Rheinmetall’s €350 Million Powder Plant: A Bet on Artillery Volume as Portfolio Critics Circle
Published on 07/23/2026 at 20:31 | Redaktion boerse-global.de
Rheinmetall has broken ground on a sprawling new powder factory in Aschau, Bavaria, committing €350 million to a facility designed to churn out 2,500 tonnes of propellant annually from 2027 onward. The 110-hectare site, operated by subsidiary Nitrochemie, is the centerpiece of a broader munitions push that aims to lift the Düsseldorf-based group’s annual artillery shell output from roughly 70,000 before the Ukraine war to 1.5 million by 2030. Yet even as the concrete is poured, a debate is intensifying over whether the company is betting too heavily on legacy munitions at a time when battlefield demand is shifting toward drones and precision systems.
The Aschau expansion is part of a twin-track investment program. Alongside the new plant, Rheinmetall is pursuing a separate initiative dubbed “Firepower,” which targets a doubling of propellant production at the Bavarian site by 2028 — to 750,000 propellant charges per year. That output will feed munitions factories in Unterlüß, Lithuania, Latvia and Hungary, with Ukraine remaining the primary end customer. CEO Armin Papperger has set an ambitious goal for the munitions division: revenue climbing from €3.5 billion to between €10 billion and €15 billion. To secure raw materials, the company is acquiring Hagedorn-NC, sourcing nitrocellulose from Turkey and the United States, and building up four years of inventory to reduce reliance on Chinese suppliers.
Employment at Aschau is set to rise from 800 to 1,300 workers in the near term, and could reach 1,400 under the Firepower expansion. Group-wide, Rheinmetall is pouring €650 million into powder production capacity, targeting 20,000 tonnes annually by 2030 — of which 4,200 tonnes will come from Aschau alone.
The construction comes amid heightened security concerns for the defense industry. Germany’s domestic intelligence service has warned companies about an elevated risk of Russian espionage and sabotage, according to a Handelsblatt report, with authorities not ruling out targeted attacks on executives. Papperger himself has been under police protection since 2024, when U.S. intelligence agencies uncovered alleged assassination plots. The report cited sabotage incidents against railways in Poland and a camera discovered at Minden train station near a military engineering battalion as evidence of the threat.
Should investors sell immediately? Or is it worth buying Rheinmetall?
On the order book, the news has been brisk. The British Army awarded Rheinmetall a contract worth nearly €1 billion to digitize combat training, while the German procurement office BAAINBw handed the company lead responsibility for the InterRoC VII research project on autonomous military convoys. The Bundeswehr also called down €100 million in hardware and support services from an existing digitalization framework. In the maritime domain, Rheinmetall struck a cooperation deal with Norway’s Space Norway for joint space-based naval surveillance. A recent delivery from the new Unterlüß plant — a low five-figure batch of 155mm artillery shells — has already been shipped to Ukraine and is expected to be completed this year.
But the flurry of contracts has not silenced critics on the sell side. Bank of America cut its price target for Rheinmetall on July 21, citing concerns about the portfolio mix: the company remains heavily weighted toward conventional artillery, the analysts argued, while demand is migrating toward counter-drone systems and precision munitions. Adding to the headwinds, talks to sell the German Naval Yards Kiel shipyard collapsed the same day, with ThyssenKrupp Marine Systems and the bidding side unable to agree on terms. Rheinmetall had been involved as a potential co-bidder and now walks away empty-handed.
At the stock market, the shares have staged a partial recovery. The stock closed at €1,038.40 on Thursday, up 2.39% on the day and gaining 8.14% over seven trading sessions, buoyed in part by strong half-year results from European peers Dassault Aviation and Thales. The current price of around €1,020 still represents a 34.25% decline year-to-date, a long way from the record highs set last autumn. On Thursday, the stock was among the best performers in the Euro Stoxx 50.
Rheinmetall at a turning point? This analysis reveals what investors need to know now.
Investors now have their eyes fixed on August 6, when Rheinmetall releases its second-quarter results. The report will serve as a critical test of whether the company can convert its record order backlog into actual revenue while simultaneously executing a massive capacity expansion. For a group that is simultaneously building Europe’s most advanced powder plant, fending off espionage threats, and defending its portfolio strategy against skeptical analysts, the numbers can’t come soon enough.
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