Renk Rallies the Troops: CEO Extension, Chairman Switch, and a 38% Dividend Hike as Shares Languish Near Lows

Renk's shares have halved since October despite record orders, a €7 billion backlog, and 60% analyst upside. Board changes, a five-year CEO extension, and a 38% dividend increase aim to restore confidence.

The gap between Renk’s operational performance and its stock price has rarely been wider. The gearbox specialist’s order backlog stands at nearly €7 billion, first-quarter revenue hit €284 million, and analysts see roughly 60% upside from current levels. Yet the shares have shed almost half their value since last October’s record high, sliding to a 52-week low of €43.91 just last Friday.

On Monday, the stock staged a modest recovery, closing at €44.58 – a gain of about 1.5% – but it remains deep in the red. The broader market’s growing fatigue with defence stocks, exacerbated by J.P. Morgan’s recent downgrade of sector leader Rheinmetall, has dragged Renk down even as its own business hums along.

Boardroom overhaul to reassure investors

Management is fighting back with both structural and financial measures. At the annual general meeting on 10 June, shareholders will vote on appointing Dr. Klaus Richter to the supervisory board. The industrial veteran, who previously served as CEO of the Diehl Group and chief procurement officer at Airbus, is set to replace Claus von Hermann as chairman. The move is designed to strengthen governance and bring deep sector experience to the oversight role.

In parallel, the supervisory board has extended CEO Alexander Sagel’s contract by five years, locking him in through 2032. Sagel will steer the company through what management calls a “strategic growth phase,” with plans to nearly triple revenue to €3.2 billion by 2030, up from €1.37 billion last year. The target operating margin for that period is over 20%.

Shareholders also have a financial sweetener: a proposed dividend of €0.58 per share – a 38% increase year-on-year. Analysts expect another lift to €0.72 for the current year. In addition, the meeting will vote on a new domination and profit transfer agreement with Renk GmbH, aimed at simplifying internal processes.

Record orders meet stubborn scepticism

The operational picture is unmistakably strong. First-quarter revenue climbed to roughly €284 million, compared with €273 million a year earlier. Earnings per share jumped from €0.01 to €0.15, and the full-year consensus stands at €1.73. Order intake surged to €582 million in the quarter, pushing the total backlog to almost €7 billion, driven by unrelenting demand from defence and naval customers.

Yet the market remains unconvinced. The stock’s decline has been steep and broad, reflecting sector-wide profit-taking and fears that the defence boom may be losing momentum. Still, several banks see the sell-off as overdone. Deutsche Bank reiterates a buy with a €73 price target, while DZ Bank has a €65 target and a buy recommendation. Goldman Sachs is neutral, also at €65. The average analyst target of roughly €72 implies a potential rally of about 60% from current levels.

Roadshows and new production systems

Management is taking the message on the road. Sagel is scheduled to present the company’s strategy at upcoming investor conferences in New York and Frankfurt, hoping to win over big institutional holders. At home, new production systems at the Augsburg plant are expected to lift margins over the longer term.

The next fundamental catalyst comes on 6 August, when Renk reports second-quarter results. Until then, the battle to close the gap between a soaring order book and a halved share price will be fought one investor meeting at a time.