ThyssenKrupp's Warship Arm Targets Over $70 Billion in Revenue as Europe Expands Navies

By Cristina Gallardo

Thyssenkrupp's warship business is targeting a market that could be valued at 61 billion euros ($71.54 billion) by 2033, as Europe seeks to modernize and expand its submarine fleet to deter Russia.

The German industrial group plans to list its defense marine business, called TKMS, on the Frankfurt Stock Exchange this year, as arms makers continue to have rapid growth in their valuation.

TKMS--which makes submarines, warships and electronics--said Tuesday that the spinoff company's market size could almost double from 31 billion euros last year, according to slides from its capital markets day presentation.

Chief Executive Oliver Burkhard said that TKMS's market will grow as Europe ramps up defense spending and seeks to protect itself from new forms of hybrid war such as damage to undersea cables.

Demand for maritime platforms is especially acute due to Europe almost halving its submarines and warships between 1992 and 2021, the so-called 'peace dividend' period, during which the continent's defense budgets shrunk.

Germany, with one of Europe's fastest rising military budgets, is looking at expanding its navy due to concerns that the Baltic Sea could become a key battleground in the event of a wider conflict with Russia.

TKMS expects its order backlog, which stood at a record of about 18.6 billion euros as of June, to continue to grow in the coming years, with potential orders coming from Canada, India and Germany, according to the slides.

A substantial share of future revenue is already backed by orders, and TKMS expects demand to remain consistent. TKMS's order backlog includes 27 submarines for countries including Germany, Norway, Turkey and Italy, it said.

Its adjusted earnings before interest and taxes margin could reach 7% in the medium term, up from 5.5% in the third quarter of fiscal 2025, TKMS added. This is due to new orders, a bigger share of the naval software and electronics market, and increased operational efficiency. The company also expects to reach a 10% compound annual growth rate over the same period.

TKMS plans a payout ratio of between 30% and 50% of net profit, with dividends to shareholders starting to flow in 2027.

By 2030, TKMS aims to launch new naval weapons including a missile system for submerged targets, a heavyweight torpedo, and the world's first dedicated anti-torpedo torpedo, the company said.

After the spinoff, TKMS will operate as TKMS AG & Co. KGaA. Thyssenkrupp will remain the majority shareholder with a 51% stake, while 10% will be owned by the nonprofit Alfried Krupp von Bohlen und Halbach Foundation and the remaining 39% will be transferred to shareholders.

Under a security deal with the German government, any sale of a stake bigger than 25% of TKMS will require Berlin's approval. The German government also holds a pre-emption right for stake sales of Thyssenkrupp over 5%, according to the slides.

TKMS also committed to maintaining its headquarters and manufacturing plants in Germany for at least 10 years.

Write to Cristina Gallardo at cristina.gallardo@wsj.com

Corrections & Amplifications

This article was corrected at 05:40 a.m. ET to clarify that Thyssenkrupp's warship business is targeting a market that could be valued at 61 billion euros ($71.54 billion) by 2033, almost doubling its size last year. An earlier article incorrectly said TKMS was targeting 61 billion euros in revenue in the headline and lead paragraph, and incorrectly said this would almost double its fiscal 2024 revenue in the third paragraph.

(END) Dow Jones Newswires

September 30, 2025 04:59 ET (08:59 GMT)