Rheinmetall AG

Rheinmetall said 2025 sales were nearly EUR 10 billion, or EUR 11.8 billion pro forma including the discontinued civilian business. Operating result increased 33% to EUR 1.841 billion, with operating margin at 18.5%. Group sales grew 29% overall, Electronic Solutions sales rose from EUR 1.7 billion to EUR 2.5 billion with margin improving to 14.6%, Vehicle Systems grew by more than EUR 1 billion with margin at 11.7%, and Weapon and Ammunition sales grew 27% with margin at 29.3% and operating profit above EUR 1 billion for the first time. EPS was EUR 25.28, operating free cash flow was EUR 1.218 billion, backlog was nearly EUR 64 billion, and nomination growth was 9% to EUR 26.4 billion. For 2026, management guided sales of EUR 14 billion to EUR 14.5 billion, implying 40% to 45% growth, with operating margin around 19% and continued strong operational free cash flow; the company also said the business is fully booked for 2026 and expects backlog/coverage to remain very high.

Armin Papperger framed 2025 as a strong year and emphasized that defense demand remains exceptionally favorable, driven by geopolitical tensions, European rearmament, and customer urgency around ammunition and air defense. He highlighted major opportunities in Arminius/Boxer, artillery shells, missiles, air defense systems, naval programs, satellites, and drones, while saying Rheinmetall is expanding capacity and supply chains without major issues. His tone was confident and highly constructive, though he acknowledged some customer-side timing delays and operational complexity.

Klaus Neumann focused on the quality of growth and the financial strength of the business. He said 2025 growth was mainly organic, with about EUR 0.5 billion from acquisitions, operating result up 33% to EUR 1.8 billion, EPS at EUR 25.28, and backlog at EUR 64 billion with EUR 41 billion fixed. He also highlighted cash generation of EUR 1.218 billion, including more than EUR 2 billion in Q4 alone, driven by successful negotiations for advance payments; operating working capital ended just under EUR 500 million, and the equity ratio improved to 33.5%. He said the balance sheet and liquidity are strong enough to support further acquisitions, including Naval business, and noted the dividend proposal of EUR 11.5.

Analysts focused on the size and timing of 2026 order intake, especially the Arminius program, ammunition contracts, Puma, trucks, and whether German procurement delays could push orders into later quarters. Management said Arminius is the largest opportunity at about EUR 12 billion to EUR 13 billion, with a 20% to 30% down payment expected, and added that ammunition and Puma each represent multibillion-euro opportunities as well. On cash, management said 2026 free cash flow will depend heavily on prepayments and timing of orders, and that a higher cash conversion rate is possible if large contracts close. Analysts also asked about air defense demand, U.S. programs such as XM30, and the delayed Power Systems disposal; management remained positive on XM30, said the U.S. process is still moving, and said the Power Systems deal is now expected in Q2 or Q3 rather than before Easter.