Rheinmetall posts a new sales record
Rheinmetall, a German defense conglomerate, is poised for a profitable full year in 2025, with expected revenues ranging between 10.9 billion and 12.7 billion euros. This prediction comes on the heels of the company's most profitable first half-year ever, where it reported a revenue increase of almost a quarter to 4.7 billion euros.
The company's success is not limited to the first half of the year. Rheinmetall's order book is fuller than ever before, and it is actively engaged in building new factories, expanding existing ones, and converting sites from civilian to military production. The management expects Bundeswehr orders to come in by the end of the year.
Meanwhile, the defense industry as a whole has proven to be a good investment for investors. Since the beginning of the year, the shares of Rheinmetall, Renk, and Hensoldt have almost tripled in value. Even on a single day like Thursday, the share price of Rheinmetall fell by 6%, but this dip did not deter investors from maintaining confidence in the sector's potential.
Rheinmetall is not the only company reaping the benefits of Europe's rising defense spending. Lockheed Martin, an American defense giant, is also a major supplier to Eastern European defense procurement, benefiting from NATO's and EU's increased budgets.
The European Union is actively supporting defense investments through significant financial programs. The Defence Readiness Omnibus, launched in June 2025, is unlocking up to 800 billion euros over the next four years for defense investments, including private capital participation in dual-use technologies like AI, quantum, space, and cybersecurity. The Security Action for Europe (SAFE) initiative offers up to €150 billion in competitively priced, long-term loans to EU Member States for urgent and large-scale defense procurement.
These EU initiatives, along with streamlined investment pathways, underpin the growth prospects for defense companies, especially those focusing on munitions, missiles, anti-aircraft systems, and dual-use technology sectors. While specific recent announcements from individual companies besides Rheinmetall and Lockheed Martin are not detailed in the available sources, the legislative and financial environment is clearly catalyzing large-scale investments and partnerships across the European defense industry.
In a related development, Heidelberger Druck, a German printing and publishing company, recently announced its entry into the defense business. This move triggered a share price rally, indicating a positive market response to the company's foray into the defense sector. Deutz, another German company, is also setting up its own business unit for the defense sector, with CEO Sebastian Schulte aiming to establish Deutz as a recognized market participant in the defense industry.
Various projects are underway at Deutz, expected to contribute to earnings for the first time in 2026. CEO Armin Papperger explained that the company is investing in many European countries to create new capacities. However, the shares of Augsburg tank gear manufacturer Renk and radar specialist Hensoldt also fell on Thursday, suggesting that not all companies in the sector are experiencing the same level of success.
In conclusion, the European defense industry is witnessing a boom, with key players like Rheinmetall and Lockheed Martin benefiting significantly from increased spending and favourable investment conditions. As the EU continues to implement initiatives like the Defence Readiness Omnibus and SAFE, we can expect to see more companies entering the defense sector and existing ones expanding their operations.
Rheinmetall's growth is not solely attributed to the first half of the year; the company is actively involved in building new factories, expanding existing ones, and converting sites from civilian to military production, expected to contribute to their revenues by the end of the year. The European Union's Defence Readiness Omnibus and SAFE initiatives are unlocking substantial funds for defense investments, including dual-use technologies like AI, quantum, space, and cybersecurity, which could potentially benefit companies beyond Rheinmetall.
