Steyr Motors Flying High: Defense Business and Expansion Drive Growth

But while the business figures are impressive, the extreme jumps in the Steyr share price raise questions. Critics are already talking about speculative exaggerations that no longer have anything to do with the company's fundamentals. If this forecast proves to be true, Steyr Motors would finally be in the top league of the global military engine industry.

Leap in sales and substantial increase in profits

As the company announced on Tuesday, revenue rose by 9.2% to 41.7 million euros in 2024. Operating profit (EBIT) grew even more strongly, jumping from EUR 3.6 million in the previous year to EUR 10.1 million, which corresponds to an impressive EBIT margin of 24.3%. The main driver of this development is the defense sector, which remains the most important pillar of Steyr Motors with 61% of total sales (25.6 million euros). Demand for robust engines for military vehicles and maritime applications grew in Asia and North Africa in particular.

“We are currently experiencing very dynamic growth in demand for our products in the defense sector, but also in the civilian sector. Our expansion activities, particularly in Asia, are bearing fruit,” commented CEO Julian Cassutti on the business development.

Steyr Motors conquers new markets

The company has been focusing on targeted international expansion for some time now. In 2024, new sales channels were established in Taiwan, Vietnam, and Indonesia. The Asian market in particular offers great potential for the robust high-performance engines from Steyr Motors, as many armed forces there are modernizing their outdated systems.

The MENA region (Middle East and North Africa) has also been defined as a strategic growth region. The expansion of sales structures there should further increase sales, as Arab countries in particular are investing heavily in their defense capacities. Another important milestone is the increased supply of the US Navy SEALs. Steyr Motors has further intensified its supply relationships with the US armed forces and is increasingly supplying engines for special boats and other military applications.

Looking ahead to 2025: Steyr Motors expects a massive jump in sales and shares

The management of Steyr Motors is extremely optimistic about the future. For 2025, the company expects an increase in turnover of at least 40% with a production of over 1,250 engine units (previous year: 729). A dividend of EUR 0.55 per share was also announced. While the company is growing economically, the share price is causing head-scratching. The Steyr Motors share had already risen by 76.5% on Friday, but an even more dramatic jump followed on Monday: +140% in just one trading day.

Since the IPO in October 2024 at a price of 14 euros per share, the share price has now multiplied to over 350 euros - an increase of over 2,000%. This development has now also called the Interest Group for Investors (IVA) into action. In an initial statement, the association warned against a speculative “mini-casino” and emphasized that the share price was no longer covered by even the best economic figures. “The development is reminiscent of hype that has little to do with real company growth,” said the IVA, as reported by ‘DiePresse’. Small investors in particular should be aware that such price capers can also come to an abrupt end.

Industry on the upswing - geopolitical tensions fuel demand

Steyr Motors is benefiting from a general boom in the defense industry. Defense budgets are increasing massively in many countries, not least due to the ongoing geopolitical tensions between China and Taiwan, the war in Ukraine, and the unstable situation in the Middle East. The demand for modern, efficient and robust drives for military vehicles is growing in particular. Manufacturers such as Renk, Rolls-Royce, and Steyr Motors are therefore more in demand than ever.

How sustainable is the growth?

Despite the positive business figures, the question remains as to whether Steyr Motors can maintain these growth rates in the long term. The recent expansion is promising, but the strong dependence on the defense sector also harbors risks - for example in the event of geopolitical changes or budget cuts in the target countries.

Analysts therefore see a certain degree of uncertainty in the long-term development. While some experts see the company as a clear beneficiary of the global armament trend, others urge caution: a market correction could cause the share to fall faster than it has risen.

Austria's neutrality as a challenge?

Despite its economic success, Steyr Motors faces a considerable regulatory challenge: as an Austrian company, it is subject to the War Material Act (KMG), which strictly regulates the export of armaments. While international competitors such as Rolls-Royce or General Dynamics can act more flexibly, Steyr Motors requires official approval from the Government for many of its foreign transactions, which is granted in cooperation with the Ministry of Foreign Affairs and the Ministry of Defense. Geopolitical considerations, Austrian foreign policy, and human rights aspects play a central role here.

This legislation could significantly restrict Steyr Motors' growth in some of its new target markets. Particularly in the MENA region (Middle East and North Africa), which the company has defined as a strategic growth region, political tensions or embargoes could lead to export licenses being denied or licenses already granted being revoked. In Asia, too, where Steyr Motors has recently opened up new sales markets in Taiwan, Vietnam, and Indonesia, Austrian export law could represent an obstacle to long-term supply contracts.

Another problem is the potential competitive disadvantage compared to international defense companies. While German or British manufacturers, for example, often have alternative production locations or more flexible export licenses, Steyr Motors is bound by strict Austrian legislation. This could mean that the company is unable to realize lucrative large orders or that customers switch to manufacturers from countries with less restrictive export regulations.

To counter these challenges, Steyr Motors could strengthen its presence in the civilian market, for example by increasing the production of high-performance engines for commercial shipping or railroad technology. Partnerships with foreign manufacturers that are subject to less stringent export regulations could also be a solution - for example through joint ventures that give Steyr Motors indirect access to regulation-intensive markets.

In the long term, the company may also have to consider relocating part of its production to escape Austrian export restrictions. Similar strategies have already been pursued by other European arms companies that have opened sites in NATO countries or countries with more liberal arms export laws. At the same time, Steyr Motors could try to achieve a more flexible licensing practice or a relaxation of Austrian export law through targeted lobbying.

While the company's economic prospects are positive, the strict export legislation remains a potential brake on growth. If Austria maintains or even tightens its restrictive stance on arms exports, this could significantly jeopardize the global success of Steyr Motors. The coming years will show whether the company can successfully master this balancing act between economic success and regulatory hurdles.

Growth with a question mark

Steyr Motors is undoubtedly facing an economically successful year in 2025. Increased demand, expansion into Asia, and strengthened supply relationships with the US armed forces are clear success factors.

At the same time, the extreme development of the share price remains a mystery, which could have more to do with speculative movements than actual company growth. It remains to be seen whether the euphoria in the financial markets will be confirmed or whether a rude awakening will follow. One thing is certain: Steyr Motors will be one of the most exciting companies in the defense industry in 2025.

Steyr Motors