Rheinmetall Bolsters European Supply Chain with Greek Sensor Deal and Drone Contract Revival

Rheinmetall partners with Greece's Theon Sensors for vehicle tech and nears a major drone contract with the Bundeswehr, underpinning its strong financial outlook and growth strategy.

The German defense group Rheinmetall is advancing its European supply chain strategy through a new partnership with Greek specialist Theon Sensors SA. The agreement, valued at over €40 million, will see Rheinmetall Electronics integrate Theon's PHYLAX stabilized multisensor electro-optics into its 25mm turret solutions, specifically targeting the fire control system for the new Lynx 2 reconnaissance vehicle. To fulfill this initial order for several hundred systems, Theon is investing approximately €10 million in a new production facility in Athens, scheduled to be operational by the second quarter of 2027.

This move coincides with a potential major contract win for Rheinmetall's drone division. After initially being excluded from a German parliamentary committee's decision in late February, the company's FV-014 "Raider" loitering munition system is back in contention for a framework contract worth up to €2.4 billion. The Bundeswehr reportedly found the drone's optical sensors to be a valuable complement to competing systems, leading to its reconsideration following successful recent testing.

A parliamentary budget committee vote on an initial tranche, worth nearly €300 million, could occur as soon as April. This firm order would cover about 2,500 loitering munition systems, ground stations, and simulators. The drones are designed for ranges up to 100 kilometers and are primarily intended to protect the new German Panzerbrigade 45 stationed in Lithuania. However, full execution of the framework contract is contingent on the systems achieving official qualification by April 2027 at the latest.

Financially, Rheinmetall's outlook remains robust. The company forecasts revenue for the current fiscal year to reach between €14.0 and €14.5 billion, with an exceptional 91% of this target already covered by existing orders. Looking further ahead, management is targeting revenue exceeding €14 billion for 2026 with an operating margin of 19%. Shareholders will vote on a proposed dividend of €11.50 per share at the Annual General Meeting in May 2026, representing a 42% year-over-year increase and the fourth consecutive hike.

Trading around €1,569 recently, Rheinmetall's share price has gained roughly 16% over the past twelve months, showing a muted reaction to these latest developments. The Lynx 2 program offers further growth potential beyond the initial Greek order for equipping additional vehicle platforms. Similarly, the drone contract, if fully realized, would provide another significant pillar supporting the group's fundamental growth trajectory.