Hensoldt Pitches a Bigger, More Global Business While PEGASUS Slips to 2027

Hensoldt used its capital markets day in London to lay out a decade-long expansion, but the German defence-electronics group also gave investors a reminder of how hard big programmes can be to deliver. The first handover of the PEGASUS airborne surveillance system to the Bundeswehr is now slated for 2027 — roughly eighteen months behind the original schedule, held up by supply-chain problems and the late availability of the US military GPS.

That programme sits at the centre of Hensoldt's order book and its execution risk in equal measure. As prime contractor, the company is responsible for integrating the mission system as well as ground stations, training and analysis. A 2027 handover would mark genuine operational progress, provided the remaining integration and delivery work stays on track.

Capacity, Not Demand, Is the Constraint

Management's core message was that the order book is already full and the task now is to work through it faster. Hensoldt says it has secured the capacity step-up needed to do so by mid-2027. On the TRML-4D radar, output has already been multiplied fivefold within three years, and the company plans to double it again over the next two years.

Headcount is the other half of that equation. The workforce is set to rise from around 10,600 to roughly 14,000 by 2029, and more than 100,000 applications have already come in this year. The interest is encouraging; whether Hensoldt converts it into the right hires, and folds them into a scaling production line, is what investors will be watching.

The backlog gives the plan a foundation. It stood at EUR 10.4 billion at the end of September, with Hensoldt guiding to around EUR 11.2 billion at year-end. Order intake is expected to keep growing markedly faster than revenue.

Should investors sell immediately? Or is it worth buying Hensoldt?

A 2035 Revenue Target and a Global Mix

Longer term, the company is aiming for annual revenue of EUR 10 billion by 2035, with air defence and next-generation mission aircraft and platforms named as the growth engines. CEO Oliver Dörre said decisions on major programmes are due soon, and that the platforms involved will need sensors, software and services for decades afterwards.

The EUR 6 billion revenue target for 2030 was reaffirmed, alongside expected annual growth of 15–20% from next year. By then, services should account for around 25% of group revenue, with international customers contributing roughly 50%. A further growth leg is MDOcore, where Hensoldt is in talks with three potential customers and expects first orders from 2027.

The unweighted pipeline for 2027–2032 is put at around EUR 110 billion — potential business that only becomes real as contracts are signed and then worked off.

Margins, Cash and a Billion for Deals

Profitability is meant to climb alongside sales. The adjusted EBITDA margin is targeted to rise by about 50 basis points a year to roughly 21% by 2030. Hensoldt also plans cash conversion of around 50% of adjusted EBITDA and is sticking to a payout ratio of 30–40% of adjusted net income.

For acquisitions, the group has around EUR 1 billion of headroom, subject to net debt of no more than 2.5 times EBITDA at the end of the financial year.

Jefferies is positive on the long-term story. Analyst Ben Brown said the revenue target presented on the day reassures on long-term growth prospects, and the broker reiterated its buy rating with a price target of EUR 98. The shares nevertheless slipped 1.2% on the day.

What ties the strategy together is delivery: new service and international revenue will only strengthen the case if Hensoldt reliably executes incoming orders while hitting its margin and financing targets. The PEGASUS handover and the first MDOcore orders are the concrete tests ahead.

Ad

Hensoldt Stock: New Analysis - 10 November

Fresh Hensoldt information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated Hensoldt analysis...