Hensoldt Aktie

Ladies and gentlemen, welcome to the Hensoldt AG Full Year 2025 Preliminary Results Analyst Conference Call. I am Matilde, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's my pleasure to hand over to Veronika Endres, Head of Investor Relations. Please go ahead.

Good afternoon, everybody, and welcome to Hensoldt's Full Year 2025 Preliminary Results Call. Thank you for joining us today. I'm Veronika Endres, Head of Investor Relations at Hensoldt. And with me are our CEO, Oliver Dorre; and our CFO, Christian Ladurner. Oliver and Christian will guide you through this presentation today, which will be followed by a Q&A session. And with that, I hand over to you, Oliver.

Thank you very much, Veronika, and a warm and cordial welcome to our valued investors and the analysts covering the Hensoldt stock. Let me begin with a clear statement. In 2025, we delivered on our commitments. Our book-to-bill ratio reached 1.9x. Revenue came in within the guided range. Adjusted EBITDA increased by 12% on a year-on-year to EUR 452 million, resulting in a margin of 18.4%, fully in line with the guidance we updated in October. And free cash flow significantly exceeded expectations at a level of EUR 347 million. These figures tell an important story. A book-to-bill ratio of 1.9x is not just a strong order intake number. It is tangible evidence that the Zeitenwende 2.0, as we call it, has moved from political announcement to contractual execution.

Accelerated defense budgets are translating into funded procurement decisions. And those decisions are arriving in our order books. Demand is concrete and operational. At the same time, the increase in adjusted EBITDA to EUR 452 million shows that we are managing growth with discipline. A 12% improvement in comparison to 2024 reflects emerging scaling effects while we continue to focus on efficiency. Free cash flow of EUR 347 million reflects a strong operational execution, but also a structural evolution in contract arrangements, which, for example, now increasingly include advanced payments. In other words, our customers are co-financing development and production ramp-ups. That strengthens our liquidity position and supports disciplined industrial expansion.

Revenue development within guidance underlines another important reality, scaling defense electronics production is a complex multiyear process. It requires stable supply chains, industrial precision and a careful ramp-up management. We are giving this maximum attention because reliability and delivery remains our first obligation to the customers. Taken together, 2025 was a strong and balanced year for Hensoldt financially, operationally and strategically. The figures you have just seen do not stand on their own. They are embedded in a geopolitical environment that has changed fundamentally. The Munich Security Conference 2026 made this shift unmistakably clear. The international order has entered a new phase of open great power competition from Russia's ongoing war of aggression to China's expanding global ambitions and multiple overlapping crisis from the Middle East to East Asia.

At the same time, the transatlantic relationship remains defined by strategic necessity, yet also by increasing uncertainty. While the United States continue to emphasize burden sharing under America first priorities, Europe is debating greater military self-reliance amid declining confidence in long-term U.S. predictability. Yet the conference also signaled recalibration rather than fragmentation. NATO cohesion and G7 coordination remain central, while Europe is positioning itself as a more autonomous security actor, strengthening its defense, industrial base and expanding partnerships beyond the traditional Western framework, for example, with India.

Against this backdrop, we are operating in a phase of persistent instability. Capability gaps are accumulated over decades are now being addressed with urgency. The demand we see is structural. It is not headline driven, and it does not depend on the precise trajectory of the war in Ukraine. Even in a scenario of reduced hostilities, strengthen air defense and expand ISR and electromagnetic warfare capabilities, the deficits are known. Political decisions have been taken. Funding frameworks are in place. Temporary market reactions to ceasefire discussions do not alter this underlying reality. The rebuilding of European defense capacity is a multiyear undertaking embedded in national force planning and procurement pipeline.

For Europe, this has translated into a clear shift in posture. Budgets are structurally higher, commitments are framed as multiyear contracts and the sovereignty in critical technologies has become central. The European industrial base is being strengthened deliberately, not only to secure supply chains, but to ensure autonomy in such domains such as sensors, data processing and the electromagnetic spectrum. For Hensoldt, this environment has very concrete implications. The immediate priority for many customers is what we call fight to night, operational readiness today. And this is where software-defined defense becomes a central lever. Real-time multi-domain data fusion and AI-supported analysis shorten the sensor to shooter cycle and increase resilience in a contested environment. Software upgrades enhance capabilities without waiting for new hardware platforms.

Modular architectures enable sovereign agility and scalable deployment under European control. In short, the geopolitical shift drives demand. Europe's response provides funding, software-defined defense translate both improved deployable capability. Let me connect the geopolitical backdrop to something very concrete, procurement execution. Throughout 2025, we have tracked these milestones carefully. And the central point today is this. The assumptions we made about acceleration have materialized exactly as expected. Three developments define the end of the year 2025. First, the 2026 budget has been formally approved with the regular defense budget rising to around EUR 82.7 billion. At the same time, the Sondervermogen Bundeswehr is effectively fully committed through authorization frameworks. The transition from extraordinary funding to structurally higher annual budgets is underway.

Second, the planning and procurement acceleration law has been enacted. This is structurally important. It shortens administrative cycles and reduces procedural delays, enabling faster contract awards. In addition, we are seeing an increasing number of projects with limited competition or even direct contracts, reinforcing our position as national champion. Third and most telling is the parliamentary approval dynamic. In 2025 alone, the budget committee of the German Bundestag approved 103 so-called EUR 25 million proposals, 103. The total volume amounted to approximately EUR 83 billion. To put this a little bit into perspective, before 2022, Germany's annual defense procurement spending typically ranged between EUR 15 billion and EUR 20 billion. What we saw in 2025 is, therefore, not a marginal increase. It represents a historic step change in procurement scale.

The December sessions alone illustrate this acceleration. In a single meeting on 17 December, 30 major projects with a combined value of nearly EUR 50 billion were approved. For us, many of these approvals are directly relevant, Eurofighter Mark 1, Pegasus, reinforcement of IRIS-T and major land system upgrades such as Luchs 2, Puma and the remotely controlled Howitzer RCH-155. These are not abstract budget lines. They are funded programs entering execution. And this is precisely the procurement environment behind our 1.9x book-to-bill ratio. The order momentum we reported is not speculative. It is rooted in a historically unprecedented approval dynamic. Looking into 2026, the pace remains elevated. More than 70 major proposals are planned with an expected volume of at least EUR 48 billion.

While this may not repeat the exceptional peak of 2025, it confirms that the acceleration is embedded in a multiyear force planning. In short, 2025 marked the transition from political intent to structural procurement execution at a scale Germany has not seen before and at a scale that will be sustained over the coming years. Let me now move from parliamentary approvals to what has actually entered our order book. The orders we secured in 2025 reflect 3 characteristics: scale, technological depth and geographic breadth. In our Sensors segment, intake was driven by major European air defense and reconnaissance programs, including Eurofighter, radar developments, Pegasus rebaselining, sustainment activities for maritime patrol aircraft and next-generation radar systems such as Spexer MKIII. These programs underline our strong positioning in air defense, ISR and electromagnetic spectrum capabilities, domains that are clearly prioritized in Europe and the overall force planning.

At the same time, the portfolio is not limited to Germany or Europe, a EUR 60 million contract for an obstacle avoidance system for the Indian advanced light helicopters illustrates the effectiveness of our grow with focus strategy. It shows that our technology is competitive in selected international markets and that we are expanding in a targeted and disciplined way. In our Optronics segment, the picture is equally compelling. The landmark Luchs 2 contract with its Ceretron sensors suite and integrated self-protection systems represents a structural upgrade in how land platforms are equipped. It moves us further towards connected software-enabled architectures.

In addition, we secured substantial orders for sighting systems, self-protection solutions and border surveillance sensor suites across Europe and North Africa. These contracts confirm strong demand not only for new platforms, but also for upgrades and capability enhancements of existing systems. Taken together, the 2 slides demonstrate that our order momentum is not concentrated in a single program or geographical area. It spans air, land and maritime domains, it covers new development, upgrades and sustainment, and it reflects both domestic strength and selective international expansion. This breadth is important. It increases resilience, improves visibility and supports margin quality across the portfolio.

Let me now turn to partnerships because the next phase of defense capability cannot be built in isolation. I would first like to address a topic that has been mentioned by some of our analysts in their reports, namely the statements Leonardo's CEO, Roberto Cingolani, made in his analyst call yesterday. Leonardo is a constructive shareholder and an important long-term industrial partner for Hensoldt. We maintain a close and trustful dialogue. However, it is not our role, and we are not in a position to comment on shareholders' intentions or potential changes in ownership. Any decisions regarding shareholdings in Hensoldt are solely a matter for the respective shareholders. This applies to both Leonardo and the German federal government.

What I can say is this, Hensoldt is strongly positioned. We are delivering on our commitments. We are scaling our industrial capabilities, and we are consistently advancing our role as a leading European sensor house and increasingly as a neo system house. Our focus is clear. It is on execution, on performance and on creating long-term value. Now on to our recent partnerships. Over the past 2 years, we have deliberately positioned Hensoldt as a bridge builder within the evolving defense ecosystem. The partnerships announced in the past weeks are clear proof that this positioning is now operational. With Tytan, we integrate cost-efficient interceptor drones into our Elysion Mission Core. This strengthen our UAS -- counter UAS architecture, particularly for domestic critical infrastructures and selected international programs, including Ukraine.

