Rheinmetall Scraps €20 Billion Q2 Target After Berlin Kills Frigate Programme, Seeks Belgian Lifeline
Published on 07/06/2026 at 07:44 | Redaktion boerse-global.de
Rheinmetall has slashed its second-quarter 2026 order expectations after the German government abruptly cancelled the multi-billion-euro F126 frigate project, a blow that leaves the defence contractor scrambling to fill a revenue hole of up to €300 million for the full year. The Düsseldorf-based group now anticipates order intake in the low double-digit billions for Q2, a far cry from the €20 billion originally pencilled in by management.
The decision to terminate the F126 programme early sees Berlin pivot to eight alternative warships from rival TKMS, effectively shutting Rheinmetall out of a major naval contract. The fallout extends beyond the company itself: partner Thales will book a special charge of roughly €450 million in the first half, though the bulk of it is non-cash.
Despite the setback, Rheinmetall’s board is standing by its full-year guidance. Revenue is still expected to climb above €14 billion in 2026, representing growth of more than 60% from the prior year, while the operating margin should hold at around 19%. A record order backlog of €73 billion — set to swell to roughly €135 billion by year-end — provides a thick cushion. The company is now assessing whether further cancellations could hit the annual numbers and what countermeasures might limit the damage.
While the Q2 target has been torpedoed, a potential €3.1 billion contract from Belgium could offset some of the pain. Media reports indicate Brussels is planning to buy air-defence systems from Rheinmetall, including 20 Skyranger short-range platforms. The Belgian ministerial council still needs to green-light the deal, and an official announcement could come during the NATO summit scheduled for 7–8 July in Ankara. If confirmed, it would give Rheinmetall a tangible counterweight to the frigate loss.
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Political support is also building at home. Finance Minister Lars Klingbeil has defended higher borrowing for defence, and the cabinet on Monday approved a draft budget that significantly boosts military spending from 2027. The defence ministry is planning €105.8 billion for that year, supplemented by around €27.5 billion from the Bundeswehr’s special fund, with the overall defence budget set to rise stepwise to €179.9 billion by 2030. That landscape, including Ukraine-related aid that could push total defence spending above €130 billion, keeps the long-term market intact for Rheinmetall.
CEO Armin Papperger used the past days to fire a broadside at the country’s former leadership. He accused ex-Chancellor Angela Merkel of deliberately weakening the domestic arms industry, telling the sector Germany did not need it and could rely on the United States instead. That dependency, he argued, kept the industry small for years. Rheinmetall has since ramped up capacity dramatically — artillery shell production has surged from 70,000 units a year to one million — and Papperger is now calling for binding contracts and faster procurement to justify the investment.
The stock’s reaction has been mixed. Shares closed Friday at €1,097, notching a weekly gain of 12.8% and a solid rebound from the 52-week low of €902.50 hit at the end of June. Yet the year-to-date loss remains steep at 31.5%, and the equity still trades roughly 45% below its September 2025 all-time high of €1,995. The relative strength index stands at 46.5, a neutral reading, while the stock’s 29% gap below the 200-day moving line underscores the damage done.
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All eyes are now on the Ankara summit. A confirmed Belgian order would strengthen confidence that Rheinmetall can absorb the frigate setback. Without it, the question of how much revenue 2026 will actually lose becomes increasingly urgent.
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