Rheinmetall’s Bumpy Road: Artillery Orders and a 16% Weekly Rebound Can’t Mask Frigate Fallout and UK Legal Risks
Published on 07/05/2026 at 21:26 | Redaktion boerse-global.de
The defence industry’s tug-of-war between geopolitical tailwinds and domestic headwinds is playing out in full force at Rheinmetall. The Düsseldorf-based group has clawed back more than a fifth from its 52-week trough in the space of a week, but the recovery remains fragile as a cancelled frigate programme, a criminal probe in Britain, and a stalled European fighter jet project all weigh on sentiment.
Ukraine’s steady demand for standard ammunition provided a fresh bright spot this week. Rheinmetall has secured another order for artillery shells and propelling charges, with a total value in the high double-digit millions. The volume runs into the low five figures, and production is already under way at the company’s Spanish site, run by its Expal Munitions subsidiary. Delivery is scheduled to be completed by the first quarter of 2027, though the order will be booked as early as the second quarter of 2026. The contract underlines that Ukraine remains a reliable buyer of conventional munitions, helping keep Rheinmetall’s production lines running at high capacity for years to come.
But the maritime division is in stormy waters. Just days ago, the stock plunged roughly a fifth after the German Defence Ministry shelved the F126 frigate project. What began in 2020 as a €5.27 billion plan for four vessels has ballooned to an estimated €18 billion. Rheinmetall tabled a rescue package worth €12.8 billion in May, but Defence Minister Boris Pistorius is now leaning towards procuring eight smaller Meko-200 frigates from ThyssenKrupp Marine Systems, each costing around €1.6 billion. The fallout for Rheinmetall: revenue shortfalls of up to €300 million this year alone.
Legal trouble on another front adds to the complexity. The UK’s Health and Safety Executive has authorised a formal “crown censure” against the Ministry of Defence, while simultaneously pursuing a criminal prosecution against Rheinmetall BAE Systems Land Ltd, the joint venture behind the Challenger 2 tank. The action stems from a June 2017 incident at Castlemartin training area, when a gun barrel exploded, killing two soldiers. The case illustrates how liability risks in the defence sector can resurface years later, creating an additional regulatory overhang for Rheinmetall’s UK operations.
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The broader European defence landscape has also turned choppy. In June, the partners behind the Future Combat Air System (FCAS) pulled the plug on that programme. And while Rheinmetall did secure a contract for seven field hospitals – a sign of ongoing diversification – the combined effect of the FCAS cancellation and the F126 debacle has left investors questioning the near-term growth trajectory.
Two key events next week could provide the next directional cue. On 6 July, Canada is set to award its multibillion-dollar CPSP submarine contract. Rheinmetall is not a direct bidder, but the decision between TKMS and South Korea’s Hanwha Ocean is seen as a bellwether for the German naval supply chain. Then, on 7-8 July, NATO leaders gather in Ankara for a summit centred on Ukraine aid, higher defence spending, and the alliance’s 5% target. The NATO Defence Industry Forum, running in parallel, will look at transatlantic production capacity. For Rheinmetall, fresh commitments on European ammunition capacity would be the most welcome outcome.
On the charts, the shares closed Friday at €1,097.00, down 0.51% on the day but up a hefty 16.63% on the week. That still leaves them 45% below the 52-week high of €1,995.00 set in September 2025, though they have bounced 21.55% from the calendar-year low of €902.50 reached only at the end of June. The relative strength index sits at 46.5, a neutral reading that could point to a breather before the next catalyst. Yet the annualised volatility of 69.10% is a reminder that Rheinmetall’s shares remain a wild ride, tethered as much to political decisions in Berlin, London, and Ankara as to the company’s own order book.
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