It connects start-up agility with our system integration capability. With Schwarz Digits, we combine Hensoldt sensors and MDOcore with a sovereign classified cloud, fog and edge infrastructure. This enables secure data-centric defense architectures under European control and connects our hardware and software backbone with large-scale digital infrastructure. And with Helsing, we have entered into a long-term industrial cooperation to operationalize software-defined defense in deployable multi-domain sensor-to-shooter chains. This is about execution architecture, not conceptual cooperation. What unites these partnerships is more important than the individual agreements.

They show that Hensoldt connects 3 layers of the emerging defense landscape, disruptive start-ups, sovereign digital platform providers and new generation system primes. Modern defense capability is increasingly built as an interoperable multi-domain architecture. In such an environment, integration becomes the decisive function integrating sensors, fusing data, combining software layers and effectors across domains. That is the role we are assuming. We are evolving beyond a traditional sensor champion. We are becoming what I would describe as a neo system house, a system integrator built around data, software and electromagnetic spectrum superiority, capable of operating across air and space, land, sea and cyber domains.

To our knowledge, no other company in Germany combines this breadth of multi-domain capability under a unified software-defined defense architecture. This role strengthens our strategic relevance in future procurement programs and increases our resilience in a rapidly evolving ecosystem. And with this, I hand over to Christian with an update on operations and the financials.

Yes. Thank you very much, Oliver. So when we talk about growth, one key aspect is the systematic expansion of our industrial footprint. Thanks to early anticipation, we started implementing footprint expansions and efficiency measures already some time ago. Our Operations 2.0 targets reflect our ambitious growth trajectory with further expansions planned, especially for air defense radars and ground-based systems, ensuring we can fully deliver on customer requirements and sustain growth well into the next decade.

To enable this kind of scale, we are also continuously expanding our physical footprint and strengthening our industrial base. End of last year, we announced plans to increase production capacity for air defense radars from 2027 onwards. Already in 2026, we will launch a new repair center for ground-based systems to meet customer demand for spare parts and MRO services. Further expansions, including additional capacity for infantry sites are currently under evaluation. And beyond that, we are assessing strategic partnerships and selective M&A opportunities as well as outsourced manufacturing. Together, these initiatives lay the foundation for scale, efficiency and profitability.

Let me now guide you through our preliminary results for the year 2025. I'm very proud of our achievements and the strong performance in the last year. We once exceeded most of our KPIs. Let's now have a closer look on that. Starting with the top line, order intake came in at the upper end of the raised guidance, resulting in a book-to-bill ratio of 1.9x. This significant order intake was driven by both segments and several major programs, including Luchs 2, air defense radar such as Spexer and TRML-4D, as well as the Eurofighter program and Pegasus. Overall, order intake increased by 62% year-on-year, reaching an impressive figure of EUR 5.7 billion.

Revenue increased to EUR 2.6 billion with a strong growth in core revenue of 11% despite the slower start in sensors in the first half of the year due to the ramp-up of our logistics center. Optronics continued its strong momentum with revenue growth of 20%, primarily driven by ground-based systems. At the same time, parcel revenue decreased by 12%, leading to an improved quality of revenue. Building on previous year's strong order book, we substantially increased our order backlog by 33% in 2025, reaching a new record level of EUR 8.8 billion. This provides sustained strong revenue visibility for the future. And to sum it up and to reinforce what Oliver highlighted earlier, the acceleration in defense spending is now converting into material orders, underpinning a sustained growth path for the years ahead.

The strong top line performance in 2025 is also clearly reflected in our profitability and cash generation. Adjusted EBITDA increased by 12% to EUR 452 million with an adjusted EBITDA margin of 18.4%. The strong performance was driven by higher volumes and scaling effects, particularly in Optronics and supported by material synergies from the ESG acquisition. This was partly offset by the impact of the logistics ramp-up, which continued to diminish over the course of 2025 and by an unfavorable product mix in Sensors. Adjusted EBIT also increased by 11% to EUR 327 million, benefiting from volume effects and economies of scale. As a result, the adjusted EBIT margin improved year-on-year to 13.3%. Cash generation in 2025 was excellent.

Adjusted free cash flow increased by 39% to EUR 347 million. With a cash conversion rate of 77%, we clearly outperformed our guidance range of 50% to 60%. This strong performance was supported by advanced payments, while investments in inventories developed as planned to support the growing business volume. To conclude, the strong bottom line performance exceeded our guidance, reflecting disciplined execution and operating leverage. Now let's take a closer look at our segments. In the Sensors segment, we realized a strong order intake with an increase of 42% compared to previous year. In total, orders summed up to more than EUR 3.1 billion, resulting in a book-to-bill ratio of 1.5x.

Key drivers were orders for Air Defense radars, the Eurofighter program, Pegasus and P-8 Poseidon. Core revenue in Sensors increased by 10% to over EUR 1.9 billion. Despite the slower start in our radar production in the first half of the year, revenue growth was strong and fully in line with our expectations. The share of parcel revenue further declined to an amount of EUR 132 million. Adjusted EBITDA in Sensors increased to EUR 394 million with an adjusted EBITDA margin of 19.2%. Product mix effects had a minor impact on margins, while the effect from the logistical ramp-up further diluted until year-end.

Synergies from the ESG acquisition materialized as planned and that supported profitability. Turning now to our Optronics segment delivered an outstanding year. We once again achieved a record order intake, reflecting continued momentum with orders summing up to EUR 1.6 billion, representing an increase of 114% compared to the prior year. Optronics recorded a book-to-bill of 3.8x. Key drivers were the orders for Luchs 2, the Leopard 2 and orders for the Algerian land border surveillance. Revenue performance in Optronics was excellent with a 20% increase to EUR 419 million, driven by the sustained strong development of ground-based systems. The site move of ground-based systems was successfully completed and provides a solid foundation for further growth.

In terms of margins, Optronics showed a substantial improvement with adjusted EBITDA increasing by 140% year-on-year to EUR 58 million. This development was driven by higher volumes and economies of scale materializing due to production ramp-up. Now let me briefly comment on our balance sheet and net leverage development. Over the recent years, we have continuously reduced our net debt. Following the ESG acquisition 2 years ago, we quickly returned to a deleveraging path and reached a net leverage of 1.6x by the end of 2024.

At the year-end 2025, net leverage remained stable at 1.6x, while net debt excluding lease liabilities continued to decline, our increased lease liabilities kept net leverage stable. This reflects our planned investments and the sustained expansion of production capacity, including the move to our new Optronics site in Oberkochen. Excluding lease liabilities, net leverage declined to 0.6x compared to 0.9x in 2024. This underlines our highly cash-generative business model and our ability to further reduce net leverage following an acquisition. To sum it up, Hensoldt is in excellent financial shape with a conservative balance sheet in place.

Moving on to our dividend proposal. We have guided for a payout ratio of up to 30% to 40% of the adjusted net income 2025. Adjusted net income in 2025 sum up to EUR 170 million, slightly below last year. Main driver were higher income taxes as the prior year still benefited from tax loss carryforwards. Due to the excellent business performance and strong cash generation, the Management Board intends to propose a dividend per share of EUR 0.55 to the Supervisory Board and the AGM. And this marks a 10% increase compared to dividend in 2024 and corresponds to a payout ratio of 37% of adjusted net income 2025. So let me now present our specified guidance for 2026. First and foremost, order intake. Driven by the sustained high demand and order momentum, we expect the book-to-bill ratio in 2026 to remain strong between in 1.5 and 2x.

For revenues, we are specifying our guidance to approximately EUR 2.75 billion. Furthermore, we increased our guidance for adjusted EBITDA margin to a range between 18.5% and 19%. This reflects our focus on sustained strong profitability while investing in our capacity to support long-term growth. For adjusted free cash flow, we continue to expect cash conversion of around 40%. As outlined in the Capital Markets Day, this reflects our planned CapEx for infrastructure expansion, in particular, for our new radar production site. For net leverage target, we specify our guidance to around 1.5x. As we expand our operational footprint, lease liabilities are expected to increase.

Apart from this noncash effect, net leverage would decrease even stronger. Finally, our dividend payout ratio will continue to be in the range of 30% to 40% of adjusted net income, in line with our commitment to shareholder returns. For the midterm, we confirm our targets outlined at our Capital Markets Day in November. We expect order intake to continue outpacing revenue growth, translating into average annual organic revenue growth of around 15% to 20%, likely more back-end loaded as large programs ramp up. Margins will continue to expand by about 50 basis points per year, reflecting scale and productivity gains, while cash conversion normalizes to around 50%, coming back to 50% to 60% from 2028 onwards.

Finally, our dividend payout ratio will continue to be in the range of 30% to 40% of adjusted net income while maintaining a conservative financial profile. And going forward, our priorities for capital allocation remain unchanged. First, fueling the growth. We continue to invest Hensoldt 2.0, scaling production, strengthening technology and developing our people. Second, sharing growth. We maintain a 30% to 40% dividend payout ratio of adjusted net income, ensuring shareholders participating in our success.

And third, strategic acquisitions. We pursue value-accretive M&A, focusing on technologies, markets and capacities that strengthen our core capabilities in the value chain. Last not least, we are adhering to a conservative financial debt profile and medium-term dividend payout guidance. And with that, I'm happy to hand back to Oliver for an outlook on expected key orders and priorities in 2026.

