Hensoldt Ag Unsp/Adr

Ladies and gentlemen, welcome to the Hensoldt AG H1 Results 2026 Analyst Conference Call. I'm Sergen, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference 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 Nicole Schillinger, Head of Investor Relations. Please go ahead.

Good afternoon and welcome, everyone. Thank you for joining us for our HO1 2026 Bernie's Call. My name is Nicole Schillinger, and I took over as Head of Investor Relations on the 1st of July. I am delighted to have joined such a strong IR team and I'm very pleased to be hosting my first earnings call with you. Joining me on the call are our CEO, Oliver Dorre and our CFO, Christian Ladurner. They will take you through today's presentation and provide an update on our business performance, strategic priorities and financial development. We will then move into the Q&A session at the end of the call. With that, I hand over to you, Oliver.

Thank you very much, Nicole, and a warm welcome to all of our investors and analysts. It's a real pleasure to have you with us today. There are moments when geopolitical decisions translate directly into industrial reality. The NATO summit in Ankara was one of them. The five themes on this slide map onto our business. So let me take them in turn. First, the financial commitment. They confirm a multi-year investment cycle across all our core markets and give us a long-term demand visibility that supports the capacity investments we are already making. Second, the DroneEdge initiative formalizes Counter-US as an alliance priority. That creates additional momentum for capabilities that are already in our portfolio. Nato's technological focus on sensors, radar, and electromagnetic warfare aligns closely with our core technologies. As these become alliance priorities, procurement programs tend to follow. Fourth, digitalization, cloud, and AI. The future battlefield is networked, data-centric, and software enabled. Whoever sees first and decides faster prevails. That is sensors plus software, and it is exactly where Hensoldt is positioned. And fifth, Ukraine's support creates a durable service and upgrade pipeline for systems already in operation. Ukraine is today the largest operator of our TML4D radar worldwide. That is a strong validation of our positioning and the foundation for long-term support business. Ankara, to sum it up, did not change the direction of travel. and Accelerator. The previous slide shows the political frame. This one shows now how our portfolio maps onto the defense architecture that is now emerging. MDO Core is our software backbone for the digitalization of defense. It connects sensors, platforms and defectors with an open software architecture, which is what multi-domain operations require. Platforms matter still, but increasingly the network defies. In missile defense, our position becomes tangible with Freya. Together with Firepoint, we are combining combat proven Ukrainian technologies with our radar expertise. The Ukraine connection is deliberate. We are integrating proven capabilities and with them operational expertise from the battlefield where innovation cycles are measured in weeks rather than years. Electromagnetic warfare and airborne ISR are equally strategic. Pegasus is a flagship European program, and we supply its core sensors and mission system, laying the foundation for the upcoming LUVIS program. That role strengthens European technological sovereignty in a domain where independence has become a strategic necessity. We are deliberately extending this position into space. The war in Ukraine has shown that space-based sensing has become an operational requirement. We are building sovereign MDO core-based sensing capabilities that integrate space into the same real-time picture as the land, air and maritime domains. For a company positioned as leader in sensor and multi-domain integration, that is the next logical step. Together, these positions give us exposure to some of the strategically most relevant defense programs in Europe for the coming decades. Talking about Henselt's strategic relevance, within one week, two federal ministers visited Henselt. Boris Pistorius, Federal Minister of Defense in Oberkochen, Katharina Reiche, Federal Minister for Economic Affairs and Energy in Fürstenfeldburg. Two ministers, one message. Henselt is central to Germany's defense and industrial strategy. In the words of Minister Pistorius, I quote, I'm very glad to have such a reliable partner in Henselt. These visits confirm that our technologies are recognized at the highest political level and that we are ready to deliver at the scale and in the quality Germany needs. That recognition shapes where Germany is placing its bets for the future. CFSM is one of the most significant examples. The combat fighter system nucleus sits at the heart of next generation air combat, one of Europe's highest strategic priorities. Let me be clear on one point up front. Our position in air combat does not depend on the pace of any single program. ESCAS, even without the next generation fighters, continues to represent the long-term European vision and while its future shape is evolving. Germany is advancing solar technologies through CFSM in parallel. We play a central role in both because our technologies sit at the core The architecture either way. Within CFSN, we have been selected to provide the mission sensor system and the initial contract was booked in the first half. CFSN is also the first program where our partnership with Helsing moves from strategic agreement to operational implementation. We are combining software-defined capabilities with advanced mission sensors in future air combat information superiority design. The strategic value therefore goes well beyond the initial contract. It reinforces our leadership in sensors, electromagnetic warfare and system of systems integration, and it positions us in the programs that will shape European air combat capability for years to come. The F-126 termination has drawn some attention, so let me address it directly. The financial impact is not material. The contract value was just over 200 million and more than one-third has already been recognized as revenue. The remaining share, around 130 million, comes out of our order backlog. There is no impact on our short-term or medium guidance. The fundamentals of our naval business are unchanged. Demand for naval sensors and mission systems continues to grow as European navies modernize their fleets over the coming decades. That structural trend remains intact. Our naval business is built around technology families rather than individual programs. The TRF-3D-4D radar family is deployed across multiple vessel classes, including F-125 and K-130 in Germany. And it has been selected by international customers like Brazil for the Tamandare 3 grids. Continuous capacity upgrades benefit the entire family and create value well beyond any single platform or single custom. The recently approved Mikko A200 frigates for the German Navy illustrate the point. They open new opportunities in a market where our technology is already established and competitive. F-126 is a data fault, not a signal about our naval business, Our strategy, our technology roadmap, and our market opportunities remain unchanged. The previous slides showed our strategic position. This one shows how it translates into execution across all our four North Star axes. Deliver at scale. Our electronics production is ramping up significantly. Printed circuit board output has almost tripled Since January, from around 600 to roughly 1,500 populated boards per week. What matters is what the number represents. Our capacity investments are converting directly into industrial output. We are no longer building capacity for future demand. We are delivering into today's demand. Pioneer Software Defined Defense. We have expanded the MBO core ecosystem through four technology partnerships, each contributing a distinct capability. We are building an open ecosystem in which integration is a differentiator. That is the neo system house in practice. Drop with Focus, our partnership with Bacat Electronics gives us a sovereign route into India's defense ecosystem and turns local content requirements into a competitive advantage. In one of the world's most important long-term defense markets, that is a strong foundation for future growth. Lead our team into the future is about ensuring that our organization scales alongside our business. Our leadership team meeting aligns senior leaders around the next phase of execution across the room. As we grow across markets, technologies, and geographies, consistent leadership becomes an operational capability in its own right. Now I hand over to Christian, who will give you an update on our financials.

