Germany ditches delayed frigate programme in major blow to Rheinmetall (updated)

TKMS AG & Co KgaA

24/06/2026 10:34

Rheinmetall shares set for record daily fall
Berlin confirms F126 programme axed, backs TKMS' Meko line
Germany examining damage claims against initial contractor
KNDS IPO highlights Europe's defence shake-up
Adds Defence Minister comment in paragraph 11, updates shares in paragraph 10
By Emanuele  Berro and Christoph Steitz

    June 24 (Reuters) - Germany scrapped a landmark frigate programme on Wednesday following delays and expected cost overruns, sending shares in the country's top defence firm Rheinmetall RHMG.DE — which was tipped to win the contract — sharply lower.
Plans to build six F126 frigates had been mired in trouble for a while, with Berlin weighing whether to hand the contract to Rheinmetall's NVL division after initial supplier, Dutch group Damen Schelde Naval Shipbuilding, failed to meet timelines and budgets.
Germany's defence ministry said it would terminate the programme, warning it would have pushed the cost of six ships to more than €18 billion ($20 billion), up from an initial estimate of about €10 billion.
Instead, Berlin will switch to eight smaller Meko A-200 frigates from Thyssenkrupp's TKAG.DE marine unit TKMS TMS.DE at an expected €11.6 billion, partly confirming earlier plans.
"Great news, definitely for us," TKMS CEO Oliver Burkhard said in a video post on LinkedIn, leaving open the option of including industrial partners that lost out on the F126 project, without giving details.
Shares in Rheinmetall, Europe's largest ammunition maker, fell by as much as 20% to their lowest in nearly 15 months, wiping more than €11 billion off its market value.
Only last year the group expanded into naval defence with the purchase of NVL. It is also vying with TKMS to buy smaller rival German Naval Yards Kiel.
JP Morgan analysts said the decision means Rheinmetall "probably won't make its order intake target" in 2026 of €80 billion.
Rheinmetall declined to comment.

TKMS IN LINE FOR MAJOR ORDERS
Meanwhile, TKMS's stock was up 14.2% at 1507 GMT, with brokerage Metzler saying its order backlog could more than triple to €68 billion if the Meko order and a larger potential order from Canada's navy proceed.
Since the F126 order was placed in 2020, Germany has spent around €2.3 billion on the project, Defence Minister Boris Pistorius said, adding that while the government was examining damage claims against Damen he saw little chance of success.
Rheinmetall had offered in May to take over the project for €12.8 billion, Der Spiegel reported.
The defence ministry had said in March it would buy four Meko A-200 frigates from TKMS as a stopgap to meet NATO anti-submarine commitments from 2028, with deliveries from end-2029. 
On Wednesday it said it now aims to buy eight Meko frigates "primarily for anti-submarine warfare", at about €6.3 billion for the first four and €5.3 billion for an option on four more if exercised by end-2026.
Rheinmetall CEO Armin Papperger said in May the group expected to sign the F126 deal in the second quarter.
TKMS said it had begun preparatory work in February, aims to deliver the first Meko A-200 frigate in 2029 and sees scope to involve other German yards if the option for four more ships is exercised.
Amid Europe's complex rearmament drive, where Berlin and Paris have scrapped their joint FCAS fighter jet project and their MGCS tank programme is running about a decade late, Franco-German tank maker KNDS on Wednesday outlined plans for a dual Frankfurt-Paris IPO that sources told Reuters could value it at about €15 billion.
($1 = 0.8814 euros)

BREAKINGVIEWS-Naval loss holes Rheinmetall’s German hubris nL6N42W0NI
 (Reporting by Emanuele Berro in Gdansk, Christoph Steitz in Frankfurt, Holger Hansen, Kirsti Knolle and Sabine Siebold in Berlin and Matthias Inverardi in Duesseldorf. Editing by Mark Potter and Elaine Hardcastle)
 ((Emanuele.Berro@thomsonreuters.com; +48 587696510))