TKMS Shares Slide at London Conference as Cash Flow Worries Overshadow Record Backlog

ThyssenKrupp Marine Systems shares fall up to 4.81% at Deutsche Bank conference as record order backlog fails to offset weak cash generation, raising doubts on profitability targets.

ThyssenKrupp Marine Systems (TKMS) saw its stock take a beating at the start of a high-profile investor conference in London, with the shares falling as much as 4.81% to €71.30 before paring some losses. The session began with a 3.34% drop to €72.40 as management took the stage at Deutsche Bank’s industry gathering, but the selling pressure intensified as the day wore on. The decline leaves the stock more than 30% below its January high of €102.90, though it still clings to a year-to-date gain of 4.55%.

The selloff reflects a growing disconnect between TKMS’s record order book and its weak cash generation. The submarine and naval shipbuilder reported an order backlog of over €20 billion at the half-year mark, fueled by new contracts worth €3.4 billion in the first six months alone — including Norway’s submarine program. Revenue rose to nearly €1.17 billion, while adjusted operating profit improved to €60 million, lifting the margin to 5.1%. Yet the free cash flow flipped deep into the red, landing at negative €72 million, compared with a hefty surplus a year earlier. Management attributes the shortfall to planned project outflows and the absence of the unusually large customer prepayments that boosted last year’s figures.

The earnings picture across TKMS’s divisions is mixed. Atlas Electronics saw operating profit nearly double to €41 million (from €24 million), and the Submarines segment swung from €2 million to €21 million. The Surface Vessels unit, however, saw its contribution shrink to €18 million from €23 million. While the overall margin trend is encouraging, investors are demanding more tangible proof that the booming order intake will translate into sustained cash returns.

Technically, the stock has broken decisively below its 50-day moving average, sliding almost 9% under that key level. The short-term trend is firmly negative, and market observers warn that the November low could come back into play if management fails to restore confidence in the company’s profitability trajectory.

The immediate test comes on August 12, when TKMS publishes its third-quarter report. The board is sticking to its full-year target of an operating margin above 6%, a threshold that now looks ambitious given the first-half performance. Before then, the executive team faces sceptical audiences at upcoming roadshows in Milan and Singapore, where the focus will be squarely on cash flow and margin execution. If the narrative around profitability doesn’t gain traction, the current retreat may prove only the beginning.