Yeah, thank you very much, Oliver, and good afternoon, everyone. Let me now walk you through our financial performance of the first half of 2026. The key message is pretty straightforward. Hensel delivered a record first half with strong growth across all major KPIs. Most importantly, we continue to translate our strong market position and robust customer demand into tangible financial results. Starting with order intake, the first six months of the year were outstanding. Order intake doubled year-over-year to more than 2.8 billion, lifting the book-to-bill ratio to 2.4 times. This strong performance was seen by several major contracts, particularly the Armored Vehicle Program and the Eurofighter MP1. With initial contributions from the MyFish Program, and additional TLM-40 radar orders. This underscores what we have consistently highlighted over the past several quarters. Strong defense procurement dynamics continue to translate into robust thought intake and long-term program commitments. Revenue increased by 24 percent in the first six months to more than 1.1 billion. Growth was driven primarily by the continued rapid electronics and sustained strong execution in Edison. As expected, successful milestone achievements in our key programs MK1 and Pegasus resulted in higher parcel revenues, which we gradually phased out over the second half. Core revenue, that is without parcel, gained further traction and increased by 18%, underlining the moment of our core business. Order backlog increased by 46% to a new record high of over 10 billion, providing excellent visibility for future growth. Importantly, a significant share of secure contracts extends well into the next decade, reflecting our strong positioning in major European defense programs. To sum it up, increasing defense spending by our German international customers continues to translate to stronger intake, accelerating revenue growth, and long-term revenue visibility. Let me now turn to our earnings and cash flow performance. Alongside our strong business growth, profitability increased at an even faster pace, underscoring the quality of our growth and execution effectiveness. Adjusted FTA increased by 29% to 137 million, corresponding to a margin of 11.8%, that is a plus of 0.5 percentage points. This strong performance was primarily driven by high volumes, particularly in our product segment. Our profitability benefited from revenue growth too, but it was temporarily compensated by higher partial revenues as well as increased R&D spending. Our adjusted EBIT increased 70 million, driven by the same operational factors. With depreciation amortization growing at a significantly lower level than revenue and adjusted EBITDA, the adjusted EBIT margin expanded by even 0.9 percentage points to 6.0%. Turning to cash flow, performance is in line with the usual seasonal pattern, reflecting our investing in working capital and infrastructure to support future growth. High advance payments levels provided the financial flexibility for these investments, leading to an adjusted free cash flow improvement of 25% year-on-year to minus 136 million. In summary, Profitability is well on track and set to gain further momentum as the year progresses. Turning now to our segments starting with SESTS. The SESTS segment delivered a record first-half performance with strong momentum across both orders and signals. Orders accelerated significantly in the second quarter, resulting in almost €2 billion of new orders in the first half of 2016. Consequently, the backlog increased to more than 7 billion, providing long-term visibility. The strong ornamentum was primarily driven by major contracts for Eurofighter, initial contributions from the MyFish program, as well as TLM40 waves. Revenue increased by 17%, year-on-year, to 955 million, supported by accelerated dynamics in Edison solutions, particularly TLM40 waves. Our integration business, resulting from the former ESG acquisition, as well as our service activities, each contributed double-digit million-euro growth. As highlighted earlier, milestone achievements in the MK1 program drove pass-through revenues in the first half. We continue to expect a full-year contribution of approximately 150 million from this. Excluding pass-through revenues, core revenue increased by 10% to 844 million, demonstrating the underlying strength and momentum of the business. This growth translated into healthy profitability, adjusted everyday increase by 8% to 113 million, corresponding to a margin of 11.9%. Segmental profit benefited in particular from high volumes in TLM4DE and our integration business. At the same time, the margin was temporarily diluted by a high share of partial revenues and continued R&D investments. Overall, Census continues to benefit from strong demand across the portfolio, combined sustained profitability with a record order backlog and a strong foundation for long-term growth. Moving on to our electronics segment. Our electronics continued its strong momentum and delivered another strong set of results in the first half of this year. All these have increased significantly to more than 900 million in the first half of the year, representing an almost six-fold increase compared to the prior year period. This exceptional performance was driven by major armoured vehicle programs, including Shakal and second batch of Puma. These orders further strengthen our key position on key European platforms and enhance long-term revenue with effect. Sales increased substantially by 60% year-on-year supported by strong growth across all businesses. In particular, round-based systems sustained their momentum, but also additional revenues from the Lux2 program further contributed to segment growth. The strong top-line performance also translated into significant profitability improvements. Adjusted EBITDA increased to 24 million, resulting in a margin of almost 11%. The significant uplift was driven by continued revenue momentum across the business and increasing economies of scale. Overall, Optronix demo-distributed its ability to convert a substantial order backlog of more than 3 billion into strong operational performance. With continued demand across key European land platforms, the business is well-positioned to sustain its growth trajectory in the coming years. Let me now turn on to our guidance and output for the remainder of the year. Bidding on a very strong first half, we remain firmly on track and therefore reaffirm our guidance across all key paid KPIs. As you are aware, business activities typically waited towards the second half of the year, particularly in the fourth quarter. While our strong H1 performance provides a solid foundation, we remain focused on delivering our targets for the second half. We continue to expect a book bill ratio between 1.5 and 2 times, supported by sustained defence procurement dynamics across our key markets. For revenue, we continue to expect a growth to approximately 2.7 billion euros. We forecast an adjusted NDA margin in the range of 18.5% to 19%, reflecting our continued focus on profitable growth. As updated on June 1st, we expect cash conversion of approximately 50%. This reflects continued positive impact of customer advance payments, which support our investments in capacity expansion, including our new radar production facility in the near future. Finally, we continue to target net leverage around 1.5 times, while maintaining our dividend policy of distributing between 30% and 40% of adjusted net income. For the mid-term, we expect all anything to continue to outpace revenue growth, translating into average annual organic revenue growth to around 15% to 20%. Again, growth is likely to be more back-end loaded as large programs wrap up. Margins are expected to expand by approximately 50 base points per year, supported by scale effects and productivity gains, while cash conversion normalizes towards 50 to 60%. In summary, our auto combines strong top line momentum with sustained profitability and disciplined financial management. And with that, I will hand over back to you, Oliver, for an update on key orders in 2026 and beyond.

