Rheinmetall's Hiring Surge and Record Backlog Paint a Picture of a Defence Giant in Transition

Rheinmetall posts strong H1 results and record €80.5B backlog, but trims guidance after F126 cancellation; shares down 25% since January.

The numbers flowing out of Rheinmetall these days tell two very different stories. On one side sits a company so confident in its trajectory that it fielded 232,000 German job applications last year — roughly 23,000 a month — and saw its order book swell to an unprecedented €80.5 billion. On the other side sits a share price that has shed more than a quarter of its value since January, leaving investors to puzzle over which version of the Düsseldorf-based group is the real one.

Chief executive Armin Papperger, 63, chose the weekend to spotlight the recruitment boom, telling Die Zeit and the Süddeutsche Zeitung that he has observed a growing willingness among young people to take on societal responsibility. "Service to society doesn't do young people any harm," he said. The group received 360,000 applications worldwide last year, and the flow shows no sign of abating — a useful signal for investors who worry that the defence sector's expansion could hit a talent ceiling just as production demands escalate.

The personnel story dovetails neatly with the operational picture laid out in Thursday's half-year report. Revenue for the first six months jumped 39 percent to €5.227 billion, while operating profit climbed 74 percent to €786 million, up from €453 million in the prior-year period. The operating margin improved from 12.1 percent to 15.0 percent, and the second quarter alone delivered operating earnings of €562 million — comfortably ahead of the roughly €470 million consensus figure. Quarterly sales rose nearly 70 percent year-on-year to approximately €3.3 billion.

That momentum, however, collided with a dose of political reality. Rheinmetall trimmed its full-year revenue guidance to a range of €13.7 billion to €14.2 billion, down from the previously communicated €14.0 billion to €14.5 billion, after Berlin scrapped the F126 frigate programme. The company has nonetheless held firm on its operating margin target of around 19 percent for the year — a signal that the lost programme, while painful for top-line planning, does not fundamentally alter the profitability trajectory.

The order book provides the counterweight to the guidance cut. As of June 30, the backlog stood at a record €80.5 billion, up sharply from €56.0 billion a year earlier. New orders in the second quarter alone reached €11.4 billion, and media reports on Thursday suggested Rheinmetall has secured contracts for four naval vessels under a Romanian defence package valued at €5.7 billion — a deal that would swell the backlog further once formally reflected in the figures.

Papperger also waded into the ongoing debate about reintroducing some form of conscription in Germany. He considers the discussion appropriate but sees practical obstacles to implementing it on a voluntary basis. The context is telling: the Bundeswehr itself has seen applications rise 24 percent since January to around 38,500, suggesting a broader shift in attitudes toward defence-related careers. Rheinmetall currently employs roughly 34,000 people, with nearly 1,000 based at the Düsseldorf headquarters — half of them aged 30 or younger. Its largest production site sits in Unterlüß, Lower Saxony.

Two further threads emerged over the weekend. Rheinmetall is reportedly preparing to challenge rival TKMS in the naval defence segment, though details on the scope and direction of that push remain thin. Separately, questions are circulating about who will supply the rare earths needed for the group's expanding weapons production — an issue that underscores how raw material security has become a central concern for the entire European defence industry. Both topics arrived in a week that had already generated headlines with Tuesday's presentation of the GMF 140 frigate and Thursday's half-year results.

The market's response to all this has been muted at best. The shares closed Friday at €1,145.40, down 0.40 percent on the day. The monthly picture shows a gain of 7.71 percent, reflecting a recovery from recent lows, yet the stock has fallen 4.9 percent since the GMF 140 presentation — evidence of how sensitive investors have become to individual product announcements. Since the start of the year, the shares are down 26.22 percent, and they now sit 42.93 percent below the 52-week high of €2,007.00 reached on October 3, 2025.

Analysts remain largely constructive despite the guidance revision. Goldman Sachs reaffirmed its buy recommendation on Friday with a price target of €2,300, describing the quarterly results as strong. Deutsche Bank had already trimmed its target from €2,100 to €1,800 in early July while maintaining its "Buy" rating — an adjustment made more than a month before the latest figures and therefore not reflective of the current news flow.

The central question for the coming quarters is whether the record backlog can offset the lost revenue momentum from the F126 cancellation. The next checkpoint arrives on November 7, when Rheinmetall publishes its third-quarter update. For now, the group presents investors with a peculiar duality: a company whose operational appeal is drawing record numbers of applicants and orders, yet whose share price continues to search for a footing after a bruising year.