German defence giants vie for €10B frigate contract as shares waver
Germany's defence sector is seeing major shifts as companies compete for lucrative military contracts. Rheinmetall and RENK have both reported strong financial results, but share prices remain volatile amid uncertainty over the German Navy's F126 frigate program. The Defence Ministry's decision on a lead contractor, expected by late April, could reshape the industry's future.
Rheinmetall has positioned itself as a frontrunner for the F126 frigate program, the German Navy's largest newbuild project. The initiative involves six frigates worth around €10 billion. A contract award could arrive as early as this summer, though the Defence Ministry is still evaluating Rheinmetall alongside another bidder.
The company's growth reflects broader trends in European defence spending. Over the past five years, Rheinmetall's market value has surged to roughly €72 billion, supported by rising military budgets—Germany alone plans to spend €48 billion on procurement by 2026, increasing to €152 billion by 2029. Strategic moves, such as selling its automotive division and acquiring Naval Vessels Lürssen, have further strengthened its position.
Meanwhile, RENK reported record figures for 2025, with revenue hitting €1.37 billion and net profit more than doubling to €101 million. Its order backlog now stands at €6.68 billion. For 2026, the company forecasts revenue above €1.5 billion and adjusted earnings between €255 million and €285 million. Shareholders will also see a 38 percent dividend increase to €0.58 per share, payable from June 11, 2026.
Despite these strong results, investor confidence has wavered. RENK's share price remains over 40 percent below its October 2025 peak and well under its 200-day average. ThyssenKrupp Marine Systems, another contender in naval defence, saw its shares drop by nearly seven percent, while RENK fell by three percent. The uncertainty stems from delays in the F126 procurement process, with the next RENK quarterly report due on May 6, 2026.
The outcome of the F126 contract will have significant financial and strategic consequences. A decision in late April could either boost investor confidence or extend market uncertainty. With defence budgets rising and major projects underway, the sector's trajectory will depend heavily on government procurement choices.