Thank you very much, Kristin. Since our last analysis call, we have seen tangible progress across all sensor pipelines, with several key opportunities converting into book business. Eurofiber is one example. Orders for the MK1 rebase line, the Spanish Halcon program, and from Turkey have materialized, contributing around €580 million of booked orders. TML4D and NYFISH are following a similar path with initial tranches already secured and substantial opportunities ahead. Pegasus remains one of the largest opportunities in front of us with a potential order volume of around 900 million Euro for the second German batch. One program deserves particular mention, Lubis. Building on the technology and the operational experience we have gained through Pegasus, we believe We are very well positioned to play a leading role in this program. The overall opportunity ranges from several hundred billion euros up to billion euro levels. All in all, the message is clear. Our census pipeline remains broad and continues to convert into high quality order intake across multiple programs. Turning to optronics, we continue to see a very strong momentum with a significant share of the expected order intake already secured. The largest contributions come from Puma and Chaka. Together, these programs amount for around 800 million euros of booked orders and are now firmly in execution. This underlines the strength of our position on two of the Bundeswehr's most important land platforms. Following the last German order last year, Leopard 2 now provides further upsets into international markets, with the first €20 million already secured and reflected in order intake. U212 CD highlights the breadth of our portfolio in optronics. TKMS has been selected in Canada as preferred bidder, and our optronics mask systems will be part of the offer. Taken together, these programs provide a strong foundation for continued growth in our electronics business across the full range of platforms that define European conventional capabilities. Before we come to the key takeaways, let me share one broader observation. We are often asked whether defense spending is shifting from conventional capabilities towards the next generation systems. That question is built on a false premise. A tank cannot be replaced by a drone. But a drone changes how a tank is deployed, protected, and supplied. The two are not substitutes. They are parts of the same system. Modern armed forces need both, at scale, connected, through an architecture that processes information and adapts faster than the adversary. Three conclusions follow for hands-on. First, conventional and next-generation capabilities are complementary. Our sensors provide the situational awareness on which drone operations, air defense, and software-defined command all depend. Without the sensor layer, the software layer has nothing to work on. Second, our positioning across technologies, platforms, and domains structurally reduces program risk. We have seen that from several angles today in the parallel development of SCAS and CLSM. and in the F126 termination. Our investment case does not rest on the trajectory of any single program or customer. First, defense spending is expanding across conventional platforms and next generation capabilities. At the same time, the company positioned in only one of the parts of that spectrum captures only part of the opportunity. We are positioned across both. Today, the constraint is no longer defense budget, it is industrial capacity and technology innovation. That is precisely where we have invested and it is where we continue to execute. Let me conclude with a few takeaways. The first is that our operational execution is progressively translating into measurable results. Record order backlog of more than 10 billion euros provides excellent visibility, revenue growth is accelerating, and higher production volumes are driving improved profitability. At the same time, the investments we have made to deliver at scale are increasingly visible in our industrial performance. Second, our strategic positioning continues to strengthen. We are expanding the software-defined defense ecosystem through new technology partnerships, while our platform-agnostic approach is proving its value across programs, technologies, and domains. That gives us resilience as well as access to a broader set of opportunities. Third and finally, the long-term demand environment remains highly supported. We continue to expect major contract awards. Our industrial footprint expansion is progressing as planned, and the NATO Summit has further reinforced the multi-year investment cycle across our portfolio and core markets. Taken together, these developments demonstrate our ability to convert structural demand into operational performance while continuing to strengthen our strategic foundations. And with that, we are happy to take your questions.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and then one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. And we have the first question coming from Marco Vitale from Mediobanker. Please go ahead.