Thank you, Christian. Now let me turn to 2026 and the order environment we see ahead of us. As in 2025, both segments are expected to contribute meaningfully to order intake, and the momentum is broad-based rather than concentrated. In the Sensors segment, core programs such as TRML-4D air defense radars and the Eurofighter platform remain firmly embedded in national procurement plans. These are not cyclical projects. They are structural pillars of European capability expansion. We also anticipate the complementary procurement for Pegasus, which would further strengthen our position in airborne ISR and signal intelligence. In addition, we are seeing clear momentum in land-based electromagnetic warfare. The Knifefish program in the Netherlands and further European customers illustrate that electromagnetic spectrum capabilities are gaining priority across European armed forces.

And then there is luWES, airborne electromagnetic standoff capability. We consider ourselves very well positioned in this program. Depending on customer requirements and subject to the outcome of competitive tendering, luWES has the potential to become a true game changer for Hensoldt. The possible order range spans from multi-hundred million euros to in certain scenarios, billion levels. This would be a logical expansion of our electromagnetic warfare expertise and our ability to integrate complex airborne systems at scale. Turning to the Optronics segment, 2026 has already started with strong momentum. The Schakal program is already in our books and further land system-related contracts are expected as platform modernization continues.

As in 2025, demand combines new procurement with capability upgrades and self-protection enhancements. Taken together, the 2026 order environment confirms the structural nature of the growth dynamics we described earlier. It underpins our guidance and provides visibility across both segments. In other words, 2025 was not an isolated peak. It was a starting point of a part of a broader and sustained capability expansion cycle.

Let me give you some color on how we are translating this momentum into execution discipline. We are very clear about what the next phase requires. The structural growth dynamic creates opportunity, but it also increases complexity. Scaling production, integrating software architectures, managing supply chains and maintaining delivery reliability at the same time is demanding. That is why we have defined clear priorities for 2026. The central axis remains deliver at scale, industrialization, supply chain stability, engineering discipline and production ramp-up are at the core of our attention. In a market environment like the current one, credibility is built through delivery. We are fully aware of that.

At the same time, we continue to scale software-defined defense, MDOcore and our multi-domain architectures are moving from positioning to operational deployment. Partnerships are being translated into executable programs. Grow with focus remains selective and disciplined. We expand where we have technological relevance and structural demand, not opportunistically. And finally, we are investing in organizational effectiveness. The scale of our growth requires clarity in governance, faster decision-making and empowerment in leadership. These priorities are not abstract management slogan. We presented them to the entire organization in our recent first global town hall meeting where we reached almost 5,000 colleagues and the feedback was strong.

This is a clear understanding internally that the next phase is about disciplined execution and operational excellence. In short, we know what needs to be done and the organization is aligned and behind it. Before we conclude, let me briefly address leadership continuity and evolution. On May 1, Inka Tews will join Hensoldt as member of the Management Board and our new Chief Human Resource Officer. She brings extensive experience in guiding organizations through transformation and growth phases. As we continue to scale industrially and organizationally, strong leadership in people development, governance and execution becomes even more critical. We are very much looking forward to working with her in this next phase.

And yesterday, on 25th February, we announced that the Supervisory Board has extended my contract until the end of 2031. This extension provides continuity as we execute our long-term strategy and manage the current scaling phase. It reflects a shared commitment to stability, disciplined growth and consistent implementation of the strategic path that we have identified. Continuity and evolution go hand-in-hand. We are strengthening the organization while maintaining strategic consistency, ensuring that Hensoldt remains focused, resilient and execution-driven in the most dynamic market environment.

Ladies and gentlemen, let me conclude by bringing the key points together. 2025 was a year of execution and confirmation. We achieved a record order backlog, which provides high visibility for the years ahead. Revenue development is on track, demonstrating that we are converting backlog into delivery. Profitability remains strong with adjusted EBITDA having increased significantly year-on-year. At the same time, we generated outstanding cash flow, strengthening our financial resilience and supporting disciplined expansion. Operationally, we continue to expand and modernize our industrial footprint, increasing capacity, stabilizing supply chains and preparing the organization for sustained scaling.

And our strategic transformation under the North Star framework is clearly on track with measurable impact across the company. Looking ahead, the outlook remains robust. Our new strategic partnerships are accelerating innovation and strengthening our ramp-up capability. They demonstrate that Hensoldt is deliberately positioning itself as a bridge builder across the defense ecosystem, connecting agile start-ups, sovereign digital infrastructure providers and next-generation system primes. In this architecture-driven environment, integration becomes the decisive capability. We are evolving beyond a traditional sensor house champion into what I described as a neo system house, a multi-domain integrator built around data, software and smart and connected sensors, providing electromagnetic spectrum superiority.

This positioning broadens our relevance in future programs and strengthens our competitive resilience. At the same time, we see a multitude of major contracts expected in 2026. And we are confident that a strong order intake level can be sustained. What we are experiencing is not a cyclical volatility. It is structural growth driven by funded procurement decisions, multiyear force planning and lasting shift in European defense policy. In this environment, we remain a reliable partner for our customers, delivering at scale while shaping sustainable growth, both industrially and organizationally. Hensoldt is scaling with discipline, expanding with purpose and positioning itself at the center of Europe's evolving defense architecture. That is the foundation on which we build the next phase of our development. Thank you very much, and we are now happy to take your questions.

[Operator Instructions] The first question comes from the line of Sebastian Growe from BNP Paribas.

The first one would be around free cash flow. And apparently, you ended the year about EUR 100 million higher compared to your earlier guidance, and that was largely working capital driven. So I was wondering how we should think about the building blocks behind the about EUR 200 million free cash flow target for this year, i.e. '26. And on the structural note, are you seeing any structural improvements really for working capital at this stage? If you could start there, and then I would have 2 more around the industrial footprint and the order pipeline.

Sebastian, thanks for your question. Yes, you are right. I think there were 2 aspects in 2025. First, we -- from my point of view, did a proper working capital management. But on the other hand, we clearly increased advanced payments. So we were fighting now 3 to 4 years to get this structurally done. So this is now the case. So when I look in terms of figures, we have approximately 18% out of order intake, we receive advanced payments on average on the group. And this is also a figure we now go ahead, which is then substantially higher than in the last years, and this helps us, of course, to balance the working capital requirements on the one hand, but also on the other hand, the CapEx required for our investments.

So going forward, 2026, we will see a similar percentage of advanced payments compared to order intake. You see that the book-to-bill guidance 1.5 to 2 is relatively broad. There are 1 or 2 tickets in where we have to see. But another building block is, of course, that we will have a high CapEx number this year, approximately 6% of revenues. And this is very heavily depending on the new production site, which is then go live beginning of 2027 and including the new repair line for ground-based systems. And this in total makes EUR 80 million on top CapEx when we compare the figure to 2025. And the rest, I would say, in terms of interest, we are a little bit better now to the new refunding. So the structure is more or less corresponding with 2025. But of course, the additional CapEx for infrastructure has the impact on the 40% conversion.

Right. And then talking about CapEx, you mentioned industrial footprint before. You have also alluding to be evaluating further site expansions. And I do remember also that you pointed to a CapEx reserve of 1.2%, 1.5% of sales for further expansion projects. And apparently, orders are continuing to as well. So can you remind us by when you will have to take a decision here? And can you also share with us an update whether your priorities might have changed with regard to going for own plans as opposed to more partnering M&A or outsourcing?

Yes. First of all, the reserve and the approach we outlined in the Capital Market Day is still the same. So the figures are stable in this regard. What I can say that we are very close in terms of decisions for ground-based systems. You know that our new site in Oberkochen is now already -- almost finished. But with the increased demand in services and availability of systems, we have to have a solution here. So we are quite close and we'll, of course, update you as soon we have taken a decision for services.

Next thing will be that we, of course, have to elaborate on having another or an expansion in infantry sites, which is done in Wetzlar. Also here, we have to do some investments, but this will be well covered in the CapEx plan we have outlined. And these are, I would say, the next 2 ones, and then we are well prepared for the next 3 to 4 years. So this is valid. And in terms of how do we structure it, on the one hand, we have our real estate company who has done many of the investments in Oberkochen and other real estate investments. Going forward, if there will be a new -- a big program for Ulm refurbishment, then this real estate company will do it and we rent it back from the HV perspective.

On the other hand, I'm clearly in favor currently that we partner with a project developer in terms of real estate. There are many, many companies out there who are very professional in this regard and are able in weeks or months to ramp up a real estate and then we will rent it from them because our cash should go to our business model, developing our radars, our optronics and investing in software defense.

And maybe there was one aspect in the question as well. It's very clear that this organic scaling, which Christian in principle alluded to, goes hand-in-hand with what I would see as smart scaling. And that is still, we have many options under discussions where, of course, on one hand, we reduce our own work share in outsourcing, bringing more resilience to the supply chain up to partnering and including partnering where we would also consider a build-to-print view for rather lower complexity products. So that is all part of a comprehensive plan that we are currently putting in place.

Okay. And then what have you, on luWES, you mentioned Oliver that, that might be a multi-hundred million, if not an opportunity in the billions. Can you just remind us and walk us through the time line here for the project? And how should one think of the mix impact related to the very program, please?

