Rheinmetall's Danish Deal and Drone Reveal Add Fresh Momentum to a Record-Breaking Quarter

Rheinmetall gains 2.7% as Danish frigate decoy order and FV-014 drone demo boost backlog to €80.4B, with Q2 sales up 69%.

The defence contractor's stock has been on a tear since Thursday's half-year results, and Friday brought two more reasons for investors to stay bullish. Rheinmetall closed the session at €1,207.00, up 2.7 percent on the day, after confirming a new order from Denmark's armed forces and showcasing a long-range loitering munition that fires from the back of a moving truck.

The Copenhagen contract covers the company's MASS (Multi Ammunition Softkill System) decoy launchers for frigates of the Absalon and Iver Huitfeldt classes, plus a naval weapons school. Valued in the low tens of millions of euros, the deal was booked in the second quarter of 2026, with deliveries slated to begin in the fourth quarter of 2027. A separate supply agreement covering Omnitrap-ER decoys runs for up to 21 years.

MASS, which shields vessels against incoming guided missiles, has now been adopted by 18 navies and is deployed on more than 400 launchers worldwide — a footprint that positions it as something close to a standard fit across Scandinavian fleets. The order follows a roughly two-week-old modernisation contract for the German frigate Bayern, and Rheinmetall's shares have gained 5.1 percent since that announcement.

A Backlog That Keeps Growing

The Danish order is modest in the context of the group's overall scale, but it lands at a moment when the order book is swelling at an extraordinary pace. Thursday's half-year report showed a record backlog of €80.4 billion, up 44 percent year on year. Second-quarter order intake reached €11.371 billion — a 476 percent jump against the prior-year period — pushing the book-to-bill ratio above 3.0, a sign that growth is accelerating rather than plateauing.

The operational figures were equally striking. Revenue climbed 69 percent to €3.289 billion in the second quarter, while operating profit surged 115 percent to €562 million, lifting the operating margin to 17.1 percent. Management's full-year guidance points to sales of between €13.7 billion and €14.2 billion, a 42 percent increase, with an operating margin of roughly 19 percent. The proposed dividend of €15.60 per share would mark a 36 percent rise.

A Drone That Travels in a Shipping Container

Alongside the contract news, Rheinmetall used its Cochstedt test centre in July to demonstrate the FV-014 loitering munition, including a launch from a moving lorry. The system is housed in a 20-foot ISO container that carries up to 18 munitions, each with a range of 100 kilometres and a flight time of 70 minutes. Weighing around 22 kilograms at launch, the FV-014 carries a payload of nearly 6 kilograms, and its HEDP warhead can penetrate more than 600 millimetres of armoured steel. The munition operates autonomously and is resistant to GNSS jamming, though it remains under human supervision.

The drone programme is one strand of a broader push to expand Rheinmetall's footprint beyond its traditional artillery and vehicle business. The group has formed a joint venture with Destinus to develop rocket and cruise missile systems, aiming to reduce Europe's reliance on American technology. In the UK, a new centre of excellence for autonomous systems is being built around Canadian PATH technology, which has already been trialled on more than 40 vehicles. Rheinmetall's American subsidiary is also participating in a US Army programme for autonomous logistics vehicles, one of six manufacturers selected.

Analysts Turn More Confident

The market's mood has brightened considerably since mid-July, with defence stocks broadly firmer — TKMS and other sector peers gained between 2 and 5 percent on Friday. Rheinmetall was among the DAX's biggest contributors, rising 3.4 percent as the index added 0.8 percent to reach 26,513 points, edging back toward its record high.

Jefferies raised its price target on Rheinmetall to €1,350 from €1,300, maintaining a "Buy" rating, with analyst Chloe Lemarie updating her models to reflect the latest quarterly figures. Earlier in the week, RBC Capital Markets initiated coverage with an "Outperform" rating and a €1,600 target, citing an estimated 35 percent annual EBITA growth rate through 2030 and the group's positioning within Europe's rearmament drive.

The stock now sits 34 percent above its 52-week low of €902.50, though it remains 40 percent below the all-time high of €2,007.00 reached on 3 October 2025. With a record backlog, accelerating order intake, and a steady stream of contract wins and technology milestones, the near-term narrative for Rheinmetall appears firmly tilted to the upside — even if the gap to those October peaks still leaves room for debate about how much of the growth story is already priced in.