Good afternoon. Thank you. A couple of questions from my side. The first one is you could provide us an update on the naval pipeline after the F-126 cancellations. Also, if you would quantify the magnitude of opportunity you see for the U-212 CDEV campaign, the successful campaign of Eastern Group with Canada. Second one is on space that you mentioned during the presentation. Could you provide us with additional comments whether you want to pursue this opportunity with a make-or-buy strategy and would you be interested in adding this domain? Thank you.

Markus, can you please repeat the question? So for the first one, I've understood it's a little bit on the consequences of F-126 and the naval market in general. I'm very sorry, there was an audio problem here.

Oh yes, no problem. Yes, it was just a broad question on the pipeline that you see on maritime after the Springer cancellation, what could be the opportunities you are looking at also, and if you could provide or try to quantify the magnitude of opportunity that you see from the export orders from Canada for the submarine, one recently won by Eastern Crew Marine. And then the second one, if you could add comments on space that you mentioned, you're very interested in expanding this domain. What could be the strategy and also how do we want to pursue these opportunities from an organic standpoint or M&A?

Thank you.

Okay, I mean, I start, Marco, with the naval opportunities. So, I mean, I won't repeat what I said during my presentation. So, again, F-126, yes, there is a decision which is still evaluated. I think also on the customer side, a lot of, let's say, administrative formal legal work has to be done. You read the media that the prime went into it. You know, in a more conservative approach, I think we digest it. The financial impact and as we outlined very clearly, no material impact on our financial performance or guidance. The strategy, and I just want to stress that point again, the strategy for the naval market is still on. First of all, I think we have a very competitive product with TRS-4D, which by the way was a mandated product in the F126 campaign. and definitely we see that the concept of having a harmonized radar family within the German Navy is on and also international campaigns in Asia Pacific. I mentioned the Tamandara case where, by the way, Tamandara is a Mako 200 kind of derivative where we have put our radar as well. So I think that also opens opportunity for additional batches of Mako 200 The second topic, which I think underlines that our naval strategy future opportunities is strong, is that we have a strategic cooperation with Lockheed Martin Canada. We are the strategic partner of bringing this system, CMS 330, to Germany. And also what has been confirmed to us is that the F-126 decision, which actually had a TALIS This has no impact on the confirmed strategy of the German customer to harmonize their combat management systems across the field. And the CMS 330 from Lockheed Martin has been preselected. And I think that again confirms a broad range of opportunities in the German market. But also being well aware that Germany, and that probably leads to the U-212 CD, that this cooperation with Canada, where I would see U-212 CD only as a first step, opens a broader corridor for corporations. And I think, first of all, U-212 CD is roughly 200 million. But of course, we have to accept that DKMS so far has only been selected as a preferred bidder. So the negotiations will start. So that is the rough magnitude of the opportunity, 200 million, as I outlined. But again, there are ideas of opening bi-directional streets, bringing Canadian technologies to Germany, bringing German technologies to Canada. Well, of course, with a footprint that we do have in Canada, we see also a lot of opportunities coming up. And for the second one, is it LUWES that actually you want a bit more of

I was actually interested in hearing your thoughts on space domain on page 4.

So basically, and I think it was public, I joined our Chancellor and also Minister Pistorius When they visited Andoya as part of G2G discussions, how could Germany and Norway combine their strengths in actually building an ISR space constellation? So these discussions are ongoing. At the same time, we've heard of a German program called SPOC, where the first This batch has been awarded to Rheinmetall with ISI. But again, it's fully open how SPOC2, the broader ISR constellation would be awarded. So this could be a competitive tendering and that could even move into a broader kind of also time sensitive targeting capability. And we have joined forces. We have teamed up. As we also made public with OHB, with Helsing and Kongsberg, we have agreed that HENSOID would provide the sensor capability and that ranges From radar, synthetic aperture radar capability, actually we have a clear technological product roadmap to bring our Precisa radar, which has a lot of interest in the market, an advanced synthetic aperture radar into space. So that is part of the sensor package. Also, we are very strong in bringing electro-optical, infrared capabilities into that market. And what we also see is, talking about Pegasus, that some of the sensors, the signal intelligence sensors, would also not only be employed across the naval, land, and air domains, I think talking to our customers, there's a significant need to bring signal intelligence, electromagnetic warfare also to space, and that will be part of our value proposition.

