Hensoldt Ag · XETR:HAG
Hensoldt — Investor Day (November 2023)
62 slides from Hensoldt's investor day presentation, Nov 22, 2023
Slide 1: Setting up for long-cycle high growth
HENSOLDT Setting up for long-cycle high growth Capital Markets Day 2023 Ulm, 22nd of November 2023 This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HENSOLDT AG 2022. 2023. All rights reserve
Slide 2: Disclaimer Forward Looking Statement
HENSOLDT CMD 2023 Disclaimer Forward Looking Statement This presentation and the information contained herein are for information purposes only and should not be treated as This presentation may contain forward-looking statements about HENSOLDT and its businesses, including statements investment adv
Slide 3: Agenda
HENSOLDT CMD 2023 Agenda Thomas Müller 1. Introduction and Key Messages Chief Executive Officer Celia Pelaz 2. Defence environment and HENSOLDT markets Chief Strategy Officer Celia Pelaz 3. Technology-driven growth Chief Strategy Officer Celia Pelaz 4. Portfolio development strategy Chief Strategy O
Slide 4: 1. Introduction and Key Messages
1. Introduction and Key Messages Thomas Müller, Chief Executive Officer This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HENSOLDT AG 2022. 2023. All rights reserved.
Slide 5: On track to deliver a record 2023
HENSOLDT CMD 2023 On track to deliver a record 2023 Strong order backlog of €5.5bn Very high visibility on revenue FY 2023 and mid-term Efficient project execution guidance confirmed and significant increase of core revenue Excellent profitability Source: HENSOLDT AG. This document and its content i
Slide 6: High visibility from orders and pipeline
HENSOLDT CMD 2023 High visibility from orders and pipeline Order backlog (€bn) Pipeline(1) (€bn) ~34 ~30 >25 2.5x 5.6 2.2 10 2019 2023E At IPO Today Identified pipeline Identified pipeline 2021 - 2023E 2024E - 2026E for 2023E - 2027E for 2024E - 2028E Source: HENSOLDT AG. (1) Pipeline is defined as
Slide 7: Pipeline weighted to international and European opportunities
HENSOLDT – CMD 2023 Pipeline weighted to international and European opportunities Order pipeline(1) by region (€bn) International 46% ~€30bn ~€34bn Germany 24% 2023E – 2027E 2024E – 2028E Europe excluding Germany 30% Source: HENSOLDT AG. (1) Pipeline is defined as total identified opportunities open
Slide 8: HENSOLDT setting up for long-cycle high-growth phase
HENSOLDT CMD 2023 HENSOLDT setting up for long-cycle high-growth phase New defence environment HENSOLDT priorities Increasing defence budgets 8.6% €5.5bn Market across the World driving Hensoldt market growth...(1) growth Lock in new contracts and convert Orderbook(4) ...and locally with €100bn Germ
Slide 9: HENSOLDT technology and capabilities core to future warfare and security
HENSOLDT CMD 2023 HENSOLDT technology and capabilities core to future warfare and security ▪ Battlefields are becoming increasingly interconnected ▪ All domains are becoming equally important ▪ Every platform is a sensor ▪ New sensors (e.g. OSINT) are fully integrated ▪ C2, sophisticated EW and cybe
Slide 10: 2. Defence environment and HENSOLDT markets
2. Defence environment and HENSOLDT markets Celia Pelaz, Chief Strategy Officer This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HENSOLDT AG 2022. 2023. All rights reserved.
