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(Sharecast News) - Rheinmetall shares slumped on Thursday after the German defence group cut its 2026 sales outlook, overshadowing otherwise steady quarterly figures.
The company said it now expects 2026 revenue to fall short of its previous guidance, citing slower programme rampups and delays in several international procurement cycles. Management stressed that longterm demand remained intact but acknowledged nearterm visibility had softened sending shares in the firm 5% lower.
Secondquarter results were broadly in line with expectations, with revenue supported by continued strength in ammunition and vehicle systems. Order intake remained robust, reflecting sustained demand from European governments seeking to rebuild military stockpiles.
Rheinmetall said its backlog remained at historically high levels, giving the group multiyear coverage across key programmes. However, it noted that some deliveries had been pushed into later periods due to supplychain constraints and extended customer approval processes.
Margins were steady, helped by favourable mix effects and ongoing efficiency measures. The company reiterated its mediumterm profitability targets, saying cost discipline and scale benefits should support earnings as new contracts move into production.
The group highlighted continued investment in capacity expansion, particularly in ammunition manufacturing, where demand has surged since the start of the Ukraine conflict. Several new facilities are scheduled to come online over the next two years.
Rheinmetall also pointed to strong momentum in its automotive division, where electrificationrelated components delivered doubledigit growth. The unit's performance helped offset some of the softness in defence programme timing.
Management said geopolitical uncertainty continued to underpin longterm demand, with NATO members committed to higher defence spending. But it warned that procurement processes remained complex and subject to political delays.
Analysts said the lowered 2026 outlook was disappointing given the sector's strong fundamentals, though most expect the impact to be temporary. Several brokers noted that Rheinmetall's backlog and pipeline still support a multiyear growth trajectory.
Renk, meanwhile, provided a contrasting tone as its shares climbed 5% after the defence supplier reported record secondquarter orders, underscoring the strength of Europe's rearmament cycle. The company booked 612.8m in Q2 orders - its highest quarterly intake on record - lifting its backlog to 7.4bn.
The group held its fullyear guidance steady, saying the surge in orders had yet to translate into proportional earnings and cash flow. Investors have been increasingly focused on that gap, with Renk's shares still down more than 45% from their October 2025 peak despite booming demand.
Renk said firsthalf orders reached 1.2bn, supported by strong defence procurement and a booktobill ratio of 1.9 times, highlighting the scale of incoming work relative to deliveries. Demand remained broadbased across land systems and naval propulsion.
The company manufactures transmissions for the Leopard 2 and Puma armoured vehicles as well as propulsion systems for naval platforms, making it a key supplier in Europe's defence industrial base. Several governments have accelerated procurement since the start of the Ukraine conflict.
Despite the record order momentum, Renk reiterated that converting backlog into earnings would take time, with production cycles and customer approval processes still lengthening. Supplychain constraints continued to push some deliveries into later periods.
Reporting by Frank Prenesti for Sharecast.com