KNDS Faces Factory Capacity Crunch as Record €33bn Orderbook Tests IPO Narrative

Franco-German defence group KNDS sees revenue rise 16% to €4.4bn, order backlog hits €33.1bn, as it targets dual listing in 2026 while ramping up output via auto plant deals.

The numbers tell a compelling story — a €33.1bn order backlog, revenue of €4.4bn, new contracts worth €13.5bn in a single year — but for KNDS, the challenge is no longer about demand. It is about delivery. The Franco-German defence group, gearing up for a dual listing in Frankfurt and Paris, must now prove it can turn an unprecedented pile of orders into actual hardware.

CEO Jean-Paul Alary has been blunt: European production capacity needs a significant overhaul, particularly in Germany. KNDS is in active talks with automakers struggling with underutilised factories, a sectoral mismatch that could provide a shortcut to ramping up output of armoured vehicles, artillery and munitions. Sources familiar with the matter say discussions have centred on Mercedes-Benz’s plant in Ludwigsfelde, while parallel negotiations are examining the potential use of Volkswagen’s site in Osnabrück — though no formal agreement with VW has been reached.

The company has already taken concrete steps. A framework deal with Alstom secured the long-term viability of the Görlitz facility, with initial parts delivered in late 2025. In Belgium, a new automated production line for 155mm ammunition went live, designed to feed NATO’s insatiable demand. The workforce swelled to around 11,000 employees by the end of last year, up 7.3 percent, and further hiring is planned for 2026 alongside fresh investment in manufacturing, assembly and R&D.

These capacity moves come against a backdrop of solid financials. Revenue rose nearly 16 percent in 2025 to €4.4bn, with the Land Systems Germany division contributing €2.5bn, the French unit €1.3bn, and the ammunition business €612m. The order book swelled from €23.5bn at end-2024 to a historic peak of €33.1bn, giving investors exceptional visibility into future revenues. But the critical question for IPO-bound KNDS has shifted from order intake to execution: can it scale without hitting factory, supply chain or certification bottlenecks?

Meanwhile, the group is polishing its balance sheet ahead of the stock market debut. On May 19, 2026, KNDS placed 5.8 million shares of gearbox specialist RENK Group in an accelerated bookbuilding, raising roughly €262m and trimming its stake to about 10 percent. The proceeds will help strengthen the capital structure as the dual listing approaches.

KNDS has confirmed that preparations for the Frankfurt and Paris flotation are on track and fully backed by the supervisory board, with a target window of 2026. Yet the ownership structure remains a point of contention in Berlin. The defence ministry is pushing for a 40 percent government stake to maintain strategic parity with France, while other ministries argue that a blocking minority of 30 percent under Dutch law would suffice. Whatever the outcome, management insists the IPO timetable remains intact.

For prospective investors, the valuation debate will increasingly centre on tangible capacity agreements — especially confirmed deals to repurpose automotive plants — and clarity on how capital will be allocated across the group's three main product lines. KNDS has the orders. Now it has to show it can build.