Okay, clear. Anything.

The next question comes from Ben Brown from Jefferies. Please go ahead.

Hi, morning, guys. Thanks for taking my questions. I have two, if I may. The first is, if I look at the revenue guide, it implies a slowdown in H2 versus H1. I assume a proportion of this is on the lower pass-throughs, but if you could give us some help on some of the other moving parts here, that would be great. And the second question is on the census margin. The decline year on year, I know it's a lot of pass-throughs in there, but if I also look at excluding pass-throughs, there's a small decline as well. I know you tend to have an acceleration in the second half and pass-throughs should be lower. But again, how should we think about the moving parts for achieving the 19% margin target you've previously pointed to? Thank you very much.

Hi, Ben. Thanks for your question. So the first question, two comments on that. Of course, pass-through will slow down. And in the rest of the year, we approximately think that we will be around $170 million. and Paz Revenues. That means people only make another 50 to 60 instead of having the same amount also in the half year. So this is one effect. The second is, let me clearly point it out, the first half year gave us excellent results for the second half year. Nevertheless, we have 60% ahead of us. Maybe we are a little bit cautious in this moment, but I see a very good Thank you very much. The next thing is that we are clearly committed to spend for R&D. So Oliver has mentioned MDO Core will be significantly invested and this investment weighs on H1 sensors, but I'm I'm absolutely sure that it will phase out until year end, and the revenues kick in in this segment. We will be well on track to deliver on our marching buttons.

Thank you very much.

The next question comes from Sebastian Groh from BNP PowerPulse. Please go ahead.

Good afternoon. Hi Nicole and also a question. Two questions. One said more on the order pipeline and the other on the guidance. Maybe we can separate the two. So if I may start on the orders. I've noticed that there has been an upgrade by around 80 million for the Eurofighter part in the order pipeline. as opposed to what you had disclosed in quarter one. So what's been the driver here? And I was also wondering whether there's a similar potential for other programs that you might see. And then I have a couple of questions related to Pegasus in particular. Can you remind us of the potential there for export contracts and more specifically which milestones would have to be passed here or are you already actively offering the solution to potential export customers? And lastly, how might the margin profile differ between domestic and export at least indicatively? Yeah, if we could start there please.

Yeah, Sebastian, hi. Thanks for the question. So first of all, what will the order pipeline look like in the second half year? So we have now collected 2.8 billion, 1.9 billion amounts to sensors and approximately 1 billion to products. We see especially some more orders in the Eurofighter program. It will be An order due to the fact that we have still some legacy topics in the MK1 radar. So the STC, the power unit, which is in, and Germany and Spain have both decided that they will be replaced. And it will be a significant one in the second half year, so approximately 200-300 million Euro amount, which we will see. A second thing is, of course, the NYCSIS program. It's an EW program for land forces, a combined multinational program where we equip the Piranha platform with our EV capabilities. And we also expect this program in the second half of the year, which also will be a triple-pitch milling amount coming to our order book. Then we see some more demand for Air Defense CLM-30, especially from the Ukraine, where we see another batch coming up in autumn, which will give us some more orders. I think we've elaborated in the electronic segment that there will be some network international programs, which is another part. And then, of course, the last big one is the Pegasus, Maybe I start with the current situation around the second batch and then Oliver continues with export. So we have now yet the request for proposal done. We will give our bid in the beginning of next week to the customer and then the negotiation phase starts so that we are very confident that we can do this in this year. But time is running. I have to say that it will be a A December race, let me say it like that. But currently, all the forces work like hell, but it works for the second lot. And these are the big bugs we see in the order pipeline for this year. And maybe with that, I hand over to Oliver for the export campaign to Pegasus.

Yeah, absolutely. Sebastian, so talking Pegasus, I make a preliminary remark. So what is worth to note is that the program is really on a very good track as far as the remaining milestones for this year are concerned. And it's not that we have no doubts. We are absolutely confident that we will hand over the first capability to the customer mid-2027, which is a bit earlier than initially anticipated. And that's based on the The contract changes we have agreed with our customer end of last year. And of course, that good news spreads to our customers. So our export campaigns, and please understand that I cannot name the countries, but what I can say that we initially started our export campaigns with three global customers. Partially also with the support of the German Air Force at the exhibitions and special venues looking at Asia Pacific and so on. But at the moment, and that is since quarter four last year, the focus shifts on three European customers. Two of them with a very strong G2G agenda between the respective air forces So in that regard, still having a full priority on execution in our ongoing program and on the amendment, the extra batch that Christian talked about, I definitely see that the export campaigns are maturing and that we would see next, but most probably the year after the first of those campaigns are coming into our books. Margin-wise, it is worth to note that also the team that we have set up for Pegasus, Hensoldt, Lufthansa Technik, Bombardier, is really strengthening the ties, also with the perspective of Luwes. And looking at all the experience, the maturity we get into our industrial capacity relating to the antennas that are part of Pegasus. Considering that part of the mission system is software that would need to be multiplied then with our customers, I'm pretty confident, and I have to go from Christian, that the margins will go up.

