Rheinmetall’s Record Dividend Offer Comes as Revenue Disappoints and Shares Slump

Rheinmetall offers €11.50 dividend (+42%) as Q1 revenue of €1.94bn misses €2.3bn consensus, but order backlog surges to €73bn and full-year guidance remains ambitious.

Rheinmetall shareholders are being offered a record payout even as the defence group’s first-quarter sales fell short of expectations and its stock languishes near multi-month lows. The Düsseldorf-based company is proposing a dividend of €11.50 per share for the 2025 financial year, a 42% increase on the prior year, to be voted on at the virtual annual general meeting on 12 May.

The payment, scheduled for 15 May if approved, comes with an ex-dividend date of 13 May. Investors must hold the shares by the day of the AGM to qualify. The generous distribution reflects a year of bumper order intake, yet the market’s mood remains distinctly cautious.

Revenue miss clouds a strong margin story

Rheinmetall’s operating performance in the first quarter was a tale of two metrics. The operating margin improved to 11.6% from 10.5% a year earlier, matching analyst forecasts, while operating profit rose to €224m. But revenue of €1.94bn, while up 7.7% year-on-year, undershot the consensus estimate of €2.3bn by a wide margin.

The shortfall was largely down to timing. Pre-produced trucks for a German customer and higher ammunition deliveries from the new plant in Murcia, Spain, are expected to be recognised only in the second quarter. Production at the Spanish facility was also disrupted by an accident, further crimping output.

The company’s order book tells a far more buoyant story. A new nomination worth €4.9bn and the first-time inclusion of the Naval Systems backlog pushed total orders to around €73bn, a 31% increase. Rheinmetall’s full-year guidance remains ambitious: revenue growth of 40% to 45%, an operating margin of roughly 19%, and a cash conversion rate above 40%.

Share price under pressure despite analyst backing

The disconnect between operational strength and market sentiment is stark. Rheinmetall shares traded at €1,433 on Wednesday, roughly 28% below their 52-week high of €1,995 and down nearly 12% since the start of the year. At €1,415 on the day of the dividend announcement, the stock has shed about a tenth of its value in 2026 alone.

Analysts remain broadly bullish. Jefferies has a price target of €2,220, Barclays sees €2,125, and JPMorgan is at €2,130. The broader analyst range stretches from €1,700 to €2,500, implying significant upside from current levels. The full first-quarter results, due on 7 May, will be a critical test of whether the promised acceleration materialises in the second quarter.

A sector-wide pattern of order gluts and delivery delays

Rheinmetall is not alone in grappling with the gap between demand and delivery. Across the European defence sector, record order books are colliding with capacity constraints, supply-chain bottlenecks, and postponed customer acceptances. Germany plans defence spending of over €108bn in 2026, and NATO members are ramping up budgets, but the ability to convert orders into revenue is proving uneven.

Italy’s Leonardo posted a 33% jump in EBITA to €281m, beating consensus by 10%, with orders surging 31% to €9bn. Hensoldt more than doubled its order intake to nearly €1.5bn, though revenue of €496m slightly missed expectations. Renk reported its best-ever first-quarter order intake at €582.3m, yet the stock fell 1.7% on the day. MTU Aero Engines saw its shares jump over 10% on solid numbers, but analyst views are split, with price targets ranging from €296 to €515.

The common thread: production capacity, logistics, and supply-chain issues are delaying revenue recognition across the board. Rheinmetall’s second-quarter results will be a key indicator of whether the sector can finally turn its order mountain into cash flow — or whether the defence boom remains, for now, a story written largely in backlog.