Sales set to grow up to 45% in 2026

German arms maker Rheinmetall on Wednesday reported full-year sales that grew 29% year-over-year and said revenue would grow by even more in 2026, as defense companies are expected to be on the receiving end of governments’ hiked spending on military capabilities. 

Sales grew by 29% over the full year to 9.94 billion euros ($11.56 billion), missing expectations of 10.53 billion euros, according LSEG estimates.

Earnings before tax and interest came in at 1.68 billion euros, compared with estimates of 1.75 billion euros, while the order backlog reached a record high of 63.8 billion euros, a 36% jump 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 increasing equipment spend of the armed forces and deliver what modern armed forces need in the 21st century.”

The defense giant, Germany’s seventh-largest company by market value, also issued its 2026 outlook, which it had hinted at during a preclose call in early February.

Group sales are expected to grow by between 40% and 45% to between 14 billion and 14.5 billion euros. Operating result margin is expected to be around 19%.

“As budget approvals resumed toward year‑end and defence spending picked up across Europe – particularly in Germany – we expect delayed programmes to convert into contracts, supporting a rebound in nominations and reinforcing the company’s already elevated backlog,” noted Morningstar analyst Loredana Muharremi ahead of the print. 

In February, the company indicated sales for this year would come in at 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. Shares subsequently fell 6.5%.

Barclays analysts in February called the share move following the indicated guidance “a marked over-reaction,” saying that “expectations are high, and shares continue to be very sensitive to any information that comes out.”

Noting some confusion over the like-for-like numbers this year, given recent changes to the business structure, the analysts said that weapon and ammunition growth will remain elevated, and there is scope for its naval business to be resilient, too. 

“From a structural perspective we think nothing has really changed here: the backlog growth in 2026 will be material.”

Rheinmetall shares have risen about 540% over the past three years, as a leading provider of land systems and ammunition in Europe.

Gains, however, have moderated over the past year as some investors question whether shares have reached their full value and if growth can be sustained long-term. Coming into Wednesday trading, the stock was up just 3.4% year-to-date. 

Rheinmetall…