RENK Group (R3NK) Update / Briefing Transcript

Renk Group (R3NK) Update Summary Company Overview - Company: Renk Group - Date of Call: July 17, 2025 - Purpose: Pre-close call for H1 2025 results Key Points Industry and Market Dynamics - The defense sector remains a significant driver for Renk Group, particularly in land and sea platforms [4][6] - The company is experiencing solid order intake momentum, although it is slightly below the previous year's strong second quarter [4] - Renk has made strategic market entry into the Japanese navy market, indicating a focus on long-term sustainable business [6] Financial Performance - Revenue for Q2 2025 is expected to be stronger than Q2 2024, exceeding the 15% CAGR midterm target [7] - Adjusted EBIT is also showing positive development, outperforming both Q2 and H1 2024 [7] - A record production month was achieved in June 2025, with 91 HMPT transmissions produced [7] Segment Performance - VMS Segment: - Continues to be the largest and most dynamic segment, contributing significantly to order intake, revenue, and adjusted EBIT [8] - Order intake remains elevated, with a book-to-bill ratio above one [9] - Revenue growth in this segment is above the group average, with improved operational leverage and efficiency gains [10] - NII Segment: - Overall positive performance, with stable demand despite a global soft GDP-related economy [11] - Revenue growth in Q2 was in the double digits compared to Q2 2024, with adjusted EBIT on par with the previous year [12] - Slide Bearings Segment: - Stable order intake and performance, with revenue and adjusted EBIT at similar levels to Q2 2024 [13] Strategic Insights - The German government is significantly increasing its defense budget, which is expected to drive demand for Renk's products [26] - Anticipated frame contracts for new platforms are expected to be awarded in Q4 2025, with significant volumes projected [30] - Renk's civil business is expected to decrease in share, focusing on profitability rather than growth [34] Regional Market Potential - Germany: Major focus due to increased defense spending and potential contracts [41] - India: New facility opening in Bangalore, with a focus on defense programs [45] - Poland and Finland: Attractive markets for future growth, with ongoing programs [46] - United States: Strong position in legacy business and growth potential in the naval market due to geopolitical tensions [48] Investment and Cash Flow - Renk plans to invest approximately €500 million in capacity and R&D over the next four to five years, aligning with their CapEx targets [53] - The company aims for a cash conversion rate of 80% or above, despite higher net working capital in Q1 [56] Conclusion - Renk Group is on track to meet its financial targets for 2025, with strong performance across its segments and a positive outlook driven by increased defense spending and strategic market entries [13][14]