Yes. Maybe I'll start with the project and then the impacts are rather taken by Christian. So well, why are we well positioned for luWES? So luWES has a history of, I would say, more than 5 years where the German government had decided that part of the national sovereign interest in technology, they would invest in electromagnetic warfare capabilities, be it passive, and that's what we see with Pegasus, where actually we can put intelligence on the enemies signal intelligence spectrum. And of course, what we were also developing in this framework was the active electromagnetic capability, means electromagnetic combat where we have the ability to jam or at least interfere with the enemies electromagnetic spectrum.

So that's why at the lower end of the luWES program, we see ourselves well positioned, if not set as the contributor of the mission system package, which will, of course, be a significant part of the luWES program. Germany has committed to NATO that they will contribute, I would say, a dozen of jammers to the NATO order of battle. And in that regard, this commitment is about the turn from the 20s to the 30s. So we would expect such capability coming into force around 2030, which puts some pressure on the time line for the program. Last year, in summer, we have demonstrated with a couple of partner companies, our technical capability, which can be considered as a kind of critical design feasibility review. And based on that, the German customer is currently working on the competition where I would see a limited number of players being capable to offer.

So our decision as we go forward, and I cannot give more details on that because that is a competitive or rather close competitive tender that is ahead. But the question depends, could we go further because we have all the experience from Pegasus. Could we not just offer the mission package as the mission package is the formative element of the capability that is about to be built. It could be that we take the full responsibility as a prime or in a partnership with some system integrators on the market, and that will drive the volume that actually comes into our books. So it's definitely a program as we have announced it here for this year, where we will see the tender. If it comes into force this year or early next year, that depends also on buying [indiscernible] and how the process proceeds. But again, with the commitment to NATO, which is clearly made until the early 2030s, the pressure is very high to start this program as quickly as possible.

Maybe to add on that, Sebastian, because you asked when we stay with the mission package, as Oliver has elaborated, then we talk about the figures we have now cited, and this is also included in our plan. If we go beyond, then figures will be significantly higher. This will also have a positive impact to our plan. But I think we're in a very early stage in this regard. So -- but we will keep you updated.

If I may just quickly come back to the mix aspect in the sense of at least indicationally providing some color around how we think about eventually the margins because Pegasus eventually we have some memory, which is different to the group margin. So if you could just qualify that.

Yes, sure. So we have 2 segments, and we have seen 2025 with 19.2% in sensors and around 14% in optronics. So for this year, I see approximately a similar margin in sensors, especially because we have now the invests and the costs for the new production side. Of course, we will have upside in volume, but encountered by the invest. And in optronics, I see a 2% improvement going ahead, going along with the revenue increase. So this, from my point of view, is the margin picture for 2026 for Sensors and Optronics.

My question was more related to luWES, if there's any sort of indication that you can drive.

I think in luWES, it depends how it's structured. Is it pass-through? Is it -- I think in general, for the payload and a little bit beyond, it will be similar to our used margins. It will be clearly better than in Pegasus. So this is for sure the case. If we go beyond, I think it's still too early to envisage on that, but we will not go for a program where we do not earn money. That's for sure.

The next question comes from the line of Marco Vitale from Mediobanca.

I have a couple. First one is on the potential, say, progression in top line growth that you expect for 2026. I mean you guided for a 10% increase, and we noted -- say that in 2025, the top line growth, progression was sort of front-end loaded. Should we expect now that the, say, comparison base gets tougher going ahead, a back-end loaded profile also for 2026? And then second question is still on the underlying assumption for your guidance. what are the assumption for the FCAS project and underlying your guidance? We heard yesterday from your partner, Indra that they are still committed to deliver on the sensor pillar regardless of any outcome of the project for the aircraft. What are your target about that? And what is included to your assumption?

Thanks for your question. So first of all, the question on top line, I think the top line guidance is, from my point of view, very realistic. The good news is that all the orders we assumed in Q4 came in. So it's now on us to execute on them. We have 2 major complexity points out. That means the logistics center, which has clearly stabilized and the move to the new site, there are -- there were 2 cornerstones where we managed quite well despite they had a minor impact on revenue. But these are out and now we -- it's on us to stabilize. And this is why I see that this is very realistic to -- for our revenue guidance.

So this is in total the topic. And of course, it will be -- it will depend on ramping up of ground-based systems, periscope, MAWS, TRML-4D for sure, then the first batch of Spexer for the Skyranger. I think these are the major building blocks. And a part of that, of course, Luchs 2 is now one of our key programs where we develop the suit. And these are the main building blocks. But as I said before, I'm very confident on the guidance for 2026 because we have now many, many peripheral sites in place.

Yes. On FCAS, a couple of comments. So in principle, this, of course, is a political decision. And we are currently making very clear that we need that clarity now. We have about 200 highly experienced engineers supporting the program as well as some national activities that are around FCAS. So in that regard, it's important for us to see how would we work with those people in the future. Looking at what we would do in the future, we, of course, remain committed, and I have also discussed with our colleagues from Indra during the Munich Security Conference. So we remain committed to contribute to FCAS in whatever shape or form FCAS would look like.

But according to also our claim to be strongly platform independent, we as Hensoldt also say we are also open to contribute to any alternative path that might arise for the future. And here, I would see from the Hensoldt perspective that any realignment on FCAS also bears opportunity. It bears opportunity because with our current posture, we cannot only contribute on the sensor pillar, but we will also contribute to what I see as the -- also driven by the market dynamics at the moment, with is the capability driving element. And that's a system of system part, which is also called CFSN, so the nucleus of a system of system capability architecture where, of course, with our multi-domain core and our sensors, we can play a major role.

That is what also the cooperation with Helsing that we have announced is about where we will develop our sensors and contribute these rather collaborative combat elements to the combat drone, the 4 tons combat drone CA1, which, of course, would be part of such system of system. And on a broader term, and I think that is very important to note, we don't see any risk related to such a realignment on our planning assumptions because with a growing business, whatever the future direction would be, I think we have enough work -- qualified work and also quantity of work for those engineers that are applied and whatever direction it will go, I see a most relevant contribution of Hensoldt.

We now have a question from the line of Afonso Osorio from Barclays.

First of all, Oliver, congrats on your new 5-year contract. That's great to see. I have 3 questions, if I can. You already touched on some of these anyway, but I'll ask anyway. First one is on your current ramp-up in your capacity plans. Can you perhaps expand a little bit on your supply chain situation in terms of the bottlenecks you're currently seeing, if there are any? And within that, also trying to understand if you have any need for incremental CapEx this year and next year, at least versus what you said to us in November to arrive to the planned production volumes.

So that's the first one. Second one is based on the latest news flow from the German budget and demand situation there. Given the news flow on possible delays or no delays, curious to hear your thoughts on that based on everything you just said, I'm assuming that everything remains intact, but just wanted to double check on that front. And then finally, if I can squeeze one more. it would be great to see your thoughts on the opportunity in the drone market. I mean you have the Slide 8, where you already talked about a little bit on that part. But I appreciate the exposure to drone is quite small for you today, but any thoughts on the tangible revenue opportunity on the drone side, that would be super helpful.

Thank you. Then I'll take the first question regarding supply chain. Yes, I think as we elaborated in the Capital Market Day, the downside is that we cannot just put on a button and it runs. The good thing, I think, is that we have a clear perspective what are now the challenges. And currently, I do not see, I would say, a major blocking point. I think the major challenge in this business is to manage the complexity, beginning with our infrastructure, beginning with our own production and then having seamless communication with the suppliers, with the supply chain quality and ramping up in an orchestrated way.

And the orchestration of the whole supply chain is the challenge, but there is no one challenge where I could say, okay, we have to solve this and this, and then we are fine. But we also show, I think that we can manage it. So when I just compare the material throughput, and we had a proper discussion yesterday in Ulm from a pure material throughput, we doubled the material throughput now in 2 years. You cannot see it yet in the revenues because also the mixture between material and personnel expenses has changed, but it shows that with our measures we have taken and laid up in the Operations 2.0, we clearly pushed the supply chain up. So this is my comment regarding supply chain. It's a complex system, which we have to manage. But currently, we have the necessary levers in place.

Okay. So question 2, German budgets. I'm not sure if we understand it well, but we see everything intact. I mean, we underline it also in our pitch. It's structural. We have a long-term plan that the budget will grow to EUR 152 billion by '29. So in that regard, all what we hear and see is really structural growth and a long-term commitment of the German customer.

Okay. And then the last one on the drone side.

Yes, yes. The last one on the drone. I mean, yes, we -- I mean, Hensoldt is really positioning, and that's what I introduced as the neo system prime as a kind of bridge builder because I'm a bit -- I would rather say fed up with the discussion of drones or tanks, drones or fighter airplanes, drones or frigates. I think definitely a defense scenario of our alliance in Germany and Europe -- and that is what we can state upfront would be different than the Ukraine war. However, drones are changing the future war scenario, and that's why Hensoldt positioning as this neo system prime, we are working very closely with the drone supplier.

So I highlighted our cooperations with Tytan, with Helsing and also with Quantum Systems, including that also, as you know, we have invested in Quantum. So all of these cooperations are strategic. We are talking to other drone suppliers, including other domains than air that applies to the land domain where, for example, for the Luchs 2 or also for some of the electromagnetic combat systems, our customers are asking concepts couldn't we have additional UGVs supporting those traditional platforms in penetrating deeper into enemy territory, distributing antennas and sensors across the battlefield. So I think there's a strong dynamics, and that is why we are talking to those companies. What is also very clear, as stated before, we will stay platform independent. So none of those companies is in any shape or form exclusive.

