TKMS raises outlook as shares rise 14%

German naval shipbuilder TKMS raised its outlook for the second time this year on Wednesday, forecasting stronger sales growth and a higher core profit margin as its shares rose 14 percent.

The maker of submarines and frigates said it now expects sales to grow by 10 to 12 percent for the year compared with last year's 2.2 billion euros, up from a previous forecast of two to five percent growth. It also lifted its core profit margin forecast to as much as 6.5 percent, from an earlier estimate of more than six percent.

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

Chief executive Oliver Burkhard said on an earnings call that rising defence spending was increasing pressure on the company to deliver. "Everybody has budget but nobody has time," he said.

TKMS took a German government order in July worth about 5 billion euros for at least four MEKO A-200 anti-submarine frigates, which it described as the largest surface vessel order in its history. Canada also selected TKMS in July for up to 12 submarines.

Burkhard said the Middle East war could further support future results, with higher demand for products including mine countermeasures.