Geopolitical tensions continue to drive military demand, with Rheinmetall's Q2 revenue surging by 69%, surpassing expectations.

(1) According to preliminary data from German arms manufacturer Rheinmetall, second-quarter revenue increased by approximately 69% year-on-year to 3.29 billion euros, and operating profit reached 562 million euros. Both figures exceeded analysts’ expectations, as continued geopolitical tensions have driven strong growth in military equipment demand. (2) Previously, analysts had forecast revenue of 3.16 billion euros and operating profit of 469.9 million euros. The actual results surpassed general market expectations, reflecting the substantial benefits to defense companies from the European defense spending expansion cycle. (3) The company expects second-quarter operating free cash flow to record a significant negative value, mainly due to large capital expenditures from capacity expansion plans. This demonstrates that, during a period of strong demand, the company is actively increasing investment to enhance delivery capabilities. (4) Rheinmetall is scheduled to release its full quarterly report on August 6. The market will focus on the size of its order backlog and whether there is further room for raising its full-year outlook.