HENSOLDT AG ((DE:HAG)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for HENSOLDT AG painted a picture of robust growth and strategic challenges. The sentiment was generally positive, with strong order intake and revenue growth taking center stage. However, the company also faced some hurdles, including temporary productivity issues in the Sensors segment and strategic challenges within its South African entity, alongside a negative free cash flow.
Strong Order Backlog
HENSOLDT AG reported a remarkable order intake of EUR 1.5 billion in the first half of 2025, pushing the order backlog to a record EUR 7 billion. This significant backlog underscores the company’s strong market position and provides a solid foundation for future growth.
Significant Revenue Growth
The company achieved an 11% increase in group revenue, reaching EUR 944 million. This growth was primarily driven by the sustained momentum in the Optronics business, highlighting the segment’s critical role in the company’s overall performance.
Adjusted EBITDA and Margin
HENSOLDT AG’s adjusted EBITDA rose to EUR 107 million, with an adjusted EBITDA margin of 11.3%. This improvement reflects the company’s effective cost management and operational efficiency.
Successful Promissory Note Loan Issuance
In a strategic financial move, HENSOLDT successfully issued a promissory note loan, securing EUR 300 million at the lower end of the pricing range. This issuance strengthens the company’s financial position and supports its growth initiatives.
Growth in Optronics Business
The Optronics segment reported a strong order intake of EUR 164 million, driven by demand for ground-based systems and self-protection systems. This growth highlights the segment’s strategic importance and its contribution to the company’s revenue.
Temporary Lower Productivity in Sensors Segment
The ramp-up of a new logistics center led to temporary lower productivity in the Sensors segment. While this posed a short-term challenge, it is expected to stabilize as the logistics operations mature.
Negative Free Cash Flow
The company reported a negative adjusted free cash flow of EUR 181 million, primarily due to investments in working capital. This reflects the company’s commitment to supporting its growth strategy, despite the short-term cash flow impact.
Challenges with South African Entity
HENSOLDT’s South African entity faced strategic challenges, with modest growth in order intake but revenue development impacted by ongoing technology changes and strategic realignment. This highlights the need for strategic adjustments to navigate the evolving market landscape.
Forward-Looking Guidance
Looking ahead, HENSOLDT AG reaffirmed its guidance for fiscal year 2025, projecting a revenue range between EUR 2.5 billion and EUR 2.6 billion. The company anticipates an adjusted EBITDA margin of around 18% and a cash conversion target of 50% to 60%. With a record order backlog and a book-to-bill ratio of 1.5x, HENSOLDT is well-positioned for future growth, despite the challenges in free cash flow.
In summary, HENSOLDT AG’s earnings call reflected a positive sentiment with strong growth indicators, particularly in order intake and revenue. While the company faces some challenges, particularly in the Sensors segment and its South African operations, its strategic initiatives and robust financial structuring efforts provide a promising outlook for the future.