Renk is gearing up for a surge in orders
The defence contractor Renk is expecting double-digit growth for the current year. Alexander Sagel, who became CEO of the company in February, projected revenues exceeding 1.3 billion euros during the annual earnings presentation. In 2024, the company's revenues rose by more than 23% to 1.14 billion euros. Renk manufactures transmission systems for military and civilian applications, including tanks.
Management said that the outlook – including medium-term goals – is based on the currently expected operational performance and the high order backlog, which has increased to its highest level ever at 5 billion euros. „Further potential in the market“, resulting from higher defence spending recently announced by EU countries, has not yet been taken into account. And some NATO planning by the European members is still awaited.
Additional brigades for the Bundeswehr
If the Bundeswehr were to build additional heavily armed brigades and strengthen its existing forces, this could bring Renk orders worth between 400 million and 800 million euros, according to the CEO. The timing of orders and additional revenues would depend on how quickly the German government makes decisions, and how fast production capacity can be ramped up. Renk will be prepared for various scenarios, but it is still too early to quantify the effects of significantly higher defence spending. Rearmament will also increase Renk’s aftermarket business, which accounts for around 40% of the group’s revenue.
The board expects the adjusted earnings before interest and taxes (EBIT) for 2025 to range between 210 million and 235 million euros. Last year, this figure grew by more than 26% to 189 million euros. As a result, the adjusted EBIT margin increased slightly to 16.6% (from 16.2%). The company is proposing a dividend increase to 42 cents, an increase of 40% versus the previous year.
The strongest revenue growth last year was achieved by the drive and control technology for vehicles, which includes tank transmissions. This segment’s revenue increased by nearly a third to 699 million euros. The adjusted EBIT rose almost as significantly, reaching 140 million euros. The two smaller segments are Marine & Industry, and Slide Bearings.
The stock, which is listed in the MDax, has more than doubled since the beginning of this year. This trend is comparable to other publicly listed German defence companies such as Rheinmetall and Hensoldt.
