Europe's defence spending surge is driving extraordinary growth at Rheinmetall, Germany's largest defence manufacturer. The Düsseldorf-based group recorded record earnings in 2025 and is forecasting even faster growth in 2026, as European nations race to rebuild their militaries amid a hostile Russia and deepening uncertainty over US security commitments.
Rheinmetall spent years keeping a low profile in a country with deep pacifist traditions rooted in its World War II history. That era is firmly over. Moscow's invasion of Ukraine in 2022 triggered a continent-wide drive to rebuild long-neglected militaries, a trend that accelerated sharply after the return of US President Donald Trump to office shook Europe's confidence in American security guarantees.
The result has been a dramatic transformation in Rheinmetall's fortunes. In 2025, the group's sales rose by almost 30%, while its core profit jumped by a third to a record 1.8 billion euros. Its order backlog grew by 36% to a new record of 63.8 billion euros.
For 2026, the group is forecasting a sales jump of up to 45%, with revenues expected to reach a maximum of 14.5 billion euros. According to a company-provided poll of analysts, sales are projected to exceed 42 billion euros by 2030.
"The world is changing rapidly, and Rheinmetall is well prepared," said CEO Armin Papperger, whose firm produces a range of defence equipment from ammunition and artillery to military vehicles. "We are needed when it comes to increasing the defence capabilities of Germany and Europe and creating an effective deterrence."
Rheinmetall has benefitted in particular from a sharp increase in defence spending in Germany, where Chancellor Friedrich Merz has pledged to build the Bundeswehr into Europe's largest conventional army. The broader surge in demand has boosted Germany's entire defence sector, the country overtook China to become the world's fourth largest arms exporter in the period from 2021 to 2025, accounting for 5.7% of global exports, according to the Stockholm International Peace Research Institute (SIPRI).
Rebuilding European militaries that shrank dramatically after the Cold War is no simple task, with soldiers across the continent frequently contending with poor living conditions and ageing equipment. But the pace is accelerating. Europe more than tripled its arms imports over the past five years, according to SIPRI, and many NATO member states have committed to increasing defence spending following pressure from Trump for allies to shoulder more of the cost of their own security.
Rheinmetall's growth has driven a vast expansion of its operations. The company has opened new munitions plants across the continent, including the largest in Europe, located in northern Germany, which will be capable of producing 350,000 artillery shells a year by 2027. It has also acquired German warship builder Naval Vessels Luerssen, marking a significant move into naval defence.
At the same time, the company has decided to sell off its automotive division, a move that reflects both its strategic focus on defence and the broader difficulties facing Germany's car industry.
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