The guidance cut follows delays in the German military’s Arminius project, a major procurement program for Boxer wheeled armored vehicles built by Rheinmetall and KNDS. Rheinmetall stated it no longer expects the contract to be awarded this year, meaning anticipated advance payments and related revenue will be deferred to 2027. The company provided no updated timetable for the award. Previously, Chief Executive Armin Papperger had expressed confidence in a year-end signature and estimated Rheinmetall’s share of an initial order at about 12.4 billion euros, including a 30% advance payment worth more than 3 billion euros. Additionally, Rheinmetall noted that slower batch approvals for artillery ammunition will defer related sales until next year, and expected revenue from newer activities, including cooperation with Dutch drone maker Destinus, will not fully materialize in 2026.
The downgrade overshadowed strong third-quarter results, where sales rose to 3.15 billion euros from 2.31 billion euros a year earlier. Operating profit increased 62% to 553 million euros, lifting the operating margin to 17.5% from 14.8%. Order intake totaled 2.89 billion euros. While Rheinmetall continues to expect positive operating free cash flow for the full year, it withdrew its target for a cash conversion rate above 40% due to the Arminius delay. Operating free cash flow for the third quarter remained negative at 82 million euros, an improvement from an outflow of 168 million euros in the same period last year.
CEO Papperger stated that demand remains strong as countries increase defense spending, and that the company’s substantial order book supports long-term capacity expansion. He highlighted the start of production at new facilities in the UK and Spain. The Arminius program is expected to become one of Germany’s largest military procurement projects, with industry sources previously citing volumes of up to 3,000 vehicles. The financial adjustment reflects a shift in timing rather than a reduction in overall demand, though it impacts short-term revenue recognition and cash flow metrics for the current fiscal year.
Investors expressed concern over the second guidance cut in three months, leading to the significant share price decline. The company’s performance underscores the complexities of large-scale military procurement timelines, where administrative and approval processes can delay revenue recognition even when industrial capacity is expanding. Rheinmetall’s long-term outlook remains tied to the broader European trend of increased defense spending and the rebuilding of Bundeswehr capabilities.
