Rheinmetall Strips Down to Pure Defense with €350M Divestiture and US Capacity Push

Rheinmetall finalizes €350M sale of Power Systems to AEQUITA, records €200M impairment, invests $41M in US defence sites, and pivots Neuss plant to defence production amid record €63.8B orders.

Rheinmetall has taken the final step in its long-telegraphed transformation into a pure-play defence contractor. On 3 June 2026, the Düsseldorf-based group signed the agreement to sell its remaining civilian business, Power Systems, to Munich-based industrial holding AEQUITA for a preliminary €350 million. The closing is expected in the fourth quarter of 2026, subject to regulatory approvals.

The deal covers approximately 6,250 employees and well-known automotive brands such as Pierburg and Kolbenschmidt, which together generated roughly €2 billion in revenue in the 2025 financial year. Rheinmetall now classifies Power Systems as a discontinued operation, alongside three joint-venture sites — Neckarsulm, Walldürn and Langenhagen — that remain temporarily inside the portfolio under the KS Huayu AluTech name. CEO Armin Papperger called the transaction “firmenhistorisch bedeutend” — a company-historic milestone.

But the exit is not entirely clean on the balance sheet. Rheinmetall has flagged an additional non-cash impairment of around €200 million, on top of the €350 million already written down, to cover the final accounting clean-up. The strategic rationale, however, is unambiguous: low-margin automotive components were consuming capital and management attention that Rheinmetall now wants to channel entirely into defence.

Parallel to the divestiture, the group’s US subsidiary, American Rheinmetall, is ploughing $41 million into six existing production sites across the United States. The money will modernise workflows and shore up supply chains rather than build new factories, saving time to serial production. The investment is tied to key US military programmes including XM30, MTC, CTT and CAML, for which Rheinmetall is accelerating its manufacturing readiness.

The Neuss plant in Germany also gets a new mission. Instead of automotive parts, it will produce satellites and other defence equipment — a vivid illustration of how deeply the restructuring now reaches. Labour representatives from IG Metall have secured a three-year transitional agreement covering jobs and locations, and AEQUITA has committed to taking over all transferred employees.

On the order book, the demand picture remains strong. Rheinmetall ended 2025 with a record €63.8 billion in orders, up from €46.9 billion a year earlier. Recent contract wins include a €5.7 billion award from Romania and German military truck orders worth more than €1 billion. Management forecasts revenue growth of 40 to 45 percent for the 2026 financial year.

Yet the share price tells a different story. The stock has been trading around €1,190 in recent sessions, a decline of roughly 26 percent since the start of 2026 and well over 40 percent below the 52-week high of €1,995 reached in September 2025. Wednesday’s session saw it slip 0.35 percent to €1,186. The 52-week low of €1,099.80, set on 13 May 2026, is now only about eight percent away. The relative strength index hovers at 39.5 — technically in oversold territory — and the stock trades 27 percent below its 200-day moving average.

What will it take to revive the valuation? Analysts point to follow-on contract announcements from the newly upgraded US production lines as the most likely catalyst. Until that next wave of order news materialises, the purer corporate structure alone — while cleaner and easier to understand — may not be enough to lift the shares out of their current trough. The next concrete milestones are the regulatory green lights for the Power Systems sale and a clear ramp-up in US military output.