Rheinmetall Cuts Its 2026 Outlook Again as a German Vehicle Order Slips Into 2027

Rheinmetall cut its 2026 sales forecast to about €13.2 billion late on Wednesday, its second reduction in three months, after Germany's Arminius armored-vehicle project slipped out of the year.

Rheinmetall shares closed down 16.7% in Frankfurt on Thursday, at €836.30 against €1,003.40 a session earlier. TickerGrove calculates the fall from the two Xetra closing prices, and it was the steepest drop in Germany's DAX index that day.

The guidance cut was announced late on Wednesday, a day before the company's third-quarter statement. The quarter itself was strong, which is why the market's verdict landed on the outlook instead.

The vehicle order that moved a year

The Arminius project, Germany's plan to buy Boxer armored vehicles, is in the final phase of negotiations and cannot be commissioned until next year, the company said. Revenue and advance payments tied to it now move into 2027.

The sums at stake are large. Chief executive Armin Papperger told reporters in August that Rheinmetall's share of an initial Arminius order could reach about €12.4 billion, including a 30% advance payment worth more than €3 billion.

Slower lot acceptance tests for artillery ammunition will also delay revenue, the company said. Reuters reported that not all expected revenue from newer activities, including cooperation with Dutch drone maker Destinus, would materialize in 2026.

Rheinmetall dropped its target for a cash conversion rate above 40% because of the Arminius delay. It still expects positive operating free cash flow for the full year.

The quarter beat on profit and missed on sales

Third-quarter sales rose 36% to €3.15 billion, below the €3.25 billion analysts expected, according to Vara Research figures reported by Dow Jones Newswires. The operating result rose 62% to €553 million, ahead of the €531.4 million expected.

The operating margin widened to 17.5% from 14.8% a year earlier, also ahead of the 16.3% analysts had forecast. Order intake of €2.89 billion ran below the quarter's sales.

Record nine months, negative cash flow

Across the first nine months, sales rose 38% to €8.38 billion and the operating result rose 68% to €1.34 billion. The nine-month margin reached 16.0%, up from 13.1%, and earnings per share rose to €14.44 from €7.83.

The order book kept growing even as the year's targets fell. Rheinmetall Backlog, the company's measure that adds signed framework agreements to firm orders, reached €78.0 billion on September 30, up from €56.7 billion a year earlier. New business booked over the nine months, which the company calls Nomination, reached €19.1 billion.

Operating free cash flow was negative €1.7 billion for the nine months. The company attributes the drain to inventories built for the targeted sales growth, against a prior year flattered by high customer advance payments.

Two cuts in three months test credibility

The first cut came in August, after Germany scrapped the F126 frigate project. Dow Jones described the canceled ships as what could have been the country's biggest class of warship since the end of World War II.

That August cut lowered the sales range to €13.7 billion to €14.2 billion. The new figure of about €13.2 billion sits below the whole range. Reuters noted it also sits below the lowest of 22 analyst estimates compiled by Vara Research in October.

The margin target eased to about 18.5% from around 19%. Rheinmetall noted the revised margin matches the level it achieved last year, so the cut is concentrated in sales rather than profitability.

Papperger struck a different tone in the release: "We are achieving very strong growth coupled with high profitability, which makes us a global leader within our sector." The argument between the company and its investors is not about demand. It is about how much of that demand becomes this year's sales.

The timetable questions the release leaves open

Rheinmetall gave no updated timetable for the Arminius award in its release, and it offered no guidance for 2027. Whether fourth-quarter ammunition acceptance tests catch up with the plan is also unstated.

Reporting after the release suggested the German bulk order may now be placed in February 2027 rather than early December, pushing the advance payment into next year too. Rheinmetall has not confirmed that shift.

What investors test next

On the earnings call, executives said they now expect the Arminius signing in the first quarter of 2027. A capital markets day later this month, where management has said it will address the 2028 outlook, is the next chance to rebuild the timetable.

Investors will also watch whether rival European defense groups report the same acceptance-test delays. If they do not, Rheinmetall's timing problem reads as company-specific rather than a German procurement bottleneck.