Rheinmetall: Do not lose sight of the big picture

Research evidence excerpt

Rheinmetall: Do not lose sight of the big picture

ngrade to reflect F126 decision. The full financial implication from F126 cancellation is

52 Week range EUR 2008.00-900.20still not fully known, but RHM now expects this to have an impact of up to €300m in revenue this

year (~2% of low end of guidance), and <3% by FY30. Given the normal phasing in Naval

contracts (typically loss making in early years), we continue to see a minor impact on operating

profit figures in FY26 and, on revenue, we believe it is feasible to still fall within the €14.0-14.5bn

range provided previously. We leave our FY26 numbers broadly unchanged and model €14.1bn

of revenue (+42% y/y), operating profit €2.66bn (+45%), and margins at 18.8% (+30bps).

Consensus is at €2.68bn. We also see €2.4bn operating cash flow and net cash of €1.7bn (0.5x

EBITDA), already reflecting the acquisition of NVL (€990m net of cash acquired) and the sale of Source: IDC

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Power Systems (€350m). On guidance, we expect RHM to reiterate most items, but see the

company lowering the backlog figure to ~€125bn as a result of F126 programme being scrapped

(prev. guide: €135bn backlog). We lower our revenue and operating profit numbers within Naval European Aerospace & Defence

as a result of this too, resulting in -2% at the Group level (FY27-30). Afonso Osorio, CFA

+44 (0)20 3134 7016

What to do with the shares here? We believe 2Q is an important catalyst for Rheinmetall to afonso.osorio@barclays.com

rebuild confidence in the structural investment case, by demonstrating execution in the areas it Barclays, UK

can control: ramping production, driving efficiencies, increasing vertical integration and Milene Kerner

+33 (0)1 4458 4002

Barclays Capital Inc.