So we try to deliver to the breadth of those platforms. And we are evaluating, I would say, in 2 directions. The first one is the role of a system integrator where we see a strong necessity that especially looking at intelligence surveillance reconnaissance, the sensors of this drone cloud, as I would call it, are seamlessly integrated into broader defense architectures, be it air defense, be it counter UAS, be it ISR, signal intelligence, electromagnetic warfare or whatever. So it's our clear self-taken task, and we have a strong backup from the customer that we put the 2 worlds together in a sense of a seamless ISR infrastructure supporting information superiority decision speed and especially precision engagements.

So that is one element where MDO core and our general ability as system integrator comes into place. And the second thing is, of course, our sensors, not the breadth of the sensors, but looking at the preciser, looking at some of the optics, we will evolute our portfolio in the range of drones. That is not to say that we go into the commodity market of the smaller drones, but having like midsized unmanned ground vehicles, having like mid- to bigger size unmanned aerial vehicles as we do with CA1 with Helsing, we sure have an ability to provide sensors to this segment. And that is, of course, driving also quantities. So I think drones changes our business, and we're anticipating that in both in quantitative growth, but as well as in moving the quality and evaluating also the business model of the company.

The next question comes from the line of Chloe Lemarie from Jefferies.

Most of mine have been answered, but I'll have a follow-up on -- so first of all, on the comments that you made with regards to the Sebastian question on free cash flow. On the advanced payments, should we take the EUR 344 million contract balances as kind of a guide, which is equal to about 7% of your order intake? Is that the right ballpark for 2026? And then second question on the 2026 order intake, the range is quite large. So I was wondering how much of that EUR 4.1 billion, EUR 5.5 billion guidance are you expecting to come from Germany? And what would be kind of any large order that you see potentially slipping to 2027 to explain that range?

Thank you for your question. I think when you want to have a calculation of the pure advanced payments volume, then you should take our order intake, multiply it with an 18% and then you will see that the advanced payment figure on that. So here, we have growth also in line with our order intake and our revenues. So what drives the range? You have seen that in our expected key orders, there are some very big ones. So we have elaborated on Pegasus, for example, we have elaborated on luWES.

And as such big programs are planned or on our contract, -- it could be that it's contracted in November, December, but it could also be that it slips to January, February. I think during the course of the year, we will be clearer in the book-to-bill guidance. From the current point of view, I can say that everything evolves very, very fast in a very dynamic way. But this is simply the reason why we have chosen now this guidance range. But in case if it's then December or January, February, I think it's not our biggest worries because the order book is very, very full, and we are very busy of exploiting the order intake into revenues.

Understood. And just on the share that you expect from Germany?

Sorry. Yes, I think we have elaborated also in the Capital Market Day that in a long-term perspective, we see 50:30:20. But when I look in the next 2 to 3 years, we should assume 60:25:15, so 60% from Germany, 25% Europe, 15% rest of world. This will be reflected in our order book and also then, of course, reflected in the revenue split in the next 2 to 3 years.

We now have a question from the line of Carlos Iranzo Peris from Bank of America.

On the follow-up order on the Pegasus program, should we expect any meaningful change in terms of pass-through revenues versus the previous order? Or should we kind of expect the same setup?

Carlos, thank you for your question. So if it's the 900, which we have shown in the page, I do not see a split. I think what's currently discussed is what will be the structure. The Germany has some Global 6,000 aircraft in their fleet operating. And now then it will be the question how will be the structure will be given us as a so-called bestellung or will they be bought? And this, of course, then drives the revenue split. And then, of course, it could be that the revenue figure changes a little bit. We will learn, I think, also in this regard more during the year. But if it's the EUR 900 million we have planned for, then the share of pass-through will somehow similar as in the last program.

Okay. Great. Understood. And then if we can speak a bit about your book-to-bill because coming back to the comments that you made in the interim remarks, when you said that you expect a volume of at least EUR 48 billion, but this might not repeat the exceptional peak of 2025. So I just wonder how should we read this in the context of your book-to-bill guidance? Does that mean that you think your book-to-bill can potentially peak in '25, '26? And then should we assume that progressively normalizes from '27 onwards?

Could you please repeat that? I've not catched it. Sorry.

Yes. So like when we think about book-to-bill from 2027 onwards versus what you plan to do in '25 and 2026, how should we think about it? Do you see the book-to-bill peak in '25, '26? Or do you think that those levels can be sustained going forward?

Okay. Now Carlos, understood. So I think that the order intake will be substantially higher in the outpacing years. Why? Because the German defense budget will grow heavily in the next years, not only marginally, but structurally to EUR 160 billion in 2009, now coming from a figure slightly beyond EUR 100 billion this year. And this will, at the end of the day, be reflected in our order book. So I do not see that this will be the peak. There is more to come in the next years. And we will also see we have guided for EUR 6 billion in 2030. That means order book will increase simply to our revenue structure across the years.

Plus what we need to consider here is the international customers. I mean once we have scaled our capacity, which is on its way, I mean, just coming back from 2 big exhibitions in Riyadh as well as Singapore, I mean, one thing is for clear, the technology we deliver would sell on an international market. So it depends on our focused approach as well on the capacity. So in that regard, I'm very confident about future order intakes.

The next question comes from the line of Christophe Menard from Deutsche Bank.

Just one question on the margin guidance. You used to guide to a 50 bps increment, which I mean, is, to some extent, you're getting to the same level. But still in 2026, you may have a slightly lower margin increment, if I take your range. What has driven you to do -- I mean, such a range? I mean what is the potential headwind, I would say, that you may see in '26 to -- not to just simply guide to 18.9%.

The second question was on the partnerships, very interesting. What forms will they take? Do you plan to have joint ventures? Or is it really kind of a supplier to client relationship? Or is it purely a collaboration? And the financial contribution of those partnerships, I would guess they are in your guidance. And do you expect to have more of these partnerships? Do you need more of those partnerships going forward? And the last question is on IRIS-T SL MX, apparently the latest evolution. Is it something that will require a new radar development on your side? Or is it already developed and already in your -- I mean, it has been kind of spent in terms of R&D?

Thanks, Christophe, for your margin question. I'm happy to take it. So first of all, while we have guided for a range, we have seen in the last 1 to 2 years that we always have, I would say, a slight or smart start into the year with lower margins because costs are in a linear perspective, whilst our business is still very, very heavily Q4 related. And you will see that in the first 1 or 2 quarters, normally, margins are under pressure because we take normal costs on board, we need them in order to have capacity. And then the margin turns out in November, December. And this makes the exact margin guidance relatively, I would say, to be very precise, it's difficult.

But in the range, I feel quite comfortable. And you have seen in the last 2 to 3 years that we were always at the upper end and even beyond in the margin. So I'm very -- yes, also in this regard, I'm very convinced that we can also reach the 19%. But now let's stay with the guidance. I think this is one aspect. Another thing is that when -- especially when we talk about air defense and the current situation in the Ukraine and our TRML-4D, there are sometimes decisions during the year that we prepone the one or the other radar for our customers, and they have a slightly different margin profile. And of course, we will always work together with our closest partners, the German government to have the radars there where needed. But this implies then a little different margin perspective, which has an impact then on the bottom line.

Okay. To the other questions, Christophe, partnerships, I think that varies. The current status is indeed the partnerships are strategic. They are collaborative. And at that stage, it's supply in both directions. We would supply components, be it sensors, be it interfaces to the partners as well as we would get their supply, example, given Tytan on a counter UAV drone that is embedded into our Elysion system. I mean, looking into the future, we are open in, of course, extending that to a stronger tie which depends then, I mean, especially looking at Schwarz Digits. Once we have a larger program coming out, then, of course, program to program, we have to consider also from financial aspects, we had the question on luWES, what would be the best setup, the industrial setup to support also the financial, the risk sharing, the work sharing and all of that, where in the end, we definitely are open also in structures of JVs and putting things together.

But that is what I would say rather in the future. As you know from past discussions, I'm a strong fend that such industrial constructs are means to an end. So at the moment, we're really focusing on the end, bringing the topics of the companies together to the benefit of our customer. Do we need more partners? I mean, clear conviction from my side, nobody can do it alone. We need more partnerships at the moment. So we have an MOU with SAP in place, which we discussed last year at the Munich Security Conference, which was primarily aiming at the electromagnetic combat element of the Eurofighter.

So we have revisited that on management level at the MSC this year. We have recently signed an MOU with Kongsberg on the space constellation. In that regard, especially looking into the Nordics, there are strong G2G agendas. And whenever a G2G agenda would need a strong partnership on industrial level, we are open to discuss. And as a matter of fact, I'm in a very frequent dialogue with most of the CEOs here in looking at the traditional defense players. But also partnerships with -- and I won't elaborate too much anymore on supply chain and so on, where we have, at the moment, strong discussions with automotive suppliers, be it that we take personal, be it that we use their capacity in production, extending our supply chain and so on.

So partnering indeed is a very strong element, and I would rather conclude you can't have enough partners in order to cope with the dynamics and the growth that we see ahead of us. And the last thing, IRIS-T SLX. Yes, there will be adaptations on software level, but it's software-defined radar. So in that regard, I would consider this as evolutionary, not disruptive in that sense. Also considering the fact that we have a strategic partnership with Diehl. Helmut Rauch and I meet on a very regular basis. We have established governance to discuss the way forward.

