Hensoldt Q2 results exceed expectations with 6% sales growth

Investing.com -- Hensoldt on Thursday reported better-than-feared second quarter results with sales up 6% and EBITDA increasing 10%, exceeding consensus estimates by 13%.

The German defense electronics company’s Q2 group revenues came in 2% ahead of expectations, primarily driven by its Sensors division. Orders rose 1% year-over-year, beating consensus by 9%.

Despite ongoing challenges from operational reorganization, the Sensors division experienced less margin compression than anticipated, with EBITDA margin down approximately 80 basis points year-over-year.

Excluding drop-through revenues, the underlying EBITDA margin in the division decreased by about 340 basis points, attributed to product mix and lower productivity as the company establishes a new logistics center.

The Optronics division showed improvement, with its German business experiencing a solid year-over-year recovery, helping the division reach breakeven EBIT in Q2.

Free cash flow remained negative for the quarter at €(74) million, though the outflow was slightly narrower than expected.

Hensoldt reiterated its full-year 2025 guidance, maintaining expectations for a book-to-bill ratio of 1.2x, revenue of €2.5-2.6 billion, adjusted EBITDA margin of approximately 18%, adjusted free cash flow conversion of 50-60%, net leverage of about 1.5x, and a dividend payout ratio of 30-40%.

The company continues to expect first orders from Germany in 2026 following the country’s announcement to spend 3.5% of GDP on defense.

These orders would impact revenue in 2027, after the 2025 defense budget is approved in September and the 2026 budget in November.

For the second half of 2025, Hensoldt anticipates key orders including approximately €200 million on the Eurofighter, €200 million on air defense radars, over €500 million on ground-based systems, more than €100 million on land border surveillance, and about €80 million on maritime patrol.

The company’s 2030 revenue ambition stands at €6 billion, including €0.6 billion from mergers and acquisitions and a 15% organic compound annual growth rate, not accounting for potential upside from recent European budget increases.

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