Slide 11: Geopolitical tensions and operational trends driving growth
HENSOLDT CMD 2023 Geopolitical tensions and operational trends driving growth Geopolitical Tensions Operational Trends Global Topline Defence & Electronics Spending Evolution Eastern Europe Return to Conventional Warfare 8.6% Middle East Multi-Domain Operations 4.4% East Asia /South China Sea Hybrid
Slide 12: Sensor demand growth is structural
HENSOLDT CMD 2023 Sensor demand growth is structural Current generation Future Generation Leopard 2A7+ (ca. 45%) crewed – uncrewed teaming volume growth (ca. 55%) Electronics Eurofighter (ca. 40%) density constantly increasing, (ca. 45%) greater volumes from uncrewed system uptake F125 class (ca. 35
Slide 13: High growth outlook across all regions
HENSOLDT CMD 2023 High growth outlook across all regions Germany Europe excluding Germany International(1) 12.5% 2023 2023 2023 €2.2B €4.5B €16.0B 8.6% 7.5% 6.3% 4.6% 4.3% Defence Spending CAGR 2023E – 2028F Accessible Defence Electronics CAGR 2023E – 2028F 2023 Accessible Market Size Source: Renais
Slide 14: Growth consistent across sensor capabilities
HENSOLDT CMD 2023 Growth consistent across sensor capabilities Global Accessible Defence Electronics Growth 8.6% Recent policy and spending shifts solidified by ongoing Ukraine War and conflicts in MENA and APAC 10.7% Requirement for high capability sensors consistent across all major defence market
Slide 15: Orders momentum remains strong
HENSOLDT CMD 2023 Orders momentum remains strong Case study NNbS Political and environmental influences until order received Project structure influences timing Procurement decision Revenue Q4/2021 Budget legislation €25m proposal Budget approval Profit Q1- Q4/2022 Q3/2023 Q4/2023 Offer process Nego
Slide 16: Flexible and adaptive go-to-market strategy
HENSOLDT CMD 2023 Flexible and adaptive go-to-market strategy Go-to-Market Toolbox Germany & Home Markets Rest of Europe International Embedded through Technology Insertion Industrial Sustainment Local Workshare Partnerships, Flexible approach technology and local production to fit customer R&D, pro
Slide 17: HENSOLDT leads Germany's sensors capabilities
HENSOLDT CMD 2023 HENSOLDT leads Germany's sensors capabilities Core domains and German systems Go-to-market toolbox Global market advantages Air Land Sea Key partner of German Armed Forces and major destination of home customer technology development funding Industrial Sustainment Leverages positio
Slide 18: Domestic German position strong and broad
HENSOLDT CMD 2023 Domestic German position strong and broad Service Programs 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 EF Mk1 + Rebaselining Rebaselining To 2035 -> Twinvis To 2025 -> STH1 2030+ -> F-351 (TOR Replacement) To 2030 -> ISS Eurofighter EK To 2030 -> Air PEGASUS (1st batch)
Slide 19: Current orders demonstrate technology leadership in core German market
HENSOLDT CMD 2023 Current orders demonstrate technology leadership in core German market Puma IFV TRML-4D Radar EF re-baselining NNbS Sights and self-protection TRML-4D Germany Additional features required Radars for short range for Puma 2nd batch for European by the customer and very short range pr
Slide 20: European partnering is core to our success
HENSOLDT CMD 2023 European partnering is core to our success Domain Go-to-market toolbox Selected European opportunities Air Technology Insertion Industrial Sustainment Airborne Solutions Belgium C130J MILDS Italy HALCON Praetorian Spain Land Knife Fish NL ASR-NG Poland LEO A4 EU Sea Local Support I
Slide 21: Partnerships key to European success
HENSOLDT CMD 2023 Partnerships key to European success Domain Application of toolbox European partnership between FCMS Air consortium, Indra and Thales to develop suite of networked sensors within FCAS programme Technology Insertion Industrial Sustainment Industrial Partnerships Joint Venture with T
Slide 22: Recent orders demonstrate enduring European position
HENSOLDT CMD 2023 Recent orders demonstrate enduring European position Recent European Wins Ula class submarine TRML-4D Radar Leopard 2 AMPS Periscopes and Further TRML-4D radars Optronics Self-protection systems Optronic Mast Systems for Ukraine for Norway and Sweden for Ukrainian helicopters for N
Slide 23: International markets a significant opportunity
HENSOLDT CMD 2023 International markets a significant opportunity Domain Go-to-market toolbox Selected international opportunities Air F-16 MILDS Indonesia LCH & ALH AMPS India Super Tucano AMPS Brazil PrecISR Taiwan Technology Insertion Industrial Sustainment Local Workshare Land Local Production C
Slide 24: Range of approaches being deployed internationally
HENSOLDT CMD 2023 Range of approaches being deployed internationally Domain Application of Toolbox Local production and support agreement Air to provide MILDS systems into South Korean market with Huneed Technologies Technology Insertion Local Workshare Local Production Local Support Strategic allia
Slide 25: Recent international success is just the beginning
HENSOLDT CMD 2023 Recent international success is just the beginning Recent International Wins Mission System Passive Radar ELRF M1 Abrams Self-protection Modernization Indonesia Undisclosed customer USA Japan Source: HENSOLDT AG 25 This document and its content is the property of HENSOLDT AG. It sh
Slide 26: 3. Technology-driven growth
3. Technology-driven growth Celia Pelaz, Chief Strategy Officer This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HENSOLDT AG 2022. 2023. All rights reserved.
