(Update: Potential major order, updated share price, further details.)
KIEL (dpa-AFX) - Kiel-based submarine manufacturer TKMS believes it is in a strong position to secure a massive order from Canada for a dozen vessels. 'I expect us to win this,' said TKMS CEO Oliver Burkhard. The defense contractor is competing against South Korean provider Hanwha Ocean for the contract to build up to twelve submarines. According to information obtained by Deutsche Presse-Agentur, the order volume could exceed ten billion euros, depending on the final number of vessels. TKMS has declined to comment on the figure. TKMS shares remained significantly lower in afternoon trading, caught in a broader sector-wide downturn.
The MDax-listed stock fell 6.5 percent to 73.60 euros. While the shares initially performed well following the release of half-year results after the market open, prevailing weak sentiment across the defense sector took hold among investors, pushing the price into negative territory. Despite losses in recent months, TKMS shares remain up nearly 13 percent for the year to date.
Adrien Rabier of Bernstein Research noted that while the naval shipyard's revenue topped expectations in the second fiscal quarter, overall margins did not. However, he viewed the continued improvement in profitability within the submarine division and the overall robust order backlog as positive indicators.
'I believe we have put together an industrial package that is second to none,' Burkhard said regarding the bid. 'We have never had anything of this scale before.' The shipyard expects a decision shortly. 'We anticipate it could come as early as the first half of the year.' Both TKMS and its rival Hanwha Ocean have announced partnerships with Canadian companies to bolster their chances of winning the contract.
Vessels to be built in Kiel and Wismar
TKMS is one of the world's leading companies in the construction of non-nuclear submarines. Burkhard noted that visits by German government officials have helped support the bid. Most recently, Federal Finance Minister Lars Klingbeil (SPD) lobbied Canadian Prime Minister Mark Carney on behalf of the German company.
A double-digit number of TKMS employees are currently in Canada, Burkhard said, traveling across the country to promote the bid. The campaign is now in 'crunch time' - the final phase. According to previous statements by the CEO, Canada aims to commission the first new vessels by 2035 at the latest. Should TKMS be awarded the contract, the submarines would be built at both the headquarters in Kiel and the second shipyard in Wismar, Mecklenburg-Western Pomerania.
New record high for orders
Even without the overseas contract, the order books in Kiel are already well-filled with orders for submarines and related equipment. The shipyard is benefiting from sustained high demand for defense goods. In the first half of the fiscal year - from October 2025 to March 2026 - the order backlog reached 20.6 billion euros, marking a new record high.
The shipyard is currently building six Type 212CD submarines each for Germany and Norway, a model in which the Canadians are also interested. The letters 'CD' stand for 'Common Design.' Identical construction is intended to reduce costs and facilitate seamless cooperation between the navies of different nations. The new submarines will be approximately 72 meters long, making them slightly longer than the current German Class 212A vessels. The new class features improved sensor technology and is designed to operate with a crew of 30. According to TKMS, it is specifically engineered for Arctic operations and under-ice deployment.
At the end of last year, TKMS received a torpedo contract from the Bundeswehr. In January, it was announced that the Norwegian government had ordered two additional submarines, bringing their total order to six.
TKMS explores international partnerships
Total order intake amounted to 3.4 billion euros. While this figure was higher in the prior-year period, Burkhard emphasized that TKMS can cover the current backlog with its own shipyards. 'Looking ahead, however, we are already evaluating potential international partnerships.'
Revenue rose by ten percent to 1.17 billion euros, as TKMS was able to process orders according to schedule. Adjusted earnings before interest and taxes (EBIT) increased by 14 percent to 60 million euros.
On the bottom line, TKMS earned 27 million euros, representing a 41 percent decline. The drop in profit is the result of investments in company expansion, including research and development as well as sales and distribution.
For 2025/26, TKMS continues to expect revenue growth of two to five percent and an adjusted operating profit margin of more than six percent. In the first half of the year, the margin stood at 5.1 percent. According to CEO Burkhard, profitability is expected to pick up in the second half of the fiscal year. Medium-term targets were also confirmed.
Expansion in Kiel?
Despite a competing bid from the defense group Rheinmetall, the naval shipbuilder is also sticking to its plans to acquire its Kiel neighbor, German Naval Yards. 'Money alone doesn't build ships,' Burkhard said, referring to Rheinmetall. He acknowledged that Rheinmetall is clearly more financially potent than TKMS, adding that while he has 'a price in mind' for a possible acquisition, he does not intend to enter a bidding war that would not make economic sense for TKMS.
Both TKMS and Rheinmetall are bidding for the German Naval Yards shipyard, which belongs to the French group CMN Naval. CMN Naval has not yet issued a statement regarding the reports, despite inquiries. Rheinmetall announced on Thursday that a non-binding offer for the shipyard had been submitted.
While TKMS has been bidding for the shipyard for some time, Rheinmetall only recently entered the shipbuilding sector. The Dusseldorf-based group acquired the naval division of the Bremen-based Lürssen shipyard group at the end of February.
German Naval Yards, part of the French CMN Naval group, builds large naval vessels such as frigates and corvettes, as well as ocean-going yachts. The two naval shipyards share a site and were part of the same entity for a long time. They originated from the historic HDW (Howaldtswerke-Deutsche Werft AG) shipyard, whose roots date back to 1838. The former HDW surface shipbuilding division was spun off and now operates as German Naval Yards./lkm/akl/nas/men
