German propulsion maker posts record defense orders

A German company that makes the transmissions and propulsion systems inside tanks, armored vehicles, and warships has posted its best order intake in company history, and the surge traces directly back to militaries around the world rushing to rearm. RENK Group AG, a Germany-based manufacturer that builds gear units, transmissions, and propulsion systems for military vehicles and naval vessels, reported that new orders climbed to approximately $1.39 billion in the first half of 2026, a 29.7% jump from the $1.07 billion booked over the same period last year, driven almost entirely by sustained demand from defense customers rather than any recovery in the company’s smaller industrial business lines.

The second quarter alone set a new company record, with $711 million in new orders landing in a single three-month stretch, the highest quarterly total RENK has ever recorded. That pace pushed the company’s book-to-bill ratio, a metric that compares new orders against revenue actually delivered and billed during the same period, to 1.9 times for the first half of the year, up from 1.5 times over the same stretch in 2025. A ratio above 1.0 means a company is landing more new business than it is currently able to deliver, and RENK’s order backlog, the total value of contracted work still waiting to be built and shipped, grew to a record $8.58 billion by the end of June, up from $7.77 billion at the close of 2025.

Dr. Alexander Sagel, RENK Group’s CEO, tied that order surge directly to how heavily militaries worldwide are now investing in both new and existing armored and naval platforms.

“Our order intake of close to €1.2 billion for the six-month period almost matched the volume for the first nine months of the previous year. This consistently high demand shows that our customers continue to invest extensively in existing and new land and naval platforms worldwide. Their trust confirms the relevance of our technologies and our portfolio. At the same time, we are systematically realizing our growth strategy and making targeted investments in technology and additional capacities in order to continue to provide reliable long-term support to our customers,” Sagel said.

Revenue grew more modestly than orders did, rising 2.7% to $739 million for the half year, a gap that makes sense given how contract timelines work in defense manufacturing, since a signed order typically takes months or years to convert into delivered, billable equipment rather than showing up immediately on the revenue line. Profitability improved faster than revenue did, with adjusted earnings before interest and taxes, a standard measure of operating profit that strips out one-time or unusual costs, climbing 10.1% to $114 million, pushing RENK’s adjusted profit margin up by a full percentage point to 15.4%. The company attributed that margin improvement largely to economies of scale within its largest division and to efficiency gains from a new modular production concept it launched at its Augsburg facility in September 2025, a manufacturing approach designed to let the company build components in reusable, standardized modules rather than custom-engineering each order from scratch.

That largest division, called Vehicle Mobility Solutions, which builds transmissions and drivetrain components for military ground vehicles, did the heaviest lifting behind RENK’s overall growth, with new orders in that segment jumping 42.6% to $1.13 billion for the half year and pushing its own book-to-bill ratio to 2.3 times. Two contracts anchored that surge. RENK extended its existing framework agreement with German defense contractor Rheinmetall to keep supplying transmissions and final drives for the KF41 Lynx infantry fighting vehicle program, a deal worth roughly $313 million including options worth an additional $73 million, and the company landed a follow-on order from the U.S. Army for its HMPT 800 transmission, a component that has powered vehicles including the Bradley Fighting Vehicle for decades. That U.S. Army order came through a five-year framework agreement called THOR-IV, marking the fourth contract in that series and carrying a potential value of up to $691 million, of which roughly $140 million was formally booked as new orders during the second quarter based on the contract’s guaranteed minimum purchase quantity. RENK also landed its first production orders to supply propulsion systems for the Patria TRACKX, a newer all-terrain tracked armored vehicle.

RENK’s naval-focused Marine & Industry division told a more mixed story, with order intake for the half year falling 9.9% to $191 million even as the second quarter alone showed strong double-digit growth driven by orders from several international frigate programs, a divisional split the company attributed to previous quarters dragging down the six-month total more than any weakness in current demand. The division’s smaller industrial customer base, which has nothing to do with defense spending, continued weighing on results as broader manufacturing activity stayed weak across Europe, pulling divisional revenue down 6.1% to $191 million and cutting its profit margin to 9.9% from 10.7% a year earlier. RENK’s smallest division, Slide Bearings, which makes precision bearing components used in both military and industrial equipment, posted similarly soft results, with revenue down 4.4% to $69 million and profit margin falling more sharply, to 12.5% from 16.6%, a decline the company linked to weak industrial demand and to significantly higher U.S. tariffs compared with the prior year.

Management left its full-year financial targets unchanged despite the mixed divisional picture, continuing to project 2026 revenue above $1.74 billion and adjusted operating profit between $296 million and $331 million. Anja Mänz-Siebje, RENK’s CFO, pointed to the company’s financial position as support for pursuing further acquisitions on top of organic growth.

“Our positive financial performance and our new flexible financing provide a solid basis to continue pursuing our strategic ambitions for profitable growth and M&A,” Mänz-Siebje said.

That acquisition strategy is already in motion. RENK is in the process of acquiring David Brown Defence, a Huddersfield, England-based transmission and gearbox specialist with more than a century of history serving British naval and land defense programs, in a deal the companies expect to close during the fourth quarter of 2026 pending regulatory approval. The acquisition gives RENK direct access to the Global Combat Ship program, a multinational naval effort covering up to 34 frigates and destroyers being built for Canada, the United Kingdom, Australia, and Norway, along with a secured order backlog and sales pipeline worth roughly $890 million running through 2030. That deal also plugs RENK into what the industry calls the Five Eyes intelligence and defense alliance, comprising the United States, United Kingdom, Canada, Australia, and New Zealand, a group of countries whose defense industrial bases have grown increasingly interconnected as they coordinate more closely on shared military platforms and technology.

RENK’s results land inside a broader pattern playing out across European and allied defense manufacturers, where sustained government spending increases tied to the war in Ukraine and rising concern over Russian and Chinese military capability have pushed order books to levels few in the industry anticipated just a few years ago.