Hensoldt Pushes Into New Territory as Capacity Crunch Tests Ambition

Hensoldt opens new Ulm office, launches drone training service, but factory capacity lags as orders surge 62% and backlog hits €8.8 billion.

The defence electronics group is moving beyond its traditional hardware roots, opening a new office in Ulm on Monday and completing a drone pilot training programme for the Multinational Command for Operational Command based in the same city. The twin announcements signal a company trying to reposition itself as a systems integrator and service provider, not merely a supplier of sensors and radars.

But beneath the expansion narrative lies a persistent structural challenge: Hensoldt’s factory floor cannot keep pace with the orders pouring in.

The Capacity Gap Widens

Orders surged 62 percent in 2025, yet revenue inched up just under 10 percent to €2.46 billion. The book-to-bill ratio of 1.9 tells the story starkly — for every euro of revenue generated, €1.90 in new business landed on the books. The order backlog has swelled to €8.8 billion, a figure that represents potential rather than profit.

Management is targeting around €2.75 billion in sales for 2026, with an adjusted EBITDA margin of up to 19 percent. Whether those targets hold depends on how quickly the company’s capacity investments start to bite. Roughly €1 billion is being funnelled into expansion through 2027 — new production sites, the integration of Dutch acquisition Nedinsco, and a rolling SAP implementation. All of it consumes capital and weighs on margins in the near term.

Supply Chain Moves and Talent Poaching

On the procurement side, Hensoldt has locked in a multi-year supply agreement with United Monolithic Semiconductors for 900,000 gallium-nitride semiconductor modules through 2030. These components are critical for the transmit-receive modules in modern radar systems, including the Spexer family used in air defence platforms such as Skyranger and IRIS-T.

The personnel challenge is being tackled from an unusual angle. Hensoldt has struck a cooperation deal with technology firm Aumovio to ease the transition for workers from the automotive industry — up to 600 employees at sites in Ulm, Lindau and Markdorf are affected. After adding roughly 1,200 new hires in 2025, the company plans another 1,600 in 2026, predominantly in Germany.

The new Ulm office is part of that push, providing space for additional staff needed to work through the backlog. Hensoldt is also leaning on AI-powered software and sensor capabilities to strengthen its systems-house credentials.

Drone Training Opens a Service Line

The completion of the drone pilot training programme marks a strategic shift. The course blended civilian EASA standards with military requirements, and the client was the Multinational Command in Ulm. Unmanned systems are gaining weight in modern armed forces, and Hensoldt sees an opportunity to monetise expertise beyond hardware delivery. The training offering opens a service line that could generate recurring revenue — a contrast to the lumpy, project-based nature of sensor sales.

Q1 Numbers as a Litmus Test

The first-quarter results, due on 5 May, will provide the first hard data point on whether the capacity investments are translating into revenue growth. Analysts expect sales of roughly €493 million, an increase of nearly 25 percent year-on-year. The earnings per share forecast is a loss of around €0.16, an improvement from the €0.26 loss in the same period last year.

The annual general meeting follows on 22 May, where a proposed dividend of €0.55 per share — up 10 percent from last year — will be put to a vote. The ex-dividend date is set for 25 May.

The Macro Tailwind

The structural backdrop remains supportive. Germany’s defence budget is expected to breach the €108 billion mark in 2026, while the European SAFE programme encompasses €150 billion. Thales, a peer, reported a 27 percent jump in order intake in the first quarter of 2026, with its defence division surging 75 percent — demand driven explicitly by geopolitical tensions fuelling the need for air surveillance, air defence and maritime mine countermeasures.

Hensoldt’s share price, however, has not reflected the same momentum. The stock trades at around €73.50, roughly 36 percent below its 52-week high of €115.10 from October 2025. The gap between the order book and the share price is a bet on execution — and the Q1 numbers will either narrow it or widen it.