[Pictured above: Saab’s Swedish Gripen fighter jet. Source: Saab]

Europe’s push to rapidly strengthen its military capabilities is now clearly reflected in the latest quarterly reports from the continent’s largest defense contractors. Their second-quarter and first-half 2025 results reveal the vast scale of incoming orders, the build-out of production capacity, and forward-looking projections tied to Europe’s rearmament drive.

Leading the charge are Sweden’s Saab, Germany’s Rheinmetall and Hensoldt, France’s Thales, the UK’s BAE Systems, and Italy’s Leonardo. Together, they anchor Europe’s defense-industrial base, producing everything from fighter jets and armored vehicles to missile systems, sensors, command-and-control suites, naval platforms, and submarines. The first-half 2025 numbers point to an unprecedented surge—steep revenue gains, massive order volumes, and sweeping investments in new manufacturing infrastructure.

Investment Wave Across the Defense Supply Chain

Rheinmetall is building Europe’s largest ammunition plant in Lower Saxony, targeting output of hundreds of thousands of shells annually by 2027, alongside expanded Leopard tank lines, armored vehicle production, and F-35 components. Saab is boosting output of its Gripen fighter jets, missile systems, and submarines, aiming for annual order growth of around 20%.

Thales is doubling electronics plant output to ramp up production of weapons systems, antennas, and aerial systems. BAE Systems—the continent’s largest defense contractor—is doubling Eurofighter Typhoon output and expanding submarine and land-systems facilities. Leonardo, partially owned by the Italian government, is reducing debt, streamlining manufacturing, and investing in new projects. Hensoldt is building logistics capacity to produce at least 30 TRML-4D air-defense radars a year by 2027.

Accelerated Factory Construction

Saab reported a 22% sales increase in the first half of 2025, fueled by demand from Scandinavia, Central Europe, and Asia. Its flagship Gripen aircraft, missile systems, and submarines are seeing heightened NATO demand to strengthen air and naval forces. Saab raised its full-year growth forecast to 16–20% and unveiled plans for production expansion at existing sites and new lines. CEO Micael Johansson emphasized the company’s strategy to remain an independent, end-to-end defense manufacturer.

Rheinmetall, a cornerstone of Europe’s defense industry, posted 24% first-half sales growth and a record order backlog driven by European customers. Its headline project—the giant ammunition plant in Unterlüß—will reach full capacity by 2027. The company is also ramping up production of F-35 components and Lynx and Boxer armored vehicles. CEO Armin Papperger called Rheinmetall “a critical player in supplying essential weaponry in response to growing threats to Europe’s security.”

Hensoldt ended the first half with an 11% sales increase year-on-year, reaching €944 million, and a record €7 billion order backlog. Most of its orders center on radar systems—particularly the TRML-4D air-defense radar and radars integrated into the Eurofighter—vital for early detection of aircraft, cruise missiles, and drones.

A Prolonged Era of Military Buildup

Thales saw 8.1% first-half revenue growth and raised its full-year forecast to 6–7%, backed by strength in sensors, command-and-control systems, and missiles. BAE Systems holds an order backlog exceeding £75 billion, with plans to double Eurofighter Typhoon output and advance nuclear submarine and armored vehicle programs. Leonardo reported 12.9% sales growth, a stronger balance sheet, and ongoing supply chain optimization to meet rising demand.

While many companies disclose only partial figures, the trend is unmistakable: Rheinmetall’s sales rose from €3.8 billion in H1 2024 to roughly €4.7 billion in 2025; Saab’s Q1 sales climbed to $1.6 billion from $1.4 billion a year earlier; BAE’s first-half revenue increased from £13.4 billion in 2024 to £14.6 billion in 2025. Leonardo did not release consolidated figures, but its U.S. subsidiary Leonardo DRS—owner of Israel’s RADA—posted a 20% sales jump to $1.44 billion.

Across the EU, defense spending rose more than 30% in real terms from 2021 to 2024. Among the 23 EU countries that are also NATO members, joint defense outlays are set to rise from 1.99% of combined GDP in 2024 to about 2.04% in 2025. Analysts forecast an additional increase exceeding €100 billion in budgets by 2027.