Rheinmetall Navigates a Frigate Setback as Berlin's €110 Billion Defence Plan Takes Shape
Published on 07/06/2026 at 09:22 | Redaktion boerse-global.de
The German government’s decision to ramp up defence spending to a record €109.7 billion for 2027 might seem like an unalloyed win for Rheinmetall. Yet the same cabinet meeting that approved the budget also scrapped the F126 frigate programme, punching an immediate hole in the armsmaker’s second-quarter order book. The contrast illustrates a widening gap between political ambition and procurement reality that investors are now forced to judge.
Without the frigate contract, Rheinmetall expects Q2 order intake to land in the low double-digit billions — well short of the €20 billion-plus the management had been targeting. The cancellation could also slice up to €300 million from full-year revenue if no compensating orders emerge. For now, the group reaffirms its forecast of more than 60 percent sales growth, underpinned by a record backlog of €73 billion that is projected to swell to €135 billion by year-end.
A potential lifeline is taking shape in Brussels. Belgium is reportedly preparing to buy air-defence systems worth €3.1 billion, including 20 Skyranger short-range launchers from Rheinmetall. The deal still requires approval from the Belgian minister council, and an official announcement could be timed to coincide with the NATO summit in Ankara on 7–8 July. If confirmed, the order would go a long way toward offsetting the F126 blowout.
On the operational front, Rheinmetall continues to rack up field successes. A single battery of its Skynex air-defence system recently intercepted 34 Shahed drones and two Russian Kh-101 cruise missiles in Ukraine, bolstering the case for short-range air-defence procurement across Europe. Meanwhile, the Rheinmetall ICEYE Space Solutions joint venture secured a €1.7 billion Bundeswehr contract to supply SAR satellites, with production starting in Neuss in the third quarter of 2026. Those satellites will feed surveillance data to the 45th Panzer Brigade stationed in Lithuania as part of NATO’s eastern flank monitoring.
Should investors sell immediately? Or is it worth buying Rheinmetall?
Berlin’s fiscal largesse extends beyond next year’s headline number. The finance ministry says the defence ministry will receive €105.8 billion in 2027 plus roughly €27.5 billion from the Bundeswehr’s special fund, bringing total military spending to around €133 billion. By 2030, the regular defence budget is scheduled to climb to €179.9 billion. Finance Minister Lars Klingbeil defended the higher net borrowing of €118.7 billion planned for 2027, arguing that a “black zero” is no longer appropriate given the security environment.
Yet for all the promises, Rheinmetall CEO Armin Papperger remains frustrated by the slow pace of actual contract awards. The group sank €500 million into a new artillery plant, ramping annual shell capacity from 70,000 to a million rounds. To date, the government has ordered just 200,000 rounds — a fraction of what the factory can deliver. Papperger has used recent appearances to criticise the legacy of former Chancellor Angela Merkel, accusing her of deliberately weakening the domestic defence industry by signalling that Germany would rely on the United States instead. Now, he argues, the government must back up its budget vows with binding, long-term contracts.
The stock market has taken note of the mixed signals. Rheinmetall shares closed on Friday at €1,097.00, a weekly gain of 12.8 percent and a solid recovery from the 52-week low of €902.50 hit in late June. The relative strength index of 46.5 points to a neutral zone. Still, the equity remains 31.5 percent in the red year to date and about 45 percent below the 52-week high of €1,995.00 set last September.
Rheinmetall at a turning point? This analysis reveals what investors need to know now.
The NATO summit in Ankara now looms as the next inflection point. A Belgian order would give Rheinmetall a concrete counterbalance to the frigate cancellation, while any further budget clarity from Berlin could restore investor confidence. Without a firm deal, the €300 million revenue question for 2026 will only grow louder.
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