TKMS's €60 Billion Canadian Prize Arrives as a Record Order Book Offers Little Shelter

Despite a €20.6B order book and raised outlook, TKMS shares drop 26% as market eyes Canada's C$60B submarine contract decision, amid partnerships and rivalry.

Thyssenkrupp Marine Systems is living a contradiction. The naval shipbuilder has never held a bigger order book – €20.6 billion, enough to keep its yards occupied for nearly a decade. Yet its share price has been sliding, shedding more than 11% over the past seven trading sessions to land at €75.80, a full 26% below the year's peak of €102.90. The market's attention has fixed on a single binary event: Ottawa's decision on the largest defence procurement in Canadian history, due by the end of June.

Under the Canadian Patrol Submarine Project (CPSP), TKMS is bidding for a contract worth up to 60 billion Canadian dollars. The company has assembled an unusually broad proposal to stand out. In May it struck a cooperation deal with Isar Aerospace, a German launch-services startup, aiming to build a Canadian space-launch capability as part of the bid. The partnership, targeting operational readiness by the end of 2028 or early 2029, is designed to strengthen NATO's responsive launch posture. TKMS and Isar peg the potential domestic value-add at over 10 billion Canadian dollars, and Berlin has offered political backing.

A week later, on 18 May, TKMS signed a memorandum of understanding with Israeli defence group Elbit Systems, marrying its submarine expertise with Elbit's sensor and autonomous-technology strengths. That alliance, however, comes with baggage. The NATO Support and Procurement Agency (NSPA) excluded Elbit from new tender processes last year amid an investigation into alleged irregularities in NATO contracts – a charge Elbit denies. Whether Ottawa views the Elbit link as a risk remains unspoken. Meanwhile, a South Korean consortium of Hanwha Ocean and HD Hyundai Heavy Industries has also expanded its offer into the space domain, threatening to upset the German bid. A Korean win would mark the first export of strategic weapons from Seoul into the NATO market.

Amid the geopolitical noise, TKMS's chief financial officer, Paul Glaser, has tried to redirect the conversation to the long haul. In an interview with the Nebenwerte-Journal, he stressed that the existing order book gives nine years of planning security on revenue and profit – and could nearly double if further big contracts land. The half-year report for fiscal 2025/26, published on 31 March, showed a record backlog of €20.6 billion, with €3.4 billion in new orders flowing in during the first six months alone. Those included two additional Type 212CD submarines for Norway and a torpedo contract.

Operationally, the figures have been ticking up. First-quarter revenue came in at €545 million with an adjusted EBIT margin of 4.8%, prompting management to raise its full-year outlook for 2026: revenue growth of 2% to 5% and a margin above 6%. The half-year report confirmed that guidance, with first-half revenue climbing 10% to €1.168 billion and adjusted EBIT reaching €60 million, equivalent to a 5.1% margin. A sour note was the free cash flow, which swung to minus €72 million from a huge positive €756 million a year earlier, the latter inflated by customer prepayments for the 212CD programme.

Glaser outlined four levers to push margins past 7% in the medium term: a richer mix of newer, higher-margin contracts, better utilisation of yards, operational efficiencies, and a growing share of electronics content. The Kiel group is also investing more than €200 million in a hybrid production facility in Wismar for submarines and frigates, set to create 1,500 jobs by the end of 2029.

The market’s near-term mood, however, depends on how Ottawa reads the Canadian bid. The stock opened Friday at €76.80, a 0.26% dip, with the wider MDAX up 0.20%. Whether the record order book will earn TKMS a valuation premium hangs on the margin targets being met. The June decision will tell investors if the sell-off was a buying opportunity or the start of a deeper slide.