EU Industrials Sector Specialist Commentary: Cap Goods • Chemicals • A&D • Autos • Building Materials

Research evidence excerpt

EU Industrials Sector Specialist Commentary: Cap Goods • Chemicals • A&D • Autos • Building Materials

of a squeeze over

reporting season is elevated. The good news continues for Truck companies with our Global Truck Market update (see

below for details) highlighting ongoing European and North American market recovery. The US book to bill of 1.9x is

running ahead of our expectations of a +3% market this year. A MSD increase would be a good outcome for investors -

because more than that would point to a more significant EPA27 pre-buy which would then raise questions over an air pocket

next year. Brazil remains a weak market, however, as a small offset to the good news elsewhere.

• RHEINMETALL - is likely to continue to be a focus. David published yesterday (see HERE) - and I followed up with some

thoughts (here). Feedback from investors was generally a bit confused given how confident RHM had been at Eurosatory

regarding the F126 contract and their view it would be awarded in July. Share price reactions across the sector yesterday

showed that the market was pricing more than just the contract loss (RHM market cap down c€8bn vs maximum contract

profit contribution of €2bn). Investors are worried that this contract cancelation, with its clear implication that Germany is

price sensitive for certain capabilities implies that others might be over earning. There’s not an easy answer - but this is an

issue that companies will need to resolve for investors for the sector to find a solid valuation floor.

Pan European Industrials Research

1. Yara - Weak short-term fundamentals warrant more downside to 2H26 consensus – Remain UW- Angelina Glazova

hereIn our last report on Yara on 07 June 2026, we highlighted that the share price did not capture the material reduction in