Defence company Hensoldt AG expects new orders worth in the high single-digit billions of euros from Germany's special defence fund, riding a boom in military spending after Russia's invasion of Ukraine, its CFO told Reuters on Thursday.
The Bavaria-based firm, which makes radar and sensor systems for aircraft, ships and tanks and equipped Ukraine's air defences with radar last year, said its order book has swelled to a record 5.36 billion euros ($5.70 billion).
Revenues grew 15.8% to 1.7 billion euros in 2022 and it expects sales growth of around 7-10% this year, the company said while publishing its results. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) rose 12% to 292 million euros.
Hensoldt now expects to tap in to rising defence spending in Germany, where Chancellor Olaf Scholz proclaimed a "Zeitenwende," or new era of assertive foreign policy backed by higher military outlay through a special 100 billion-euro fund.
That includes kitting out the optronics for Germany's Leopard 2 tanks, some of which are also destined for Ukraine.
"The Leopard 2 is currently experiencing a renaissance," Chief Financial Officer Christian Ladurner said in an interview. "I expect that this will lead to orders in the short term."
"The Bundeswehr (German army) has to find replacements for the tanks handed over to Ukraine, and Norway has recently ordered new Leopard 2s. The strong air defence of Ukraine is also due to Hensoldt radars," he added.
Hensoldt expects "momentum" from Scholz's defence policy and NATO countries committing to the alliance's target of spending 2% of gross domestic product on defence, he said.
"From the special fund alone, we expect an order volume in the high single-digit billion range over the next four years," he said.
On the back of its 2022 performance, Hensoldt's leadership has proposed a dividend of 0.3 euro a share, a 20% increase over last year.
Since listing on the Frankfurt stock exchange in 2020, Hensoldt, which emerged from an Airbus division, has significantly reduced its debt, which stood at 336 million euros last year. That gives Hensoldt financial leeway for acquisitions, said Ladurner.
"We think a consolidation of the European defence industry is necessary. We can't avoid that in the medium term. And we don't see ourselves as a company that will be swallowed up," he said. ($1 = 0.9405 euro) (Reporting by Alexander Hubner in Munich Writing by Matthias Williams Editing by Matthew Lewis)