Rheinmetall’s Dual Alliances at AFCEA Mask a Quarter That Left Investors Cold

Rheinmetall expands beyond tanks with AI-powered Battlesuite OS and Deutsche Telekom deal, but shares hit 52-week low despite record €73bn order book and dividend hike.

The defence group’s annual shareholder meeting in Düsseldorf today coincided with a security trade fair in Bonn where Rheinmetall pulled back the curtain on two strategic partnerships that signal just how far chief executive Armin Papperger is pushing beyond tanks and shells. At AFCEA, the company unveiled its “Battlesuite” – a militarised operating system that connects sensors, platforms and effectors across land, air, sea, space and cyber domains, with new artificial-intelligence capabilities installable as apps without recertifying the entire infrastructure. Alongside that, Rheinmetall announced an alliance with Deutsche Telekom to protect critical infrastructure from hybrid threats, sabotage and drone attacks: Rheinmetall supplies specialised sensors and countermeasures, while Telekom contributes secure cloud architecture, networks and data analytics.

Yet the narrative of expansion and technological leap sits uncomfortably alongside the stock’s performance. Shares in the Düsseldorf-based company touched a 52-week low of €1,161 during Tuesday’s session, extending a year-to-date decline of roughly 27%. The slide has erased more than 40% of the value from last September’s record high. Technical indicators suggest the sell-off has been so steep that the relative strength index has jumped to 82, a reading that normally signals overbought conditions but here merely reflects the velocity of the rout.

The disconnect between operational momentum and market sentiment was underlined by the first-quarter numbers released earlier this month. Group revenue rose 8% to €1.94bn in the three months to March, while operating profit climbed 17% to €224m – solid growth, but short of consensus forecasts on both the top line and earnings per share. Management confirmed its full-year outlook for revenue between €14bn and €14.5bn and an operating margin of roughly 19%, and promised a marked acceleration in both sales and order intake during the second quarter.

The order book already provides ammunition for that confidence. At the end of the first quarter, Rheinmetall reported a record backlog of around €73bn, including €5.5bn from the newly formed marine systems segment that has been built up through targeted acquisitions. High demand for air-defence systems such as Skynex and the continuing need for artillery shells are expected to keep the pipeline full.

Shareholders are being offered a slice of that growth directly. The board is proposing a dividend of €11.50 per share, up from €8.10 last year, with payment scheduled for 15 May 2026, subject to approval at today’s virtual meeting. Papperger has also signalled a further broadening of the product range, announcing that Rheinmetall intends to manufacture cruise missiles, adding to a portfolio that already includes warships and military satellites.

For now, the market is fixated on the near-term profit miss and the sharp share-price decline. But with a record order book, a renewed technology push and a foray into new partnership models with the likes of Telekom, Papperger is betting that the story of a defence house becoming a full-spectrum security provider will eventually win over the sceptics.