GE Aerospace, Strategic Resources, Rheinmetall: Military Build-Up Fuels the Steel Boom

GE Aerospace: A Standout Performer in the Military Segment

The aerospace group recently presented its second-quarter financial results, exceeding analysts' estimates. The US-based company increased its revenue by approximately 31% year-over-year to over USD 13 billion. At the same time, profitability improved significantly. Adjusted earnings per share of USD 2.02 exceeded the previously forecast USD 1.86 per share.

In addition, the company reported an increase in its free cash flow margin to 22.7%. Due to the positive business performance in the past half-year, the earnings forecast for the full year 2026 was revised upward, with management now anticipating USD 7.75 per share.

In addition to its financial performance, the company also reported operational progress in the defence sector. GE Aerospace has signed a comprehensive supply and maintenance contract with the British military. The group will supply the powerplants for 23 planned military helicopters from manufacturer Leonardo. The agreement also includes the delivery of spare parts and long-term maintenance services. According to the company, the ordered powerplants feature reduced fuel consumption and a lower empty weight compared to competing products. Of particular note is the modular design, which allows necessary maintenance work to be performed directly at the respective deployment site.

To promote local value creation, GE Aerospace plans to carry out significant portions of manufacturing and overhaul work at locations within the United Kingdom. The company's goal is to continuously increase its market share in the military segment through international contracts.

Strategic Resources: Green Steel, Vanadium, and Billion-Dollar Potential

The transformation of the steel industry is one of the greatest challenges of the energy transition. According to the International Energy Agency, steel production accounts for about 7% of global CO₂ emissions. Accordingly, demand is growing for high-quality iron ore products for direct reduction as well as for critical metals such as vanadium, which is used in both high-strength steels and stationary energy storage systems.

To this end, Strategic Resources pursues an integrated business model that relies not only on the extraction of raw materials but also on their processing. At the heart of this is the BlackRock project in Québec, which is ready for construction and has proven ore reserves of approximately 127.8 million metric tonnes. Plans call for a pelletizing plant at the deep-water port of Port Saguenay with an annual capacity of 4 million metric tonnes. The DR-grade pellets, with an iron content of more than 67%, are specifically designed for modern direct reduction and electric arc furnace processes and are eligible for the European Carbon Border Adjustment Mechanism (CBAM). An existing port, gas connection, and affordable hydropower also reduce investment and operating costs. The province of Québec is also a shareholder.

Strategic Resources is also making significant progress in Finland. The vanadium-rich magnetite concentrate from the Mustavaara project was selected for the EUR 17 million FutSteel research program led by the University of Oulu and the steel group SSAB. The goal is to develop hydrogen-based steel production. At the same time, the company is working with Tyfast Energy to evaluate the use of vanadium oxide in lithium-vanadium batteries. If the targeted production of up to 40,000 metric tonnes of vanadium per year is achieved, Strategic Resources could become one of North America's first major primary producers.

The valuation also appears noteworthy. While the feasibility study for BlackRock shows an after-tax net present value of approximately CAD 1.93 billion, the market capitalization stands at only about CAD 16 million. If the projects are implemented as planned, Strategic Resources has significant upside potential and could become a key Western supplier of critical raw materials and climate-friendly steel production.

Rheinmetall: Analysts Remain Skeptical

The integrated technology group has so far been known exclusively for manufacturing traditional defence equipment. Now, however, the group is expanding its activities and strengthening its commitment to space-based surveillance systems. The focus is on the development of maritime situational awareness systems tailored to the requirements of the North Atlantic and the Arctic. While Rheinmetall is working with ICEYE in Germany to build capacity for high-resolution reconnaissance using X-band SAR satellites, its partner, Space Norway, is contributing C-band SAR technology, which is well suited for large-scale surveillance of vast maritime areas. The combination of these technologies is intended to ensure reliable intelligence gathering for modern armed forces while simultaneously strengthening cooperation between Germany and Norway.

In addition to new partnerships, Rheinmetall is also advancing technological development in the field of unmanned logistics. In collaboration with the British Ministry of Defence, the British Army's first driverless transport convoy was tested in the United Kingdom. Equipped with the so-called PATH kit, a system comprising sensors and artificial intelligence, logistics vehicles from the HX series completed various training scenarios. The training program prepares British soldiers to operate these autonomous systems under real-world conditions. The technology aims to make logistical processes in the military sector more efficient and safer.

While the Düsseldorf-based company is tapping into new business areas, Bank of America has revised the company's long-term financial outlook downward. Analysts consider management's goal of achieving consolidated revenue of EUR 50 billion by 2030 to be overly optimistic. Instead, they anticipate revenue of approximately EUR 35 billion. This assessment is based on a structural shift in modern warfare. BofA expects countries to invest less in traditional artillery ammunition and instead redirect budgets to areas such as drone technology and air defence. This negatively impacts the growth forecasts for Rheinmetall's weapons and ammunition division. Nevertheless, the bank continues to recommend buying the stock.

Rising defence spending, the modernization of the armed forces, and the growing demand for high-quality specialty steels are creating an attractive market environment. GE Aerospace is benefiting from strong demand for military aviation technology; Strategic Resources is positioning itself as a potential Western supplier of high-quality iron ore and vanadium for the steel industry; and Rheinmetall is further expanding its role as one of Europe's leading defence contractors with new technologies.