Slide 27: HENSOLDT technologies are critical across battlespace domains
HENSOLDT CMD 2023 HENSOLDT technologies are critical across battlespace domains [https://youtu.be/awTXGOUK0Ag] 27 This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HENSOLDT AG 2022. All right
Slide 28: Customer priorities focused on three key functional areas
HENSOLDT CMD 2023 Customer priorities focused on three key functional areas driven from ongoing customer intimacy Customer Requirements Open Architecture Modularity Hardware Technologie Software Integration Moving towards Integrating supporting software capabilities Integrating new sensor hardware o
Slide 29: SIGINT sensor development example: portfolio development
HENSOLDT CMD 2023 SIGINT sensor development example: portfolio development leveraging synergies of a common architecture EuroHawk Pegasus is a result of product evolution FCAS ▪ Reconnaissance Electronics ▪ Antenna Equipment ▪ Simulation Source: HENSOLDT AG 29 This document and its content is the pr
Slide 30: Optronics' close understanding of customer priorities
HENSOLDT CMD 2023 Optronics’ close understanding of customer priorities and requirements solidifies position on next generation platforms Digital Products | Solution Main Armored Reconnaissance Battle Fighting Howitzer Vehicle Tank Vehicle Legacy Products Source: HENSOLDT AG 30 This document and its
Slide 31: Digitalization in Optronics
HENSOLDT CMD 2023 Digitalization in Optronics Example: Ground Based Systems Analogue Legacy Products e.g. for Leopard 2 & Puma New generation of Digital Products Ground-based Sensor Solutions Source: HENSOLDT AG This document and its content is the property of HENSOLDT AG. It shall not be communicat
Slide 32: Reconnaissance, self-protection & convoy protection
HENSOLDT CMD 2023 Reconnaissance, self-protection & convoy protection Sensor fusion for vehicles https://www.youtube.com/watch?v=rkdCn_gQyyg Source: HENSOLDT AG This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written c
Slide 33: HENSOLDT will continue to prioritise R&D investment
HENSOLDT CMD 2023 HENSOLDT will continue to prioritise R&D investment Around 15% of revenue to be invested sustainably Self-funded at average ~5% of revenue Customer-funded at average ~10% of revenue (1) In % of revenue 33 This document and its content is the property of HENSOLDT AG. It shall not be
Slide 34: HENSOLDT invests prioritized in technology and capabilities
HENSOLDT CMD 2023 HENSOLDT invests prioritized in technology and capabilities Based on decades of experience in Sensor Data Fusion we invest into AI and MDO-enabling tech and capabilities Strong focused R&D Further invest into Sensor Data Fusion Multi Domain Operations matching Multi Domain Operatio
Slide 35: 4. Portfolio development strategy
4. Portfolio development strategy Celia Pelaz, Chief Strategy Officer This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HENSOLDT AG 2022. 2023. All rights reserved.
