Spectrum Dominance

MUNICH —

HENSOLDT closed the 2025 financial year with a marked acceleration in demand and improved profitability, reporting an order intake of EUR 4,710 million, a backlog of EUR 8,833 million and revenue of EUR 2,455 million. Adjusted EBITDA rose to EUR 452 million (18.4% margin) and adjusted free cash flow reached EUR 347 million, while management proposed a EUR 0.55 per‑share dividend and raised its 2026 revenue and margin guidance. The company said the book‑to‑bill ratio climbed to 1.9x, signalling continued structural demand for its sensor and optronics systems.

The results matter because they convert a wave of public procurement into near‑term cash generation and visible capacity investment. HENSOLDT’s performance links a large, fast‑moving order book to higher margins and a stronger cash position—factors that will shape how European defence suppliers negotiate capacity, financing and subcontractor commitments in the coming quarters, and how governments sequence multi‑year procurement under medium‑term budget frameworks.

“The geopolitical situation is forcing Europe to sustainably strengthen its defence capabilities. We are seeing this not only in rising defence budgets, but also in accelerated and concrete procurement decisions since the last half‑year. Germany has played a key role and was a major driver of our order intake momentum in 2025. Our intelligent and connected sensor, radar and optronics solutions address precisely the needs currently evident on the battlefield: quickly available and scalable capabilities. With our expertise in software‑defined defence, we combine hardware, data and software into integrated, cross‑domain system solutions. This makes us a unique partner for armed forces that need to strengthen their capabilities in the short term and modernise them in the long term.”

Oliver Dörre, CEO of HENSOLDT

Key financials

Performance drivers and segment detail

The Sensors segment generated the largest share of orders, with EUR 3,143 million in intake. Its revenue increased 8% to EUR 2,058 million despite a slower start to radar production in the first half of 2025; adjusted EBITDA for the segment was EUR 394 million (19.2% margin). The company reported that pass‑through revenue continued to decline—supporting mix and margin—and that logistical ramp‑up created a short, temporary impact on operations.

Optronics delivered the strongest relative improvement, more than doubling order intake to EUR 1,585 million—driven chiefly by Luchs 2 and Leopard 2 platform orders—and recorded 20% revenue growth to EUR 419 million. Adjusted EBITDA in Optronics rose by more than 140% to EUR 58 million, with a reported margin of 13.8%, signalling that the historically more volatile business is beginning to scale on a more predictable, programmatic basis.

Christian Ladurner, CFO, said: “Record order intake and a significant increase in our order backlog provide us with a high degree of planning certainty. At the same time, we have demonstrated that we can increase growth profitably. The EBITDA margin is above our forecast, and the free cash flow underscores the company’s operational performance. We are consistently investing in capacity and processes to reliably meet the increased demand. With targeted ramp‑up measures, we are laying the foundation for converting our order backlog into revenue as planned and for securing our growth path in the long term.”

Balance sheet, cash flow and capacity build

HENSOLDT reported higher free liquidity alongside an unchanged net leverage ratio of 1.6x, with the company attributing the stability to increased cash inflows from advance payments and higher lease liabilities tied to capacity expansion. For policymakers and contracting authorities operating under multi‑year defence plans, the stable leverage profile and visibility on cash generation are central to assessing execution risk on critical sensor and radar programmes.

Management expects adjusted free cash flow to remain at approximately 40% of adjusted EBITDA in 2026 and has specified a net‑leverage target of around 1.5x while guiding revenue of around EUR 2,750 million and an adjusted EBITDA margin of 18.5–19.0% for the 2026 financial year. The elevated book‑to‑bill (1.9x) and a EUR 8.8 billion backlog shift capital deployment from planning into execution: procurement timetables, supplier schedules and assembly capacity will be the immediate operational levers to convert backlog into recurring revenue.

Market, policy and governance context

HENSOLDT’s order momentum is set against a broader European increase in defence investment that has accelerated procurement cycles and binding commitments by NATO members and EU states. These decisions are being taken within the budget, capability and readiness targets laid down in NATO’s defence‑spending commitments and, at EU level, in emerging defence‑industrial policy and funding tools under frameworks such as the European Defence Industry Reinforcement through common Procurement Act. Those shifts have been a material driver of demand for radar, sensor and platform‑integration work across European prime contractors and their supply chains, and they provide the political backing for multi‑year platforms on which HENSOLDT is a key subsystem supplier.

HENSOLDT is a publicly listed group that emerged from the consolidation and sale of Airbus’s defence electronics activities and entered the Frankfurt Prime Standard in 2020; the company is headquartered in the Munich area. Its corporate history and public listing mean that its performance is subject to investor scrutiny on margins, order conversion and cash generation as it scales capacity to meet contract schedules. Germany’s move towards a “Zeitenwende” in defence policy and additional funding envelopes has made the country both a core shareholder jurisdiction and a primary customer environment for the group.

For more detail on the group’s published materials, the company’s investor relations page hosts the preliminary FY2025 release and related charts, while NATO’s own defence‑expenditure reporting provides the broader backdrop to rising European procurement.

Implications for suppliers and procurement

The combination of a larger, higher‑quality backlog and stronger cash conversion gives HENSOLDT optionality in how it funds capacity increases—whether through operating cash, lease financing, or targeted capital expenditure—and in negotiating terms with tier‑one and tier‑two suppliers. That financial flexibility matters for defence ministries and procurement agencies seeking assurance that long‑lead components, software and integration work can be delivered without repeated contract amendments or emergency budget top‑ups.

The group’s focus on software‑defined defence systems and cross‑domain integration aligns with procurement trends that prioritise modular, upgradeable systems and data integration across platforms; these attributes are recurring evaluation criteria in current procurement frameworks and in oversight by national audit offices and parliamentary budget committees.

HENSOLDT’s immediate operational priorities are converting the elevated backlog into milestone deliveries while completing capacity ramp‑ups without diluting margins through excessive subcontractor cost growth or schedule slippage. Execution against those priorities will influence how quickly ordered capability reaches frontline units and how reliably governments can translate higher defence allocations into deployable assets.

Net leverage at the end of FY2025 stood at 1.6x; Germany and other European states have increased defence budgets and procurement commitments; the audited consolidated financial statements will be published on 26 March 2026, providing the next formal checkpoint for investors, regulators and parliamentary committees monitoring Europe’s defence‑industrial ramp‑up.