Rheinmetall's Record €73 Billion Backlog Can't Mask Q1 Delivery Snags as Stock Sinks to 52-Week Low

Rheinmetall's Q1 revenue of €1.94B missed consensus of €2.3B due to supply chain snags and a plant accident, sending shares to a 52-week low. Despite this, a record order backlog and a new drone-defense partnership with Deutsche Telekom underpin long-term growth.

Rheinmetall finds itself in an uncomfortable position for a defence contractor: demand is surging, but the supply chain cannot keep pace. The Düsseldorf-based group reported first-quarter revenue that fell well short of analyst expectations, triggering a sharp sell-off that sent shares to their lowest level in a year. Yet beneath the headline disappointment, the underlying story is one of an order book bulging at the seams and a management team insisting the delays are temporary.

Revenue for the three months to March reached €1.94 billion, an 8% increase year-on-year but a clear miss against the consensus forecast of roughly €2.3 billion. Management blamed postponed deliveries of military trucks and weapons and ammunition, partly compounded by an accident at the company's Spanish plant in Murcia. The shortfall is expected to be made up in the second quarter. Earnings per share from continuing operations came in at €2.18, versus the €2.70 analysts had pencilled in.

The profit picture was brighter. Operating profit rose 17% to €224 million, pushing the operating margin to 11.6%, within the range analysts had anticipated. That combination of a respectable margin and a revenue miss made the market's reaction particularly harsh.

The stock closed Wednesday at €1,119.80, marking a 52-week low. Over the past seven days it has fallen 16.9%, and the year-to-date decline now stands at 30.08%. From its September peak, the shares have tumbled roughly 44%. The relative strength index at 91 signals extreme oversold territory, though whether that marks a bottom or merely a pause before further losses will depend on the pace of conversion from the record order backlog.

Analysts are divided on the outlook. JPMorgan delivered a sharp downgrade, slashing its price target from €2,130 to €1,500 and moving its rating to "Neutral" from "Overweight". The bank noted that Rheinmetall has missed market expectations in four of the past six months, making downward estimate revisions more likely than upgrades. Warburg Research struck a more constructive tone, upgrading the stock to "Buy" even as it trimmed its target to €1,550 from €1,700. mwb research also moved to "Buy" with a €1,450 target, while Barclays stuck with "Overweight" and a €2,125 target.

Beyond the quarterly numbers, the company continues to line up major contracts that underpin its long-term growth story. Rheinmetall and Deutsche Telekom have formed a strategic partnership to develop a drone-protection shield for critical infrastructure in German cities. The system will combine Rheinmetall's sensor technology, lasers and countermeasures with Telekom's mobile network and cloud-based analytics. A particular focus is the growing threat of drones controlled via mobile networks — around 90% of commercial drones still use ISM radio frequencies, but the partnership is researching how to detect and neutralise the remainder that rely on cellular links. The collaboration was announced ahead of the AFCEA security fair in Bonn.

On the export front, the Romanian defence ministry selected Rheinmetall's Lynx KF41 infantry fighting vehicle at the end of April for a procurement programme worth €3.4 billion. The vehicle is being showcased at the BSDA defence fair in Bucharest, which runs until 15 May 2026. Meanwhile, the joint venture Artec — in which Rheinmetall and KNDS each hold a stake — has secured a UK Army order for 72 RCH 155 wheeled howitzers valued at roughly £1 billion. Production will be based in the UK, securing more than 500 jobs, with first deliveries scheduled for 2028.

Ammunition capacity is also being ramped up aggressively. Rheinmetall aims to produce 1.1 million 155 mm artillery shells annually by 2027, rising to 1.5 million by 2030. For 120 mm tank ammunition, the target is 240,000 rounds per year from 2027.

Shareholders received some consolation at the annual general meeting, where a dividend of €11.50 per share for 2025 was approved — an increase of roughly 42% from the prior year. The stock, however, showed little reaction.

Management reaffirmed its full-year guidance: revenue of €14 billion to €14.5 billion and an operating margin of around 19%. With an order backlog of €73 billion, the group has plenty of visibility. The question hanging over the stock is whether the second quarter will finally show that those delayed military-truck and munition deliveries have been pushed out of the factory doors.