German warship-maker TKMS raises outlook, shares surge

German warship-maker TKMS on Wednesday raised its outlook for the second time this year as the company cashes in on global rearmament, sending its shares up a whopping 14 percent.

The maker of submarines and frigates now expects sales to grow between 10 and 12 percent this year on last year's figure of 2.2 billion euros ($2.54 billion), up from a previous forecast of growth of between two and five percent.

The company's core profit margin is now seen at up to 6.5 percent for the year, up from an earlier estimate of more than six percent.

Speaking on an earnings call, TKMS CEO Oliver Burkhard said surging defence spending meant growth was assured and the pressure was on to deliver.

"Everybody has budget but nobody has time," he said. "We have to concentrate on time because this is the critical factor."

Defence budgets are growing worldwide as geopolitical uncertainty has increased.

In TKMS' home market of Germany, defence spending is slated to rise 33 percent next year to almost 110 billion euros as Berlin rearms to face the threat from Moscow and compensate for wavering American commitment to European security.

TKMS in July took an order worth about 5 billion euros for at least four anti-submarine MEKO A-200 frigates from the German government, the largest surface vessel order in the company's history.

The move wrong-footed competitor Rheinmetall, which had been widely expected to take over a struggling project and develop a new generation of frigates before Berlin pulled the plug citing cost-overruns and delays.

Canada also tapped TKMS in July for up to 12 submarines in what Prime Minister Mark Carney said was the largest government order in Canadian history.

TKMS sales grew 19 percent in the first nine months of the year to 1.89 billion euros, the firm said, while core profit rose 13 percent to 110 million euros.

Core profit surged fourfold at the firm's submarine segment, TKMS said.

Speaking on the call, Burkhardt said the Middle East war could be expected to further boost the company's results in future.

"The Iran conflict had and will have a profound impact on our industry," he said.

"There is higher demand for our products, especially for mine countermeasures."

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