Rheinmetall (RHMG.DE): Q2 Pre-release: operating profit 20% ahead; strong execution and order momentum should raise confidence in FY

First-page research excerpt

Equity Research

29 July 2026 | 12:38PM BST

Rheinmetall (RHMG.DE): Q2 Pre-release: operating profit 20% ahead;

strong execution and order momentum should raise confidence in FY

Sam Burgess

+44(20)7774-9651 |

Goldman Sachs International

Jubril Moronfolu

Bottom line: Rheinmetall has pre-released a very strong Q2, with revenue of

c.€3.29bn, up c.69% year-on-year and c.4% ahead of company-compiled consensus,

while operating profit of €562mn was c.20% ahead. This implies an operating margin

of c.17.1%, around 220bp above consensus. In our view, the result provides strong

evidence that the softer Q1 reflected phasing rather than weakness in underlying

demand or execution.

+44(20)7051-0985 |

Goldman Sachs International

Milind Sikchi

+1(332)245-7985 |

Goldman Sachs India SPL

Our view: We expect the release to strengthen investor confidence in the full-year

guidance, and continue to believe Rheinmetall is significantly undervalued. The

shares have increasingly reflected concerns around execution, programme timing

and the conversion of German defence spending into reported financials. This

update directly challenges those concerns: revenue growth accelerated sharply,

profitability was substantially above expectations and backlog reached a new

record. We believe FY27 multiples will look increasingly attractive for a company

growing significantly faster than any other defence name in our coverage (Exhibit 1).

Orders remain encouraging post-F126: Rheinmetall recorded €11.37bn of Q2

Nominations, consistent with its revised expectation for a low-double-digit

billion-euro outcome following the F126 cancellation. While below the original

c.€20bn expectation including F126, the result indicates strong order momentum

elsewhere and takes Rheinmetall backlog above €80bn.

Cash flow: The company also highlighted significantly negative Q2 operating free

cash flow, attributed primarily to the timing of advance payments, preparations for

capacity expansion, higher receivables following strong revenue recognition towards

quarter-end and inventory build for subsequent quarters. We see this as normal

volatility for a defence business, where working capital movements can be

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