Rheinmetall rolled into the ILA Berlin air show this week with a €5.7 billion Romanian order in hand, but the stock remains stuck in a deep rut that no single contract can easily fill. The Düsseldorf-based defence group landed a massive multi-year deal from Bucharest covering Lynx infantry fighting vehicles, Skyranger air-defence systems and naval vessels, with deliveries scheduled to begin in 2028. The company plans to build local manufacturing capacity in Romania as part of the package.
Yet the share price tells a much grimmer story. On Monday the stock closed at €1,204, leaving it down nearly 25% since the start of the year and around 40% below the record high of almost €2,000 reached last September. Technically the trend remains bearish: the equity trades roughly 10% beneath its 50-day moving average and sits far below the long-term 200-day line of €1,617.
At the Berlin air show, which opens on June 10, management is trying to reposition the group as an integrated systems house spanning land, air and space. The exhibition space of 840 square metres features the Skyranger 30 weapon station mounted on a Boxer armoured vehicle, a joint venture with ICEYE to build a German satellite constellation for high-resolution radar imagery, and the ongoing production of fuselage sections for the F-35 in Weeze — the eighth of 400 planned units is currently rolling off the line. Rheinmetall is also displaying Boeing’s MQ-28 autonomous combat drone, which the German military aims to procure by 2029.
Alongside these projects, the company is pressing into the maritime domain. A non-binding offer has been submitted for the Kiel-based shipyard German Naval Yards, and due diligence is already under way. Rival TKMS has also expressed interest, setting the stage for a bidding contest for the frigate builder.
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But the most existential threat to Rheinmetall’s core land-systems business is coming from a state-backed competitor. The German government is planning an initial public offering for KNDS, the maker of the Leopard 2 tank, later this summer. Berlin and Paris intend to retain significant stakes in the company, which is valued at up to €20 billion. A state-backed rival directly challenging Rheinmetall in its home market is a risk that investors are beginning to price in.
Operationally, the numbers have underwhelmed. First-quarter revenue of €1.94 billion fell 15% short of analyst expectations, and heavy investment spending pushed free cash flow deeply negative. The one bright spot remains the order book, which climbed to €73 billion — equivalent to five times the planned annual sales. Management is sticking to its full-year guidance, but the conversion of that record backlog into profit is what the market is waiting to see.
External factors are adding to the pressure. Signs of progress in peace talks between the US and Ukraine have deflated the so-called escalation premium that had been baked into defence stocks. The next sector catalyst comes in early July with the NATO summit in Ankara, but the real test is August 6, when Rheinmetall reports half-year results. By then, the management will need to show that the order backlog is accelerating earnings growth at a pace that justifies the stock’s valuation.
Meanwhile, the planned sale of the legacy Power Systems division — the former automotive unit — to Aequita is expected to close by year-end. The provisional price tag is €350 million, though non-cash write-downs will weigh on the final contribution. For now, the only concrete fundamental anchor for the share price is the Romanian megadeal, and that alone has not been enough to reverse the slide.
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