Slide 36: We pursue multiple vectors for portfolio expansion
HENSOLDT CMD 2023 We pursue multiple vectors for portfolio expansion to enhance depth and market position • Artificial Intelligence • Europe, e.g. UK and France Pipeline • Data Fusion and Analytics Strengthen Access to • APAC, e.g. Australia disruptive • Autonomy capabilities key regions and enter •
Slide 37: 5. Industrialising the opportunity
5. Industrialising the opportunity Christian Ladurner, Chief Financial Officer Dr. Lars Immisch, Chief HR Officer This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HENSOLDT AG 2022. 2023. All
Slide 38: Opening key messages
HENSOLDT CMD 2023 Opening key messages ✓ Industrialising technology is in our DNA ✓ We have a strong workforce and industrial footprint ✓ Careful and strategic investments are being made to maximise our growth opportunities ✓ We are tooled for and focused on continuous improvement ✓ Talent is a prio
Slide 39: Consistently investing in the asset and employee base
HENSOLDT CMD 2023 Consistently investing in the asset and employee base Order backlog in €bn Stable capex spending(1) (capex-light business) ~2.6 % 2.4 % 2.3 % 2.9 % 2.5x 5.6 2.3 % 2.2 2019 2023E 2019A 2020A 2021A 2022A 2023E Headcount development(2) Revenue in €bn ~ 1,700+ ~ 6,350 14% CAGR 1.9 1.1
Slide 40: HENSOLDT GO! Continues as we constantly strive to improve
HENSOLDT CMD 2023 HENSOLDT GO! Continues as we constantly strive to improve Key transformation levers to become more Industrial, Agile & Resilient HENSOLDT Go! Wave 1 HENSOLDT Go! Wave 2 HENSOLDT Go! Wave 3 focuses on the right topics to prepare for future growth Optimizing End-to-end individual opt
Slide 41: Industrialising our technology is a core competency
HENSOLDT CMD 2023 Industrialising our technology is a core competency Integrated industrialization process “Cover increasing customer demand “Improve efficiency across “Ensure top product quality for key products” entire value chain” and reliability” Aligned industrialization Improvement measure Ind
Slide 42: Engineering enhancement improvement is in our DNA
HENSOLDT CMD 2023 Engineering enhancement improvement is in our DNA Key contributor to the HENSOLDT business targets Externalization Operating Model Modularization Externalization of existing FTE gap Ability to deliver Cross-divisional optimization and future growth through SDF & MDO centric modular
Slide 43: Our supply chain is robust and we continue to improve
HENSOLDT CMD 2023 Our supply chain is robust and we continue to improve Key areas for supply chain robustness @ HENSOLDT Further strengthen proactive management Further stabilization of supply chain planning Further improve on-time delivery rate of supply issues and disruptions and improve availabil
Slide 44: TRML-4D industrialisation being well executed
HENSOLDT CMD 2023 TRML-4D industrialisation being well executed Case study #1 HENSOLDT Go! Wave 1 HENSOLDT Go! Wave 2 HENSOLDT Go! Wave 3 ▪ Production System Optimization ▪ Optimization of Production lines ▪ Industrialization for current products ▪ Improve Cost of Non Quality ▪ Anonymous production
Slide 45: HENSOLDT Optronics new state-of-the-art campus
HENSOLDT CMD 2023 HENSOLDT Optronics new state-of-the-art campus Case study #2 Rationale for move and benefits ▪ State-of-the-art facilities ▪ Consolidates Optronics team across facilities ▪ Enhanced production capacity to serve growing demand ▪ Improved efficiency in production, engineering and pro
Slide 46: OneSAPnow – an important enabler to support execution of our growth
HENSOLDT CMD 2023 OneSAPnow – an important enabler to support execution of our growth Digital products & services Digital enterprise Digital work and culture Digital foundation Improved customer service Increased efficiency Future growth Enhanced business through better data through cost-efficient,
Slide 47: OneSAPnow rollout in waves to de-risk process
HENSOLDT CMD 2023 OneSAPnow rollout in waves to de-risk process 2022 2023 2024 2025 2026 2027 Global Process Template Design Post Partner and Project Pilot Rollout Rollout Explore Realize Go-live software selection ramp-up Rollout Wave 1 Wave 2 Support Mid of 2023 Mid of 2024 End of 2024 Mid of 2027
Slide 48: Structured approach to skills and competence development
HENSOLDT CMD 2023 Structured approach to skills and competence development “Global skilled labor shortage “New and changing key competencies “Operationalization of vs. HENSOLDT growth ambition” due to future market demand” strategic competence management” Profiles & Levels Strategic Competence Mgmt.
