Shockwaves in the German defence sector! TKMS Surges! Will drone specialist Volatus Aerospace and Heidelberger Druckmaschinen be next?

Rheinmetall and TKMS in the Spotlight

Joy and sorrow were closely intertwined in the defence sector yesterday. While Rheinmetall's stock briefly plummeted by more than 16% on Wednesday, TKMS's stock rose by over 10%. The trigger was a Spiegel report confirmed by the Ministry of Defence. According to the report, the federal government is terminating the severely delayed and significantly more expensive F126 frigate program. For Rheinmetall, this is a bitter setback. Following its acquisition of NVL, the company had hoped to save the project as the new general contractor. Due to significant delays, cost risks, and the complicated changes in project partners, the program is now being terminated. This could force Rheinmetall to adjust its medium-term planning. The F126 program was originally budgeted at around EUR 10 billion for six frigates. Most recently, total costs of over EUR 18 billion were expected.

TKMS is likely to be the beneficiary of the German government's change of course. The German government apparently intends to order eight smaller frigates from TKMS instead of the six large F126 frigates. The focus here is on anti-submarine warfare, a high priority for NATO given the current security situation. For TKMS, the contract would be further proof of the strategic importance of the naval business and could add billions in volume to its already well-filled order books.

Volatus Aerospace Reaches Milestone

Volatus Aerospace is one of the promising Western drone pure-plays on the stock market. The Canadian company offers a broad portfolio of unmanned aerial systems, reconnaissance and data services and pilot training. It also has its own V-Cortex AI platform, which functions as autonomous control and mission software. Volatus serves not only the growing defence market but also customers in sectors such as public safety, critical infrastructure, and industry. The company has a sales pipeline exceeding USD 500 million.

To monetize this sales pipeline, Volatus Aerospace celebrated a milestone this week. It has commissioned a 53,000-square-foot production and system integration facility at Montréal-Mirabel Airport. The facility is designed to centralize the manufacturing, integration, and testing of autonomous systems for civil, industrial, public, and military applications. Production is already underway. According to the company, drone docking stations are already being delivered to its first commercial customers. Production of its own V-Series drones is also set to begin in the near future.

The V-Series drone family includes, in particular, the V200 Vantage and VIGIL-V300 models. Designed as fixed-wing aircraft, they are intended for long-range missions requiring high endurance, such as reconnaissance, surveillance, target acquisition, electronic warfare, communications, or potentially military operations. With a wingspan of 8 m, a flight duration of up to 35 hours, and a maximum takeoff weight of 160 kg, the V200 is designed for a wide variety of missions, including border security, monitoring maritime threats, and operations in remote regions.

For Volatus, the planned manufacturing facility in Mirabel is strategically important. Unlike small inspection or delivery drones, the V-Series targets more demanding government, security, and defence applications, as well as NATO and partner nations. The specific technical configuration may vary depending on the sensors, payload, and mission profile.

With this facility, Volatus is expanding its production capacity in Canada and positioning itself as a provider of domestic autonomous technologies for NATO member states and allied markets. The company cites Canada's Defence Industrial Strategy, which calls for a stronger domestic manufacturing base for strategic technologies. Volatus expects the new facility to enable faster commercialization, better scalability, and greater delivery capacity amid growing demand for unmanned systems.

With the new facility in place, the company is well-positioned for growth. This development could also provide fresh momentum for Volatus shares.

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Heidelberger Druckmaschinen: Drone Defence Instead of Printing

Heidelberger Druckmaschinen also wants a slice of the multi-billion-euro defence pie. According to mwb research, the company increasingly sees itself as an industrial and technology company rather than a traditional printing press manufacturer. At the mwb Industrial Technology Conference, IR Director Marc Schellenberger emphasized the shift toward packaging automation, digital lifecycle solutions, and new high-tech business areas. While the core printing and packaging business continues to suffer from economic headwinds and price pressure, analysts see progress in the strategic realignment. In particular, the more than 11,000 networked machines and the Prinect software platform could generate more stable, recurring, and higher-margin revenue in the future.

Activities outside the traditional printing business provide additional upside potential. The partnership with VINCORION has generated initial revenue in the defence sector. In addition, the ONBERG joint venture, in which Heidelberger Druckmaschinen holds a 49% stake, is set to develop solutions for drone defence and the protection of critical infrastructure. mwb research does not yet consider these areas to be financially secure but sees them as presenting significant strategic opportunities. Due to the expected margin recovery, cost discipline, and the potential from software, automation, and defence, the analysts reaffirm their "Buy" recommendation with a price target of EUR 2.50. The stock is currently trading at EUR 1.39.

In its estimates, mwb research anticipates 2026 revenue of EUR 2.3 billion, EBITDA of EUR 169 million, and earnings per share of EUR 0.15. Revenue is expected to rise to EUR 2.4 billion by 2028. EBITDA is expected to rise to EUR 204 million over the same period. Earnings per share are projected to climb to EUR 0.25.

At TKMS, they are popping the corks right now. At the same time, developments surrounding the frigate program highlight just how heavily the maritime defence business, in particular, relies on major contracts. With its new location, Volatus Aerospace is expected to enter a new phase of operational growth. If the company succeeds in monetizing its 500-million pipeline, the stock is likely to come back into sharper focus. Heidelberger Druckmaschinen, on the other hand, is still in the early stages of a lengthy transformation process. Whether investors want to bet on the success of the company's transition from a printing press manufacturer to a technology and defence supplier is ultimately a decision each must make for themselves. In any case, it is not a sure thing.