German defense giant Rheinmetall cut its full-year forecasts late Wednesday, citing delays in military contracts and ammunition deliveries. It is the company’s second forecast cut since August, when Germany scrapped plans to build warships in what would have been Rheinmetall’s largest order since World War II. The defense company now expects sales to rise to around 13.2 billion euros ($14.9 billion) in 2026, down from a previous outlook of between 13.7 billion and 14.2 billion euros. It is expected to have an operating margin of around 18.5%, down from the 19% previously expected. Rheinmetall said it revised its guidance for 2026 due to delays in the German military’s Arminius project, a major German military procurement program for Boxer armored vehicles and setbacks in artillery ammunition acceptance tests. The Arminius contract, now expected to come into operation next year, involves vehicles manufactured by ARTEC, a joint venture between Rheinmetall and Franco-German defense group KNDS. Rheinmetall shares fell more than 17% in early trading, bringing losses so far this year to around 46%. It follows an average annual gain of 119% over the previous four years as it became one of the main beneficiaries of increased military spending by European governments amid Russia’s full-scale invasion. of Ukraine in 2022. Stock Chart Icon Stock Chart Icon Rheinmetall shares in the last five years. RBC analysts called the announcement “clearly negative,” citing concerns about the timing, scope and impact of the Boxer program on medium-term guidance. They warned that the news could fuel broader investor concerns about traditional defense technology. “We suspect bears will view this negatively as part of the current ‘new tech versus old tech’ industry debate,” they said. Rheinmetall said delays to the Boxer contract would also push expected prepayments into 2027, hitting its previous cash conversion target of more than 40%, although it still expects positive operating free cash flow this year. The company also flagged delays in expected fourth-quarter revenue from new business activities, particularly its partnership with Dutch defense technology firm Destinus. The forecast cut came as the German company posted better results, with third-quarter sales rising 32% year-on-year to €3.15 billion and operating profits jumping 62% to €553 million. New order intake was 2.89 billion euros, bringing its order book to 78 billion euros at the end of the third quarter. Third quarter results.”
