The high demand for armaments brought record sales and new business to the gear manufacturer RENK last year.
The company, which produces drive systems especially for tanks and the navy, was also able to improve its results. Shareholders can therefore look forward to a significantly higher dividend. RENK announced further growth in the new financial year.
The outlook is somewhat weaker than expected at the midpoint of the very broad target ranges for both sales and operating results, noted Chloe Lemarie from the analysis house Jefferies. Typically, however, RENK narrows down to the top end later, and this would be solid. JPMorgan expert David Perry pointed out that the final quarter was below expectations. George McWhirter from Berenberg found another point, noting that the delay of orders until 2026 had put a slight strain on the free cash inflow.
RENK increased sales in 2025 by almost a fifth to 1.37 billion euros, as the company announced in Augsburg. The arms business was the growth driver. RENK produces drive technologies for military vehicles such as tanks and the navy, but also for civil shipping and industry. “Our strategy of consistently focusing on defense technologies is paying off,” said CEO Alexander Sagel, commenting on the figures.
Adjusted earnings before interest and taxes (EBIT) improved by 21.7 percent to 230 million euros. The company thus achieved its forecast and just about the average market expectation. The bottom line is that RENK earned 101.3 million euros, almost twice as much as the previous year. Shareholders should receive a 38 percent higher dividend of EUR 0.58 per share.
The company was able to convert its growth into sustainable profitability, said CFO Anja Mänz-Siebje. This “despite the fact that we faced headwinds from various issues such as US tariffs, weak industrial business, export embargoes and exchange rate effects.”
RENK expects further growth in the new year. Sales are expected to increase to more than 1.5 billion euros. The group sees adjusted EBIT at 255 to 285 million euros. The average analyst estimate here is already in the upper half of the range.
The company has a record order backlog of almost 6.7 billion euros. New business increased last year by a new percent to 1.57 billion euros. However, a large main battle tank project for an international customer has reportedly been postponed until the current year.
This is how RENK shares are moving – below the shares of other defense stocks
RENK’s business outlook on Thursday could not free the arms supplier’s shares from the lethargy of the past few weeks. There were critical voices about the outlook and cash flow after the company reported record sales and new business last year. In XETRA trading, the RENK share temporarily lost 6.39 percent to 54.95 euros. The shares of other arms representatives also moved on Thursday: Rheinmetall were trading 3.42 percent higher at 1,582.50 euros, HENSOLDT lost 4.39 percent to 75.20 euros and TKMS stocks fell 3.78 percent to 94.20 euros.
The outlook is somewhat weaker than expected at the midpoint of the very broad target ranges for both sales and operating results, wrote Jefferies expert Chloe Lemarie. Meanwhile, George McWhirter from Berenberg Bank saw free cash flow weighed down by delayed orders. According to JPMorgan expert David Perry, the operating result in the fourth quarter also did not meet expectations, but the market had already been prepared for this in a preliminary briefing.
With the price losses, Renk shares remained in the recent fluctuation range of around 55 to around 62 euros on Thursday. They also had a rather negative impact in the sector environment on Thursday, as at least Rheinmetall shares performed better compared to the previous day’s level. The overall market continued to stabilize after suffering significantly from fears of oil and gas shortages at the beginning of the week due to the Iran war.
According to JPMorgan expert Perry, the geopolitical environment suggests that defense stocks will initially perform very strongly. He sees Renk as exceptionally well positioned due to its presence in the German and US defense markets and therefore mentioned his belief that weakness in the stock price creates a buying opportunity.
AUGSBURG (dpa-AFX)
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