IN Brief:
- Rheinmetall’s first-half sales rose 39% to €5.227 billion as operating profit increased 74%.
- The group’s backlog reached €80.5 billion across vehicles, weapons, air defence, digital, and naval systems.
- The F126 decision cut expected 2026 naval sales by up to €300 million and reduced group guidance.
Rheinmetall increased first-half sales and operating profit sharply during 2026, although the cancellation of its expected role in Germany’s F126 frigate programme removed up to €300 million from anticipated annual sales.
Rheinmetall recorded consolidated sales of €5.227 billion for the six months to 30 June, up 39% from €3.749 billion a year earlier. Operating profit rose by 74% to €786 million, lifting the group operating margin from 12.1% to 15%.
The group’s backlog reached €80.5 billion, compared with €56 billion at the same point in 2025. Rheinmetall’s broader “Nomination” measure, which combines conventional order intake with expected call-offs from framework agreements, increased by 28% to €16.2 billion.
Demand is expanding across vehicles, ammunition, air defence, digital systems, and naval work, but the timing of defence contracts remains uneven. Operating free cash flow fell to minus €1.616 billion, affected by changes in advance payments, higher receivables, inventory accumulation, and continuing investment in additional capacity.
The F126 decision produced the clearest revision. Rheinmetall expects its Naval Systems division to lose up to €300 million of 2026 sales following cancellation of the programme contribution it had anticipated. Group sales guidance has been reset to between €13.7 billion and €14.2 billion, while expected organic growth remains between 28% and 31%, with an operating margin of about 19%.
Armin Papperger, chief executive officer of Rheinmetall, said: “We have achieved record growth and are well on the way to meeting our annual targets, which remain very ambitious. We owe this not only to a very strong order book and the significant expansion of capacity, but also, above all, to the outstanding performance of our workforce.”
Vehicle Systems remained the largest sales segment. Revenue increased by 28% to €2.431 billion, supported by tactical vehicle deliveries for Germany, wheeled armoured vehicles for German and European customers, and logistics vehicles. Segment backlog rose by 41% to €28.829 billion, with order activity including 200 additional Puma infantry fighting vehicles for Germany and 298 Lynx vehicles for Romania.
Weapon and Ammunition sales climbed by 33% to €1.757 billion, while operating profit reached €417 million and the margin rose to 23.7%. Rheinmetall continued investing in capacity, including UK gun-barrel production, a new Lithuanian plant, and expanded powder manufacture at Nitrochemie Aschau. Those projects convert demand into physical output only after factories, suppliers, and qualification processes are in place, which helps explain the pressure on cash flow.
Air Defence recorded the fastest percentage growth among the disclosed operating areas. Sales rose by 62% to €478 million as Skynex and Skyranger production advanced for European customers. New nominations increased more than sixfold to €1.534 billion, and backlog rose by 80% to €4.218 billion.
Digital Systems sales reached €820 million, up 23%, with work including German command-network and soldier-system programmes, short-range air defence, uncrewed aircraft, simulation, and a British military training digitalisation contract. Its backlog increased to €20.646 billion, even though new nominations fell against a comparison period that included several unusually large framework awards.
Naval Systems was reported as a separate segment for the first time after Rheinmetall’s acquisition activity earlier in 2026. It generated €334 million of sales from shipbuilding programmes including German intelligence vessels, K130 corvettes, replenishment oilers, and Bulgarian patrol vessels, while a Romanian order for four ships accounted for most of its €1.004 billion intake.
The F126 loss is large enough to reduce annual guidance without changing demand across the rest of the portfolio. Rheinmetall had previously outlined a higher 2026 turnover range while discussing the rapid expansion of European ammunition output, a trajectory examined in its broader capacity and production outlook.
The balance-sheet effect of expansion now deserves the same attention as the order figures. Framework agreements can support long production runs, yet they do not become revenue until customers place call-offs and deliveries are completed. Inventory, tooling, facilities, workforce growth, and supplier commitments must be funded in the interval, allowing profit and free cash flow to move in opposite directions.
Rheinmetall must now convert an €80.5 billion backlog into qualified vehicles, ammunition, air-defence systems, digital equipment, and ships while absorbing programme changes such as F126. The demand is already firmly booked; factory output, supplier performance, and cash discipline will decide the pace at which it becomes delivered capability.
