Steyr Motors AG, an Austrian maker of diesel engines used in tanks and military boats, says it can easily double output to meet European demand amid an arms race that’s lifted its stock by almost 300% this year.
The company already made 61% of its €41.7 million (US$45.3 million) of revenue last year from deliveries to the defense industry, and that share is set to increase in coming years, CEO Julian Cassutti said in an interview on Thursday.
The prospects of booming demand have propelled the shares to the best performance among major European equities this year, according data compiled by Bloomberg, with a 288% rally. That’s handed majority owner Mutares SE, a German special-situations fund, a return of more than €144 million.
The company said it will only register the effect of surging European defense spending next year. Steyr currently operates on a one-shift schedule for four days a week, meaning there is significant potential to ramp up.
“These billions have not reached us yet, but we are more than confident to benefit for the next ten years to come,” Cassutti said. “We have capacity to at least double our production capacities without having to expand our site or hiring a substantial number of people.”
Steyr’s surge has followed Europe’s plans to boost defense spending in reaction to President Donald Trump’s wavering on U.S. defense guarantees. The company also clinched a deal to supply German defense giant Rheinmetall AG, another company that’s seen explosive growth in its revenue and stock price as investors pile into the sector.
The Rheinmetall deal is related to engines for Panther battle tanks, of which Italy has ordered more than 132 units, Hauck Aufhaeuser said in a research report. Future deals for Steyr may include supplying South Korean K2 tanks ordered by Poland, according to analyst Simon Keller.
Steyr Motors’s products include specialized diesel engines and power units used in military vehicles, tanks and battle boats. It was created in 2001 as a spinoff from the Austrian Steyr-Daimler-Puch conglomerate. Steyr was listed in Frankfurt last year by Munich-based Mutares as part of its exit strategy for the investment it entered in 2022.
Steyr is scheduled to announce 2024 earnings on March 18. The company targets a topline growth of around 40% this year, according to the CEO.
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