Düsseldorf-based defense group Rheinmetall will have to be patient when it comes to upcoming major orders. „The delayed adoption of the federal budget following the change in government, due to the new elections, together with the NATO summit at the end of June 2025, has postponed order intake,“ the company said on 7 August when presenting its half-year results. However, the battle tank manufacturer still sees consistently strong demand in its military business. Against this backdrop, Rheinmetall confirmed its full-year forecast of a significant increase in revenue and a higher operating margin.

The so-called „nomination“, essentially the sum of order intake and newly signed framework agreements with military customers, fell by 11% in the first half to 13.7 billion euros. In the second quarter alone, the nomination plunged by 77% to 2.6 billion euros. Rheinmetall expects to receive the Bundeswehr orders by the end of the year, which are likely to include major contracts for transport, reconnaissance, and infantry fighting vehicles.

The share price has fallen by around 10% over the past week. However, since Russia’s invasion of Ukraine, Rheinmetall has been one of the best performers on the German stock market, with the price increasing by more than 15 times.

In the first half of the year, Rheinmetall achieved record revenue of 4.7 billion euros, 24% more than in the same period last year. The military business alone grew by 36%. The group manufactures, among other things, armored transport vehicles, battle tanks, infantry fighting vehicles, air defense systems, and ammunition.

Its second pillar is the ailing automotive supply business, which is up for sale. The company is currently in talks with several potential buyers, with a decision expected by the end of the year, Rheinmetall said. The sale marks a turning point: just a few years ago, Rheinmetall was more of an automotive supplier with an attached defense business. Its subsidiary Kolbenschmidt Pierburg produced engine components. Remaining activities include, among others, electromobility solutions, exhaust management components, and plain bearings.

„Rheinmetall is successfully on its way to becoming a global defence champion,“ said CEO Armin Papperger. Operating profit, almost entirely driven by the military business, rose by 18% in the first half to 475 million euros. The operating margin came in at 10% and is expected to rise to around 15.5% for the full year. Management continues to forecast a full-year revenue increase of between 25% and 30%.

„We are now also a serious partner for US companies,“ said Papperger. For example, Rheinmetall has built a production facility for F-35 fuselage centre sections in Weeze, North Rhine-Westphalia, for Lockheed Martin, the fighter jet ordered by the Bundeswehr. Rheinmetall is also in talks with Italian defence group Leonardo about acquiring the military truck business of Iveco, which the Rheinmetall partner recently secured.

The construction of new plants, the expansion and conversion of existing production facilities, and inventory build-ups have been costly. Operating free cash flow fell to –644 million euros in the first half, compared with –19 million euros in the same period last year. In the second quarter alone, free cash flow stood at –911 million euros. Rheinmetall has built Europe’s largest ammunition factory in Unterlüß, Lower Saxony. The supply plants in Berlin and Neuss have been, or are being, converted from civilian to military production, with further sites under review for this transition.

„Our order books are full and will continue to grow in the future,“ said Papperger. The backlog reached a record 63.2 billion euros at mid-year. An increase of 30% compared with the same date last year.