Rheinmetall experienced an avalanche on the stock exchange only on November 5: during trading, the shares of the German arms concern lost about 17%. The second reduction in the annual forecast in 3 months caught investors in the midst of European arming. Germany has allocated 108.2 billion euros for defense in 2026, Rheinmetall plants are rapidly increasing sales. In such circumstances the promise of making money before the customer is ready to sign the contract is especially expensive.
As part of the Arminius program, the Bundeswehr intends to purchase Boxer armored vehicles. The head of Rheinmetall, Armin Pefferger, estimated the concern's share in the initial order at approximately 12.4 billion euros. The signing is postponed to 2027, and with it the expected advance of more than 3 billion euros disappears. The company included these revenues in the calculations long before the negotiations were completed. Coordinating a future purchase and getting the right to spend the customer's money turned out to be 2 different tasks.
You need to pay for the prepayment now. In the months of January-September, Rheinmetall's operating free cash flow amounted to minus 1.7 billion euros compared to minus 798 million euros a year earlier. The concern explains the deterioration by stockpiling for future growth and high progress of customers in the base last year. These team numbers cannot be attributed entirely to Boxer. They establish a wider dependence: the expansion of production already requires money, and the large revenues are still subject to the negotiation table.
At the same time, over 9 months, sales increased by 38%, to 8.4 billion euros, the operating result reached 1.34 billion euros. The profit may well be accompanied by an infusion of money: purchased materials will remain in the warehouse before they become accepted and paid for equipment. Previously, Rheinmetall was on track to end the year with free cash flow above 40% of operating results. After the transfer of the boxer, the company guarantees only positive results. The manufacturer has a job and an increasing income, but he has to wait longer for the money for the next expansion.
Delays in artillery ammunition occur at another stage.