Rheinmetall cut its full-year guidance for the second time since August, citing delays to military contracts and ammunition deliveries. Shares fell sharply even though third-quarter sales and operating profit grew.
German defense group Rheinmetall cut its full-year guidance late Wednesday, citing delays to military contracts and ammunition deliveries. The stock dropped as much as 15% in early trading on Thursday, according to CNBC.
Lower sales and margin targets
Rheinmetall now expects sales of around 13.2 billion euros ($14.9 billion) in 2026, down from a prior range of between 13.7 billion and 14.2 billion euros. It also lowered its expected operating margin to around 18.5% from the previously expected 19%.
The company blamed delays in the German military's Arminius Boxer project, now expected to be commissioned next year, and setbacks in artillery ammunition acceptance testing. Investing.com adds that cash conversion fell to just above 0% from a prior target of more than 40%.
Strong quarter, weak stock
The cut came despite improving results. Third-quarter sales rose 32% year-on-year to 3.15 billion euros, and operating profit jumped 62% to 553 million euros. New order intake reached 2.89 billion euros, which lifted the backlog to 78 billion euros by the end of the quarter.
Even so, the shares were down roughly 35% year-to-date heading into Thursday trading. Investing.com reported the stock trading at €880 during the session, down nearly 7.0%, after touching a 52-week low of €870 intraday.
Analysts warn of wider doubts
RBC analysts called the announcement "clearly negative", citing concerns over the Boxer program's timing, scope and impact on medium-term guidance. They warned the news could fuel broader investor concerns about traditional defense technology.
JPMorgan analyst David Perry reduced his price target to €1,150 from €1,350 and kept a Neutral rating. He noted this is the fifth revenue or profit warning from the company in eleven months.
Sources: CNBC, Investing.com
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