Rheinmetall’s Artillery Ambition: A Powder Plant Expansion Meets a Stock in Need of a Catalyst

Rheinmetall invests €350M to triple propellant output at Aschau plant by 2028, boosting NATO capabilities amid Ukraine war demand and securing Europe's ammunition supply.

The Bavarian town of Aschau am Inn, a place that has produced propellant powder since the 1930s, is about to become the epicentre of Europe’s artillery renaissance. On 22 July 2026, a gathering that included Bavaria’s Minister-President Markus Söder, state secretary Nils Schmid, economy minister Hubert Aiwanger, and Rheinmetall chief executive Armin Papperger marked the official start of a major expansion at the site. The project, dubbed “Firepower”, represents an investment in the mid-hundreds of millions of euros, with roughly €350 million earmarked for Aschau alone.

The scale of the ambition is striking. Rheinmetall aims to double the plant’s annual powder output from the current 1,700 tonnes to 4,200 tonnes by 2028, while trebling production of propellant charge modules from 300,000 to over one million units per year. First production from the expanded facility is expected in 2027. The workforce in Aschau is set to grow from around 800 to 1,400 employees, making Rheinmetall the region’s largest employer ahead of ZF Lifetech, according to local mayor Christian Weyrich. The mayor described the sabotage risk of operating a defence site as manageable.

Papperger framed the expansion in stark geopolitical terms. The United States, he noted, now holds only 20 to 30 percent of its former ammunition stockpiles and is producing primarily for its own needs, leaving Europe to fend for itself. “Without the Aschau plant, NATO would not be combat-capable,” he said, according to multiple reports. State secretary Schmid pointed to the acute demand for 155-millimetre artillery shells, a key consumable in the Ukraine conflict. On the raw materials front, Papperger confirmed that the previously critical shortage of nitrocellulose has been resolved, with reserves now sufficient for four years. Rheinmetall is also exploring a switch from cotton linters to wood pulp as a feedstock, aiming to reduce import dependence.

The powder plant is far from the only front where Rheinmetall is advancing. On 9 July, the company and MBDA Deutschland signed a development contract for a high-energy laser weapon system designed to counter drones, with operational deployment on naval vessels targeted for 2029. The same day, the German Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support (BAAINBw) awarded a joint venture between Rheinmetall Waffe Munition and MBDA a major contract in the mid-hundreds of millions to realise the naval laser system.

Just over a week later, on 20 July, the Bundeswehr placed a €100 million order for hardware components and integration services under the “Digitalisierung Landbasierte Operationen” (D-LBO) programme. The call-off includes 5,000 adapter plates and 11,000 pin pads, to be delivered by a consortium of Rheinmetall Electronics and partner blackned. The rapid succession of contract announcements underscores the breadth of Rheinmetall’s defence portfolio, stretching from conventional munitions through sensors and digitalisation to cutting-edge laser technology.

Papperger expects the group’s order backlog to surpass €100 billion by the end of the year, and he spoke of a decade of elevated production demands for the European defence industry. International expansion is also on the agenda: Rheinmetall and Bulgaria are reportedly resuming talks on a joint munitions plant that would produce powder, 155-millimetre shells, and propellant charge modules. The project envisions an investment of around €1 billion and the creation of roughly 1,000 jobs, though a founding agreement and secured financing remain absent. Bulgaria is hoping for support from the EU’s SAFE programme.

Yet for all the operational momentum, Rheinmetall’s share price tells a more cautious story. The stock closed recently at €1,019.40, having fallen 34.34 percent since the start of the year. From its 52-week high of €2,007.00, reached on 3 October 2025, the shares are down 49.21 percent. The powder plant expansion and the prospect of a €100 billion order book have done little to reverse the year’s decline. On the day the Aschau ground-breaking was announced, the stock managed a modest gain of 0.93 percent to €1,022.00, continuing a tentative recovery that has seen it rise 8.01 percent over the past 30 days. That still leaves it well above the 52-week low of €902.50 touched in June, but the market is clearly demanding more than just capacity expansion to reignite enthusiasm.

Adding to the list of distractions, Rheinmetall is also facing a legal claim in Russia. The Moscow prosecutor’s office and a company called AG Garnison are demanding €47.2 million from Rheinmetall, alleging unjust enrichment related to a contract for the construction and equipping of a combat training centre in Mulino. The court proceedings are being held behind closed doors.

Investors will get a clearer picture of how the new orders and investment projects are feeding through to the bottom line on 6 August 2026, when Rheinmetall publishes its second-quarter results. A presentation at the Berenberg Stockholm Seminar on 1 September will give institutional investors a chance to hear the strategy directly from management. For now, Rheinmetall finds itself in an unusual position: a company with a bulging order book, a major capacity expansion underway, and a laser weapon programme in development, yet a stock that has shed half its value from its peak. The market appears to be waiting for proof that the growth story can translate into earnings momentum before it starts cheering again.