Rheinmetall shares fall in Frankfurt. The suspension of the F126 frigate programme will weigh on the company’s results

(Il Sole 24 Ore Radiocor)- Rheinmetall has taken a hit on the Frankfurt Stock Exchange after warning of the impact on orders and revenue following the cancellation of the F126 frigate programme, recently decided by the German government, from which the group would have been the main beneficiary. “Rheinmetall is assessing the potential implications of the cancellation of the F126 frigate programme,” the company stated in a press release. Whilst confirming its second-quarter forecasts – “namely, the achievement of a projected revenue growth rate of over 60%” – the cancellation of the programme will result in a reduction in the expected order volume for the quarter, amounting to €20 billion, including the F126, despite strong order momentum across all other segments, including the first order for autonomous guided munitions in April and the package of orders for Romania under the SAFE scheme at the end of May. In summary, Rheinmetall’s total order volume is expected to be in the low double figures in billions of euros in the second quarter.

The company is currently assessing whether the cancellation of the order will have a further impact on its full-year forecasts and will provide a more detailed update when it publishes its second-quarter results on 6 August 2026. Should it “not be possible to identify mitigation measures, the impact on 2026 revenue could reach €300 million”. Rheinmetall states that the contribution expected from the cancelled order towards achieving its medium-term revenue targets for 2030 was less than 3 per cent and that it “will do everything possible to mitigate this effect by securing new orders in the future”. A decline in orders for Rheinmetall comes as no surprise following the German government’s cancellation of a project to purchase F-126 frigates, write Deutsche Bank analysts in a research note, adding that whilst the impact on orders was expected, it is surprising that the company’s annual revenue forecasts could be affected by up to 300 million euros if the group fails to mitigate the consequences of the order cancellations. ‘Overall,’ DB also points out, ‘we maintain our positive view on Rheinmetall and consider the recent weakness in the share price to be exaggerated and an attractive entry point.’ Rheinmetall may have to revise its forecasts for 2030, write analysts at JP Morgan, who see further risks on the horizon. Changes in defence technology are happening faster than expected, and the German government is taking longer than anticipated to place orders, according to JP Morgan. Furthermore, Rheinmetall’s plans to diversify rapidly across multiple sectors entail higher risks than those faced by its competitors. “In our view, the group’s targets for 2030 appear increasingly ambitious,” the US bank states, cutting its earnings forecasts for Rheinmetall through to 2030 and lowering the share price target from €1,500 to €1,350.

On 24 June, the German Government announced its decision to scrap plans to build six F126 frigates. This was the German Navy’s most significant warship contract since the Second World War, and Rheinmetall had been selected as the programme’s main contractor under a €12.8 billion agreement. The German group’s share price had reacted with a very sharp fall at the time. Since the start of the year, the share price has fallen by around 30 per cent. Over the course of the week now drawing to a close, however, the share price has recorded a series of substantial gains, and over the last five trading sessions it has risen by around 14 per cent.