Hensoldt AGM Backs 10% Dividend Hike as Record €9.8 Billion Backlog Offsets Legal Procurement Cloud

Constitutional challenge to Bundeswehr-Beschleunigungsgesetz could delay defense contracts; Hensoldt reports record order backlog, but free cash flow remains negative.

A potential constitutional challenge to Germany’s military procurement acceleration law threatens to temper the euphoria around Hensoldt’s recent rally. The Higher Regional Court in Düsseldorf has flagged a key provision of the new Bundeswehr-Beschleunigungsgesetz as unconstitutional, specifically the removal of suspensive effect for complaints against contract awards. The case now heads to the Federal Constitutional Court, a process that could delay the very procurement speed the legislation was designed to unlock. For Hensoldt, which relies heavily on defence contracts, any stalling of the hoped-for acceleration introduces a layer of regulatory risk into an otherwise stellar operational picture.

That operational picture was on full display at Friday’s virtual annual general meeting, where shareholders gave near-unanimous backing to management’s proposals. The dividend for fiscal 2025 will rise 10% to €0.55 per share, translating to a total payout of approximately €63.5 million. The payment is scheduled for 27 May 2026. The AGM saw 67.11% of voting capital represented, with 92.83% approving the 2025 compensation report and KPMG reappointed as auditor. CEO Oliver Dörre described the past year as a strategic milestone and reiterated that the company’s long-term growth trajectory remains firmly on track.

The first-quarter numbers underpinning that confidence are striking. Revenue surged nearly 26% to €496 million, while order intake more than doubled from €701 million to €1.483 billion, driven by large contracts for the Puma and Schakal platforms as well as expanded Eurofighter radar system orders. The order backlog hit a new record of €9.8 billion. Adjusted EBITDA margin improved to 8.9% from 7.6% a year earlier. Earnings per share also narrowed its loss from minus €0.26 to minus €0.16, underscoring that although the group is not yet profitable on a net basis, operational progress is measurable.

The cash-flow picture, however, remains a drag. Free cash flow in the first quarter stood at minus €95 million, reflecting heavy investment in capacity expansion. Whether the record order book can convert into positive cash generation in the second half of the year is the key question for the coming months. Hensoldt maintains its full-year 2026 revenue guidance of around €2.75 billion.

The share price rally that preceded the AGM has reopened a debate about valuation. The stock closed Friday at €88.00, up roughly 19% over the past seven sessions and 13% over 30 days. Year to date, the gain stands at about 15%. The move has drawn contrasting assessments from analysts: mwb research sees no fundamental justification for the jump and reaffirms a sell rating, while Deutsche Bank sticks with a buy and a €101 price target. Jefferies and Warburg Research have price targets of €90 and €91 respectively, both recommending buy. The market capitalisation now stands at roughly €10.2 billion. The relative strength index of 55.4 indicates a neutral technical posture — neither overbought nor oversold.

Technically, the stock has reclaimed its 200-day moving average of €83.81, a bullish signal, but faces stiff resistance around the €90 psychological level. During Friday’s session, the share briefly tested €90.20 before failing to hold. The 50-day average of €77.72 sits well below, confirming the short-term uptrend. An ex-dividend adjustment of €0.55 is pending in the coming week, which will mechanically pull the price lower.

The next major catalyst is the second-quarter report due on 31 July 2026. Until then, the narrative will oscillate between Hensoldt’s record operational momentum and the twin headwinds of a negative cash flow and a potential legal roadblock to faster defence procurement. After a near-19% weekly surge, a period of consolidation would come as no surprise.