Hensoldt AG (HAGHY) (H1 2024) Earnings Call Highlights: Strong Order Intake and Revenue Growth ...

GuruFocus News
4 min read

In This Article:

  • Order Intake: Over EUR1.3 billion, an increase of 27%.

  • Order Backlog: Almost EUR6.6 billion.

  • Revenue: EUR849 million in H1, marking an increase of 17%.

  • Adjusted EBITDA: EUR103 million, with a margin improvement to 12.2%.

  • Adjusted EBIT: EUR52 million, with a margin of 6.1%.

  • Adjusted Free Cash Flow: Minus EUR145 million.

  • Net Leverage: Increased to 2.8 times due to ESG acquisition.

  • Guidance for 2024: Revenue growth around EUR2.3 billion, adjusted EBITDA margin before pass-through between 18% to 19%.

Release Date: July 26, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Hensoldt AG (HAGHY) reported a strong order intake of over EUR1.3 billion, marking a 27% increase, driven by air defense systems and radar orders.

  • The company's order backlog reached a record level of EUR6.6 billion, providing excellent business visibility for future growth.

  • Hensoldt AG (HAGHY) achieved an adjusted EBITDA margin improvement to 12.2%, with core margin excluding pass revenues further improving to 13.2%.

  • The integration of ESG is on track, contributing positively to the group's performance with a strong order book and revenue contributions.

  • The company is strategically focusing on internationalization, aiming to expand its market presence beyond Germany and Europe, targeting selected global markets.

Negative Points

  • The optronics segment faced challenges, particularly in South Africa, due to technology changes and market strategy realignment, impacting revenue and profitability.

  • Net leverage increased to 2.8 times due to the partial funding of the ESG acquisition, though operationally the company remains on track.

  • The company is heavily reliant on the German and European markets, with over 80% of its order book concentrated in these regions.

  • There are concerns about the German defense budget and potential cuts, particularly regarding military support for Ukraine, which could impact future orders.

  • The resignation of the COO raises questions about the continuity of operational excellence initiatives during a critical growth phase.

Q & A Highlights

Q: Can you provide more details on the German defense budget and your confidence in its growth over the medium term? Additionally, what is the progress on key orders expected in the second half of the year? A: Oliver Dorre, CEO, expressed confidence in the German defense budget reaching 2% of GDP by 2028, supported by recent parliamentary approvals for new programs. He highlighted ongoing discussions for additional orders, including Eurofighters and Leopard tanks, indicating a strong pipeline for the second half of the year.

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