Rheinmetall AG recorded consolidated sales of €9.9 billion for the 2025 fiscal year, representing a 29% increase over the €7.7 billion reported in the previous year. Operating profit for the period rose 33% to reach €1.8 billion, up from €1.4 billion in 2024. Despite revenue growth and improved operating performance, net income for the year declined to €696 million, down from €717 million in the prior year, primarily due to higher interest expenses and investments in production capacity.
“The world is changing rapidly, and Rheinmetall is well prepared,” CEO Armin Papperger said. “We are needed when it comes to increasing the defence capabilities of Germany and Europe and creating an effective deterrence. With our products, we will have a significant share in the increasing equipment spend of the armed forces and deliver what modern armed forces need in the 21st century. We are setting sail with our new Naval Systems division and are now picking up full speed.”
“We have achieved a new record operating result and will continue to improve the Group’s profitability. We are well-positioned for new major projects with the armed forces. We are on track for success with our acquisitions and partnerships, which will enable us to continue securing our growth in the long term.”
The Group’s backlog reached a record high of €63.8 billion at year-end, a 36% increase from the €46.9 billion recorded at the close of 2024. Notable contract wins included the German TaWAN digitization program and continued demand for air defense systems and ammunition. The surge reflects the ongoing prioritization of European force-structure modernization and the replenishment of munitions stockpiles. These long-term agreements will fuel significant production through the end of the decade, aligning with NATO-wide readiness requirements.
For 2026 the company is forecasting sales of between €14 billion and €14.5 billion, representing growth of 40% to 45% over 2025 — an ambitious target that will require clean execution across several simultaneous moving parts, including the integration of newly acquired naval shipbuilder NVL, the split of Electronic Solutions into two standalone units (Air Defence and Digital Systems), and the establishment of a fifth segment in Naval Systems. That level of organizational change introduces real complexity, and the pace at which management brings these new structures up to full productivity will be critical in hitting the target. The key is that the underlying market remains strongly supportive: defense budgets across European NATO members continue to grow, driven by a combination of political commitment and genuine capability gaps that years of underinvestment have left behind, and that spending momentum shows no meaningful signs of slowing across multiple government budget cycles.
Of particular note, Rheinmetall is accelerating its transition into a pure-play defense and security company by divesting its remaining civilian automotive operations. In December 2025, the Executive Board formally designated the Power Systems division, which historically produced internal combustion engine components, pistons, and actuators, as a discontinued operation. To facilitate this exit, the company recorded a non-cash impairment charge of approximately €350 million in the fourth quarter of 2025.
The sale process has narrowed to two final bidders, with a closing expected by the end of the second quarter. This strategic pivot allows Rheinmetall to reallocate capital and manufacturing capacity toward its record €63.8 billion defense backlog, even exploring the repurposing of former automotive facilities for armored vehicle production to meet surging NATO demand.
INDUSTRY SEGMENTS
Vehicle Systems
Vehicle Systems, which produces wheeled and tracked military vehicles, reported full-year sales of €4,992 million, a 32% increase from €3,790 million the prior year. The biggest contributors to that growth were deliveries of logistics trucks and the ramping production of two Boxer armored vehicle programs – one in the Mechanized Infantry Vehicle configuration for the United Kingdom, and one configured as a heavy weapons platform for the German Armed Forces. Both programs reflect a broader push by European NATO members to expand and modernize their ground combat fleets, with the Boxer increasingly central to that effort across multiple national armies. Incoming orders reached €7,797 million, just short of last year’s figure, but the volume confirms that customers continue to line up future purchases across Rheinmetall’s military vehicle portfolio.
The segment’s operating profit improved by €158 million year-over-year to €583 million, with the profit margin edging up from 11.2% to 11.7%. Management attributed the improvement to a more favorable mix of contracts in active production during the year. Vehicle Systems carries the lowest profit margin of Rheinmetall’s three legacy business units, which is not unusual given the complexity and capital demands of building armored vehicles at scale. That said, the direction of travel is positive, as higher-value vehicle variants enter production and output volumes continue to grow.