Slide 49: How trainee and students programs contribute
HENSOLDT CMD 2023 How trainee and students programs contribute … Evolution number of trainees and students (incl. Apprenticeship in Germany) 120 105 ▪ Significant growth of 65% since 2017 90 ▪ HENSOLDT tailored student programs in close cooperation with universities 75 ▪ Implementation of HENSOLDT-s
Slide 50: How learning needs are approached
HENSOLDT CMD 2023 How learning needs are approached ... High Level of Learning & Development Investment 622 ▪ Majority of eLearnings relate to mandatory trainings, general Soft and Hard Skills development ▪ Internal Trainings focussed on HENSOLDT Number of 7557 specific learning content conducted by
Slide 51: Ecosystems being essential to combine external and internal strengths
HENSOLDT CMD 2023 Ecosystems being essential to combine external and internal strengths... Radar Optronics Spectrum Dominance Airborne radars, ground-based radar, Airborne optronics, vehicle optronics, Receivers, direction finders, security radar, naval radar maritime optronics, high-performance opt
Slide 52: 6. Financial and capital allocation framework update
6. Financial and capital allocation framework update Christian Ladurner, Chief Financial Officer This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HENSOLDT AG 2022. 2023. All rights reserved.
Slide 53: 9-month results on track to deliver on our 2023E guidance
HENSOLDT CMD 2023 9-month results on track to deliver on our 2023E guidance Order intake in line with expectations Excellent revenue performance Robust order backlog € 1,281m € 1,136 m € 5,472 m Core revenue(2): €1,006m Strong adjusted EBITDA(1) result Improved adjusted EBITDA(1) margin (before pass
Slide 54: Short and medium term guidance reconfirmed
HENSOLDT CMD 2023 Short and medium term guidance reconfirmed 2023 target(5) Medium term target(5) Orders to grow significantly faster than Book-to-bill ratio(1) / Order intake 1.1x - 1.2x revenue ~ €1,850m 10% Revenue growth with stronger growth in core revenue average annual growth Adjusted EBITDA
Slide 55: Based on order backlog 9M2023, benchmark visibility continues also for 2024
HENSOLDT CMD 2023 Based on order backlog 9M2023, benchmark visibility continues also for 2024 Revenue coverage 2024E – 2026E 2024E 2025E 2026E Firm order backlog Recurring short cycle and aftermarket business (1) New orders to be executed in the respective year (2) ~85% revenue for 2024E covered(3)
Slide 56: We expect revenue split to be more balanced in the longer term
HENSOLDT CMD 2023 We expect revenue split to be more balanced in the longer term 2023E(1) Future International Europe excluding International Germany Europe excluding Germany Germany Germany Source: HENSOLDT AG. (1) Based on management estimates on the expected conversion of order backlog and furthe
Slide 57: Robust margin and cash conversion whilst investing
HENSOLDT CMD 2023 Robust margin and cash conversion whilst investing Margin discipline and cash generation potential >19% >19% ~19% 20% Adjusted EBITDA(1)(2) margin % 20% (before pass-through) 19% Adjusted EBITDA(1)(2) Cash conversion 70- on adjusted EBITDA(1)(2)(3) 70- 80% 80% 97% 75% 70% 90% 2020A
Slide 58: Capital allocation framework
HENSOLDT CMD 2023 Capital allocation framework Fund our growth Dividends M&A Supporting growth profile by preserving a conservative financial debt profile 58 This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written cons
Slide 59: Key messages
HENSOLDT CMD 2023 Key messages Excellent visibility Sustainable, consistent Highly profitable & long term growth cash generating growth 59 This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HE
Slide 60: 7. Closing remarks
7. Closing remarks Thomas Müller, Chief Executive Officer This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HENSOLDT AG 2022. 2023. All rights reserved.
Slide 61: Management priorities for HENSOLDT over next 3 years
HENSOLDT CMD 2023 Management priorities for HENSOLDT over next 3 years to underpin long-cycle HENSOLDT priorities Key KPIs Measures Today 3 years Revenue growth 7-10% 10%(3) ▪ Maintain strong order intake Lock in new contracts and convert Book-to-Bill 1.1-1.2x >1x ▪ Orders to grow significantly fast
Slide 62: Q&A session
HENSOLDT CMD 2023 Q&A session Q&A session 62 This document and its content is the property of HENSOLDT AG. It shall not be communicated to any third party without the owner’s written consent. © Copyright HENSOLDT AG 2022. All rights reserved.