AUGSBURG (dpa-AFX) - The tank transmission manufacturer Renk has grown strongly in the first quarter in view of the armaments boom. "The demand for Renk technologies to secure and strengthen the defense capability of Germany and its allies remains high," said company CEO Susanne Wiegand on Wednesday, according to a statement. However, Renk landed significantly fewer new orders at the start of the year. The defense supplier confirmed its forecast. Nevertheless, the share price fell in the morning.

In early trading, the share price rose by more than four percent at its peak, but quickly turned negative and fell by 1.9 percent to 27.24 euros. Renk had only moved up into the small cap index SDax at the beginning of the month to replace the battery company Varta. Main shareholder Triton had floated Renk on the stock exchange in February at an issue price of 15 euros. The subsequent record-breaking run has since come to a standstill, with the share price recently moving mostly sideways.

Renk increased its turnover at the start of the year by 22.5 percent to 237.7 million euros compared to the same quarter of the previous year, as the newcomer to the stock exchange announced in Augsburg on Wednesday. Earnings before interest and taxes adjusted for special effects (adjusted EBIT) climbed by almost half to 27.8 million euros. The corresponding margin improved from 9.9 to 11.7 percent. According to Renk, the optimization of production processes and an advantageous product mix made themselves felt.

At the start of the year, however, the defense supplier's incoming orders plummeted by more than half to 208.2 million euros. This was due to two major orders in the same period of the previous year. In addition, incoming orders were shifted to the following quarters. As a result, the ratio of incoming orders to sales (book-to-bill) was 0.9 at the start of the year, signaling weakening demand.

Nevertheless, Renk is barely keeping up with the processing of existing orders. The order backlog rose by 3.7 percent to 1.8 billion euros. Berenberg analyst George McWhirter described the order backlog as promising, with new orders likely to pick up again in the remainder of the year. A USD 100 million (around EUR 92 million) order from the US Army, for example, will be booked in the second quarter.

Renk made a net loss of 2.8 million euros from January to the end of March and thus slipped a good 41 percent deeper into the red than a year earlier - mainly due to a higher tax burden. The company manufactures transmissions for tanks, vehicles and ships, but also for industrial plants. The product range also includes couplings, plain bearings and testing systems.

For the current year, Renk continues to anticipate an increase in turnover to between 1 and 1.1 billion euros. Before interest, taxes and special effects, this should result in an operating profit of 16 to 18 percent. In the medium term, the Management Board aims to increase turnover by around 10 percent per year. The margin should then climb to 19 to 20 percent./niw/mne/zb