Weapons and Ammunition
Weapons and Ammunition reported full-year sales of €3,532 million, an increase of €749 million or 27% compared to the prior year. Demand was driven by Germany, other NATO member states, and Ukraine, which remained the segment’s single largest customer country during the period. Artillery ammunition and protective systems were the core revenue generators. New order intake reached €6,736 million, up from €6,237 million in 2024, with the Nordic NATO members – Denmark, Finland, Norway, and Sweden – among the most active buyers. The total figure for new contract orders came in at €7,126 million, well below 2024’s unusually high €12,307 million, but that gap reflects the absence of a single large artillery ammunition framework agreement that skewed last year’s numbers rather than any meaningful softening in underlying demand.
Operating profit for the segment rose by €247 million, or roughly 31%, to €1,037 million, with the profit margin improving from approximately 28% to 29%. Management pointed to higher sales volumes, a better product mix, and ongoing cost discipline as the drivers of that improvement. At 29%, Weapons and Ammunition generates the highest profit margin in the Group, a reflection of the relatively straightforward economics of high-volume ammunition production compared to the more capital-intensive work of building complete vehicle systems.
Electronic Solutions
Electronic Solutions, which covers battlefield communications and digitization, infantry equipment, air defense systems, and military simulation, reported full-year sales of €2,504 million, a 45% increase over the prior year’s €1,726 million. Two programs drove the bulk of that growth: initial revenue from the TaWAN tactical communications and digitization contract awarded by the German Armed Forces in 2025, and deliveries of communications equipment ordered in the prior period. Additional revenue came from ongoing shipments of Skyranger and Skynex short-range air defense systems to European customers. The segment’s forward order book was the standout story across the entire Group: total bookings, including framework agreements, reached €14,235 million – more than double the prior year’s €5,065 million – reflecting strong and converging demand from NATO members for networked battlefield systems, air defense capability, and Germany’s own military modernization agenda.
Operating profit rose 68% to €366 million from €217 million in 2024, and the profit margin climbed from 12.6% to 14.6%. The improvement was driven by the higher revenue base and better productivity as the segment worked through its growing order load. Looking ahead, Electronic Solutions will no longer exist as a single reporting unit: effective January 1, 2026, it has been split into two separate divisions – Digital Systems and Air Defence – a structural change that reflects both how large the business has become and Rheinmetall’s decision to manage these two capability areas as distinct strategic priorities going forward.
Outlook
Rheinmetall’s 2025 results paint a picture of a company that has made a clear strategic decision to become a full-spectrum defense supplier – and is executing on that plan at pace. The record order backlog, the dramatic growth in Electronic Solutions’ forward order book, and the company’s recent moves into naval shipbuilding and satellite technology all point in the same direction: Rheinmetall is no longer primarily a maker of vehicles and ammunition, but is positioning itself as a one-stop provider of defense capability across land, air, sea, and space. Contracted revenue now extends well into the next decade, which gives the business an unusually stable foundation by industry standards.
The near-term revenue outlook is well-supported by that backlog, but sustaining and growing profit margins is a more complex challenge. The company is simultaneously ramping production across multiple large programs, integrating a newly acquired shipbuilder in NVL, and reorganizing from three business units into five. Each of those tasks carries its own execution risk, and managing all of them at once will test the organization. On the positive side, Germany’s own defense spending is growing reliably – domestic sales now account for 38% of Group revenue, up from 34% the prior year – and the political consensus in Berlin around sustained military investment shows little sign of weakening. That home market anchor provides a meaningful buffer as Rheinmetall manages the complexity of its own rapid expansion.
A military history enthusiast, Richard began his career at Forecast International as editor of the World Weapons Weekly newsletter. As the Internet became central to defense research, he helped design the company’s Forecast Intelligence Center and now coordinates the FI Market Recap newsletters for clients. He also manages two blogs: Defense & Security Monitor, which covers defense systems and international security issues, and Flight Plan, focused on commercial aviation and space systems.
For more than 30 years, Richard has authored Defense & Aerospace Companies, Volume I (North America) and Volume II (International), providing detailed data on major aerospace and defense contractors. He also edits the International Contractors service, a database tracking all companies involved in programs covered by the FI library. Richard currently serves as Manager of the Information Services Group (ISG), which develops outbound content for both Forecast International and Military Periscope.
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