reflected only one month of consolidation.
"We believe the expected acceleration in deliveries should mechanically support free cash flow generation through inventory reduction," commented Saïma Hussain, the analyst covering the stock at AlphaValue.
She also reported that the group expressed satisfaction with the sale of its automotive activities, transforming it into a defense "pure player." "While the strategic rationale is understandable, the terms of the transaction appear relatively unfavorable to us," AlphaValue noted, however.
Note that last week Rheinmetall announced the signing of an agreement with the Munich-based industrial group AEQUITA for the sale of its automotive business, previously housed within the former Power Systems division. The transaction, subject to regulatory approvals, is expected to be finalized in Q4 2026.
The provisional acquisition price for 100% of the capital stands at 350 million euros, subject to customary closing adjustments. The divested division generated approximately €2bn in revenue in 2025.
Shortly after 3 pm, Rheinmetall shares were up 0.4% in Frankfurt, outperforming a DAX index, which was down 0.4%.
Rheinmetall AG specializes in the design, manufacture and marketing of equipment, components and solutions for the military and civilian industries. Net sales (including intragroup and not including sold divisions) break down by family of products as follows:
- vehicle systems (49%): multi-purpose wheeled and tracked vehicles (tactical military vehicles, support vehicles, logistics vehicles and special vehicles);
- weapon and ammunition systems (32%): automatic cannons for land, air and sea vehicles, smooth-bore weapons, artillery systems, smart projectiles, high-energy lasers, etc.;
- electronic solutions (19%): sensors and networking systems, cyberspace protection solutions, air defense systems, radar systems, technical documentation solutions, integrated electronic systems, drones and automated ground robots, training and simulation solutions.
Net sales are distributed geographically as follows: Germany (38%), Europe (42.9%), Americas (7.9%), Asia and the Middle East (5.1%) and other (6.1%).
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