Rheinmetall Adds F-35 and Missile Factories as €80.4 Billion Backlog Ties Up Cash

Rheinmetall’s €80.4 billion order backlog is driving a factory expansion that reaches from F-35 aircraft structures to rocket motors, drones, radar satellites, explosives and propellants. The industrial push is also absorbing cash before expected customer advances arrive: the company received about €6.2 billion in supplies during the second quarter of 2026 and recorded negative €1.33 billion in operating free cash flow.

That tension building inventory now to support contracted growth later defines the production program Rheinmetall outlined during its second-quarter earnings call. Most projects remain on schedule for service between late 2026 and 2027, management said, while the company continues hiring about 10,000 people annually.

F-35 work is already ramping

Aircraft production is the most direct connection to the U.S. aerospace supply chain. Output is increasing at Rheinmetall’s F-35 center-fuselage facility in Weeze, near Düsseldorf. The plant is operated by Rheinmetall Aviation Services in cooperation with Northrop Grumman and Lockheed Martin.

The approximately 30,000-square-meter production site was designed as a second source for F-35 center fuselages. Rheinmetall previously said the combined arrangement with Northrop Grumman could support production of up to 185 center sections annually, with at least 400 sections planned at Weeze over the program. The factory also incorporates warehousing, training, testing and quality-control functions an important distinction because adding assembly space alone does not create dependable aircraft output.

Chief Financial Officer Klaus Neumann attributed part of a 30% increase in Digital Systems sales, to €417 million, to the F-35 ramp and the German Army’s TAVARM program. The sales figure is secondary to the operational point: the new aerospace line has moved beyond construction and into a rising production workload.

Upstream materials are part of the expansion

Rheinmetall is not limiting the build-out to final-system manufacturing. It is adding capacity for inputs that determine how quickly downstream lines can operate. An RDX explosives plant in Várpalota is expected to be ready in 2027, while new powder-blending capacity is being added in Switzerland.

At Aschau, a propellant plant is scheduled to begin production in the third quarter of 2027. Rheinmetall plans capacity of up to 4,500 tons of triple-base powder there. A new rocket-motor facility in Unterlüß is expected in the first quarter of 2027 and will supplement an existing rocket plant in Burgos, Spain.

This upstream investment matters because a finished-system factory cannot compensate for shortages of energetic materials, motors or qualified subassemblies. Rheinmetall is effectively expanding several linked tiers of its manufacturing chain rather than relying only on more final-assembly stations. That approach requires more capital, inventory and process qualification, but it gives the company greater control over production flow once the new plants are operating.

New lines extend through late 2026 and 2027

Other additions are concentrated around the next five quarters. Initial production of the Ruta Block 2 and Kryla cruise-missile systems is planned around the end of 2026 through a majority-owned partnership with Destinus, followed by a dedicated factory in 2027. An FV-014 drone line near Düsseldorf is also expected by the end of 2026.

Management additionally plans industrial capacity to manufacture one synthetic-aperture radar satellite per week. That target adds a space-production challenge to a portfolio already spanning aircraft structures, energetic materials and propulsion. Satellite output at that rate depends not just on assembly throughput but on repeatable integration and testing across a production line.

Chief Executive Armin Papperger identified the unspecified “Ukrainian side” as the only delayed capacity element discussed. He said production elsewhere would limit the effect, but no additional schedule or facility detail was provided.

Inventory is the immediate cost of growth

Rheinmetall expects 2026 capital spending to equal roughly 8% to 9% of sales. Papperger said purchasing and investment savings were not intended to remove planned factories or reduce line capacity: We reduce CapEx at the moment, not because we reduce the factories.

The more immediate cash burden is inventory. Materials are arriving before advance payments tied to major contracts in Germany and Romania, leaving Rheinmetall to finance the gap. Second-quarter sales rose almost 70% to €3.29 billion and operating profit more than doubled to €562 million, yet operating free cash flow remained deeply negative.

We need these goods in our stocks, otherwise it’s impossible to grow, Papperger said. With more than 160,000 job applications reported and thousands of annual hires planned, labor interest is not the only constraint. Through 2027, Rheinmetall’s expansion will depend on converting billions of euros in stored materials, new equipment and partially built facilities into qualified, repeatable production before that €80.4 billion backlog can become delivered hardware.

By David Whitaker — Associate editor for AMI’s aerospace and drone systems desk, translating flight systems, aircraft programs, spaceflight, and UAV developments into accessible technical stories.