Tank gearbox maker Renk slips as largest business disappoints
Corrects AUG 13 story to show Leopard tank is produced by KNDS (not by Rheinmetall), paragraph 8
Q2 core profit at Vehicle Mobility Solutions misses forecast
Company sees FY revenues, core profit at top end of range
Shares fall as much as 6.8%
By Louis van Boxel-Woolf and Chiara Holzhaeuser
Aug 13 (Reuters) -Shares in German tank gearbox maker Renk R3NK.DE fell as much as 6.8% on Tuesday after its largest business missed profit expectations, overshadowing a strong performance elsewhere.
European defence companies including Renk are seeing a boom in demand as Western nations buy supplies to help Ukraine fight Russia's invasion and strengthen their own capabilities.
Renk, which has been revamping operations at its Augsburg plant to meet increased demand, reported a record order intake of 419 million euros ($458 million) in the second quarter, beating analysts' average forecast of 376 million euros in a Vara poll.
However, core profit at its Vehicle Mobility Solutions (VMS) business, whose products are used by over 70 militaries worldwide, came in at 26 million euros in the quarter, missing analysts' average forecast of 28.3 million.
"The rest is fine, but the focus was really on this division", said ODDO BHF analyst Yan Derocles.
"I think most investors were maybe expecting something better because management has been discussing the past few months' progress they have seen in Augsburg."
CEO Susanne Wiegand told Reuters in May that Renk was hiring 20 to 30 people per month at the plant.
Renk, which makes the transmission used in the Leopard 2 tank that is produced by KNDS, also said it expected revenue and core profit - or adjusted earnings before interest and taxes - for the year to be at the upper end of its forecast ranges.
It has forecast 1.0-1.1 billion euros of revenues and core profit of 160-190 million euros.
The company also increased its mid-term annual revenue growth target to about 15% from about 10%.
Renk's shares, which were floated at 15 euros apiece in February, were last down 2.6% at 24.975 euros.
($1 = 0.9149 euros)
Reporting by Louis van Boxel-Woolf and Chiara Holzhaeuser; Editing by Savio D'Souza and Mark Potter
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