Rheinmetall's Two-Pronged Offensive: A Frigate for the World and an Artillery Windfall at Home

Rheinmetall launches new frigate amid market gaps, posts 69% revenue growth, and sees record €80B backlog despite cash flow strain.

The Düsseldorf-based defense group is making a bold play on two fronts at once. On Monday morning, Rheinmetall unveiled its new GMF140 multi-role frigate, a 140-meter warship with more than 6,000 tonnes of displacement, 64 vertical launch cells, the Aegis combat system and US radar technology. The vessel can be fitted with Lockheed Martin's CMS330 battle management system and is designed for air defense, ballistic missile interception, anti-submarine warfare and land attack missions, carrying a 5-inch gun, anti-ship missiles, torpedoes and a laser weapon.

The timing is no accident. The frigate enters a market suddenly short of suppliers. Germany's F-126 program for six frigates collapsed at the end of June when Defense Minister Pistorius pulled the plug — costs had ballooned from €10 billion to €18 billion, according to Handelsblatt, and delivery would have slipped from 2028 to 2032. The US Navy had already scrapped its Constellation program in November 2025 after completing just two ships. Rheinmetall sees an opening, though it faces stiff competition from TKMS, which has secured the German F128 successor contract — four of a possible eight ships worth around €12 billion.

The Order Book Tops €80 Billion

The naval push lands amid a torrent of contract news that has pushed the company's backlog past a symbolic threshold. Preliminary second-quarter figures released Wednesday showed revenue climbing 69 percent to roughly €3.29 billion, with operating profit of €562 million coming in about 20 percent above market expectations. Most striking: the order book crossed €80 billion for the first time in company history.

That headline number, however, carries an asterisk. Rheinmetall acknowledged a sharply negative operating free cash flow, attributing it to a massive buildup of inventories for follow-on orders and timing shifts in customer advance payments. The company has been scrambling to expand capacity — on July 27 it announced €350 million in new production investments to meet demand for ammunition and combat vehicles.

Artillery, Howitzers and a Frigate Refit

The contract pipeline shows no signs of slowing. The Bundeswehr has expanded an existing framework agreement for 155mm artillery ammunition to a total volume of €8.5 billion — a clear signal that the ammunition boom remains intact. The German Navy also awarded Rheinmetall a contract in the mid-three-digit million range for the comprehensive modernization of the frigate BAYERN, with work to be carried out at the Neue Jadewerft in Wilhelmshaven through 2029.

On Friday, the company's ARTEC joint venture with KNDS Deutschland received a sub-contract to supply weapon systems for 72 British RCH 155 wheeled howitzers, a deal valued in the low three-digit million range. That follows a massive €5.7 billion order from Romania in early June covering Lynx infantry fighting vehicles, Skyranger air defense systems and ammunition.

The US subsidiary American Rheinmetall added its own piece on Monday: an 18-month development and deployment contract from the US Army under the "Project Sustainment" program, delivering autonomous unmanned ground vehicles for tactical logistics in partnership with Harbinger. The award builds on a strategic partnership the two companies signed in late July.

A Market Cautiously Warming Up

Investors have responded with measured enthusiasm. The stock gained 3.46 percent on Monday morning to €1,184.60, following Friday's close of €1,145.00 — though the secondary report cites a slightly different intraday figure of €1,177.80, up 2.86 percent. Over the past seven trading days, the shares have climbed nearly 12 percent. Yet the rally only partially repairs the damage: the stock remains down 23.70 percent year-to-date and sits well below its 52-week high of €2,007.

The share purchase by ATP Holding — 3.04 million euros' worth of shares at €954.60 each — has been read as a vote of confidence. Chart technicians note the stock has decisively cleared its 50-day moving average, now trading about seven percent above that level, suggesting the short-term trend has turned.

What Thursday's Full Report May Reveal

Bernstein Research raised its price target from €1,700 to €1,900 on Wednesday while maintaining an "Outperform" rating. Jefferies reaffirmed its buy recommendation with a €1,300 target. The average analyst price target across the coverage universe stands at €1,705.56.

The full second-quarter and first-half report, with detailed segment breakdowns, arrives Thursday — the same week as earnings from Siemens, Bayer, Allianz and Deutsche Telekom. Morningstar expects a strong rebound in the second quarter. The frigate presentation, coming days before those numbers, appears designed to signal that Rheinmetall is actively building new growth avenues even after losing the domestic F-126 contract. The company aims to grow its naval division's revenue from roughly €1 billion today to €5 billion by 2030, targeting a 15 percent margin — with the GMF140 positioned as the flagship export product.

Institutional investors will get another chance to probe management on August 27, when Rheinmetall participates in DZ Bank's "Expert Day." The immediate question hanging over the stock is whether the cash-flow squeeze is a temporary artifact of rapid scaling or a sign that the breakneck expansion is outrunning the company's financial engine.