Markets
Rheinmetall Fell 13% After Its Second Outlook Cut of 2026
Rheinmetall shares fell 13% on Thursday, the steepest drop in the STOXX 600, after it cut its 2026 sales forecast to about €13.2 billion from €13.7 billion to €14.2 billion.
Europe's largest ammunition maker had a strong quarter and a bad day. Rheinmetall's shares fell 13% on Thursday, November 5, the biggest decline in the STOXX 600, after falling as much as 16.3% and briefly being halted, Reuters and Investing.com reported. The trigger was a second cut to the company's 2026 outlook in three months: sales are now expected at about €13.2 billion, from €13.7 billion to €14.2 billion, and the operating margin at about 18.5%, from around 19%. Analysts had expected €13.88 billion.
The quarter itself looked fine on the profit line. Operating profit rose 62% to €553 million, above the €531.4 million consensus, for a margin of 17.5% against 14.8% a year earlier, and sales rose to €3.15 billion from €2.31 billion. But sales missed the €3.25 billion analysts expected, order intake of €2.89 billion was lower than sales, and operating free cash flow was an outflow of €82 million, against an expected inflow of €123 million. Over nine months the outflow reached €1.70 billion as inventories built up, and the company moved from €369 million of net liquidity at the end of 2025 to €2.90 billion of net debt.
The reasons are delays rather than lost demand. The Arminius order, a Boxer armoured-vehicle programme whose initial Rheinmetall share the chief executive had put at about €12.4 billion in August, has slipped into 2027, taking its revenue and an advance payment of more than €3 billion with it. Acceptance of artillery ammunition batches has been slower than planned, and sales from newer activities, including a collaboration with Destinus, will not all land this year. The Weapon and Ammunition division now expects €4.4 billion to €4.5 billion of sales, from €4.9 billion to €5 billion; Air Defence was the only segment raised.
The cash target was the bigger surprise. Rheinmetall dropped its goal of converting more than 40% of operating profit into cash and now expects a rate just above zero. "The Boxer contract seems not to be the whole story," one trader told Reuters, pointing to the weak orders, negative cash flow and the absence of revised backlog guidance, a gap Jefferies also flagged. The first cut, in August, came after Germany cancelled the F126 frigate programme and the company wrote €2.15 billion of naval orders off its books.
For investors in European defence, the episode separates two questions that rising budgets had merged: whether governments will spend, and when the money turns into deliveries and invoices. Order books across the sector remain among the largest on record, but procurement runs on approvals, acceptance tests and contract signatures that can slip by quarters. A stock priced for growth that arrives on schedule is vulnerable to growth that arrives late, even when none of it is cancelled.