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German arms company Rheinmetall plans to return more than half a billion euros to shareholders this year as investors reap the rewards of surging European defence spending.
The Düsseldorf-based maker of tanks and artillery proposed a dividend payment of €11.50 per share as it announced booming sales and profits for 2025.
The figure, which amounts to a total payout of €528mn, is up from €8.10 the previous year and compares with a payout of just €2 per share in 2021, before Vladimir Putin’s full-blown invasion of Ukraine led to large-scale rearmament in Europe.
The company, which is expanding beyond its traditional realm of defence and weaponry into shipbuilding and space technology, is one of the biggest corporate winners from the war in Ukraine. Its share price has risen almost 20-fold since the start of the conflict.
Rheinmetall wants to become a “global champion”, chief executive Armin Papperger told reporters on a call, citing the US and the Middle East as areas of expansion.
Several of the company’s air defence systems are already in use across the Middle East and Papperger said the region was “more in focus” given the ongoing conflict. He told the FT that Rheinmetall was in talks about securing contracts with governments there, noting that “all the countries are interested”.
The war has underlined the lethality of cheap drones, in particular against critical infrastructure, and triggered a rise in demand for lower-cost interceptors.
Using a missile that costs “$500,000 or $2mn” to shoot down a $20,000-$30,000 drone “is stupid to do — they fill it with our system for $5,000,” added Papperger.
The company said on Wednesday that the tense global security situation “underpins the promising position of the group” as it announced sales of €9.9bn in 2025, up from €7.7bn the previous year.
Operating profits rose 33 per cent to €1.8bn, indicating a profit margin of 18.5 per cent.
Rheinmetall said that 2025 was characterised by strong and rising demand as European countries, led by Germany, invest hundreds of billions of euros in their armed forces. The spending surge comes amid Nato fears of Russian aggression as well as an increasing desire to reduce dependence on the US.
The company won €7.8bn in orders for vehicle systems last year, including for Boxer infantry fighting vehicles and the Leopard 2 tank, which is produced by Franco-German group KNDS but has a gun barrel made by Rheinmetall.
Rheinmetall said that business with Germany was becoming an “increasingly important” share of its operations, with the share of total sales generated from the EU’s largest nation rising 4 percentage points to 38 per cent.
Papperger confirmed that the company was in talks with satellite producer OHB on a joint venture to build an equivalent to Elon Musk’s Starlink internet service for the German armed forces. A co-operation also with Airbus was also possible, he added, as it could help deliver capabilities quicker.
“If Airbus can also build some of the satellites it would help with the speed,” he said.
Separately, Papperger said the company was not in talks to acquire a stake in Franco-German tank maker KNDS, which is planning to list later this year. He noted that it made no sense for Rheinmetall to take a stake in the group unless it was a majority share.
“The French government don’t like it — Rheinmetall becomes too big,” Papperger added.
The company said that sales were forecast to increase at least 40 per cent this year to about €14bn as rising national defence budgets translate into orders.
Its order backlog — a key measure of future income for defence contractors — reached a new high of almost €64bn.
The 2026 figures fell short of analysts’ expectations and shares in the group fell 4.4 per cent in early trading on Wednesday.
Louis Knight of equity research group Third Bridge said that while the expected orders for 2026 were “staggering”, there were mounting questions among investors “how quickly Rheinmetall can scale its industrial base to meet it”.
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