That is about integrating. And also you see our MOU that Helmut -- that Diehl and Hensoldt have signed during the Paris Air Show last year, where we want to improve the surveillance and reconnaissance elements where we would connect the radars of the IRIS-T SLM also with the broader air surveillance where Hensoldt has many radars in place, integrating the passive radar, also extending, let's say, the ISR network, air defense ISR network to counter UAS, where at the moment, we are in discussions with the German ANSP, DFS as well as with Deutsche Telekom to probably bring things more broader into the German infrastructure.

And also, what you saw is that recently, Diehl has proven that they can shoot a missile also from a German frigate -- in that regard, as you know, we also have our radar on this frigate, which would be adapted to the software stand of the TRML-4D in that regards to support a new air defense capability for the Navy. All of that is in the perimeter of a very strategic discussion with Diehl and that, of course, encompasses the Iris-T SLX as well.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Veronika Endres for any closing remarks.

Yes. Thank you all for listening today. And as always, should you have any further questions, the IR team is around all day to follow up. With that, have a great day. Thank you, and goodbye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Yes. Good afternoon, everybody, and welcome to Hensoldt's Capital Markets Day 2025. Thank you all for coming to Ulm today. And this year, this room is really packed. And I can see there are many on the webcast as well. So great to have you all here.

My name is Veronika Endres, Head of Investor Relations at Hensoldt, and I will guide you through this event today. With me are Oliver Dorre, our CEO; and Christian Ladurner, our CFO. Klaus Emmis, our CHRO, unfortunately, can't join us today, but he send us his regards.

Before we begin, let's have a brief look at today's agenda. We will start with Oliver, who will open the day with an update how Hensoldt is mastering the defense super cycle. Then we will dive into the 4 axis of our North Star strategy, deliver at scale, which Christian will take you through; Pioneer software-defined defense and grow with focus, both elaborated by Oliver and then lead our teams into the future, which is presented by Oliver as well. After that, Christian will provide a detailed update on our financial outlook and performance before Oliver will come back on stage for his closing remarks.

We plan a short 15-minute coffee break at around 2 -- 2:15 p.m. And at the end of the session, we will, of course, open the floor for your questions, both here inside the room and all who participate virtually. And now one final closing remark from my side. Please note that this event will be recorded. A video will be available on our website shortly after.

And with that, over to you, Oliver.

Well, thank you very much, Veronika, and really great to have you all here in Ulm. Dear investors in Hensoldt, dear analysts, ladies and gentlemen, a very, very warm welcome from my side to our 2025 Capital Markets Day. It is my second CMD and my first one here in the beautiful city of Ulm, the very heart of our operations. Thank you very much for joining us today.

Before we dive into strategy and performance, allow me to start with a broader reflection because since last CMD, the world around us has changed once again and fundamentally. The American strategic reorientation toward Pacific has become tangible. I witnessed it firsthand, starting with JD. Van's speech at the Munich Security Conference and most recently, through the announcements that the U.S. will reduce its presence in Eastern Europe, particularly in Romania. At the same time, here in Europe, Germany has formed a new and most decisive government. The dead break for defense spending has effectively been removed and Germany and many of our allies have now committed to spending 3.5% of their GDP on defense. In short, Europe will be ready soon.

Yet when I speak with our customers, the armed forces, the operators, the people who stand and watch every night, I sense two things: optimism and concern. Optimism because the political will and the budgets are finally there, but concern because the threat is immediate. Russian drone activities, airspace violations, hybrid attacks and all of these have increased exponentially. Our customers are not preparing for 2030. They are thinking about tonight, about 2026 to 2028, the critical years before the buildup fully takes effect. That's why we have adopted their language, a simple but powerful operational mindset, fight tonight, support our customers with maximum readiness by making the best use of existing systems and improving them through software and data; fight tomorrow, deliver at scale, providing the next generation of interconnected multi-domain capabilities. This dual mission supporting readiness today while building strength for tomorrow defines what we, what Hensoldt does.

There's another aspect of this reality we must recognize. Operational security matters. Russian Espionage activities are real, including the collection of intelligence on industrial sites and production capabilities. We ask for your understanding that going forward, we will be more careful about what we share publicly, fewer details about facility locations, production numbers or unit references. We have the duty to protect our people and our customers, and we take that responsibility very serious. That said, we will still show as much as possible. And during today's site tour, you have seen for yourself how much progress we have made.

With that context in mind, the changing world, the immediate threat and our growing responsibility, let me turn to Hensoldt's own journey because the past year has been very busy, demanding and extraordinarily productive. Last year, we presented to you our North Star strategy, a comprehensive framework for growth, innovation and leadership. Since then, we have delivered and the Hensoldt investment case has become even stronger. Today, our story is clearer and as said, stronger than ever. Hensoldt continues to benefit from a step change in market growth, especially in Germany and across Europe. We are Germany's defense and electronics champion with the German government as anchor shareholder and a very strong political support. We are technology and innovation leader with software-defined defense and our multi-domain operations software backbone called MDOCore, paving the way not only for the fight to night, but for long-term competitiveness. And we are multi-domain defense player, serving all branches of armed forces with smart software-enabled interconnected sensors. Exactly 334 days after our last CMD, we are not only giving you an update, we have entered a new era of our business.

Let's take a closer look at how our ambition translates into growth. Since introducing North Star, growth formula last year, we have refined our approach and raised our target from EUR 5 billion to EUR 6 billion by 2030. That means we are committed to doubling our revenues at an accelerated rate, but doing so sustainably with efficiency, resilience and profitability. This is not about chasing numbers. It's about building a scalable sovereign and sustainable growth engine.

Before we start, let's quickly revisit the North Star structure now reordered to reflect what the past has taught us. You've all seen this picture before, but let me briefly recap. At the foundation is deliver at scale, building a scalable, resilient and efficient industrial base for European security. That is where we create the operational backbone of our Hensoldt 2.0.

Next is pioneer software-defined defense, our strategic ambition and future differentiator. With MDOCore, we now have a clear right to win as the integrator of multi-domain data-enabled solutions. Third, grow with focus. Our commitment to expand internationally strategically and sustainably beyond Germany and Europe, our strategic regions, the United States, Canada, the Middle East, India, APAC and Australia play a central role here. And finally, lead our teams into the future because none of this happens without people. We have become a unique employer of choice with a motivated and rapidly growing team. Together, these 4 axis from North Star, the framework that guides us towards sustainable growth and European technological sovereignty.

So what progress have we made in just under 1 year? Let's jointly take a look. The progress across the company has been impressive and inspiring so many hands, so many minds working in concert toward one goal. Operationally, we have made decisive progress. Our new logistics center is live. The new Optronics campus is coming online, and we have launched Operations 2.0, a key milestone we will return to later today. Strategically, we have established a dedicated SDD organization, signed key partnerships and were selected for major software-defined programs, including the new reconnaissance vehicle, Luchs 2.

Internationally, we have formulated regional strategies, introduced key account management for our most important customers and refocused our international organization. Culturally, we have launched our evolution initiative to strengthen leadership and collaboration, and we have welcomed over 1,000 new Hensolians to the team. That is, to our understanding, transformation at scale, operational, strategic and human. With a strong foundation in place, it's time to look outward at the world that surrounds us and the opportunities it presents because the super cycle we anticipated last year is no longer a forecast. It's happening right now. So let's turn to the environment that will define our next decade of growth and see how Hensoldt is seizing the second chapter of the

Ladies and gentlemen, when we met in London last year, we spoke about the world entering a turning point defined by instability, strategic competition and the return of hard security. A year later, we can say it clearly, the super cycle has arrived. The drivers are geopolitical. They are structural, and they will shape our business for the next decade and beyond. Let me start by taking a step back and look at what has changed in the global security environment since our last Capital Market Day.

The now almost 4-year long war in Ukraine and the Russian threat to Europe's Eastern flank have only grown more acute. News of Russian airspace incursions, drone activity near European military sites and hybrid operations have become almost daily occurrences. At the same time, the situation in the Middle East remains tense. Even though the release of hostages from Gaza brought relief, tensions are far from easing. The continue to disrupt maritime traffic in the Red Sea and the civil war in Sudan is intensifying. In Asia, we have again seen major clashes between India and Pakistan, both on the ground and in the air. Meanwhile, China is ramping up military pressure on Taiwan and against neighboring states in the South China Sea.

And as I said last year, and it remains true today, what different is not the crisis that exist, but that they are happening all at once and at accelerating speed. Let me be very clear. The threat to Europe from Russia is real. This will define the mission of European armed forces for the foreseeable future, and therefore, it defines our mission, too. But amid all these challenges, I remain confident because what we are seeing today is not paralysis. It's a real political and industrial awakening.

We can now clearly see the defense super cycle is becoming a reality. Last year, we faced deep uncertainty in Germany. The coalition had collapsed, spending decisions were frozen and the was being absorbed by urgent replacement programs. Today, the picture has changed completely. We have a decisive new government, continuity in the defense ministry and crucially, the dead break has been lifted for defense spending. Germany has fully committed to 3.5% of the GDP for defense and has already integrated it into its multiyear planning. This translates into a defense spending of more than EUR 150 billion in 2029. The order ramp-up is tangible. We see it in our own order book every month.

