Rheinmetall’s Bavarian Powder Bet: Artillery Volumes Surge as the Market Waits for Earnings
Published on 07/24/2026 at 08:51 | Redaktion boerse-global.de
Rheinmetall is pouring hundreds of millions into turning its Bavarian powder plant at Aschau am Inn into one of Europe’s largest munitions facilities, even as its share price trades nearly 50% below the record high set last October. The ground-breaking ceremony on 22 July 2026 — attended by Bavaria’s minister-president Markus Söder, state secretary Nils Schmid, economy minister Hubert Aiwanger, and Rheinmetall chief executive Armin Papperger — marked the start of a two-year expansion that will lift annual propellant charge module production from 300,000 units to over one million.
The investment of roughly €350 million at Aschau is the centrepiece of a broader push dubbed “Project Firepower”. Annual powder output at the site will climb from 1,700 tonnes to 2,500 tonnes within two years, with full capacity of 4,200 tonnes targeted for 2028. Across the entire group, Rheinmetall aims to reach 20,000 tonnes of powder per year by 2030. The workforce at Aschau is swelling from around 800 to 1,400 employees, with mayor Christian Weyrich estimating roughly 400 new jobs and a total headcount of about 1,300 at the site, which has been producing powder since the 1930s. Weyrich noted that Rheinmetall will overtake ZF Lifetech as the region’s largest employer, and described the sabotage risk for a defence plant as manageable.
Papperger framed the expansion in stark geopolitical terms. The US, he said, holds only 20 to 30% of its former ammunition stockpiles and is prioritising domestic needs, leaving Europe to build its own capacity. Without the Aschau plant, he argued, NATO would not be combat-ready. State secretary Schmid highlighted the acute demand for 155-millimetre artillery shells, a key consumable in the Ukraine conflict. On the raw materials front, Papperger said the earlier critical shortage of nitrocellulose has been resolved, with reserves now sufficient for four years. Rheinmetall is also exploring replacing the cotton linters it currently uses with wood pulp to reduce import dependency.
The powder plant is not the only big-ticket item on Rheinmetall’s agenda. On 20 July 2026, the group drew down €100 million from the Bundeswehr’s D-LBO framework contract for digitising land-based operations, earmarked for additional hardware and support services. A day earlier, on 15 July, it signed a cooperation agreement with Norway’s Space Norway on maritime space surveillance. The biggest single order came in early June 2026, when Romania — an EU and NATO member — placed a €5.7 billion contract covering tanks, air-defence systems, naval vessels and ammunition, one of the largest individual orders in the company’s recent history.
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Looking ahead, Papperger expects the group-wide order backlog to surpass €100 billion by year-end, describing a decade of elevated production demands for Europe’s defence industry. International expansion continues: Rheinmetall and Bulgaria are reportedly resuming talks on a joint munitions plant to produce powder, 155-millimetre shells and propellant charge modules, with an estimated investment of around €1 billion and roughly 1,000 new jobs, though a founding agreement and secured financing are still lacking. Bulgaria is hoping for support from the EU’s SAFE programme.
Not every development has been favourable. In June 2026, defence minister Boris Pistorius halted the F126 frigate project, where Rheinmetall, through its acquired Naval Vessels LĂĽrssen (NVL) unit, was acting as general contractor. The contract for alternative Meko-200 frigates went to rival TKMS, a reminder that even a company with a bulging order pipeline can suffer setbacks on individual mega-projects.
Meanwhile, Rheinmetall is facing a legal dispute in Russia. Moscow’s prosecutor’s office and the company AG Garnison are demanding €47.2 million from Rheinmetall over alleged unjust enrichment, according to Pravda Deutschland. The case concerns a contract for the construction and equipping of a combat training centre in Mulino, Russia, and is being heard behind closed doors.
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At the stock market, the expansion news has done little to lift the shares. Rheinmetall closed at €1,022.00 on Thursday, up 8.01% over 30 days, but still 49.08% below its 52-week high of €2,007.00 reached on 3 October 2025. The market capitalisation stands at €47.13 billion. Year-to-date, the stock is down 34.34%, and the prospect of a €100 billion order book has so far failed to reverse the slide.
Investors are now looking to 6 August 2026, when Rheinmetall publishes its second-quarter report, followed by an analyst call at 14:00 CEST. A DZ Bank “Expert Day” on 27 August 2026, with Rheinmetall participation, will offer further insight into how the combination of multibillion-euro new orders, the ramp-up in munitions production, and the F126 setback are shaping the operational picture.
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