By Cristina Gallardo
Rheinmetall shares fell as investors digested a first look at the German arms maker's forecasts for this year, which came below market expectations.
Shares fell 7.9% to 1,547.50 euros in European morning trade on Thursday. The Frankfurt-listed group said during a call with investors late Wednesday that it expects its group revenue to range between 13.2 billion and 14.1 billion euros ($15.59 billion-$16.65 billion) this year. The midpoint is 12% below Visible Alpha consensus estimates.
The shortfall was driven by lower-than-expected growth in defense, including the Naval Vessels Luerssen maritime business, which Rheinmetall is in the process of acquiring, Berenberg analysts said in a note.
Berenberg said the 2026 guidance was weak, adding that it "is a surprise and little explanation was offered for this on the call."
Rheinmetall described these 2026 estimates as a first indication rather than full guidance. It added that its defense business sales should range between 15 billion and 16 billion euros this year, including sales from NVL.
Order intake could reach 80 billion euros in 2026, pushing up the company's backlog to around 135 billion euros by the end of the year, Rheinmetall said. Of this, 67 billion euros should come from German defense contracts.
The group's operating margin should range between 18% and 20%. Its free cash flow is forecast to be very strong this year, driven by large down-payments on defense contracts, the company added.
The arms maker is quickly expanding into new domains, including drones and maritime, while launching new products in response to Europe's emerging needs, such as the air defense system Skyranger, intended to serve as a cheaper solution against enemy drones.
Jens-Peter Rieck, an analyst at Mwb-Research, said the first real-world battlefield reviews of the Skyranger in Ukraine are expected in the first quarter of this year and will be critical.
"If the Skyranger fails to perform as expected, it will have a significant impact on the broader Rheinmetall equity story," he said.
Jefferies analysts said Rheinmetall continues to showcase good value appeal over the longer-term, because the company could still quadruple its revenue by 2030.
"We see Rheinmetall still boosted by continued strong order intake, notably thanks to the rapidly expanding German defense budget," they wrote in a note. "We also appreciate the group's expansion into air defense solutions, missiles and naval defense to secure longer-term growth."
Write to Cristina Gallardo at cristina.gallardo@wsj.com
(END) Dow Jones Newswires
02-05-26 0527ET