Across Europe, Capitals are following suit. Many have now committed to the same 3.5% target. And at the European level, the Readiness 2030 initiative has been launched with also EUR 115 billion in loans already allocated to strengthen defense capabilities across the member states.

The most recent NATO summit confirmed what we have long anticipated, plans for up to 50 additional brigades, enhanced airborne and maritime capabilities and major new investments in reconnaissance and deterrence. Last year, we said, for the first time in decades, we see a broad political consensus to reconstitute a credible European defense and deterrence capability. This year, this consensus is turning into concrete action, signed contracts and already delivered equipment. Some argue that peace in Ukraine might ease tensions. Ladies and gentlemen, this view from my perspective, formally just recently traveled to Ukraine, that view is mistaken.

An end of hostilities would simply free Russian forces to shift their focus elsewhere towards our Eastern allies. The demand for air defense, sensors, self-protection will continue to rise and not just this year, but well into the 2030s. A key driver of this transformation is Germany. taking for the first time, full responsibility for Europe security. It does so through major equipment procurements and also by deepening cooperation with its European partners, for example, through the European Sky Shield initiative.

One of the most significant and long overdue developments is that Germany has stepped up. This, we call it Zeitenwende 2.0 was symbolized by 2 decisive moments in May this year. First, when Chancellor Fredriich Merz declared Germany's ambition to build the strongest conventional army in Europe. And second, during mustering tank Brigade 45 in Lithuania when he stated the protection of Vilnius is the protection of Berlin. These are not symbolic words. Since May, we have seen them turn into policy, turn into budgets and recently turning into orders. Imagine this only a few years ago, even 1 year ago, what a change in mindset and what a change in responsibility. For Germany, we now see a clear path to 3.5% defense spending by 2029. For the rest of Europe, at least 2.5% by 2030. In contrast, U.S. defense spending is expected to remain largely constant relative to the GDP. For Hensoldt, this means opportunity and obligation.

As Germany leads, we are ideally positioned to capture this growth reflected in our strong order backlog and the orders still to come before year-end and into early 2026. This renewed sense of purpose isn't just rhetoric. Germany is matching its ambition with real reform and money. The political commitments we've heard being backed by concrete action. The planning and procurement acceleration law has been enacted, cutting bureaucracy and speeding up every stage of the procurement process. The BN BW, Germany's Defense Procurement Agency has expanded its capacity significantly with over 150 parliamentary proposals expected to reach approval by the end of 2026.

The Chancellary, Ministry of Defense and Ministry of Economic Affairs and Energy have all created new structures to strengthen the defense industry. Of the known budget requests, almost all are destined for German industry. For Hensoldt, this means we have earned and will continue to hold a unique position as the national sensors champion and the partner of choice for the Bundeswehr. And I can tell you from experience, I spent a great deal of time in dialogue with political stakeholders across party lines in Berlin, Brussels and beyond. The picture is clear. Hensoldt enjoys strong political support based on trust, competence and reliability. This political momentum translates direct into market dynamics, especially in our core domain, defense electronics.

We are witnessing a major increase in our accessible markets compared to our expectations last year. Germany is again leading the way with growth rates in defense electronics doubling compared to last year. Europe and international markets are following with strong momentum. 4 factors are driving this growth. One, acceleration of procurement programs, especially in the land domain with examples like Luchs 2 and Schakal. Two, a step change in electronic density on all platforms with sensors and connectivity becoming central to future operations. Three, lessons from Ukraine, showing the need to operationalize connected sensor networks in real time; and four, the launch of next-generation capabilities across all domains, air, land, sea, cyber and space. To realize this potential, software-defined defense will play a crucial role with MDOCore enabling us to harness sensor density and data availability and adapt to new operational imperatives quickly.

All of this confirms that Hensoldt is ideally positioned in the German and European defense electronics market, a market with great perspective well into the 2030s. And these market trends are not theoretical. They are already visible in our books today. Since last year, we have increased our order backlog from EUR 6.5 billion to EUR 8.5 billion expected by the end of the year as defense spending, particularly in Germany has just recently taken off and is still gaining momentum. This is just a snapshot in time, and we expect further acceleration in 2026. That reflects both customer trust and our technological leadership. It's not just a number, it's our contribution to security.

Our pipeline has also surged compared to 2022 when we showed you EUR 30 billion, this figure has more than doubled within 3 years. This growth is fueled by the urgent need to refill conventional capabilities, upgrade existing platforms and introduce new battlefield systems, all of which are now transforming into concrete and multiyear contracts.

Let's look more closely at what drives this demand and why Hensoldt is uniquely positioned across all spending priorities. As you may recall, the accessible market in Germany is set to grow by about 20% per year through 2030, with the broader European market following at roughly half that pace around 10%. Behind this are 3 structural drivers, and Hensoldt is present in all of them. First, Procurement of new systems. Customers are buying in larger quantities and at greater speed from Eurofighter to Leopard, Puma, Schakal and Type U212CD submarines. Hensoldt sensor suites are on all of them.

Second, upgrades of existing capabilities from PEGASUS to Sawfish to Knifefish and P8 Poseidon, who has just come to Germany last week, upgrades are essential. As an incumbent with a reputation for reliability, Hensoldt is a natural partner for these programs. And third, development of new capabilities. Our early positioning on LuWES, Luchs 2 and the F127 frigates shows how customer intimacy and know-how translate into future business. And as volumes grow, so does demand for service, training and midlife upgrades. On top of that come accelerating high-margin revenues from our software-defined solutions, including license-based models.

Over time, defense budget will gradually shift from acquisition to operations following the U.S. example, where more than half of industry revenues comes from recurring service and MRO contracts. These drivers are further amplified by a unique feature of a German approach, the focus on framework contracts open to European allies.

The German government strategy of multin-nation framework contracts is proving highly successful. Each one generates multiple follow-on orders first from Germany, then from partners. This is illustrated by the European Sky Shield initiative. The number of member nations has grown to 24 and 7 of them have already signed contracts. Hensoldt has a strong position across all key programs, TRML-4D and IRIS-T SLM currently protecting the Ukrainian skies. Leopard 2A8 with Hensoldt's future sensor -- full sensor suite. SkyRanger with SPEXER radars and Type U212CD submarines with our advanced optronics technology.

Beyond these, Hensoldt is an active member in all major European collaboration programs from Eurofighter to FCAS, and we've seen Tranche 5 confirmed with Turkey joining the program only a few weeks ago. This momentum is already translating into contracts and revenues, many of them booked, others in final slowdown.

Since the start of this year, order intake has been strong, particularly from programs already approved by the Bundesthax Budget Committee. Highlights include over EUR 800 million from the Luchs 2 reconnaissance vehicle based on our software-defined defense architecture. Major follow-on orders for Eurofighter, air defense radars and Leopard/Schakal sensor suites. Orders from TRML-4D with weapon location capability, a tangible example of how software-defined defense improves an already great product through its life cycle. And a new partnership with Boeing for the sustainment of Germany's P8 Poseidon, strengthening our transatlantic ties. Together, these demonstrate our ability to capture both national and international opportunities at scale.

Let me take one of these in a showcase, a program that perfectly embodies the convergence of our strategy and our technology. The Luchs 2 reconnaissance vehicle is a milestone for Hensoldt and for European land defense. The original requirement was 92 vehicles. It has now grown to 274 platforms with potential for even more, both domestically and for partner nations. And for the first time in the land domain, Hensoldt provides not just sensors but a connected sensor suite, powered by software-defined defense. This program is not only a cornerstone of the German Army's modernization, it's a proof point of our transformation from hardware excellence to software-enabled system leadership. It provides long-term recurring revenue through both hardware upgrades and software licenses. And I'll come back to this later when we talk about the full potential of software-defined defense.

Finally, let me address a topic that has become strategically decisive, both for our customers and for Hensoldt, it's counter-UAS. After years of cautious growth, the counter UAV market has shifted into a new dimension. The threat is no longer abstract. Drones are now daily reality in European airspace, not just at the front line. Hensoldt plays a leading role here. Our system integrates own and third-party sensors and effectors into one command and control layer connecting drone defense seamlessly with air defense networks.

We also bring strong electromagnetic warfare capabilities, combining passive radar with jamming to detect and neutralize targets. Our first operational counter-UAS system dates back to 2015 when we protected the G7 Summit here in Germany. And we introduced Azul, Germany's military Counter-UAV system already in 2022. And today, several of our systems are operational with the Bundeswehr and very soon with the Federal Police Service. Through our emerging partnership with German Air Traffic Control, we are also addressing civil critical infrastructure, including airports and urban areas, extending our expertise beyond traditional defense. This, ladies and gentlemen, is a perfect example of how we evolve our portfolio in line with threat scenarios, connecting technology, purpose and protection. And it is the perfect example how we leverage the capabilities acquired through ESG in combination with Hensoldt's Sensors to form a very attractive offering for our customers and create strong synergies.

To sum it up, this is not longer about forecast. The defense market is in full acceleration. Budgets are rising, procurement programs are moving and customer confidence is strong. Hensoldt is ready to harness this momentum with the right capabilities, partnerships and at scale. Let me now show you how we are turning this dynamic into industrial reality because on this scale requires operational excellence, the ability to ramp up, produce and execute with speed and precision.

