Rheinmetall Jackals IFV.
Rheinmetall Q3 Financial Results, Order Backlog at €64 Billion: Rheinmetall AG, the Düsseldorf-based defense and technology group, has reported solid growth in its Q3 financial results for the first nine months of 2025, with a notable increase in both sales and operating income. Despite challenges stemming from delayed order placements in Germany, the company’s defence business continues to drive overall performance, confirming its pivotal role in a rapidly expanding global defence market.
Sales Surge Driven by Defence Business
For the first three quarters of 2025, Rheinmetall recorded consolidated sales of €7.515 billion, an increase of 20% compared to the same period last year. This rise was primarily fueled by an impressive 28% growth in the company’s defence business, which is benefiting from the ongoing rise in global military spending amid the geopolitical tensions surrounding Russia’s invasion of Ukraine and the broader security concerns in Europe.
The growth in sales comes as Rheinmetall continues to expand its footprint in critical defence technologies, such as ammunition, vehicle systems, and electronic solutions, while also increasing its presence in emerging areas like space-based military capabilities. The company’s operating result climbed 18% to €835 million, reflecting strong demand across its defence segments, with the operating result margin remaining robust at 11.1%.
Defence Sector Sees Sustained Demand
As expected, Rheinmetall’s defence business remains the cornerstone of the company’s financial performance. The defence division recorded an operating result of €825 million, up 14% year-on-year, and boasts an operating margin of 13.6%, underlining the profitability of Rheinmetall’s military offerings.
The company’s success in the defence sector is closely tied to the increasing demand for military products and services, particularly from Germany and other European NATO members, as well as Ukraine, which continues to rely on Western military support. Rheinmetall’s sales in Germany alone rose to 34% of total sales, up 3.5 percentage points from the previous year, underscoring the growing importance of the German market in the group’s operations.
Rheinmetall’s CEO, Armin Papperger, highlighted the strategic importance of Germany’s defence procurement, noting that several key programs for the German Armed Forces (Bundeswehr) have now been secured in the federal government’s financial planning and are set to be commissioned in the coming months. Papperger added that the company is expanding its manufacturing capacity across Europe, with new plants under construction in countries like Lithuania and Bulgaria to meet growing demand.
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RMMV Military Truck.
Order Backlog Hits Record €64 Billion
Rheinmetall’s order backlog, a key indicator of future sales, surged to a record €64 billion at the end of September 2025, up from €52 billion the previous year. This increase is largely driven by significant contracts in the company’s Weapon and Ammunition and Electronic Solutions divisions. However, the order nomination value, which includes new incoming orders and framework agreements, decreased by 18% to €18 billion, primarily due to delays in order placements within Germany. These delays were caused by the political situation following the new elections in Germany and the subsequent delay in the adoption of the federal budget, which slowed down decision-making processes.
Despite the dip in Rheinmetall’s nomination value, the company’s backlog growth highlights the continuing strength of its order book and the strong demand for its defence products. The significant increase in orders from NATO member countries, particularly for artillery ammunition and air defence systems, is expected to underpin Rheinmetall’s strong performance in the coming years.
Challenges in Civilian Markets
While Rheinmetall’s defence sector is thriving, the civilian side of its business continues to face headwinds. Sales in the Power Systems division, which focuses on technologies for civilian markets, fell 5% year-on-year to €1.459 billion. The automotive sector, a key customer base for Power Systems, has been especially weak, with project delays and lower demand exacerbating the downturn.
The company is in the midst of a strategic transformation to shift its focus entirely toward defence and security technology, with plans to repurpose civilian manufacturing plants for military use. Rheinmetall is also in the process of converting its Power Systems division, previously heavily reliant on automotive components, into a more defence-oriented business, with several sites already undergoing the transition.
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Rheinmetall’s Factory in Hungary.
Vehicle Systems: Continued Growth Despite Delays
Sales in the Vehicle Systems division, which focuses on military wheeled and tracked vehicles, grew by 28% to €3.235 billion, driven by increased orders for logistics vehicles and tactical vehicles for both Germany and international customers. However, the division’s order nomination value declined by €4.8 billion, reflecting the postponement of major orders due to political uncertainties in Germany.
Despite these delays, Rheinmetall’s vehicle division remains one of its strongest performers, and its backlog in this segment stood at €19.713 billion as of September 30, 2025, only slightly down from the previous year. This division’s operating result improved from €281 million to €346 million, though the operating result margin slipped slightly to 10.7%.
Weapon and Ammunition: Record Sales Fuel Profit Growth
The Weapon and Ammunition division posted record sales of €2.014 billion in the first nine months of 2025, up 30% from the previous year. Growth was driven by increased demand for tank and artillery ammunition, particularly from NATO member states and Ukraine. The division’s operating result rose by 30% to €440 million, with an operating margin of 22%, unchanged from the previous year despite rising personnel and material costs.
Rheinmetall’s ammunition business is benefiting from the high volume of military activity in Eastern Europe, with several NATO countries ordering large quantities of artillery shells and other munitions to replenish their stocks in response to the conflict in Ukraine.
Electronic Solutions: Strong Growth in Digital Defence Systems
Rheinmetall’s Electronic Solutions division, which specializes in digitalization and electronics for military applications, posted a 41% increase in sales to €1.46 billion. This growth is largely attributed to the delivery of communication and air defence systems for the German Armed Forces and other European customers. The division’s operating result grew significantly to €128 million, though the operating margin dropped slightly to 8.8% due to production preparation costs for the F-35 fuselage project.
The division’s order nomination increased by a remarkable 194% to €10.279 billion, driven by significant contracts with the German government for soldier systems and communications infrastructure. The rise in Rheinmetall’s backlog for Electronic Solutions, which stood at €16.659 billion, reflects the growing demand for advanced military electronics, especially in the areas of air defence and digital communications.
Outlook: Full-Year Forecast Remains Intact
Looking ahead, Rheinmetall’s management has confirmed its full-year 2025 forecast, with the company expecting to achieve consolidated sales growth of between 25% and 30%. The group also anticipates an improvement in its operating result margin, aiming for approximately 15.5% for the year.
Despite the challenges in the civilian market and delays in some key orders from Germany, the company remains confident that it will meet its ambitious targets for 2025. The strong order backlog, coupled with ongoing investments in manufacturing capacity and the successful expansion into new markets, positions Rheinmetall for continued success in the rapidly growing global defence sector.
In conclusion, Rheinmetall’s financial performance in Q3 2025 demonstrates the company’s resilience in the face of geopolitical and domestic challenges. With a strong order backlog, increasing demand for defence products, and continued investment in production capacity, Rheinmetall is well-positioned to maintain its growth trajectory as it strengthens its position as a global leader in the defence industry.
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