Rheinmetall Aims to Double Revenue, Shifts Focus to Defense Amid Europe's Spending Boom

Rheinmetall's Strategic Expansion and Market Position

Germany's Rheinmetall AG has set an ambitious target of achieving €50 billion in annual sales by 2030, according to CEO Armin Papperger, who outlined the company's strategic goals during a capital markets day call according to Bloomberg. The defense and vehicle systems manufacturer also aims to boost its operating margin to over 20% and improve its cash conversion rate to more than 50% by the end of the decade according to Bloomberg. This growth strategy aligns with the broader trend of increased defense spending in Europe and globally according to Marketscreener.

To meet these objectives, Rheinmetall plans to divest its automotive parts business by mid-2026, allowing the company to focus more on defense and other high-growth areas according to Bloomberg. The firm also intends to finalize major investments in ammunition production and digitization in 2027 according to Bloomberg. Papperger emphasized that the company's vehicle systems division, particularly its Boxer armored vehicles, will be a key driver of growth over the next five years according to Bloomberg.

With an expected surge in international demand, Rheinmetall is preparing to ramp up Boxer production to 1,000 units per year starting in 2026, following orders from Germany according to Bloomberg. The company is also seeing potential for its Lynx armored fighting vehicles, with orders expected from Italy and Ukraine, and recently securing a contract with Romania for 298 units according to Bloomberg. Papperger noted that access to EU defense funding through the SAFE mechanism is essential for expanding into global markets according to Bloomberg.

Strategic Expansion and Market Position

Rheinmetall's expansion into new defense sectors is a central component of its growth strategy. By entering naval shipbuilding through its recent acquisition of the military division of Lürssen and forming partnerships in missile technology-such as with Lockheed Martin-the company is positioning itself as a comprehensive systems provider according to Marketscreener. These moves reflect a broader trend in the defense industry as companies consolidate and diversify to capture larger market shares.

The CEO highlighted that the defense spending boom in Germany and Europe is a major tailwind for the company's ambitions according to Marketscreener. In 2024, Rheinmetall recorded just under €10 billion in revenue, with an operating margin of 15.2% according to Marketscreener. Papperger previously set a target of €20 billion in sales and an 18% operating margin by 2027, making the new 2030 goal a substantial step forward according to Marketscreener.

Rheinmetall is investing heavily in manufacturing capabilities to support its growth. The company recently opened Europe's largest ammunition plant in Germany and plans to start producing rocket motors there in the third quarter of 2026 according to Bloomberg. These investments are part of the broader effort to scale production and meet increased demand from both domestic and international defense markets.

The company's financial targets include not only higher sales and operating margins but also improved cash conversion, which Papperger sees as a critical measure of operational efficiency according to Bloomberg. By streamlining its business through divestitures and strategic acquisitions, Rheinmetall aims to become more focused and agile in responding to defense market dynamics according to Bloomberg.

What This Means for Investors

The ambitious growth targets and strategic investments have already begun to reflect in investor sentiment. Shares of Rheinmetall rose by 1.7% following the announcement of its 2030 goals according to Reuters. The company's reorganization into new business segments, including a naval division with €5 billion in potential sales by 2030, signals a long-term transformation according to Reuters.

Analysts are closely watching how Rheinmetall executes its growth strategy and whether it can achieve its operating margin targets while managing the challenges of scaling production and maintaining profitability. The defense sector remains highly competitive, and while the global boom in defense spending provides a tailwind, the company must demonstrate it can maintain its technological edge and secure international contracts according to Reuters.

Investors will also be tracking the performance of Rheinmetall's newly restructured divisions, including air defense and digital systems, which are expected to play a larger role in the company's future revenue mix according to Reuters. The focus on digitization and drone-based systems indicates a forward-looking approach, which is increasingly important in modern defense markets.