Rheinmetall’s €1.94bn Revenue Miss Sends Shares to a 52-Week Low, but Cruise Missile Plans Press Ahead

Rheinmetall's Q1 revenue of €1.94bn fell €360mn short of forecasts, sending shares to a 52-week low. Profit margins met targets, and a €73bn order pipeline supports ambitious 2025 growth goals.

The dissonance between Rheinmetall’s long-term ambitions and its immediate financial performance has rarely been starker. While the defence group pushes ahead with plans to manufacture cruise missiles and expands its naval capabilities, the market delivered a brutal verdict on Friday after first-quarter revenues fell well short of expectations.

Shares in the Düsseldorf-based company tumbled 10.42% to €1,207.20, hitting a fresh 52-week low. The trigger was a top-line miss that caught analysts off guard: Rheinmetall generated €1.94bn in revenue for the first three months of the year, against consensus forecasts of €2.3bn. The gap of roughly €360m underscored the challenges of converting a record order book into actual sales in a timely manner.

Profitability, however, came in on the nose. The operating margin climbed to 11.6%, matching market expectations precisely. That provided some comfort to the board, which reaffirmed its full-year guidance. Management continues to target revenue growth of at least 40% for 2025, with an eye on reaching up to €14.5bn in sales by 2026 and an operating margin of around 19%.

The quarterly disappointment has erased nearly a quarter of the stock’s value since the start of the year, and the share price now sits almost 40% below the record high struck last autumn. The sell-off reflects investor anxiety that the group’s breakneck expansion may be running ahead of its ability to execute.

Naval integration and a €73bn order pipeline

CEO Armin Papperger is betting on a sharp acceleration in the second quarter to restore confidence. A key pillar of that strategy is the newly integrated naval division. Rheinmetall completed the acquisition of Lürssen’s military shipbuilding business in March, creating the Naval Systems segment that brings with it a portfolio of multibillion-euro legacy projects. The group’s total order backlog now stands at €73bn.

Papperger is also looking further afield. In Lower Saxony’s Unterlüß facility, the company plans to begin manufacturing cruise missiles this year through a joint venture with Dutch firm Destinus. The Ruta Block 2 system, capable of striking targets up to 700 kilometres away and equipped with AI-driven guidance to penetrate enemy air defences, is designed to fill a gap in European capabilities. The rationale has grown more urgent as US President Donald Trump’s plans to station Tomahawk missiles in Germany appear to be stalling.

Beyond Europe, Rheinmetall is responding to rising demand in the Middle East. Against the backdrop of tensions with Iran, the company intends to double its air defence systems deployed in the region by the end of 2027, though capacity constraints are currently limiting the pace of delivery.

All eyes on the annual general meeting

Investors will have an early opportunity to press management for answers. Rheinmetall holds its virtual annual general meeting on Monday, 12 May, where a dividend of €11.50 per share is up for approval. Shareholders must hold the stock before the ex-dividend date of 13 May to qualify for the payout.

Papperger will need to do more than simply defend the numbers. He must convince a sceptical market that the promised wave of large orders — the board expects a massive order intake of over €20bn in the second quarter alone — will materialise in the second half of the year. The integration of the Spanish plants and the new naval business will be closely scrutinised as proof that the group can turn its €73bn pipeline into revenue that matches the narrative.

For now, the chart tells a sobering story. The stock has lost ground in eight of the past ten sessions, and the technical picture offers little comfort. The AGM may provide a short-term catalyst, but the medium-term question remains whether Rheinmetall can deliver on its own ambitious timetable.