Q2 2026 TKMS AG & Co KgaA Earnings Call Transcript
Key Points
- Tkms Ag & Co KGaA (XTER:TKMS) reported a solid second quarter with significant contract signings, including a preliminary contract with the German Navy and a memorandum of understanding with Navantia for potential cooperation in naval shipbuilding.
- The company delivered two legacy submarine projects and is ramping up production of the newest 212CD type submarines.
- Defense budgets are growing, with Germany's defense sector experiencing an average growth rate of 16%, which is expected to benefit Tkms Ag & Co KGaA (XTER:TKMS).
- The order backlog increased to EUR20.6 billion, representing a 13% increase since the end of the last year.
- Sales grew by 10% year-over-year, reaching nearly EUR1.2 billion, and adjusted EBIT grew by 14% year-over-year, resulting in an improved margin of 5.1%.
- Free cash flow was negative EUR72 million, attributed to timing effects in relation to milestone payments and project ramp-up, which is typical for project-based businesses.
- The surface vessels unit reported a decline in EBIT by EUR5 million and a margin decline of 4.8 percentage points to 6.3%, partly due to significant currency effects.
- The company faces challenges with legacy contracts, which impact current profitability and growth potential.
- There is uncertainty regarding the timing of certain large orders, such as the F127, which could affect future revenue streams.
- The company is experiencing higher administrative and selling expenses related to ongoing campaigns and spin-off activities, impacting overall profitability.
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Good morning, everyone. This is Jacques Esser from the Investor Relations Department of TKMS. Also, on behalf of the entire Investor Relations team, I wish you a very warm welcome to our quarterly earnings presentation for our first half of the financial year '25-'26.
With me in the room are Oliver Burkhard, our CEO; and Paul Glaser, our CFO. And we appreciate you joining us today to our H1 reporting event. Our CEO, Oliver, will start with an overview of the half year's key highlights and recent developments shaping our market. And then, as always, CFO, Paul Glaser will walk you through the detailed financial results and share our outlook for the year ahead.
Finally, and before I hand over, please allow me some housekeeping remarks. All the documents from today's earnings release and for this conference call are available on our Investor Relations website. And we will be also recording this call today. And the replay will be available shortly afterwards on our Investor
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