Rheinmetall (RHM) Q2 2025 earnings summary

Executive summary

• Q2 2025 group sales grew 9% year-over-year to €2.4 billion, with defense sales up 13% and Electronic Solutions showing the strongest segment growth.

• Operating result increased 2% to €276 million, with group margin at 11.3% and defense margin at 13.2%, slightly down due to mix and start-up costs.

• Backlog surged 30% year-over-year to €63.2 billion, positioning for future growth.

• Delays in German government orders and election timing shifted significant sales and down payments to Q3 and Q4, impacting free cash flow and inventory buildup.

• Strategic focus remains on defense, with civilian business divestiture targeted for completion by mid-2026 and ongoing M&A and partnership activity.

Financial highlights

• Group sales reached €2.4 billion in Q2, with defense contributing €1.9 billion.

• Net income from continuing operations was €167 million, up from €151 million in Q2 2024.

• Operating free cash flow was -€911 million in H1 2025, mainly due to delayed customer prepayments and inventory buildup.

• CapEx at 8.2% of sales, supporting capacity expansion.

• Equity ratio increased to 33.7% following convertible bond conversions.

Outlook and guidance

• Defense sales expected to grow 35–40% for the year, with group operating margin at minimum 15.5% and defense margin around 19%.

• Backlog projected to exceed €80 billion by year-end, with potential to reach €120 billion by mid-2026.

• Strong order intake and deliveries expected in Q4, with Q3 and Q4 backloaded due to earlier delays.

• Civilian business expected to remain flat and is being divested.

• Major construction projects completed, with production ramping up in Q3 2025.