HENSOLDT AG’s Earnings Call Highlights Strong Growth

HENSOLDT AG ((DE:HAG)) has held its Q3 earnings call. Read on for the main highlights of the call.

HENSOLDT AG’s recent earnings call conveyed a positive sentiment, underscored by robust growth in order intake and revenue. The company reported a record order backlog, which provides excellent visibility for future growth. Despite some temporary impacts on revenue growth due to logistical ramp-up and investments in working capital affecting cash flow, the overall outlook remains optimistic with strong future growth expectations.

Strong Order Intake and Revenue Growth

HENSOLDT AG reported an impressive order intake exceeding EUR 2 billion, marking a 9% increase over the previous year. Revenue also saw a significant rise, reaching EUR 1.5 billion, with core revenue growing by 14%. This growth underscores the company’s strong market position and ability to capitalize on demand.

Record Order Backlog

The company achieved a new record in order backlog, amounting to EUR 7.1 billion. This substantial backlog provides excellent visibility and confidence in sustained future growth, ensuring a steady stream of business in the coming years.

Increased Book-to-Bill Guidance

HENSOLDT AG has raised its book-to-bill guidance significantly, now projecting a range of 1.6x to 1.9x for 2025, up from around 1.2x. This adjustment reflects the company’s confidence in its ability to secure and fulfill orders efficiently.

Major Contracts Secured

The company secured a major sustainment contract for the German P-8 Poseidon program valued at EUR 130 million. Additionally, it anticipates further orders for radar systems with a combined volume of approximately EUR 380 million, bolstering its revenue prospects.

Improved EBITDA Margin

HENSOLDT AG reported an increase in adjusted EBITDA to EUR 211 million, with a margin of 13.7%. This improvement was driven by higher volumes and synergies from the ESG acquisition, highlighting operational efficiency.

Optronics Segment Growth

The Optronics segment experienced remarkable growth, with revenue increasing by 27% in the first nine months. The segment’s adjusted EBITDA reached EUR 12 million, showcasing its contribution to the company’s overall performance.

Logistical Ramp-Up Impact

The logistical ramp-up temporarily moderated the pace of revenue growth, particularly affecting the Sensors segment. However, this impact is expected to be short-lived as the company adjusts to increased demand.

Ongoing Investments in Working Capital

HENSOLDT AG continued its investments in working capital, resulting in an adjusted free cash flow of minus EUR 119 million for the first nine months. These investments are crucial for supporting future growth and operational needs.

Forward-Looking Guidance

CFO Christian Ladurner provided updated guidance, indicating a significant increase in the book-to-bill ratio for 2025, revised to a range of 1.6x to 1.9x. The company expects a robust finish to 2025, with order intake projected to grow to approximately EUR 4.4 billion by year-end. Revenue for 2025 is anticipated to be around EUR 2.5 billion, with an adjusted EBITDA margin of at least 18%. The Optronics segment is expected to play a significant role, driven by contracts like the EUR 850 million Luchs II reconnaissance vehicle.

In conclusion, HENSOLDT AG’s earnings call reflects a positive outlook, driven by strong order intake, revenue growth, and strategic contracts. The company’s increased guidance and investment plans indicate confidence in its future performance, despite temporary challenges. Investors can look forward to continued growth and profitability as HENSOLDT navigates the evolving market landscape.