Hensoldt Ag Unsp/Adr

Ladies and gentlemen, welcome to the H1 Results 2024 Analyst Conference Call. I would like to remind you that all participants will be listened on in mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Veronica Andres, Head of Investor Relations. Please go ahead.

Good afternoon, everybody, and welcome to Henshaw's H1 2024 results call, which we are holding at our ESG site in Fispenbrook today. Thank you for joining us. I'm Veronika Engris, Head of Investor Relations at Henshaw, and with me are our CEO, Oliver Dörbe, and our CFO, Christian Nadona. Oliver and Christian will guide you through this presentation today, which will be followed by Q&A sessions. And with that, I hand over to you, Oliver.

Thank you very much, Veronika, and a cordial welcome from my side as well. I'm very excited to lead you into today's presentation after having passed the 100-day mark as CEO and the 200-day mark as a Hensoldtian two weeks ago. When I briefly summarize the first half year at Hensoldt, I can say with conviction that this company excels in many areas. My three key observations are firstly, our technology is really impressive. For example, we receive high praise from the air defenders in Ukraine, where our TML4D show outstanding detection, performance and high reliability. Secondly, the entire Hensol team is extremely motivated and determined to provide our customers with much needed capabilities. And thirdly, we enjoy A very solid support by our anchor shareholder, the German government, and our stakeholders in the political domain. To drive our company from great to excellent, I have already outlined my three focus areas for the medium term, operational excellence, digitalization, and internationalization, in our 3M call. We have defined clear and tangible action plans, which we are now implementing, with rigor. So let me outline a few of the measures we are putting in place. In operational excellence, we are focusing on delivery capability in both quantity and quality. We are taking care of the expansion and stabilization of the supply chain, initiating a transformation in engineering and optimizing our approach to bits and project management. Further synchronization of the ongoing transformational programs is another focus. We are also assessing our international presence with the intent to better align market potential and resource investment. Our clear goal is to do around 50% of our business in Germany, around 30% in Europe and with NATO partners and beyond that 20% in deliberately selected markets. We will also develop a consistent approach when it comes to sensitive countries and a standardized framework for export regulations, keeping the government-to-government agenda of the German ANCOR shareholder in mind. We are also developing a conscious focus on establishing our industrial presence internationally. A first step is an improved governance to better integrate our national entities, South Africa, France, and the UK. And last, but certainly not least, we will make sure that our portfolio will become smarter, more digital, and software-enabled. Connectivity, system-of-system architectures, networking, and AI are elements that will support the transformation of hands-on from a hardware-based to a software-defined provider of integrated sensor solutions. All these measures serve as a means to an end. and I will outline our path towards the Henselt 2.0 at the end of today's presentation. It was a very rewarding experience for me to meet some of you, our investors, at our US and Canada Roadshow in June. The most frequently asked question at all meetings addressed in defence is the defence spending in Germany. So let me give you some colour on this topic. The Special Fund introduced in 2022 mainly served as start-up financing for several important and strategic defence procurement projects. This trend now stabilises and is reflected in the mid-term budget planning of the German government. With a mix of budget increases, finance authorisations and the Special Fund, the German government has sent a clear signal for its commitment to spend 2% GDP for defence, reaching approximately 80 billion in 2028. And this commitment is underpinned by very concrete procurement plans, for example, the order of 20 additional Eurofighters that Chancellor Scholz announced at the Berlin Airshow, or two additional F-126 frigates that have recently approved by the Parliament, as well as 105 additional Leopard tanks also already approved by the Parliament. I mentioned this in our 3M analyst call, and I can only repeat, defence procurement in Germany is no longer a question of if, but how. Naturally, breaking up the long-established mechanics of the communalistic system take some time, and yet I am confident that we see a continuation of the current dynamics in German defence procurement. And let us not forget that the European market remains favourable as well. Clear shift against Europe. European NATO members plus Austria and Switzerland will spend an additional 700 to 800 billion Euro on defence by 2028. and 23 of the 32 NATO nations have reached the 2% GDP defense spend target this year. The Alliance reconfirmed its commitment to Ukraine and its recent summit in Washington, authorizing a $40 billion support package and pledging strongly for enhanced air defense capabilities in Ukraine. Let me now have a look at some business highlights. Order remained strong in the second quarter, driving our total order intake for the half-year 2024 to more than €1.3 billion and our order backlog to almost €6.6 billion. We reinforced our excellent position both in the ground-based and naval radar segment with orders for further TML-4Ds within the EFI initiative, SPEXA radar for Skyranger 30, self-propelled anti-aircraft gun and the additional two F126 frigates for the German Navy. ESG also contributed to our strong Q2 order intake with a contract for A400M material management worth €45 million. In the second half of this year, we expect further dynamics in the armoured vehicle segment, benefiting our optronics division. Our German customer is preparing to order Boxer infantry fighting vehicles that will be equipped with a Puma turret featuring Hensolt optronics and self-protection as well as also the already mentioned 105 additional Leopard 2 tanks, of course also featuring Hensolt digital optronics. The Eurofighter business once again proves to be a solid contributor to our order intake. with another capability enhancement of the Mark 1 contract worth almost 300 million Euro. ESG has very recently signed the already eighth installment of its contract to operate the Central German Armed Forces spare parts logistics at least at 2028 called Säbel. Talking about ESG, let's have a look at the status of the post-merger integration. I can make this quite short. The PMI is a resounding success and I see a lot of potential. We have achieved all day 100 milestones and will even advance the integration of central functions from end of the year to October 1st. It is important that our central functions form a strong supportive backbone for the new divisional setup that we communicated a few days ago. As mentioned, I see a huge potential in the integration of ESG and I'd like to have a quick look at the unique capabilities of ESG that will contribute strongly to our multi-domain solution offering. ESG supports the German Armed Forces helicopters from introduction into service to phase out, offering full product lifecycle support. The portfolio includes the CH-53, NH-90, Tiger, Sealing, Seaking and the future CH-47 Chinook. In 2023, Germany has ordered 60 CH-47F Chinook helicopters, which will form the heavy-lift rotorcraft backbone for the Bundeswehr from 27 onwards. In partnership with Boeing, ESG is in charge for several integration services, around these helicopters, guaranteeing their seamless integration into the infrastructure of the German Armed Forces. And let's not forget, this is only the first phase where a new platform is introduced into service with the Armed Forces. With a lifespan of at least 30 years for a platform like the Chinook or the F-35, system support and service business provide us with enormous potential and high visibility of revenues. The strong partnership of ESG with US primes like Boeing, Lockheed Martin is a strong asset for ESG and for Hensoldt, opening new business potential on different platforms. And with that, I hand over to Christian to guide us through the financials.