TKMS Races to Win Over US Investors as Record Orders Clash with Negative Cash Flow

Despite a record €20.6B order backlog, TKMS shares drop below key moving averages as negative free cash flow and defense sector weakness raise investor concerns.

The management of Thyssenkrupp Marine Systems (TKMS) spent two days in early June criss-crossing New York and Boston, meeting institutional investors behind closed doors. The message was clear: the submarine builder’s order book has never been fuller, and the long-term prospects are solid. But the share price tells a different story.

Shares closed Wednesday at €72.30, down 3.47% on the day and 5.12% over the past week. That places the stock well below its 50-day moving average of €81.22. The defence sector has been losing steam, with the recent IPO of rival KNDS draining capital that might otherwise have flowed to TKMS. A technical indicator, the relative strength index (RSI), now sits at 37.4, pushing the stock toward oversold territory. If the selling pressure continues, the next support level to watch is the 52-week low of €56.75.

Yet the operational picture is strikingly robust. TKMS reported a first-half order backlog of €20.6 billion for its marine division, a record. The submarine segment alone generated €601 million in revenue. New orders worth €3.4 billion were booked in the period, including a contract for two Norwegian submarines plus torpedoes. The company is betting on even more—management expects further large awards to land this month.

To keep up with demand, TKMS is doubling its submarine production capacity. The Wismar yard is being expanded, with up to 1,500 new jobs to be created by the end of 2029. An aggressive hiring campaign is already underway.

But the numbers investors want to see are not all positive. Despite a 10% revenue increase to €1.168 billion and a 50% jump in adjusted operating profit to €60 million, free cash flow turned sharply negative at minus €72 million. The previous year had been supported by high customer prepayments, but that cushion has faded. The cash burn is a red flag for institutions accustomed to seeing multi-billion-dollar backlogs generate more liquidity.

TKMS’s leadership stuck by its full-year guidance: revenue growth of up to 5%, an operating margin above 6%, and a medium-term margin target of more than 7%. Yet on the roadshow, analysts say investors pressed for more details on profitability and cash conversion.

The communication offensive does not stop there. Later this month, the company will appear at the Deutsche Bank Defence Conference in London on June 22, and then at both the Jefferies Corporate Conference in Baden-Baden and the Mediobanca conference in Milan on June 24. Each event is another chance to persuade the market that a record order book can eventually translate into a rising share price.