RENK Group: Refinancing Complete
The RENK Group has replaced its old leveraged buyout financing from its IPO days with a new unsecured credit package totaling EUR 1.05 billion. The funds consist of a long-term syndicated loan of EUR 450 million, a revolving facility of EUR 225 million, and a credit line of EUR 375 million. All have a five-year term and a two-time extension option. With the removal of collateral requirements, management now has greater entrepreneurial freedom for acquisitions and investments. The banks significantly oversubscribed the financing, which speaks to their confidence in the company. CFO Mänz-Siebje views the new financing as the foundation for achieving the company’s goals by 2030.
With the binding acquisition of David Brown Defence, Renk secures access to the key naval programs of the Five Eyes nations. The British transmission specialist brings an order backlog of over 700 million pounds through 2030, as well as expertise in low-noise submarine propulsion systems. The transaction is expected to close in the fourth quarter, expanding the portfolio to include surface and submarine solutions while simultaneously generating long-term aftermarket revenue. In addition, British land programs such as Challenger 2 and Boxer complement the existing business. This integration significantly strengthens RENK’s position in the international defence market.
A record order intake is expected for the second quarter, primarily driven by major contracts such as the THOR4 framework agreement with the US Army worth USD 691 million and the expansion of the Rheinmetall partnership in the Lynx program. Management expects to meet the full-year forecast of over EUR 1.5 billion in revenue and an EBIT margin in the upper target range. Analysts warn of potential budget risks in the German defence budget starting in 2027, which could potentially affect land systems. The half-year report on August 6 will reveal the current operational momentum.
Volatus Aerospace: Expanding Its Business
Volatus Aerospace has evolved from a pure drone manufacturer into a service provider in the field of autonomous aviation systems. With 28 manned aircraft and over 100 drones, the company operates in Canada, the US, the UK, and South America. During annual pipeline inspections, approximately 1.7 million km are covered, providing data for further development. In June, the company opened its 53,000-square-foot Mirabel manufacturing facility. Docking stations are already being produced in series there. The V-Series aircraft are set to follow later. Management is confident in the company and holds approximately 21% of the shares.
On August 4, the company announced a partnership with Singular Aircraft, thereby opening up a new business segment for Volatus. The FlyOx 1 is an autonomous heavy-lift aircraft with amphibious capabilities. It has a takeoff weight of approximately 4,000 kg and can carry 1,560 litres of fire suppressant. It operates fully automatically on unpaved runways and bodies of water. A total of five aviation authorities on four different continents have already documented its flight operations. As Canada continues to battle record-breaking wildfires that are causing extensive damage, the country’s fleet of roughly 100 water bombers is steadily aging. Replacing these aircraft is both expensive, at approximately CAD 80 million per aircraft, and time-consuming, with delivery times of up to four years. Against this backdrop, the company’s approach offers significant long-term potential.
The FlyOx 1 fills this gap with an autonomous alternative that can respond quickly. In an illustrative scenario involving three aircraft within a government-owned structure operated by Volatus, the revenue opportunity amounts to at least CAD 15 to 20 million, with recurring revenue from operations and maintenance. The certification for BVLOS flights and the research partnership with Concordia underscore the company’s technological depth. Defence revenue has so far come from European NATO countries, but Canada’s new defence strategy, which aims to pump billions into the domestic defence industry over the next few years, opens up additional potential. The stage is set for a scalable platform with growing revenues.
TKMS: Record Orders and Operational Challenges
TKMS has secured two projects worth billions within a very short time, causing its order backlog to soar to a record high. The Canadian government selected the German-Norwegian consortium led by TKMS for its CPSP submarine program. Up to 12 212CD-class submarines are scheduled for delivery starting in 2033. At the same time, TKMS was awarded a contract by the German federal government to build eight MEKO A-200 DEU-class frigates after the F126 project was halted. The company plans to deliver the first frigate as early as 2029. Furthermore, a deal with India that is nearing completion is in the pipeline. This deal is worth approximately EUR 8 billion.
The figures for the first half of 2025/2026 show solid growth. Revenue rose by 10% to EUR 1.168 billion, and adjusted EBIT increased by 14% to EUR 60 million. The margin improved slightly from 5.0% to 5.1%. Only free cash flow slipped to EUR -72 million due to investments in project execution. The submarine division, in particular, improved its margin thanks to the expiration of old contracts. The subsidiary Atlas Elektronik increased revenue by 25% with a margin of 10.9%. Only the Surface Vessels division weighed on earnings due to currency effects.
A partnership is being formed with Navantia in the submarine segment, which is intended to pool industrial capacities and strengthen competitiveness in the long term. The withdrawal from the bid to acquire the German Naval Yards Kiel shipyard proved more difficult. No agreement could be reached with the owner on the terms, leaving Rheinmetall as the sole bidder. In early August, activists blocked access to the Kiel shipyard grounds in protest against the production of weapons of war, specifically against submarine deliveries to Israel. The stock reacted cautiously to the flood of orders. The true value creation will only become apparent in the coming years.
The West is forced to fundamentally reshape its defence capabilities—on land, in the air, and at sea. With the acquisition of David Brown Defence, the RENK Group secures access to naval programs and strengthens its land-based business, while Volatus Aerospace offers a cost-effective, scalable solution for aerial reconnaissance and firefighting with the autonomous FlyOx 1. TKMS, in turn, is benefiting from submarine and frigate orders worth billions and is solidifying its leading position in the maritime sector. The trend in the defence industry remains intact.
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