Weapons manufacturer stock drops amid reports Germany stopping assistance to Ukraine

(MENAFN) Shares of Rheinmetall, a major German defense contractor, have experienced a significant decline following reports that the German government may reduce its arms aid to Ukraine. On Monday morning, Rheinmetall’s stock fell as much as 4.5 percent to EUR536 (USD592) before partially recovering to EUR554. Despite this dip, the company’s stock had surged by up to 85 percent earlier this year, reflecting strong performance and investor confidence.

Rheinmetall, a leading arms manufacturer in the European Union, has seen substantial growth, including a 111 percent increase in profits for the second quarter of the year alone. The company plays a crucial role in supplying weapons and ammunition amid the ongoing conflict between Russia and Ukraine.

The recent drop in stock value follows a report by the Frankfurter Allgemeine Zeitung on Saturday, which indicated that the German government might halt new military aid to Ukraine as part of a broader budgetary retrenchment. According to the report, this policy change would only impact future aid and arms deliveries, with previously approved assistance remaining unaffected.

This news comes on the heels of Berlin’s announcement last month that it plans to significantly reduce its military aid to Ukraine by 2025, from approximately EUR8 billion to EUR4 billion. Since the onset of the Ukraine conflict, Germany has committed at least EUR28 billion in various forms of assistance to Kiev.

Rheinmetall, with a market capitalization of around EUR24 billion, has been instrumental in supplying Ukraine with a range of military equipment, including Leopard tanks, armored personnel carriers, air defense systems, and artillery munitions. The potential cutbacks in German aid could impact the company’s future contracts and financial outlook.

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