Rheinmetall’s Shipbuilding Ambitions Press On as Shares Plumb New Lows

Rheinmetall bids for German Naval Yards Kiel to boost maritime revenue to €5bn by 2030, but stock hits 52-week low after Q1 miss and JPMorgan downgrade.

Rheinmetall is doubling down on its maritime expansion even as its stock sinks to levels not seen in a year. The defence group has tabled a non-binding offer for German Naval Yards Kiel, putting it on a collision course with Thyssenkrupp Marine Systems, which had already signalled interest in the surface-vessel builder owned by France’s CMN Naval Group. A due-diligence process is now under way, with a binding bid expected to follow.

The move fits squarely into CEO Armin Papperger’s plan to lift maritime revenues to €5bn by 2030. It comes hot on the heels of the integration of the NVL shipyard group, which was completed on 1 March 2026. Four northern German yards — including Blohm+Voss in Hamburg and the Peene-Werft in Wolgast — were folded into a new Naval Systems division. In its first month, that unit generated €77m in sales, underpinned by ongoing construction programmes for the German navy and a Bulgarian client.

Rheinmetall has also taken over as lead contractor for the F126 frigate programme, stepping in after Damen Naval failed to meet its contractual obligations. The project covers six vessels with an estimated total value of around €12bn, though deliveries are not expected before 2031 or 2032 at the earliest.

The operational picture looks solid on paper. The order book swelled to €73bn as of 31 March 2026, up from €56bn a year earlier, with Naval Systems contributing €5.5bn for the first time. Management has reaffirmed its full-year guidance: revenue growth of 40 to 45 percent and an operating margin of roughly 19 percent. A sluggish first quarter, the board explained, was down to timing — truck handovers and higher ammunition deliveries from the new plant in Murcia have been pushed into the second quarter.

But the market is paying little attention to the backlog. The stock closed on Friday at €1,207.20, a fresh 52-week low and nearly 39 percent below its peak of €1,995 from September 2025. Over the course of the week, the shares shed more than 11 percent.

The sell-off was triggered by two events. First, the first-quarter report on 7 May showed revenue of €1.94bn, up 7.7 percent but well short of the €2.3bn analysts had pencilled in. Operating profit fared better, climbing 17 percent to €224m, with the margin improving to 11.6 percent. Then came JPMorgan. Analyst David Perry cut his price target from €2,130 to €1,500 on 8 May and downgraded the stock from “Overweight” to “Neutral”, sending the shares down roughly 10 percent in a single session. While Perry acknowledged structural tailwinds from German defence spending, he argued that near-term upside for the stock is limited.

Not all analysts are so bearish. Banco Santander upgraded the shares to “Outperform” with a €1,735 target, while Citi stuck with “Hold” at €1,480, flagging political risks around defence budgets.

Attention this week turns to the results of the Kiel due diligence and to the company’s annual general meeting on 12 May, which will be held virtually. Shareholders are set to vote on a cash dividend of €11.50 per share for the 2025 financial year. The ex-dividend date is 13 May, with payment scheduled for 15 May.

Papperger struck an optimistic tone on the second quarter, predicting stronger revenue and order intake, particularly in the naval and vehicle segments. Whether that confidence will be enough to reverse the stock’s slide — or whether fresh maritime contracts will materialise — should become clearer in the days ahead.