It's encouraging. If I could just clarify that I've got this right. So export contracts might be received by 27 for the first time. That's the message, right?

Best case, late 27, but I mean, we definitely need to consider it's a complex problem. But I mean, looking at the speed, to be honest with you, that we picked up since quarter four last year, especially related to these new European customers, I'm confident, realistically, and you know, we are taking more conservative approach, I will see it in 2028.

Okay, that's helpful. And then talking about conservatism, and let me then move to the guidance. What I've noticed is apparently that your guidance now implies quite meaningful deceleration and top-line growth in the second half of the year compared to what you printed in the first half. So I was just curious to hear if this is mainly project or phasing related, or do you feel more confident with regard to that very safe target now after how the first half has played out? Thank you.

Yeah, of course, one is clearly I have elaborated on fast flow, which will be significantly lower, but let me face it like that. I feel very comfortable for the second half year as it is as well.

All right, thank you. The next question comes from Sash Tusa from Agency Partners. Please go ahead.

Thank you. Good afternoon. I've got A number of questions. The first is just on your confidence on naval and particularly on the Mikko 200 frigates. I'm rather struck by the fact that TKMS signed a contract with Saab about two weeks ago specifically to fit out the first Mikko 200s with Giraffe flat-faced radars, Giraffe 1X, 9LV Combat Systems. And yet you still seem to think that the whole MECO program is up for grabs. I wonder if you could explain the difference between your confidence that you can get onto the MECOs and TKMS's confidence that it should go with Saab as the supplier for those systems. Because it seems to me that that pretty much fills out all of the slots that you would otherwise be bidding for. And then the second issue. On Louvre's, I wonder if you could explain how the requirement is changing. I think, if I heard you rightly, you said that your opportunity is somewhere between hundreds of millions and a billion or thereabouts. That seems to be a much smaller programme than when you were talking about it at the Capital Markets Day last December. How has the programme shifted from being a stand-off, stand-in Sash, let me start with the question on the MECO-200.

So yes, indeed, I'm also reading press releases, but I think definitely why are we still confident is because my understanding is very clearly that what is contracted and awarded now is the first batch. And I fully acknowledge that this first batch, also like the F-123 today, is with a SAP mission suite But again, also following the parliamentary decision, there is a clear conditional approval, which kind of guides that the future batches also need to consider some of the suppliers from the F-126. So that is one thing, but more importantly for us, it's definitely the reconfirmation that we have achieved from our customers that the family concept TRS-4D is still on and then also the concept of having a harmonized command and control system or better management system which is a CMS-330 which is selected is needed and why is that confirmed because It's not only about buying new ships. I think the key role, and I'm talking to the senior leaders of the German Navy, the key element is also to maintain and operate the fleet. And if they would have a heterogeneous landscape of systems under, of course, the time pressure that they see today, Then they would have really a hard time to operate them. And that's why we think that at the moment, and it's more than we think, the discussions we are having at the moment, is that also the F-126 decision triggers, and you read a couple of articles on the F-127, triggers a discussion how would a more modular, scalable fleet of the German armed forces look in the future and and that is why we see the picture a little bit different especially looking mid to long term and that includes the batch two of the MECO 200s and what also and and that is confirmed by TKMS What fuses our confidence is that the CMS-330 as well as the TRS-4D are already integrated. We have references on the MECO-200, so time is not an issue and we consider ourselves also based on market information and other tenders to be very competitive on pricing vis-à-vis SAP and we are ready, more than ready and determined to enter that battle.

Sorry, just to be totally clear. So your confidence is about the second four ships of the MECOs. You think that the first four ships are effectively an interim batch and then there will be a change of systems to ensure the commonality with F127. Okay, thank you.

The next question comes from

There was a LUVIS question on the requirement and I can make that very short. And that confirms that also on LUVIS we have a very strong dynamics. So if we are successful and LUVIS comes, I would see the order integ rather at the upper end of what we've just described. And the question why we went into that kind of corridor approach was we were not so clear at that time would we be ready to approach, also based on internal process and so on, to approach that one on the top level, as I would say, as a kind of prime or consortium partner in a broader sense. And that, of course, has an impact. Do we only deliver the payload or tame? Do we take responsibility on the overall program? And as we are advancing, so we expect the tender to be out somewhere in August, as we are advancing in the campaign, Definitely our ambition is to go for taking a broad responsibility and that's why we will end up in the upper corridor of what I've just said before.

And so just to confirm, the upper end of the corridor is one billion or billions? It's a billion, multi-billion. Great, thank you so much.

Okay, the next question comes from Ross Law from Morgan Stanley. Please go ahead.

