Rheinmetall Sheds Automotive Business for €350M, Pins Hopes on ILA and Telecoms Alliance to Recast a Sinking Stock

Rheinmetall sells its civilian Power Systems unit for €350M and rebrands as security-tech provider at ILA Berlin, but shares fall 25% YTD amid profit-taking and capex concerns.

Rheinmetall is attempting a two-front reinvention this week, and neither side of the story seems to be convincing the market. The Düsseldorf-based defence group has formally signed off the sale of its civilian Power Systems division to Munich-based AEQUITA for a provisional €350 million, while simultaneously using the ILA Berlin air show to present itself as a broader security-technology provider, not just a munitions and tank maker. Yet the stock, which closed Friday at €1,190, has shed 25.69% since the start of the year and trades 36.72% below its level twelve months ago.

The divestiture marks the cleanest break yet from Rheinmetall’s automotive heritage. The Power Systems unit, which includes brands such as Pierburg and Kolbenschmidt, employs roughly 6,250 people and generated about €2 billion in annual revenue. The deal is expected to close in the fourth quarter of 2026, subject to regulatory approval, and the business has already been classified as a discontinued operation. The transaction carries a sting, however: the group announced a non-cash impairment charge of around €200 million for the current year.

While management frames the sale as the logical next step toward a pure-play defence and security company, the market remains underwhelmed. Rheinmetall’s order book stands at a record €73 billion, and as recently as early June it landed a €5.7 billion Romanian deal covering Lynx infantry fighting vehicles, air-defence systems and naval vessels, with deliveries scheduled for 2028–2030. Yet the share price continues to slide – down 7.87% over the past week and 17.02% over 30 days. Analysts blame profit-taking after a prolonged rally, elevated valuation concerns and the heavy capital expenditure required to scale up production capacity.

The ILA Berlin forum, running from June 10 to 14, is therefore being treated as a pivotal moment for the investment narrative. Rheinmetall is showcasing drones, loitering munitions, satellite capabilities and air-defence systems – a portfolio it describes as “from the sensor to the effector.” The goal is to shift the conversation away from being a beneficiary of rising defence budgets and toward becoming a cornerstone of European security infrastructure. A second announcement this week reinforces that ambition: Rheinmetall and Deutsche Telekom are planning joint solutions to protect critical infrastructure – airports, ports, energy plants and power grids – from drone threats and sabotage.

Technically, the stock remains under pressure. The share price is 11.48% below its 50-day moving average of €1,344 and 26.56% below the 200-day line at €1,620. The relative strength index at 39.6 signals weakness without being deeply oversold. The 52-week low of €1,099.80 is just 8.20% below the current level, and the annualised volatility of nearly 52% underscores the stock’s sensitivity to political and execution-related news. Analysts, however, remain broadly positive: the average price target stands at €1,886, with JPMorgan pointing to Rheinmetall’s position in ammunition and air defence as a source of long-term, stable cash flows.

For a stock that has lost more than a quarter of its value in 2025, a trade show and a telecoms tie-up are soft catalysts compared with a hard earnings beat or a new mega-order. Yet the market’s patience is not infinite. The next scheduled reporting date is weeks away, meaning the reception of Rheinmetall’s ILA messaging – whether the company is seen as a credible architect of Europe’s security architecture or just another defence contractor riding a cyclical wave – will determine whether the share price can find a floor. Execution, not order intake, is now the measure.