Defence Contractor KNDS Taps Idle Auto Capacity as Record Backlog and EBIT Growth Strengthen IPO Story
27.05.2026 - 16:33:09 | boerse-global.de
Europe’s largest tank maker is quietly repurposing the automotive industry’s distress. KNDS, manufacturer of the Leopard 2 battle tank and Caesar howitzer, has entered talks with Volkswagen and Mercedes-Benz about taking over underused plants in Osnabrück and Ludwigsfelde for military vehicle production. Chief executive Jean-Paul Alary confirmed the negotiations on 26 May 2026, framing the move as a faster route to expand output — and a direct bet on the continent’s accelerating rearmament.
The urgency is driven by an order book that bulged to €33.1bn by the end of 2025, up from €23.5bn a year earlier. New orders alone hit €13.5bn, anchored by more than 300 Leopard 2 A8 tanks for the Czech Republic, the Netherlands and Croatia, alongside surging demand for Caesar self-propelled howitzers. To feed that pipeline, KNDS has already taken steps elsewhere: it signed a framework agreement with Alstom to secure the Görlitz site and commissioned an additional automated ammunition line in Belgium for 155mm shells. But the automotive factory talks represent a more radical shortcut — converting existing halls rather than building from scratch.
The financials underscore a business already firing on all cylinders. Revenue climbed 15.9% to €4.4bn in 2025, while earnings before interest and tax jumped to €661m from €500m a year earlier. The EBIT margin correspondingly widened to 15.0% from 13.2%, with KNDS citing operational improvements and the delivery of high-margin export contracts. The three reporting segments — Land Systems Germany, Land Systems France and Ammunition — all posted double-digit gains, with the ammunition unit expanding fastest at 24.7%.
Should investors sell immediately? Or is it worth buying KNDS?
Clearing the compliance overhang has been equally important for the company’s equity narrative. In late May, KNDS announced that an independent investigation into a 2013 deal with the Qatari armed forces — covering 24 PzH 2000 howitzers, 62 Leopard 2 tanks and support equipment — had progressed sufficiently to allow the completion of the 2025 audit. The probe, launched in April and overseen by external lawyers and auditors, had already found no evidence of criminal wrongdoing among current or former employees. While the review is not fully closed, the announcement removes a key uncertainty that had clouded the group’s governance profile.
That governance question is especially relevant as KNDS presses ahead with a dual initial public offering in Frankfurt and Paris, planned for later this year. The listing — one of the most-watched European defence IPOs — hinges on market conditions and the final shape of state ownership. Germany intends to buy a 40% stake at the IPO, matching France’s participation. Both governments then aim to reduce their holdings to roughly 30% apiece within two to three years. The Wegmann family, the long-standing majority shareholder, also plans to sell part of its stake at the market debut. Analysts have pegged the company’s valuation at around €20bn.
For investors, the convergence of an expanding capacity base, a record order pipeline and the resolution of a sensitive compliance matter shifts the focus squarely onto the group’s investability. The margin improvement and the operational agility suggested by the auto-plant negotiations strengthen the defence equity story, but the final audit certification and the precise ownership structure remain critical checkpoints before capital markets can fully price KNDS.
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KNDS Stock: New Analysis - 27 May
Fresh KNDS information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
