Rheinmetall Shares Hit 52-Week Low Despite Record €73bn Backlog, Dividend Hike and Telekom Pact

Defence group's stock hits 52-week low even as CEO cites €73bn order backlog, new alliance with Deutsche Telekom, and a 42% dividend increase.

The gap between Rheinmetall’s operational momentum and its market reception has rarely been wider. Shares in the Düsseldorf-based defence group touched €1,164 on Tuesday, exactly matching their 52-week trough. That marks a drop of more than 40% from the all-time high reached last September, with the year-to-date loss now standing at roughly 27%.

The dissonance played out in full view at Tuesday’s virtual annual general meeting. Chief executive Armin Papperger pointed to a brimming order book, a higher dividend proposal and a fresh strategic alliance with Deutsche Telekom as evidence that the company’s transformation into a full-spectrum security provider is on track. Yet the market remained unconvinced, sending the stock to fresh lows even as management reiterated its full-year forecasts.

The alliance with Deutsche Telekom targets the protection of critical infrastructure against hybrid threats including drone strikes, sabotage and cyber attacks. Under the partnership, Rheinmetall will contribute specialised sensors and countermeasure technology, while the Bonn-based telecoms group brings secure cloud infrastructure, network capabilities and data analytics. The joint system is designed to counter both physical and digital assaults. Initial details were presented this week at the AFCEA security trade fair in Bonn.

Operationally, the first quarter proved disappointing. Revenue came in at €1.94bn, well below the €2.3bn analysts had pencilled in. Rheinmetall blamed delivery delays and said it expects to catch up in the second quarter. Operating profit nevertheless rose 17% to €224m, while the order backlog swelled to a record €73bn at the end of March, of which more than half comprises firm orders. The newly formed naval systems segment, built through recent acquisitions, accounts for €5.5bn of that total.

Shareholders are being asked to approve a dividend of €11.50 per share, up from €8.10 a year ago — a roughly 42% increase. The company is also pouring capital into production expansion, with new capacity under construction in Spain and at its Unterlüß site in northern Germany. Management expects to ramp up rocket motor manufacturing significantly by the end of 2026.

The push into naval systems, following last year’s acquisition of the NVL business, is gaining traction. Rheinmetall aims to lift maritime revenue to €5bn by the end of the decade, increasingly acting as a prime contractor. On the digital front, the group is showcasing software-enabled military operations that aim to seamlessly connect land, air and naval forces.

One technical indicator added a curious note to the sell-off. The relative strength index (RSI) stood at 82, a level typically associated with overbought conditions — an unusual reading for a stock plumbing 12-month lows. The high RSI underscores the extreme volatility and nervousness that has gripped the stock.

Despite the share price rout, management is standing pat on its guidance. For the current financial year, Rheinmetall expects revenue of €14bn to €14.5bn and an operating margin close to 19%. The company continues to bank on sustained demand for air defence systems such as Skynex and for artillery ammunition. With order books securing capacity utilisation for years to come, the challenge now is to convince investors that the operational story will eventually translate into share price performance.