Rheinmetall’s group sales rose 13% to EUR 2.8 billion, with defense leading at EUR 2.3 billion. Operating income increased by 19% to EUR 360 million. Order intake dropped 36%, but backlog grew 23% to EUR 63.8 billion. Delayed orders set to be offset by major contracts in late 2025 and early 2026, supporting an order intake near EUR 80 billion this year.

Free cash flow was negative due to inventory buildup and delayed payments. Management expects 20%-30% prepayments on new contracts to normalize cash conversion from late 2025. Rheinmetall’s ammunition capacity is more than doubling, while vehicle output and electronic solutions are boosting margins through automation and digitization.

Rheinmetall reaffirms its position as Europe’s prime contractor, with a fair value estimate of EUR 2,220. The company’s proposed naval integration could access EUR 20 billion-EUR 30 billion in orders. The ICEYE venture will bring dual-use space systems with revenue potential of EUR 2 billion. Long-term upside is driven by structural demand and vertical scale.

Read more at Morningstar: Rheinmetall Earnings: Order Delays From German Election Mask Strong Backlog and Structural Growth