Volkswacht Bodensee - Rheinmetall sales keep surging despite cancelled naval frigate project

The German government announced in mid-June that it was cancelling the stalled multi-billion-euro F-126 programme, even though Rheinmetall was widely seen as the frontrunner to take over the project.

The cancellation dragged down Rheinmetall's otherwise booming financial results over the first half of 2026, as the Duesseldorf-based armaments giant continues to be one of the major beneficiaries of a European military buildup driven by Russia's invasion of Ukraine and doubts about long-term US security commitments.

Revenue surged 39 percent compared to the first half of 2025, reaching 5.2 billion euros, while operating profit soared 74 percent to 786 million euros, the company said.

The German navy's troubled F-126 programme was previously handled by Dutch shipbuilder Damen, but had faced years of delays, setbacks and cost overruns.

Rheinmetall CEO Armin Papperger on Thursday called the German government's decision "really astonishing", with the company having already completed technical due-diligence work showing that "we can make it happen".

The German armaments giant lowered its revenue forecast due to the cancellation, with revenue for the year now expected to fall between 13.7 billion and 14.2 billion euros.

Papperger said during the quarterly earnings call that the company hopes to offset the losses with new national or international naval shipbuilding contracts "in the long term".

A new frigate programme for international naval customers or sales of minehunters and unmanned drone boats to the German military are potential options, he said.

The upcoming frigate programme in particular is "a huge opportunity", Papperger said.

He also offered further details on a major contract with the German military to supply a fleet of Boxer armoured vehicles, which remains under negotiation with the defence ministry in Berlin.

Papperger said he expected the deal to be around 12.4 billion for the vehicles, primarily used as troop transports, and an additional service contract.

Overall, though, Rheinmetall's order backlog kept growing in the second quarter, surpassing the 80 billion euro mark thanks to 11.4 billion euros in new contracts awarded during the quarter.

Among the new contracts was a 5.7-billion-euro deal with the Romanian military inked in June, the company's largest international contract in recent history.

S.Leonhard--VB