Shares in German-based Rheinmetall defied a sea of red on the DAX index overnight, up 3% after the defence giant revealed plans to achieve sales of €50 billion by 2030 - five times its 2024 revenue of €9.8 billion.
While geopolitical tensions and Russia's full-scale invasion of Ukraine are driving robust demand for its weapons systems, most of 2030 its sales are expected to come from its vehicle systems and weapons and ammunitions businesses.
Since the Ukraine war began, the German tank-maker’s shares have risen around 900% and operating margins in the German blue-chip are expected to expand to around 20% - up from 15.2% in 2024 - by the end of the decade, with the cash conversion rate exceeding 50%.
To achieve these goals, the company plans to sell a division that specialises in automotive parts in the first half of 2026.
With bids due by Christmas, three potential buyers are in the mix for the civilian-facing business.
Rheinmetall, like many other defence contractors, has benefitted from Europe's increased defence spending, NATO allies earlier this year agreeing to increase defence spending to 5% of gross domestic product by 2035, up from a previous target of 2%.
Underpinning increased military spending in Europe are "profound security threats and challenges," including the long-term threat posed by Russia to Euro-Atlantic security.
"Despite the stock's meteoric rise, forward multiples suggest that the market does not fully appreciate Rheinmetall's growth," Rothschild & Co Redburn analysts said earlier this month.
Rheinmetall also used Tuesday’s market update to announce a new structure from next year, including a new naval segment, which is expected to have 2030 sales potential of €5 billion.
Rheinmetall CEO Armin Papperger expects the new naval unit to be ready in January.
Meanwhile, other new divisions include air defence, which reveals the company’s increased focus on drones.
The manufacturer is also expected to finalise major investments in ammunition making and digitisation in 2027.
After recently announcing the takeover of the Luerssen Group’s warship division, NVL for an undisclosed purchase price, Rheinmetall also has plans to grow through MA activity in the coming years.
M&A could be another growth driver for the German "wunderstock," however, it will depend on the availability of suitable targets, the Rothschild analysts said.
Meanwhile, the company kept its 2025 outlook intact, expecting 25–30% sales growth, including 35–40% growth in defence and flat civil revenue.
Operating margin guidance remains around 15.5%, with cash conversion above 40%.
Rheinmetall still sees its order backlog climbing to around 80 billion euros this year.
