Arms Maker Rheinmetall Trims Sales Guidance After Germany Scraps Frigate Project

Arms Maker Rheinmetall Trims Sales Guidance After Germany Scraps Frigate Project

Thu, August 6, 2026 at 11:27 AM GMT+3 3 min read

• RHM 0.00%

Rheinmetall lowered its sales forecasts for the year after Germany scrapped a project to procure what could have been the country's biggest class of warship since the end of World War II.

The group said it expected annual sales between 13.7 billion euros and 14.2 billion euros, equivalent to a range of $15.83 billion to $16.41 billion. Those projections are above sales of nearly 9.94 billion euros that Rheinmetall reported last year, but below prior guidance between 14 billion euros and 14.5 billion euros.

Most Read from The Wall Street Journal

The revision comes less than two months after Berlin said it had opted not to pursue an order for six F126 frigates from Rheinmetall for about 15.2 billion euros due to delays and cost increases, and instead purchase eight MEKO A-200 frigates from German shipbuilder TKMS.

Rheinmetall had warned the decision would weigh on second-quarter orders and that its naval systems division faced up to 300 million euros in lost sales if it failed to mitigate the impact of the cancellation.

Still, the group fared well in the quarter as high defense spending from North Atlantic Treaty Organization members continues to translate into orders for ammunition, air defenses and other equipment.

Rheinmetall orders surged to 11.37 billion euros in the second quarter from nearly 1.98 billion euros a year earlier, in line with preliminary figures from late July, lifting the group's backlog to 80.47 billion euros. Its backlog is now expected above 100 billion euros this year compared with around 135 billion euros previously.

The group secured a contract valued at 5.7 billion euros to supply Romania with Lynx combat vehicles, Skyranger air-defense systems, medium-caliber ammunition for air defense and armored personnel carriers, two offshore patrol vessels and two diver-support vessels.

That package, which Rheinmetall said was the largest international contract in the company's recent history, was announced days after a Russian drone crashed into an apartment building in the Romanian city of Galati, showing willingness from Romania to strengthen its defenses given the country's proximity to Ukraine.

Rheinmetall reported sales of 3.29 billion euros for the quarter compared with 1.95 billion euros a year earlier, in line with preliminary figures. Analysts had forecast 3.16 billion euros in sales, according to Vara Research.

The company said it was downscaling capital expenditure for the year to a range of 8% to 9% of sales from 16% previously, citing changing priorities with some eastern European energy production sites, other projects and savings.

Second-quarter net profit slipped to 124 million euros from 130 million euros. Operating profit climbed to 562 million euros from 262 million euros, also in line with preliminary figures, generating an operating margin of 17.1%. Analysts had forecast a net profit of 270.3 million euros, an operating profit of 469.9 million euros and an operating margin of 14.9%, according to the consensus.

After the second quarter came to a close, Rheinmetall signed a memorandum of understanding with Lockheed Martin to make American missiles in Europe. Production of the long-range Army Tactical Missile System, or ATACMS, will take place at Rheinmetall's Unterluess facility in Germany, one of its largest sites that makes weapon systems and ammunition and tracked vehicles.

The announcement, which came last month during NATO's summit in Turkey, is a sign that Lockheed Martin and Rheinmetall have been able to hammer out their differences after months of discussions.

Write to Mauro Orru at mauro.orru@wsj.com

Most Read from The Wall Street Journal