Rheinmetall's Q1 Delivery Delay Overshadows Record €73bn Backlog and Naval Expansion

Truck delivery delays cause Q1 earnings miss, sending shares to 52-week low. Record dividend hike and naval expansion fail to lift market sentiment.

Investors are finding it hard to look past a €200m truck delivery snag as Rheinmetall's share price sinks to new lows, even as the defence group announces a record dividend, a €73bn order pile and a bold push into naval shipbuilding. The stock opened with a technical dividend adjustment on Wednesday after the virtual annual general meeting approved a €11.50 per share payout – a near-42% jump from last year's €8.10 – but the broader market mood remains decidedly chilly.

The chill has its roots in a first-quarter earnings miss that rattled confidence. Revenue rose 8% to €1.94bn and operating profit climbed 17% to €224m, yet both figures undershot analyst expectations – revenues were roughly €300m short of consensus. Management had already flagged the shortfall in an ad-hoc announcement, blaming delayed deliveries of around 200 finished trucks. Customers, primarily in Germany, had contractually pushed back delivery dates. Despite the stumble, the group reaffirmed its full-year forecast: organic sales growth of 28% to 31% for 2026, implying revenues of €14bn to €14.5bn, and an operating margin of 19%. Chief executive Armin Papperger expects a marked acceleration in the current second quarter.

While the quarterly disappointment weighed, the AGM brought two headlines of a very different kind. First, the dividend hike – the highest in the company's history – was approved despite a motion from the Critical Shareholders Association to deny the board discharge over arms exports to states accused of human rights abuses. Second, Papperger used the occasion to showcase the group's rapid transformation into a full-spectrum defence supplier. The newly created Naval Systems division, following the acquisition of Lürssen's naval business, starts life with an order backlog of €5.5bn. Rheinmetall has also submitted a non-binding offer for the German Naval Yards in Kiel, with due diligence under way. It is competing against Thyssenkrupp Marine Systems for the yard.

The scale of the group's overall order book is staggering. At €73bn, the backlog now represents more than five years of sales. Management aims to expand that to as much as €135bn by the end of 2026. Yet none of this has stopped the stock from sliding. The shares fell more than 2% on Tuesday to touch a fresh 52-week low of €1,155.60, extending year-to-date losses to roughly 28%. On Wednesday, they opened with the dividend-adjusted discount, leaving the stock at its most depressed level in a year.

Analyst sentiment is increasingly mixed. JPMorgan downgraded the shares from Overweight to Neutral, citing execution risks tied to the portfolio overhaul and lowering its target to €1,500. Warburg analyst Christian Cohrs cut his price target from €1,700 to €1,550. Yet the consensus remains firmly bullish: the average analyst target stands at €2,011, implying a potential recovery of around 73% from Tuesday's close of €1,162.40. Even the most bearish forecast in the pack suggests upside of more than 25%. UBS, for its part, views the first-quarter revenue miss as a cleansing event and keeps a Buy rating with a €2,200 target.

What happens next hinges on execution. Papperger has promised a step-change in growth in the current quarter – specifically, catching up on those delayed truck deliveries. If he delivers, the stock's alarming divergence between record order books and a 52-week trough could begin to narrow. If not, the market's scepticism may prove stubborn.