Hi, good afternoon. Thanks very much for taking my questions. So two quick ones, please. Just on electronics, another quarter of better performance in Q2. Can you just confirm what you're expecting in terms of margin for the full year and also the expansion over the coming years? And then on your Freya program with Firepoint, could you just give us an idea of what this might do or contribute in terms of revenues, begin term? I apologize if either of these questions were already answered in your opening remarks. I joined the call late. Thanks.

Hi, Russ. Thanks for the question. I'll start with electronics. Yeah, you're right. Second quarter as strong as the first one. I have to say there were some revenues in which I do not see in the second half year. So the 60% I do not see year over year. For the full year, I see approximately 500 million of revenues, maybe a little bit more in this regard in this segment. And I see still 60, maybe even 17% of margin in this segment for this year. We have assumed in our midterm plan that we increase the margin 2% per year. I think this is a very solid assumption, but I'd like to now move on until the end of this year, review how we ramp up with the ground-based system delivery, and when we are very stable, when all the measures we currently take in production, multi-shift and so on, pay off, We again have another industrial base, very solid to go ahead. But for the time being, I would like to stay with that.

Okay, so I think the second one on Freya and maybe upfront, please also understand that we cannot disclose too much on the content and for operational security reasons. However, what I can confirm is that ever after we have signed the MOU with Firepoint at Eurosatori, we have seen an unprecedented dynamics on the topic. And that was also driven by the Ankara Summit, where actually also the US gave its approval that Europe would work on a kind of Patriot-like ballistic missile defense system and based on the dynamics that has been created in Ankara, there was a site meeting at the Coalition of the Willing meeting of the senior leaders in Paris prior to the 14th of July, the National Day of France, where I have been invited amongst a handful of industry leaders and where we received a big push to bring this envisaged capability on ballistic missile defense to the battlefield in Ukraine, and with that also providing a unique capability to the Europeans. I had the personal opportunity to meet President Zelensky during this event. So the political push is very strong, of course, Thank you very much. Of course, the radar capability that we already deliver into Ukraine and the investments we are currently taking to upscale our production capacity, which will be in operation early 2027, that perfectly fits because it gives us the scale to answer this demand. And then it would be also about widening The next question comes from Christoph Menard from Deutsche Bank. Please go ahead.

Yes, good afternoon. Thank you for taking my question. I had two actually on sensors. The first one is, I mean, you highlighted your win with the Turkish order for MK1. Actually, MK1 seems to be a little bit the radar of choice on your fighter or flight. I mean, you had the German, Spanish, now Turkish order. I mean, for future orders, if there are any for Eurofighters, should we assume that MK1 is best positioned so it will kind of de facto go to you? Considering I think there are three rated choices on this one. And the second question is on GCAP. We heard yesterday from BAE that the window for Germany was closing soon. If they want to join, how would it work actually for you? Because if Airbus joins, are you automatically joining or you also need to negotiate with the consortium to be able to enter GCAP or would it be through Leonardo? Thank you very much.

Okay, on the first one, of course, it's a difficult question. So I'm a bit bold on this one, also to support our engineers. I think MK1, MK2, and that's actually what we need to look at, because MK0 is the baseline capacity, where now as we have the hardware under delivery, as the software is ramping up, for sure, whenever we will be selected for the radar, it will be MK1. And what I would boldly claim is that looking at the cycles of development, also at the technical maturity, we are advanced compared to what we see on the other radars. But in the end, and that's why probably it's rather a question you need to ask to our customers, the Eurofighter program is also very Let's say, influenced by political minds. It's a four nations program where, of course, the industries representing their nations have some, let's say, also political arguments, which would be the one of choice. But purely from a competitive positioning, I think our MK1 is proving the pudding, and it's really the radar of choice at the moment. On GCAP and Christoph, you are at least, I don't know what David will ask us, but that's a tough question. This is a total, let's say, political discussion at the moment. And to be honest, it is absolutely not clear which direction our customer, the German So I think definitely what we saw in ILA is that the team generation six, where Henshaw of course is part, where Airbus at that stage, I would say, is not the kind of prime, but a primus inter pares. leading the story so I'm very much eye level with the CEO we're approaching that point and I'm very happy that at least we got the clarity that the next generation fighter would no longer be a corporation between Germany and France but also here ever since a lot of discussions are taking place some of them looking at continuity How would we sustain the engineering force, which is significant, not only in Hensolt, but across this team, Generation 6? And there are a couple of ideas on the table. How would we strengthen from the sovereign, but also with the other partner, the Spanish partner, how would we strengthen our value proposition for any program that we might join? And here, of course, we have the Nordics, we have Saab, we are also looking at the broader G2G. We see strong things. We have GCAP, which is considered, or other options which might build up. So, hands-on is well prepared. Again, we will See what kind of contractual models would arise. But I think the discussion that we are having at the moment is very transparent and led on eye level by all the players in the room. And as I outlined in my presentation, what is, I think, important for us, for the resilience, for our future guidance, while we are approaching in that direction, the next generation fighter, whatever partnership and contract that will be, is one thing. and our position for the CCA, for the Collaborative Combat Airframe, with CA-1, with Helsing, but also the MOU we have signed with Boeing on the MQ-28. I think also in that segment, that new segment, which sees a lot of dynamics, hence why it stopped. And on top of that, and that's the third part, independent, because all these dynamics that we see in the programs, hence all this reacting, and we are driving our radar agendas to also be prepared to answer any kind of platform that we would see in the airborne segment in the future. So that is probably giving you a little bit of additional light to the situation, which indeed is not yet 100% clear. A lot of political and also media claims. But again, we need to now look into all those different elements.

