KNDS Races to Turn €33bn Backlog Into Hardware as Summer Dual Listing Hinges on Audit and Assembly Lines

KNDS revenue rose 16% to €4.4B, backlog hits €33.1B, with IPO targeted for summer 2026. Talks with VW and Mercedes to convert idle auto plants into tank factories.

The Franco-German defence contractor KNDS is threading a needle: its order book has swelled to more than seven times annual sales, yet production capacity and a lingering audit snag stand between the company and a long-awaited dual listing in Frankfurt and Paris. A summer IPO, valued at €18bn to €20bn, is on the table, but the clock is ticking.

Financial results for 2025 underscore the scale of the challenge. Revenue rose nearly 16% to €4.4bn, while operating profit hit €661m, pushing the EBIT margin from 13.2% to 15%. The more eye-catching figure is the €13.5bn in new orders that landed during the year, lifting the total backlog from €23.5bn to €33.1bn. That pipeline is dominated by heavy weapons systems — Leopard 2 tanks, Caesar howitzers and the like — and has turned the company’s focus from winning contracts to fulfilling them.

To close the gap, KNDS is exploring an unusual fix: turning idle automotive plants into armoured-vehicle factories. Chief executive Jean-Paul Alary confirmed talks on 26 May 2026 with Volkswagen and Mercedes-Benz over sites in Osnabrück and Ludwigsfelde. In Ludwigsfelde, south of Berlin, the plan starts as a sublease where military vehicles could be assembled alongside Sprinter vans; a full takeover could eventually house around 2,000 workers. At Osnabrück, the investment envelope is roughly €1bn, though KNDS is not the only suitor — Israel’s Rafael Advanced Defense Systems signed a letter of intent for the site in late April.

Further north, KNDS is already ramping up. A new facility in Levanger, Norway, will begin producing Leopard 2A8NO tanks in the third quarter of 2026, with capacity for up to 36 a year. The first vehicles were handed over to the Norwegian army in late April as part of a 54-tank programme; 17 will be built in Germany and the rest in Norway.

Artillery is another growth engine. The joint venture EuroPULS, equally owned by KNDS and Elbit Systems, reached a new operational readiness milestone on 1 June 2026. Based in Kassel, it marries Elbit’s PULS rocket launcher with KNDS fire-control technology and European customer access. Germany has already ordered five EuroPULS launchers under a government-to-government deal between the Netherlands and Israel, with delivery and qualification scheduled for next year. A far larger follow-on order is being evaluated: Berlin is considering the purchase of roughly 500 MARS-3 launchers, also designated EuroPULS, to modernise its long-range artillery. For KNDS, that alone would be a game-changing industrial prize.

The UK is also adding to the order pile. Britain has placed a contract for 72 RCH 155 self-propelled howitzers, worth around £1bn, with first deliveries due in 2028. In total, KNDS now supplies more than 40 armed forces worldwide.

All this industrial activity is meant to support — and justify — a dual listing that could reshape Europe’s defence-equity landscape. The IPO is slated for June or July 2026, with September as a fallback window. Yet the process is held up by a single unresolved item: PwC has withheld its sign-off on the 2025 financial statements pending the conclusion of an internal investigation. Without that approval, the listing timetable cannot be formally executed.

The underwriting group is already in place. Bank of America, Deutsche Bank, Goldman Sachs and Société Générale are acting as global coordinators. State-owned KfW is working with JPMorgan on a possible stake purchase, while Lazard is advising KNDS on its pre-IPO positioning.

The ownership structure will be unusual for a listed company. Germany plans to take a 40% stake via KfW, matching France’s existing holding. That would leave only about 20% of shares freely tradable at the debut, with both governments expected to reduce their stakes to roughly 30% over two to three years. The strategic rationale is clear: neither Berlin nor Paris wants to lose control of a defence champion whose production is critical for European security.

For now, the IPO’s success depends on two concrete milestones: clearance from PwC on the 2025 accounts and tangible progress in bringing new production lines — whether from auto plants, Norwegian assembly halls or the EuroPULS venture — into full operation. The orders are there; the factory floor must now catch up.