German Rheinmetall MAN tactical military transport vehicles parked at the Edvard Peperko military barracks.
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german arms manufacturer Rheinmetall On Wednesday it reported full-year sales that grew 29% year-over-year and said revenue would grow further in 2026 as defense companies are expected to be on the receiving end of increased spending by governments on military capabilities.
Sales grew 29% for the full year to 9.94 billion euros ($11.56 billion), missing expectations of 10.53 billion euros, according to LSEG estimates.
Earnings before taxes and interest amounted to €1.68 billion, compared to estimates of €1.75 billion, while the order book hit a record €63.8 billion, an increase of 36% from the previous year.
“The world is changing rapidly and Rheinmetall is well prepared,” said CEO Armin Papperger. “With our products, we will have a significant share in the growing spending on military equipment and deliver what the modern military needs in the 21st century.”
The defense giant, Germany’s seventh-largest company by market value, also released its 2026 outlook, which it had hinted at during a pre-closing call in early February.
The group’s sales are expected to grow between 40% and 45% to reach between 14,000 and 14,500 million euros. The operating profit margin is expected to be around 19%.
Shares of defense stocks have risen over the past year.
“As budget approvals resumed toward the end of the year and defense spending recovered across Europe, particularly in Germany, we expect delayed programs to be converted to contracts, supporting a rebound in nominations and bolstering the company’s already elevated order book,” Morningstar analyst Loredana Muharremi noted ahead of publication.
In February, the company indicated that sales for this year would be between 13.2 billion and 14.1 billion euros, and EBIT between 2.4 billion and 2.8 billion euros, both more than 10% below expectations. The shares subsequently fell 6.5%.
In February, Barclays analysts called the stock’s move on guidance “a marked overreaction,” saying “expectations are high and the stock remains highly sensitive to any information that comes to light.”
Noting some confusion over this year’s comparable figures given recent changes in business structure, analysts said arms and ammunition growth will remain strong, and there is room for its naval business to be resilient as well.
“From a structural perspective, we believe nothing has really changed – backlog growth in 2026 will be substantial.”
Rheinmetall shares have risen around 540% over the past three years, as a leading supplier of ground systems and munitions in Europe.
However, gains have moderated over the past year as some investors question whether the stock has reached its full value and whether growth can be sustained over the long term. As of early trading Wednesday, the stock was up just 3.4% so far this year.
Rheinmetall and other defense companies like the British Bae Systems and from Italy leonardo They are seen as well positioned to capitalize on increased spending by European governments over the next five years against a backdrop of war between Russia and Ukraine.
Sales growth
Defense actions initially spiked after the United States and Israel launched attacks on Iran on February 28, killing its supreme leader, Ayatollah Ali Khamenei. This raised fears that the attacks would escalate into a full-blown war spanning the entire Middle East region, eventually leading to increased demand for military equipment.
Earnings subsequently pared some gains, and while major European defense stocks have risen on average 5% to 10% since the first attacks, Rheinmetall is largely flat over that period.
Pairs of smaller countries Renk’s Chief Executive Alexander Sagel said earlier this month that the Iran war could drive growing demand for defense capabilities in the Gulf region.
In November last year, Rheinmetall predicted its sales would quintuple over the next five years, driven by strong demand for its weapons systems amid geopolitical tensions and the war in Ukraine. Most of the estimated €50 billion in revenue by 2030 will come from its vehicle systems and its weapons and ammunition businesses, the company forecast. It also expects operating margin to expand to about 20%, up from 15.2% in 2024.
In 2025, the Arms and Ammunition business grew by 27% to 3,530 million euros. Its largest unit, Vehicle Systems, which makes military tanks and trucks, grew 32% to €4.99 billion during the year.
