Rheinmetall Posts Record Results as European Defence Spending Surges

DÜSSELDORF, 18 January 2026 – German defence giant Rheinmetall AG has closed a landmark fiscal year, posting record sales, profit, and an unprecedented order backlog, capitalising on what its CEO calls an “era of rearmament” in Europe. The company’s transformation into a primary beneficiary of heightened NATO defence budgets has propelled its stock to multi-year highs, though analysts debate whether its ambitious growth is already priced in.

Historic Financial Performance in FY 2024

In its annual report published on 12 March 2025, Rheinmetall announced consolidated sales of €9.75 billion for the 2024 fiscal year, a significant 36% increase from the €7.18 billion recorded in 2023. The growth was overwhelmingly driven by its defence business, where sales surged by 50%. The group’s operating result (EBIT) climbed even more sharply, rising 61% to a new record of €1.48 billion. This performance lifted the group’s operating margin to 15.2%, with the defence segment alone achieving a remarkable 19% margin.

Perhaps the most telling indicator of future revenue visibility is the company’s order backlog, which soared 44% to a new all-time high of €55.0 billion. This backlog, comprising firm orders and expected call-offs from framework agreements, provides the company with several years of secured production. On the back of these strong earnings, the management board proposed a dividend of €8.10 per share for 2024, up from €5.70 the previous year.

Key Financial Facts: Fiscal Year 2024

Divisional Breakdown: Defence Leads, Civilian Lags

The company’s performance was not uniform across its portfolio, highlighting its strategic pivot towards defence.

Vehicle Systems: Sales rose 45% to €3.79 billion, driven by deliveries of military trucks and the launch of new tactical vehicle programmes.

Weapon and Ammunition: As the fastest-growing division, sales skyrocketed 58% to €2.78 billion. Demand for artillery and tank ammunition from Germany, NATO allies, and for support to Ukraine was the primary driver. The division’s operating margin reached an exceptional 28.4%.

Electronic Solutions: Sales increased 31% to €1.73 billion, supported by major contracts for air defence systems like the Skyranger 30 and digitisation projects for armed forces.

Power Systems (Civilian): In contrast, the civilian division saw a 2% sales decline to €2.04 billion, reflecting ongoing challenges in the automotive sector. The company has announced plans to convert some of these facilities to defence production.

Outlook and the “Defence Supercycle” Thesis

Rheinmetall’s guidance for the 2025 fiscal year points to continued robust growth, with group sales expected to increase by 25% to 30%. The defence business is forecast to grow between 35% and 40%, with a group operating margin of around 15.5%. This outlook is underpinned by what CEO Armin Papperger describes as a structural shift, stating, “An era of rearmament has begun in Europe that will demand a lot from all of us. However, it also brings us at Rheinmetall growth prospects for the coming years that we have never experienced before.”

The investment case for Rheinmetall is tightly linked to projected increases in European and NATO defence budgets. Germany has committed to raising its defence spending toward 3.5% of GDP, and similar pledges are expected across the alliance. Analysts at Morningstar recently raised their fair value estimate for the stock to €2,220, citing an expectation that Rheinmetall could capture a significant share of this rising equipment spending across Europe.

Valuation Concerns and Risks

Despite the powerful growth narrative, Rheinmetall’s stock valuation gives many investors pause. The shares have risen over 1,000% since early 2022, and the company now trades at a forward price-to-earnings (P/E) ratio significantly above the European defence sector average. Some analysts warn the stock is “priced for perfection,” with high expectations for flawless execution on capacity expansion and contract delivery already baked into the share price.

Key risks include potential delays in German budget approvals and contract signings, geopolitical de-escalation that could soften defence spending urgency, and execution risks associated with the company’s massive capital expenditure programme to scale production. The civilian business also remains a marginal drag on group profitability.

Frequently Asked Questions

What is Rheinmetall’s order backlog?

As of the end of the third quarter of 2025 (30 September), Rheinmetall reported a record order backlog of €64 billion. This figure includes both firm orders on hand and expected future call-offs from long-term framework agreements with defence customers, providing high visibility for revenue for years to come.

What is the dividend for Rheinmetall stock?

For the 2024 fiscal year, Rheinmetall’s management has proposed a dividend of €8.10 per share, subject to approval at the Annual General Meeting on 13 May 2025. This represents a 42% increase from the €5.70 per share paid for the 2023 fiscal year.

Is Rheinmetall stock a good investment now?

The investment case hinges on one’s view of the sustainability of European defence spending increases. While the company’s fundamentals are strong with record orders and profits, its valuation is historically high. Most analysts maintain “Buy” ratings, with an average 12-month price target around €2,110, suggesting potential upside, but caution that the stock is sensitive to any disappointments in order flow or margins.