Hensoldt’s Ulm Expansion Signals Confidence as Germany’s €106 Billion Defence Budget Looms

Hensoldt opens new office for 400+ staff, targets €2.75B revenue amid European rearmament and expected €105.8B German defence budget for 2027.

The defence electronics group Hensoldt is betting big on a sustained European rearmament cycle, opening a new office building in Ulm that will accommodate more than 400 additional staff. The move, which site manager Peter Schlote described as one of the largest capacity expansions in the company’s recent history, comes as Germany prepares to unveil its 2027 defence budget — a figure that could reach €105.8 billion, equivalent to 3.1 percent of GDP.

The “Energon” building, constructed to passive-house standards, houses Hensoldt’s air defence and electronic warfare divisions — two of the hottest segments in the current defence cycle. The expansion follows a hefty order backlog that the company had built up by the end of 2025, with international clients pressing for faster delivery times.

For the current financial year, Hensoldt is targeting revenue of around €2.75 billion, with an adjusted EBITDA margin between 18.5 and 19 percent. Investors will get a first glimpse of whether the new capacity is already paying off on May 6, when the group publishes its first-quarter interim report. The annual general meeting is scheduled for May 22, to be held virtually.

The shares edged up roughly three percent on Wednesday to €76.50, though they remain well below the 52-week high of €115.10 reached in October 2025. On a year-to-date basis, the stock has gained around 15 percent. The price action has been more muted than the underlying business momentum might suggest, with the stock still trading some distance from its 200-day moving average of €84.54.

Analysts at JPMorgan see further upside, maintaining a “neutral” rating with a price target of €85. They expect the 2027 defence budget to rise markedly, providing long-term planning certainty for sensor specialists like Hensoldt. Market observers also note that concerns about potential shifts in drone doctrine are overblown, leaving the growth trajectory for mission-critical systems intact.

A potential catalyst could arrive as early as Wednesday, when details of Germany’s 2027 defence budget are expected to be published. A roughly 21 percent increase from the previous year would provide a tangible tailwind for a company whose fortunes are closely tied to state defence spending.

On the European stage, Romania has recently approved defence contracts worth more than €8 billion, partly financed by EU funds. Hensoldt faces stiff competition from international rivals for those orders. Meanwhile, the competitive landscape is shifting: competitor electrovac AG plans its Frankfurt stock market listing on April 30, aiming to carve out market share from established players including Hensoldt and Rheinmetall.