Rheinmetall reported a 29% jump in sales, reaching 9.935 billion euros, and posted a record operating profit for 2025. Yet the company’s earnings fell short of market expectations, leaving analysts puzzled about the gap between strong revenue and weaker profitability in the current quarter.

Backlog figures climbed 36% year‑on‑year to a record high, signaling robust demand for Germany’s largest arms maker. The firm still projects sales growth of 40‑45% for the year, a target that underscores the sector’s resilience amid geopolitical tensions and continued investment in new technologies.

Investors reacted cautiously, trimming the stock after the earnings miss, while analysts noted that the backlog surge could offset short‑term profitability gaps. The defense industry watches closely, as sustained demand may drive future contracts and influence pricing power in the European market.

The results highlight a disconnect between revenue growth and earnings, suggesting that cost pressures or margin compression may be eroding profits. For stakeholders, the takeaway is clear: robust sales alone do not guarantee profitability in the defense sector and investors should reassess risk exposure.