Rheinmetall’s €12bn Warship Standoff Overshadows a Record Dividend and a Revenue Gap

Rheinmetall navigates a €12bn naval cost clash with Berlin, record dividend, revenue miss, and bullish analyst targets amid stock decline.

The German defence giant is juggling a blockbuster order book, a bumper payout for shareholders, and a bruising dispute with Berlin over the cost of its flagship naval programme. Rheinmetall heads into a pivotal week with its stock nursing double-digit losses, even as the company prepares to hand investors a record dividend and unveil full first-quarter results.

A €12bn Bill for the Navy

At the heart of the tension is the F126 frigate project, a multi-billion-euro undertaking that has turned into a high-stakes negotiation with the federal government. Media reports indicate Rheinmetall is demanding roughly €12bn from the state to cover the acquisition and execution of the marine programme. Berlin has so far earmarked €2bn, while outside experts estimate the total project cost at €14bn.

The delivery timeline has already slipped. The first vessel is now expected to reach the water in 2032 — four years behind schedule. Adding to the pressure, the government is exploring the purchase of four Meko-class frigates from rival Thyssenkrupp Marine Systems, a move that could sideline Rheinmetall’s role in the programme.

Investors are hungry for clarity on the naval schedule, and the company’s full quarterly report on Thursday afternoon is expected to address the issue head-on.

Revenue Stumbles, Profitability Surges

The operational picture is mixed. Preliminary figures for the first quarter show a revenue miss of roughly €400m, which management attributes to delivery shifts that should be recouped in the second quarter. Despite the shortfall, profitability is on the rise. The operating margin climbed to 11.6%, and the order backlog swelled to a record €73bn.

The board is standing by its full-year guidance, including a target of at least 40% revenue growth by 2026 and an operating margin of around 19%. The company has completed its transformation into a pure-play defence contractor, and a recent nomination worth nearly €5bn has further padded the pipeline.

A Record Dividend for Shareholders

On May 12, Rheinmetall will hold its virtual annual general meeting, where the board is proposing a dividend of €11.50 per share — a 42% increase over the prior year. If approved, the payout will land in accounts on May 15. The ex-dividend date is set for May 13, meaning investors must hold the stock by the AGM day to qualify.

The record payout underscores the company’s confidence in its long-term trajectory, even as near-term headwinds weigh on the share price.

Stock Under Pressure, Analysts Stay Bullish

The market has taken a dim view of the recent turbulence. Shares closed Wednesday at €1,434, down roughly 10% since the start of the year and far below the 52-week high of nearly €2,000. The RSI indicator, at 76, signals an overbought condition, though the stock has edged higher on a weekly basis.

Analysts at major banks remain undeterred. J.P. Morgan, Barclays, and Goldman Sachs all maintain buy ratings, with price targets exceeding €2,100. Other analysts have set targets ranging from €1,700 to €2,500.

The full first-quarter report lands on Thursday at 14:00 CET, with the consensus net profit estimate hovering around €128m. The update arrives just days before the AGM, giving shareholders a fresh look at the operational engine behind the record dividend — and the mounting cost of the navy’s next-generation fleet.