Defense company stock falls amid reports Germany cutting aid to Ukraine

Rheinmetall has been a major beneficiary of Berlin’s campaign to arm Kiev

Shares in German defense company Rheinmetall have slumped after reports that Berlin could cut arms deliveries to Ukraine. 

Rheinmetall’s share price dropped by as much as 4.5% to €536 ($592) after European markets opened on Monday morning, although it later partially rebounded to €554. The German defense giant’s stock had been on rise since the start of the year, gaining as many as 85%.  

In July, the company reported a 111% jump in second-quarter profits alone. Rheinmetall remains one of the main arms producers in the EU, which is desperate for more weapons and ammunition amid the standoff with Russia over Ukraine. 

The latest slump, however, comes after the Frankfurter Allgemeine Zeitung newspaper reported on Saturday, citing officials and internal documents, that the German government will stop new military aid to Ukraine as part of a campaign to curb budget spending. The reported policy shift only affects new funding and deliveries, while those already approved will remain in place. 

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Germany could limit military aid to Ukraine – Bild

The report also comes after Berlin announced last month that it plans to nearly halve military aid to Ukraine by 2025, which could drop from around €8 billion to just €4 billion. Since the start of the Ukraine conflict, Berlin has pledged at least €28 billion in various aid to Kiev. 

Rheinmetall, which has a market capitalization of around €24 billion, produces a vast array of weapons that have been sent to Ukraine, including Leopard tanks, armored personnel carriers, air defense systems, and various types of artillery munitions. 

Russia has repeatedly denounced Western arms shipments to Ukraine, arguing that they only prolong the conflict without changing its outcome. Moscow has also said that efforts to support Kiev are becoming a heavy burden on Western taxpayers, but are beneficial to the military-industrial complex.