Rheinmetall’s Bavarian Powder Play: €350 Million Expansion as the Stock Struggles for Traction

Rheinmetall expands Aschau powder plant to 4,200 tonnes/year by 2028, creating 400 jobs, as CEO warns NATO readiness hinges on European production.

The ground has been broken in Aschau, Bavaria, where Rheinmetall is laying the foundations for what it bills as one of Europe’s most advanced powder plants. On July 22, 2026, Bavarian premier Markus Söder, state secretary Nils Schmid, economy minister Hubert Aiwanger, and Rheinmetall CEO Armin Papperger gathered to mark the start of construction at the site, which has been producing propellant since the 1930s. The expansion, part of a broader push dubbed “Project Firepower,” is costing the group around €350 million at this location alone.

The numbers are striking. Annual powder output at Aschau is set to climb from 1,700 tonnes to 2,500 tonnes within two years, with production of propellant charge modules jumping from 300,000 to over one million units per year. Full capacity of 4,200 tonnes annually is targeted for 2028, and the company aims to reach 20,000 tonnes of powder per year group-wide by 2030. The workforce in Aschau is expanding from roughly 800 to 1,400 employees, with local mayor Christian Weyrich estimating around 400 new jobs and a total headcount of about 1,300 at the historic site. Rheinmetall is set to become the region’s largest employer, surpassing ZF Lifetech, according to Weyrich, who downplayed sabotage risks for the defence facility.

Papperger framed the investment in stark geopolitical terms. The United States, he noted, holds only 20 to 30 percent of its required stockpiles and is producing primarily for its own needs, leaving Europe to fill the gap. Without the Aschau plant, he argued, NATO would not be combat-ready. State secretary Schmid pointed to acute ammunition shortages, particularly for 155-millimeter shells that have become a critical consumable in the Ukraine conflict. On raw materials, Papperger said the earlier critical shortage of nitrocellulose has been resolved, with reserves now sufficient for four years. The company is also exploring replacing the cotton linters it currently uses with wood pulp to reduce import dependence.

The expansion is just one piece of a much larger picture. Papperger expects the group’s order backlog to exceed €100 billion by year-end, forecasting a decade of high production demands for Europe’s defence industry. International growth is also on the agenda: Rheinmetall and Bulgaria are reportedly restarting talks on a joint munitions plant that would produce powder, 155-millimeter shells, and propellant charge modules. The project would involve an investment of around €1 billion and create roughly 1,000 jobs, though a founding agreement and secured financing are still pending. Bulgaria is hoping for support from the EU’s SAFE programme.

The recent flurry of contracts has been notable. In mid-July, Rheinmetall completed delivery of RH1412 systems to Ukraine. Shortly before that, the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support (BAAINBw) awarded a €100 million call-off to a consortium of Rheinmetall Electronics and its subsidiary blackned for 5,000 adapter plates, 11,000 pin pads, and integration services under the Bundeswehr’s multibillion-euro D-LBO digitisation project. Rheinmetall Electronics also commissioned Thales in mid-July to supply a mid-four-digit number of next-generation optronic sight systems, with deliveries expected from 2027. Days earlier, a consortium of Rheinmetall Waffe Munition and MBDA Germany received a contract in the mid-three-digit million range for a high-energy naval laser weapon system to be developed and built by 2029. In late May, Romania placed a €5.7 billion order with Rheinmetall for tanks, air defence systems, and ammunition, with much of the production to take place locally.

Yet for all the activity, the stock has been a laggard. Rheinmetall shares closed recently at €1,019.40, down 34.34 percent year-to-date and roughly 49 percent below the 52-week high of €2,007.00 reached on October 3, 2025. A brief recovery of about 5 percent followed the early-July disappointment of losing the F126 frigate project to rival TKMS, but the broader trend remains downward. On Friday, the stock edged up 0.68 percent to €1,029.00.

Insider activity near the lows has drawn attention. In early June, ATP Holding, a company linked to CEO Armin Papperger, bought Rheinmetall shares at around €955. Around the same time, Georgi Vermögensverwaltungs GmbH, associated with supervisory board member Andreas Georgi, purchased shares at €953.30. In May, Jutta Roosen-Grillo, a person close to a supervisory board member, acquired shares worth €62,656.80 at €1,253.14.

Analysts have been trimming their price targets while maintaining buy ratings. Jefferies’ Chloe Lemarie cut her target from €1,890 to €1,300 in late June, citing 2030 revenue forecasts that are 20 percent below the company’s own guidance and structural doubts about the traditional ammunition business. Benjamin Heelan of Bank of America followed on July 20, reducing his target from €1,770 to €1,300 while keeping a “Buy” rating. He pointed to a technological shift in warfare toward drones and precision weapons that could pressure the classic heavy defence equipment model.

A separate legal headache has emerged in Russia. Moscow’s prosecutor’s office and the company AG Garnison are reportedly seeking €47.2 million from Rheinmetall over alleged unjust enrichment related to a contract for the construction and equipping of a combat training centre in Mulino. The case, which concerns a contract from an earlier era, is being heard behind closed doors.

All eyes now turn to August 6, when Rheinmetall is due to report its second-quarter 2026 results. The earnings release will show whether the recent wave of orders is already translating into the numbers, and whether the more cautious analyst targets will hold or need further revision.