Thanks for the details.

The next question comes from David Perry from JP Morgan. Please go ahead.

Yeah, hi, Olivier. I'm Christian. Hope you're well. It's late on a Friday, so I hope my questions are not annoying. It's been a busy week for everyone. For you, Olivier, thank you for the slide on the beyond tanks or drones and just how Hentz salt is positioned. And I agree with everything you say about that you're very diversified. It doesn't matter so much for you. I'd just be really interested in your perspective on the debate that may or may not be happening in Germany Whether you think the leaders, the generals, the politicians are actively rethinking where they allocate money or whether you think the plans, the current plans are quite firm. And then my second one, and this is the annoying one, Christian, everyone's asked you about the second half guidance because, you know, us analysts, we all think the same. It does look very conservative. I guess my question would be this. I mean, if you have a semi-reasonable Q3 in terms of growth, you're probably going to be down in Q4 year over year in one or both divisions. So I just wondered if there's anything you can see or you know today that's making you so cautious on the sales guidance, because kind of I guess all the logic From all the other analyst questions, we all seem to think you're going to do a lot better than the 2750, if I could put it that way. Thank you.

Okay, so I start with the first one, David, and maybe a preliminary remark. Yes, it's a Friday afternoon, but just to give you a glimpse of how enduring Christian and I are, we started this day with our supervisory board this morning, and of course the pre-supervisory board committees yesterday. Then over lunch, quickly, we took a visit of the Minister-President Cem Özdemir from Baden-Württemberg, which was on top of Katharina Reiche, Boris Pistorius, a great success underlining the political backup that we have. And now we are taking your analyst call, and I hope you still see that we are on. And I would say that is also an element of the resilience that hands on brings to the game. But to be more concrete on your questions, tanks and drones, indeed, I mean, that was the main theme. When Boris Pistorius visited us, and I think that was really eye-opening to him and he made some statements when he left the company here, realizing that really we are bridging the two elements that are of utmost importance to the German Armed Forces these days. First of all, with many of the contracts we have in our books and more to come, they are scaling up their Their order of battle, as I would say, because credible defense and deterrence only comes if the German armed forces have the major weapon systems in Germany and at the borders to support and here definitely air defense. Looking at what we see in Ukraine, looking at what we see in Europe with EFI, it is also very clear that Germany in itself is lagging behind. and that we should expect a lot of more orders on air defense in Germany as we go forward. So in that regard, I see that this will continue and that's why Boris Pistorius keeps on stressing over and over again, it's not tanks or drones, it's both. And the best is if both are connected, And what he realized is that Hensoldt is really making significant progress on connecting those things. I mean, we shared with you at the Capital Market Day our MDO Core, and what I can share with you, we presented that on the exhibitions. And ever since, we are at the moment offering to two global customers first prototypes. So there are contracts, sole source contracts ramping up to buy our software stack. And we have just recently entered a tender in Germany, which is looking for a, and I stated clearly, a Palantir-like solution. We had the press with us, with Cem Özdemir today, and probably you will read in the media tomorrow, that really we're positioning in that direction and I would say not only with papers what we showed to our customers in these discussions at the exhibition the software is there and why is it there because we bring all our experience on sensors multi-domain multiple platforms all the know-how that has grown over years but in order to be quickly in the sense of time to market we work with partners As you know, with Schwarz Digits, we work with IBM. We are really intensifying our cooperation with Helsing. We have small startups with agile and with agentic AI. And all of that is very dynamic at the moment. So that's why I would see, while the balance is coming, Germany investing into existing capabilities, exhausting They are exploiting their framework contracts, all of that, which will continue some way. But also with LUVEST and the software data driven topics, we see that all these new contracts and tenders are out. And I would see us, based on also our sovereign core technology proposal, that in many areas we might be even sole source trusted partners of our customers. and that is kind of a little bit more story to what we have explained in our presentation.

Yeah, and the second question, David, your questions are never knowing. They come down to the point. So what drives me currently first is that when I look at H1 and you've seen 18% core revenue growth at approximately 20, 25 million, Our spillovers for 2024, for 2025, then to this year, which we could not make at the end of the year with spillover effects. And we have to take this into account when we go for H2O. Nevertheless, I think the base is excellent. And again, we have also some one-off opportunities in the second half year. So the start tailwind is excellent. Maybe we are very conservative at this stage, but I think September is the month that we will see That is helpful and clear.

Thank you. Appreciate it. Have a great summer.

There are no more questions at this time. I would now like to turn the conference back over to Nicole Schlinger for any closing remarks.

Thank you very much for your questions and for taking the time to join us today. Should we have any follow-up questions, our team and I will be happy to assist. We look forward to speaking with you again soon. Have a great day.