Rheinmetall: Record Orders, but Lowered Guidance
Rheinmetall’s second-quarter figures are strong. Turnover climbed by 69% to EUR 3.289 billion, operating profit rose by 115% to EUR 562 million, and the operating margin improved to 17.1%. In the first half of the year, consolidated turnover grew by 39% to EUR 5.2 billion, while operating profit rose by 74% to EUR 786 million. Nevertheless, the market reacted cautiously due to the unexpected cancellation of the German F126 frigate program. As a result of this cancellation, Rheinmetall had to absorb a revenue shortfall of around EUR 300 million in the current year and lowered its 2026 revenue forecast by EUR 300 million. The margin target, however, remains at around 19% for the full year.
The Group is increasingly positioning itself as a systems provider for networked, unmanned platforms across all sectors. The FV-014 loitering munition for the Bundeswehr, the MQ-28 Ghost Bat escort drone developed with Boeing, and the K3 Scout surface drone from Hamburg demonstrate this strategic breadth. The acquisition of DOK-ING in Croatia and the new centre of excellence for land autonomy in the UK underline this ambition. Most recently, Rheinmetall and Hensoldt demonstrated the successful integration of the Twinvis passive radar into the Skymaster command-and-control system, thereby creating an air situational picture for networked air defence.
The “Boxer” wheeled armoured vehicle could be the Bundeswehr’s next major order. A decision on the first tranche of around 1,500 vehicles, worth approximately EUR 12.4 billion, could be taken as early as September. At the same time, Rheinmetall is pressing ahead with the expansion of its main plant in Kassel. This could become Europe’s largest tank manufacturing facility. However, a final investment decision is still pending. The negative cash flow trend in the first half of the year reflects the significant build-up of inventory required to fulfil orders. Analysts hold differing views. The range of price targets extends from EUR 1,350 to EUR 2,380.
Volatus Aerospace: Drone Platform Expands
The Canadian aviation industry is transforming, with autonomous systems increasingly being viewed as a strategic necessity rather than a technology of the future. In this environment, Volatus Aerospace has positioned itself with a platform-based approach that spans everything from manufacturing and proprietary software to operational services. The recently commissioned 53,000-square-foot facility in Mirabel and the pipeline monitoring business, covering around 1.7 million km annually, underscore the company’s commercial acceptance. With 28 manned aircraft and a drone fleet that completes around 16 flights a day in Edmonton, the company has established an operational base that serves as a foundation for further growth.
Management is deliberately pursuing two business areas in parallel. On the one hand, there is the civil industrial business, which ensures predictability through regular contracts in energy monitoring and disaster management. On the other hand, the booming defence business is becoming increasingly important due to geopolitical conflicts. The partnership entered into in August with Singular Aircraft to launch the FlyOx 1, a 4,000 kg autonomous aircraft for forest firefighting, demonstrates the growing technological breadth. With revenue of CAD 8.4 million in the second quarter, up 49.5% from the previous quarter, and liquidity of CAD 59.2 million, the financial foundation is solid. Strategic upfront investments in production capacity and certifications have been deliberately made to pave the way for high-margin economies of scale.
The Canadian government plans to increase defence spending to between 3.5% and 5% of GDP, with domestic companies set to receive 70% of this budget. Volatus Aerospace is benefiting from this reorientation through its strategic partnership with Kraus Hamdani Aerospace to develop persistent reconnaissance capabilities and through regulatory successes, such as Transport Canada’s certification of the Canary system. The first list of qualified bidders for Canada’s Defence Drone Initiative is expected in September. If Volatus features on this list, it would not only be a milestone but could also lead to fixed, recurring contracts. It would act as a catalyst for a revaluation of the company.
Lockheed Martin: From Aircraft Manufacturer to Systems Architect
The US defence contractor is transforming. Although the F-35 fighter jet still forms the backbone of its business, the focus is increasingly shifting towards autonomous systems and intelligent networking. The latest drone tests, ranging from armed maritime vessels to 5G-enabled detection systems, illustrate this new focus. Lockheed Martin no longer wants to merely supply platforms, but to control entire ecosystems comprising sensors, firepower and artificial intelligence. This shift could unlock new profit potential in the medium term, even if the legacy programs continue to generate the bulk of revenue.
The group generated revenue of USD 20.1 billion in the second quarter and has a record order book of around USD 230 billion. The guided missiles division, in particular, is performing exceptionally well, with an order book that has almost doubled to just under USD 88 billion and margins of 14.5%. The latest framework agreements for PAC-3 and THAAD could boost this cushion to nearly USD 284 billion. Analysts see potential for a re-rating here, but warn that only conversion into profitable revenue counts. However, production ramp-ups will take years.
The group is currently facing challenges with its flagship product, the F-35. According to the Pentagon, the cost of ordering the F-35 fighter jet fleet is set to rise by a further USD 51 billion. In addition, two secret projects are making losses. At the same time, Lockheed is investing heavily in the future, for example in drone technologies, hypersonic manufacturing and the modular Strigo system. The USD 3.45 quarterly dividend remains stable, but capital requirements are enormous. For investors, the question arises whether strong demand for defence technology can offset operational problems.
The drone attack on Leipzig Airport marks the starting point for a defence cycle worth billions. Rheinmetall is performing brilliantly with record figures and a broad technological portfolio, but is currently struggling with project cancellations and negative cash flow. Volatus Aerospace has established itself as an agile platform provider that has gradually expanded its business areas and intends to be increasingly active in the defence sector in future. Lockheed Martin impresses with a record order book, but has yet to translate its transformation into a systems provider into sustainable profitability.
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