Rheinmetall’s €73 Billion Backlog Can’t Mask a Demand for Hard Guarantees

Rheinmetall's record €73B backlog isn't enough—CEO Armin Papperger demands binding NATO purchase guarantees before expanding production. Stock down 31.5% YTD.

Rheinmetall’s order book has never been thicker. The Düsseldorf-based defence group ended the first quarter with a record backlog of roughly €73 billion, yet chief executive Armin Papperger is far from satisfied. Heading into the NATO summit in Ankara on 7-8 July, he is demanding binding commitments from politicians — not just budget promises, but firm purchase guarantees and advance payments to justify the next wave of factory expansions.

The message is blunt: without contractual certainty, Rheinmetall won’t deploy capital on new production lines or next-generation technologies. Papperger sees a historic opening for joint European armaments programmes that could drive standardisation and economies of scale, but he insists Europe must not plan without the United States, preserving the transatlantic partnership as a strategic anchor.

The stock’s recent recovery reflects some of that tension. After plumbing a 52-week low of €902.50 in June, shares bounced back to close Friday at €1,097.00, a weekly gain of 16.63% despite a daily dip of 0.51%. The rally has narrowed the gap to the 50-day moving average of €1,197.09 — now just 8.36% away — but the 200-day average at €1,538.88 remains a distant 28.71% above current levels. Year to date the equity is still down 31.5%, and it sits a full 45% below last September’s 52-week high of €1,995.00.

Whether the Ankara meeting extends that rebound or snuffs it out depends on substance. If NATO delivers concrete procurement signals for German production sites, the bullish case gets ammunition. If the final communiqué sticks to vague pledges on higher defence spending, profit-taking could quickly erase the prior week’s gains. The relative strength index at 46.5 leaves technical room to run, but the 30-day annualised volatility of 69.1% warns that sharp moves in either direction remain the norm.

Papperger’s push for planning security comes against a backdrop of operational complexity. Media reports have questioned the performance of the Skynex air-defence system in Ukraine, claiming three of eight deployed guns suffered hydraulic or radar issues. The CEO rejects that characterisation and points to sustained demand: an unnamed client recently ordered four Skynex systems for a sum in the high three-digit million euro range, and Italy will introduce the system as the first NATO member by the end of 2025.

Meanwhile, Rheinmetall continues to broaden its footprint. In June and July it won a contract to supply seven mobile field hospitals to Morocco, with deliveries scheduled for 2027-2028 and a price tag in the mid-double-digit million euro range. At the start of July it completed the acquisition of a majority stake in Croatia’s DOK-ING, gaining access to the growth market for unmanned ground vehicles. And Latvia has signed an agreement with the company to expand ammunition production on the alliance’s eastern flank.

The geopolitical tailwinds are well understood. Germany plans to lift defence spending to as much as €130.1 billion by 2027, including financing for Ukraine, while the federal budget for external security already tops €108 billion in 2026 and is set to climb to roughly €152 billion by 2029. Berlin is also exploring licensed production of US weapon systems such as Tomahawk and PAC-3 missiles to reduce dependence on limited American capacity — a move that could create additional orders for Rheinmetall.

Yet not all NATO members are pulling in the same direction. Spain, Slovakia and the US have explicitly disavowed the latest spending targets, while France and Italy have yet to present credible plans for hitting the new benchmark. The Ankara summit will focus on burden sharing across the alliance, and any sign of disunity could sour market sentiment.

For the stock, the next decisive test after Ankara is likely the quarterly results, unofficially pencilled in for early August. They will reveal whether margins and the order inflow are holding up as the second half unfolds. Until then, the €73 billion backlog stands as an argument for resilience — but as Papperger knows, a backlog is not the same as cash in hand.