War and raw material shortages = Your profit: How Rheinmetall, Almonty Industries, and RENK are now cashing in

Rheinmetall – New deals, space ambitions, and disappointing half-year figures

Rheinmetall has secured a significant follow-up contract from the Czech Ministry of Defense. Over a period of seven years, the Company will service up to 42 Leopard 2A4 tanks and two Büffel armored recovery vehicles. The contract is potentially worth EUR 250 million. There is a particular focus on cooperation with Czech companies, especially in maintenance and knowledge transfer. At the same time, the US subsidiary American Rheinmetall is strengthening its portfolio of high-performance rubber products through the acquisition of Loc Performance. This strategic shift will be presented in September at the Global Polymer Summit.

With its newly created "Space" division, Rheinmetall is strategically focusing on the growing satellite market. At the heart of this activity is the partnership with Finnish SAR satellite specialist ICEYE. Its technology provides high-resolution images regardless of weather conditions, currently for Ukraine, for example. A joint venture is planned to produce SAR satellites at the Rheinmetall plant in Neuss starting in 2026. A test center in Norway (RhIPF) is scheduled to begin operations in 2027 and enable flexible satellite launches. According to Rheinmetall, Europe has considerable ground to make up in this area.

Rheinmetall reports record revenue for the first half of the year. Group revenue rose by 24% to EUR 4.7 billion, while operating profit increased by 18% to EUR 475 million. The military business was once again the driving force, with growth of 36%. The order backlog reached an all-time high of EUR 63 billion. The new elections in Germany led to delays in new orders. Nevertheless, the Company is confirming its annual forecast of 25-30% revenue growth and an operating margin of around 15.5%. Investments in new capacity, especially for ammunition, are in full swing. The figures were not well received and caused a slide in the share price, which the Company's executive bodies used to purchase shares worth EUR 0.75 million. The share currently costs EUR 1,633.50.

Almonty Industries - Tungsten: Metal with momentum

Deutsche Bank expects tungsten prices to rise sharply, projecting the metal to head toward USD 1,000 per metric ton (MTU) over the next twelve months. Tungsten is currently trading above USD 500, marking a new all-time high. In addition to strong demand, particularly from the defense and high-tech sectors, ongoing geopolitical tensions are also driving prices. Similar to the case of antimony in the past, government export restrictions, especially from China, could further exacerbate the already tight supply and push prices even higher. The full effect of such measures often takes time to unfold.

In this environment, Almonty Industries is coming more into focus. The Company, which has relocated its legal headquarters to the US, is one of the few major tungsten producers outside China. Its portfolio includes the established Panasqueira mine in Portugal, which currently supplies around 58,000 MTU of tungsten per year, smaller facilities in Spain, and the high-grade Sangdong project in South Korea. Production at Sangdong, the future heart of the Company, is scheduled to start at the end of 2025 and ramp up to an enormous capacity of over 600,000 MTU by the end of 2027, together with Panasqueira. Further advantages include low operating costs and an estimated mine life of over 90 years. In addition, Almonty plans to build its own plant in South Korea for the production of high-purity nano-tungsten oxide and to mine the molybdenum deposit on the same property.

Almonty is cleverly positioning itself in a market characterized by scarcity and dependencies. Approximately 85% of the global tungsten supply chain is located in China, Russia, and North Korea. Almonty's focus on stable regions, long-term supply contracts including a minimum purchase price, and diversification across multiple locations mitigates risks. In addition, the molybdenum deposit in Sangdong, with a purchase agreement at a price of USD 19 per pound, provides stability. The recent successful IPO on the NASDAQ raised USD 90 million and strengthened the Company's finances for downstream investments. Analysts at Cantor Fitzgerald have issued a price target of USD 6.50, while Oppenheimer and D.A. Davidson even see USD 7.00. The share is currently trading at USD 4.73.

RENK – Strong half-year figures

Drive technology specialist RENK posted strong growth in the first half of the year. Order intake shot up 47% to EUR 921 million. Strong demand from the defense sector was the main factor here. The book-to-bill ratio of 1.5 shows that the Company is currently unable to process orders as quickly as they are coming in. This momentum drove the total order backlog to a record high of EUR 5.9 billion. At the same time, revenue rose by 22% to EUR 620 million. The increase in operating profit was even more pronounced, climbing 29% to EUR 89 million. The margin improved to 14.4%.

The strong momentum was driven primarily by the Vehicle Mobility Solutions (VMS) segment. Here, order intake exploded by 66% to EUR 681 million. Revenue rose by 32% to EUR 389 million, and operating profit increased by 45% to EUR 67 million, with the margin climbing to an impressive 17.1%. A major order worth USD 99 million for the US subsidiary underscores the strong position. The Marine & Industry (M&I) segment remained stable with moderate growth in orders and sales. By contrast, the smaller Slide Bearings segment struggled slightly in more difficult market conditions.

In view of the successful first six months, the Board of Management confirmed its forecast for the year. Revenue is expected to exceed EUR 1.3 billion, with operating profit targeted at between EUR 210 and 235 million. This outlook is based on the high-order backlog and current operating performance. Potential from planned higher European defense spending is not yet factored into this forecast. At the same time, RENK is strengthening its global presence, most recently with the opening of a new plant in India. This investment is aimed at better serving local markets and expanding strategic partnerships, particularly in defense. RENK shares are currently trading at EUR 61.36.

Geopolitical crises and a strategic shortage of raw materials are driving record profits for defense companies and raw material producers. Rheinmetall is capitalizing on demand from tank deals and space ambitions, despite disappointing half-year figures and a setback in its share price. Almonty Industries is positioning itself as a key player in the tungsten market outside China and is benefiting from skyrocketing prices, supported by its flagship Sangdong project in South Korea. RENK shines with strong half-year figures and is expanding globally, for example, with its new factory in India. The meeting between Trump and Putin could be important for Rheinmetall and RENK.