TKMS Shares Slide as Record Backlog and Hiring Spree Collide with KNDS IPO and Pending German Defence Billions

TKMS is ramping up its workforce by more than 1,000 positions to handle a historic €20.6 billion order book, yet its shares are heading in the opposite direction. The stock closed at €75.60 on Friday, down 6.55% over the week, as the looming €15–20 billion initial public offering of rival defence group KNDS drains liquidity from the sector. Institutional investors are rotating into the new listing, putting existing defence names under pressure.

The selloff obscures a strong operational picture. TKMS posted first-half revenue of €1.168 billion and an adjusted EBIT margin of 5.1%, still shy of the medium-term target of more than 7%. The company expects to push margins above 6% this year, backed by newer, higher-margin contracts and a growing share of its profitable electronics business. CFO Paul Glaser has pointed to the delayed impact of these improvements, which are only now starting to show in the numbers. Meanwhile, free cash flow swung to minus €72 million as upfront investments in research and development weighed on the balance sheet.

The company is also scrambling to staff up for its bulging order book. Personnel chief Angelika Kambeck confirmed the hiring push, which covers both engineers and career changers, with Kiel and Wismar earmarked for expansion. The immediate priority is the U?boat class 212CD programme, but the broader pipeline includes the Israeli submarine INS Drakon, which has completed sea trials in the North and Baltic Seas and is due for delivery in the coming months.

Should investors sell immediately? Or is it worth buying TKMS?

June will be a decisive month for the share price. On 24 June the German parliament’s budget committee is expected to vote on the F127 frigate programme, a €26.18 billion project. TKMS is bidding with its MEKO A?400 design – the only national contender capable of integrating the Aegis air?defence system – and a win would almost double the company’s order backlog and cement its position in surface combatants. That same week, on 22 June, management will present profit targets at the Deutsche Bank Defence Conference in London, followed by the Jefferies conference in Baden?Baden two days later.

Across the Atlantic, Canada is expected to announce the winner of its submarine procurement programme before the end of June. The contract for up to twelve conventional submarines is valued at as much as C$60 billion, pitting TKMS against a South Korean consortium. Success in Ottawa would immediately expand the order book and provide a multi?year production anchor.

Hungrier for growth, TKMS is also circling German Naval Yards Kiel. Rheinmetall submitted a non?binding offer in May and has begun due diligence; a binding proposal is expected shortly. CEO Oliver Burkhard described the yard as “an option, but not a necessity,” leaving the door open to a counterbid.

For the first time, TKMS has outlined a dividend policy of paying out 30–50% of net profit, with the first distribution planned for 2027. Until the next quarterly update on 12 August, the stock will swing on each development in Ottawa, Berlin and the conference rooms of London and Baden?Baden. Whether the KNDS IPO is a temporary clog in the pipeline or the start of a longer?term rotation will only become clear once those decisions land.

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