Hensoldt (HAG) Q2 2025 earnings summary

Executive summary

• Order backlog surpassed €7 billion for the first time, providing strong visibility for future revenues and positioning the company to benefit from increased German and European defense spending.

• H1 2025 saw strong order intake and revenue growth, driven by major contracts such as Eurofighter and TRML-4D radars, including support for Ukraine.

• Transformation and scaling programs are advancing, with a focus on digitalization, customer-centricity, and operational expansion.

• Strategic partnerships and acquisitions, including Quantum Systems GmbH and ESG, are accelerating software-defined defense capabilities and synergies.

• Germany remains the anchor customer, with Europe and select international markets as growth areas.

Financial highlights

• H1 2025 revenue rose to €944 million, up 11.2% year-over-year; order intake reached €1,405 million.

• Adjusted EBITDA was €107 million (margin 11.3%), with adjusted EBIT at €49 million.

• Adjusted free cash flow was -€181 million, reflecting working capital investments and seasonal effects.

• Book-to-bill ratio stood at 1.5x, and order backlog increased 6.4% to €7,070 million as of June 30, 2025.

• Net income for H1 2025 was -€44 million, impacted by non-cash refinancing effects and interest expenses.

Outlook and guidance

• FY 2025 revenue guidance reaffirmed at €2,500–2,600 million, with adjusted EBITDA margin expected at 18–19%.

• Book-to-bill ratio for 2025 anticipated at 1.2x, with strong order intake and improved Optronics outlook.

• Free cash flow conversion targeted at 50–60%; net leverage to remain around 1.5x.

• Dividend payout ratio to stay at 30–40% of adjusted net income.

• First revenues from new programs expected in 2027, with high visibility on additional orders by end of 2025.