Steyr Motors' profit warning was not entirely unexpected following a weak Q1 and the absence of meaningful new order intake over the summer. Still, Q2 was weaker than anticipated, mainly due to delayed call-offs from key customers such as KNDS. As postponed volumes are unlikely to be fully recovered in H2, the company lowered its FY26 guidance. Importantly, however, there is no indication that orders have been lost, suggesting that the shortfall is primarily timing-related. We therefore still expect sales to accelerate in H2 and reiterate our BUY recommendation.
Q2 sales arrived at € 11.1m, down 4.5% yoy, despite a € 1.9m contribution of BUKH. On an H1 basis, this implies broadly flat sales yoy. In H1, civil sales increased by 39% yoy, whereas the delay in defence contracts explain a 30% yoy decline on the other side. Q2 adj. EBIT came in at € -0.8m (vs. c. € 1.3m in Q2 25), reflecting a margin of -7%, due to a lack of operating leverage and a mix, that was negatively influenced by lower-margin civilian sales. H1 adj. EBIT was broadly break-even (€ 0.1m).
The implied H2 outlook suggests that the awaited ramp-up is already nearing, indicating a c. 41% yoy growth in H2 at guidance mid-point (eNuW: c. 21% organic growth yoy in H2). Similarly, at guidance mid-point, the H2 implied adj. EBIT margin would be at c. 16%.
Looking into 2027, several programmes are seen to step-up. Urovesa won a five year Spanish MoD contract for 1,000 vehicles, production start is seen in January 2027, offered on Steyr engines. Meanwhile the Austrian MoD is tendering 800 vehicles over four years with two Steyr customers in the final round. Beyond the 500 APU frame contract, KNDS carries a further c. € 70m near-term opportunity. Red Cat's Blue Ops division alone targets production of over 1,000 USVs in 2027 (source: WorkBoat), with Steyr Motors named one of two core engine suppliers on the V7, currently the only available model. Also other USV providers are in discussions with Steyr Motors for sizable orders. The M12 power unit offers further growth potential beyond the 2026 revenue base, with prototype requests from several MoDs and tier-one OEMs. Steyr is also participating in an MoD tender for 1,500 containers, each requiring one M12PU. On the civilian side, the growth potential comes from the pending Siemens locomotive order for the Finnish Railway and the ramp-up within the Shangyan-JV (signed with € 65m guaranteed sales over a 5-year period).
Takeover optionality remains another source of share-price support. While Red Cat withdrew its preliminary, non-binding proposal and no active bid is currently outstanding, the approach itself validates Steyr Motors' strategic value. Its compact, high-power-density engines represent a scarce, qualified capability for mission-critical defence applications that would be difficult and time-consuming to replicate. For Red Cat, acquiring Steyr Motors could secure propulsion technology for its expanding unmanned surface vehicle portfolio, deepen vertical integration and create a meaningful competitive differentiator. The strategic rationale therefore remains intact, while the recent share-price correction has lowered the financial hurdle for a transaction, in our view. Hence, although any renewed approach remains speculative, the possibility of Red Cat returning should continue to support the shares.
BUY, new PT € 49 (old: € 53), based on DCF.
ISIN: AT0000A3FW25
