Rheinmetall Shares Plunge After Second 2026 Guidance Cut

Rheinmetall cut its full-year outlook for the second time since August, and the market punished it.

The German defense group said late Wednesday, Nov. 4, that it now expects 2026 sales of about €13.2 billion ($14.9 billion). The prior range was €13.7 billion to €14.2 billion. The operating margin target fell to roughly 18.5% from about 19%.

Shares fell over 17% in early trading Thursday, Nov. 5, according to CNBC, bringing year-to-date losses to about 46%. Reuters reported the stock down 13% on Thursday, the biggest decline in the STOXX 600. Another outlet put the early drop at as much as 15%, and finwire.io described a decline of nearly 7% during its session coverage, so the exact size of the move varies by source and time of day. Rheinmetall had been averaging annual gains of 119% over the prior four years, per CNBC, as it became one of the main beneficiaries of ramped-up military spending by European governments after Russia's full-scale invasion of Ukraine in 2022.

What Rheinmetall blamed

The company named two causes. The first is Arminius, the German military's big procurement program for Boxer armored vehicles. The vehicles are built by ARTEC, a joint venture between Rheinmetall and Franco-German group KNDS. The contract is now expected to be commissioned next year, which pushes both revenue and advance payments into 2027.

The second is artillery ammunition. Rheinmetall said slower batch approvals and setbacks in acceptance testing will delay deliveries and the revenue tied to them.

It also said not all of the revenue it expected from newer activities, including its partnership with Dutch firm Destinus, will arrive in 2026.

CEO Armin Papperger said in August that Rheinmetall's share of an initial Arminius order could reach about €12.4 billion, with an advance payment of more than €3 billion. That money is now a 2027 event.

A strong quarter buried under the warning

The quarterly numbers were good. Third-quarter sales rose 32% to €3.15 billion from €2.31 billion a year earlier. Operating profit jumped 62% to €553 million. The backlog stood at €78 billion at the end of September. Citi analysts called it "a strong set of Q3 results."

The cash side looks weaker. Order intake was €2.89 billion, below sales. Operating free cash flow was negative €82 million in the quarter. Rheinmetall dropped its target of a cash conversion rate above 40%, though it still expects positive operating free cash flow for the full year.

The skeptics

Not everyone accepts that Boxer is the whole explanation. "The Boxer contract seems not to be the whole story," a local trader told Reuters, pointing to weak order intake, negative free cash flow and the lack of revised backlog guidance.

Jefferies analysts said they were surprised by the size of the cut so late in the year. They noted Rheinmetall has yet to provide revised order guidance despite the Arminius delay.

JPMorgan analyst David Perry lowered his price target to €1,150 from €1,350 and kept a Neutral rating with a Negative Catalyst Watch. He counted this as the fifth revenue or profit warning from the company in eleven months and said revenue visibility for certain army product lines is increasingly uncertain, according to finwire.io. That count is Perry's alone.

RBC analysts called the announcement "clearly negative," citing the Boxer program's timing, scope and effect on medium-term guidance. They also said the news could feed the "new-tech vs old-tech" debate in the defense sector.

The August cut

The August reduction came after Germany scrapped plans to build warships, which would have been Rheinmetall's biggest order since World War II. Two guidance cuts in three months, both tied to German procurement decisions and approvals, show how much of Rheinmetall's growth story depends on the pace of German procurement. Demand from rearming European governments has not gone away. Turning it into signed contracts, deliveries and cash is the slow part.

The company says the revisions are timing shifts, and points to the record backlog and the 62% profit increase in the quarter.

Separate incident in Kassel

In a separate matter, police are investigating a fire at a construction site at Kassel Airport in North Hesse. Three construction vehicles were burnt out. Rheinmetall has selected the airport for a new facility to support vehicle exports and a drone testing site. The case has been passed to specialist officers at the state's security-focused criminal investigation unit. Police are treating it as potentially politically motivated because of the Rheinmetall link, but no suspects have been identified, according to Hessian media reports. Nothing in the reporting ties the fire to the guidance cut.

What to watch

The order book is the open question. Rheinmetall has not issued revised order guidance, and Jefferies has flagged that gap. Investors will be looking for it, along with a firm commissioning date for Arminius, before they decide whether 2026 was a bad year of delays or the start of a longer slowdown.