The RENK Group is one of the world’s leading suppliers of highly efficient drive and control technology. They develop systems that use large forces and torques to drive vehicles, ships, and machinery. Customers come from the defense, energy and industrial sectors. (Photo by CHRISTOF STACHE/AFP via Getty Images)
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CEO of a German defense company Lenk He said the escalation of wars in the Middle East could boost the company’s business in the region.
“The current crisis in the Middle East, the Iran war, overall could lead to an overall increase in demand for defense capabilities in the region, which is really intuitive,” CEO Alexander Segel said on a conference call with analysts Thursday.
Segel announced the day before that the company had received the first order from a “Gulf country” for a prototype infantry fighting vehicle (IFV), which he said would be developed over the next two to three years. “That’s kind of a sign,” he added.
Gulf states are on the front lines of the war, facing Iranian ballistic missiles targeting U.S. military bases, energy facilities, civilian infrastructure and cities within their territory.
Lenk reported fourth-quarter and full-year profits before the bell Thursday. The results covered the period before the Middle East wars, but analysts had questions about Iran.
“I think this conflict could lead to even more increases in ground defense spending, not just aviation and ammunition, but also air defense systems,” Segel said.
Renk specializes in military drivetrain technology, including IFVs, and many major defense companies count Renk as one of their suppliers.
Renk stock has risen 46% in the past 12 months.
The German mid-sized defense company reported full-year sales growth of 19.8% year-on-year and adjusted profit before interest and tax of 21.7%.
Orders increased by 9% over the year, with the order backlog reaching a record high of 6.68 billion euros, compared to 4.96 billion euros in 2024.
But the outlook for this year was below consensus, and the Frankfurt-listed company’s shares fell more than 4% in midday trading. The company expects sales of at least 1.5 billion euros in 2026, about 3% below the lowest consensus.
Lenk stock has nearly tripled in price since its initial public offering in February 2024.
European defense stocks are rising as European governments push to increase defense spending in the wake of rising geopolitical tensions and the war in Ukraine. larger peer line metal A financial report is scheduled for next week.
Renk’s largest and most important division, Vehicle Mobility Solutions, led growth in 2025, with profitability increasing by approximately 28%.
The company’s marine division has also posted double-digit growth in both sales and bottom line profits, and CEO Sagel sees an opportunity for the Navy to benefit from President Donald Trump’s push to expand the U.S. defense budget, noting that the U.S. has fewer ships than historically.
“Especially when you look at geopolitics in Asia, or when you look at the number of ships in carrier strike groups in the Middle East right now, we need to build up and build up frigates and destroyers and things like that,” Segel said.
