Rheinmetall’s Naval Ambitions Bolster €73 Billion Backlog as Share Price Languishes

Despite a €73B order backlog, Rheinmetall's stock has dropped ~25% in 2026; investors await delivery acceleration plan at upcoming conference.

What is arguably Europe’s most consequential defence company is wrestling with an uncomfortable disconnect. On one side sits a record €73 billion order book; on the other, a stock that has shed nearly a quarter of its value this year and trades almost 40% below its 52-week high. The bottleneck lies in execution — turning multi-year contracts into cash flow and satisfying investors who are growing impatient with the pace.

That tension is set to take centre stage on 27 May, when Rheinmetall’s management attends the Erste Group’s CEElection conference in Warsaw. No formal agenda has been published for the appearance, but after the release of first-quarter numbers earlier this month, the message is clear: the company needs to explain how it plans to accelerate deliveries from its swelling backlog.

The first-quarter results, released on 13 May, showed measured progress. Revenue climbed to €1.938 billion from €1.800 billion a year earlier. Operating profit rose to €224 million, pushing the margin to 11.6% from 10.6%. Those are solid figures, but they hardly reflect the scale of the opportunities ahead.

The real weight sits in the order pile. Rheinmetall’s backlog stood at €73 billion at the end of March, up from €56 billion a year ago, driven by contracts for artillery ammunition, air-defence systems and armoured vehicles. Yet the flow of new business slowed markedly in the quarter: order intake fell to €4.9 billion from €10.7 billion in the year-earlier period, which had been inflated by several large framework agreements. The company insists this is a timing issue and that demand remains robust.

For the full year, Rheinmetall is guiding for revenue of €14.0 billion to €14.5 billion, a steep jump from the €9.935 billion reported for 2025. An operating margin of approximately 19% is also confirmed, though management has cautioned that the real ramp-up in output will not happen until the second half of the year.

One of the most significant additions to the corporate story is the creation of a standalone Naval Systems division, which took shape in the first quarter of 2026 through the integration of the NVL shipyard group. Four northern German yards, including Blohm+Voss in Hamburg and the Peene-Werft in Wolgast, now fall under the Rheinmetall umbrella. The new unit started life with a project portfolio worth around €5.5 billion, drawn from the German navy’s Flottendienstboot programme and a Bulgarian patrol-boat project.

Chief executive Armin Papperger has set a target of roughly €5 billion in annual naval sales by 2030. A due-diligence process for a potential bid for German Naval Yards Kiel is already under way. Rheinmetall has also assumed project leadership of the Bundeswehr’s F126 frigate programme, an order estimated at €12 billion. The ambitious aim is to grow the overall group backlog to as much as €135 billion by the end of the year — a figure that would dwarf the current enterprise value and underscore the scale of the military spending wave sweeping Europe.

Back on the ground, the existing businesses are sending mixed signals. Vehicle Systems generated €985 million in revenue, up just €32 million year on year, as the ramp-up of military trucks was held back by delayed call-offs. The division’s backlog reached €25.852 billion. Weapon and Ammunition revenue was virtually flat at €601 million, but order intake there more than doubled to €1.806 billion, thanks largely to armour-piercing ammunition contracts for Poland and Lithuania, plus framework agreements with the Netherlands.

Air Defence fared better: revenue rose by €57 million to €192 million, supported by progress on Skynex and Skyranger systems for European clients. The segment’s operating margin improved to 15.6% from 12.5% a year ago.

Despite this favourable fundamental backdrop, the shares closed on 26 May at €1,237.00, down 22.76% since the start of the year. The price stands 24.60% below its 200-day moving average, yet the relative strength index has surged to 90, flashing an overbought signal after a 10% rally from the May low of €1,118. The technical picture is as contradictory as the narrative.

In Warsaw, the audience will be less interested in product unveilings than in clarity on the conversion of backlog to revenue, margin trajectory and capacity expansion. For a company that has become the poster child of Europe’s rearmament push, the challenge is no longer winning orders — it is delivering on them.