So with that, let's move from the why to the how, and have a look at first of our North Star pillars, starting with

And Christian, with that, over to you.

Yes. Thank you very much, Oliver, and also a very warm welcome from my side to this day. Yes, indeed, our starting position is excellent and the scale of what lies ahead of us is extraordinary. Market forecasts show that we exceed early expectation with strong visibility from both our backlog and from our pipeline. And we are on the growth trajectory that will continue well beyond 2030.

Let me start what makes the Hensoldt business model fundamentally different, and it is different from that of traditional platform manufacturers. While OEMs build and sell hardware such as aircraft, vehicles or ships, our value lies in what makes those platform intelligent. It is the sensors that perceive the algorithm that interpret and the software that connects everything into a current operational picture. Our systems are platform agnostic by design. They can be integrated across aircraft, ships, vehicles and ground systems, which mean that every new platform program in Europe or beyond becomes a potential opportunity for Hensoldt. And this independence gives us both flexibility on the one hand and resilience on the other.

At the same time, our solutions are highly complex and innovation-driven. They are not one-off projects, but multiyear programs that are built to evolve over decades. Each system starts with development and integration and then generates recurring revenues through upgrades, services and life cycle support. And in short, while the initial ramp-up phase may be demanding, the return profile of our business is fundamentally long term and sustainable. Once established, each program delivers a longer cycle of profitable growth and continues well beyond first delivery. And this is what makes Hensoldt different in scaling from others. We scale intelligence, not metal. We scale capability, not capacity. And by doing so, we capture value over a very much more long-term horizon.

For investors, this means that business that grows steadily compounds value over time and maintain strong visibility and resilience even in volatile markets. And with that foundation, let us have now a look how we are turning this model into tangible operational progress and scaling it across the entire value chain.

So to meet this growing customer demand, we are preparing for a step change in our operations, fundamentally transforming our industrial system to ensure scalability, resilience and efficiency. And our Operations 2.0 strategy is built precisely on these 3 pillars. It's first, scalability, ramping up production to meet increasing demand. Secondly, resilience, strengthening the supply chain and, of course, IT infrastructure to support the ramp-up. And third, efficiency, driving operational excellence and maintaining strict capital discipline. And all this goes, of course, under one guiding principle, ensuring sustainable, profitable and cash-generating growth.

Let's now take a closer look how this transformation starts and how we have already laid the foundation for this next phase of industrial growth. So what you see here that already since beginning of 2022, we anticipated we were expanding production capacity step by step through continuous improvement, automization and targeted outsourcing backed by a straight CapEx plan. And depending on the respective products, our current capacity will take us now through to around 2027 or 2028. I will come to that in detail. But we now are already planning for the next phase, which we call Operations 2.0 to secure delivery capability well into the next decade. And let me highlight the following, and I'm convinced of that, good preparation has always been a Hensoldt strength. So let me show how we've already translated this mindset into new sites and tangible capabilities.

So thanks to our early anticipation, we started implementing footprint expansions and efficiency measures already some time ago. In 2024, as you can see, we moved to our new Wetzlar site, a highly specialized facility for optical sites and optronic devices. This site has not only expanded our production area, but also optimized material flows and processing steps, creating more intelligent and efficient layout. Our new logistics center now provides centralized services for production sites here in Ulm, significantly enhancing both capacity but also process efficiency.

In Oberkochen, we built our new facility through our real estate company. And we are creating a modern synergistic site for Optronics business, enabling more efficient and profitable operations with modular workspaces and smart layouts. And this summer, we have successfully transformed the ground-based business, one of the biggest business in Optronics segment into the new building. The remaining areas will follow now in the upcoming months. And by, yes, Q1, Q2 next year, we will be completely finished this new building.

So with this foundation now in place, the question is, what's next? How do we build on the operations system ready for the next decade of demand? Now looking ahead, we are already evaluating customer needs and resulting capacities requirements on a constant basis, month by month, quarter-by-quarter, year by year. And our mission in Operations 2.0 is to build a scalable, resilient and efficient operation system, one that enables us to respond flexibly to future demand, address strategic challenges but also meet evolving product and service requirements. And now let's have a look what this means in concrete terms, especially for our 2 segments, sensors on the one hand, but optronics on the other.

So as you can see, we have already achieved a remarkable ramp-up in production capacity. And those of you who were joining the site tour here in Ulm have seen this how production has changed. For example, capacity for TRML-4D and SPEXER as well as for sites for armored vehicles has increased up to 8.5x since 2021. But this, as you can see, is only the beginning. Demand, particularly for sites continues to rise sharply, requiring an additional 4.5-fold capacity increase over the next few years. This growth is also driven by higher demand in the service business, especially for the ground-based systems.

As the Bundeswehr expands its circulation reserve in Germany, we say [Foreign Language] or pure availability of system by more than 90%. Fully manufactured sites are being held in stock to ensure immediate availability. By contrast, the radar services focus is more on spare parts, which explains why capacity growth there is less pronounced.

Operations 2.0 target reflects the ambitious trajectory with further expansions planned, especially for air defense radars and ground-based systems, ensuring we can fully deliver on customer requirements and sustain growth well into the next decade. To enable this kind of scale, we are also continuously expanding our physical footprint and strengthening our industrial basis. As mentioned earlier, we've expanded our operational footprint in terms of square meters with sites such as Oberkochen and the new logistics center, as you can see at the slide.

And just a few weeks ago, we have announced that we plan to increase production capacity for air defense radar from 2027 onwards. And at the same time, we are building redundant structures to ensure a robust delivery performance. By 2027, our total operational footprint will have been grown by 3.4x compared to 2023. Further expansions, including a second logistics center, and additional capacity for armored vehicle sites are currently under evaluation, and we will give you some more details as soon as we have it on hand. And beyond that, we are assessing strategic partnerships for suppliers and selective M&A opportunities, vertical integration.

One particularly important element in this expansion is our new dedicated radar production site, the next step in industrializing Hensoldt at scale. So this new radar production site, which you can see here will further strengthen our delivery capability. It will allow us to meet rising demand, especially for air defense radars. Production of even more TRML-4D and SPEXER radars will begin there from 2027 onwards. We are now investing around EUR 80 million in this rented facility, combining resilience on the one hand with synergies across our existing footprint.

Of course, scaling is only as strong as the supply chain behind. And therefore, now let's have also a look at how we are ensuring resilience and reliability along that dimension. As part of Operations 2.0 of this strategy, we are fundamentally strengthening our supply chain to resilience and scalability by continuing to grow. And we are driving improvement across 5 key areas, as you can see here. First, real-time supplier capacity monitoring, followed by targeted orders to secure capacity even on the high demand.

Secondly, long-term security. So we move to multiyear high-volume contracts and material level transparency, deepen our strategic supplier relationships. Third, performance management, mapping, segmenting our supplier landscape to manage strategic partners and supply management and continuous performance. Fourth, geopolitical resilience, local for local, the new data-driven transparency, which identifies vulnerabilities, critical dependencies and allow us to focus on sourcing on Europe for a local-to-local approach.

In Tier 1, we already source 90% of our parts from Germany and 95% in Europe. And this creates, at the end of the day, resilience on the one hand, but sustainability on the other. And last not least, we want to optimize strategic supplier development. Besides using our Hensoldt entities also abroad in other countries, we will focus on more partnerships and on M&A opportunities. Together, these measures will strengthen our supply chain resilience and delivery capability, ensuring that we can meet growing demand efficiently and predictably. However, resilience does not stop at the factory gate. It also means having a digital backbone behind being capable to support this type of scale.

And as we expand our industrial operations, we must also support this growth with a robust future-proof IT infrastructure. And our ambition is to embed resilience across the organization, ensuring every business function that can adapt, respond and perform at scale. We are doing this by increasing flexibility via dynamic resource planning, improving customer service with clean real-time data and enhancing efficiency and compliance through automated audio-ready processes. And our key enabler, and we were elaborating now several times also in Capital Market Day is still our S/4 program. And we have achieved, and you see it here strong progress in this year. So first, we went live with CRM Service Cloud, a new digital customer touch point with real-time information. Secondly, we started CRM Sales Cloud, a fully digitalized global sales pipeline for more transparency. Third, human capital management system went live 1st of July, enabling an integrated digital journey for our expanding workforce. And fourth, extended warehouse management system connected with the new logistics center, ensuring real-time stock and material tracking. And by end of this year, start of the new year, we will go live technically with the new template, laying the foundation for a unified ERP backbone for the entire group, which drives transparency and resilience.

To manage this responsibly also with the new challenges ahead with the new plans of expanding, we are following a hybrid rollout. We calibrated to minimize execution risk as we did also this year. Given the current ramp-ups, we are sequencing rollouts after critical phases to ensure continuity and stability. And in parallel, we are upgrading infrastructure underneath those systems to make sure our IT capacity grows in lockstep with our operations.

Looking now on robustness. We have implemented key resilience measures such as one-off site data replication and network decentralization. We're expanding to high availability of architectures and building the disaster recovery capabilities for mission-critical applications. And our next milestone is here an additional data center, strengthening redundancy while expanding capacity for advanced use cases such as on-premise, AI, data-intensive workload and high-performance computing. Together, these steps ensure that our digital infrastructure scales alongside our industrial footprint. And I'm convinced that without a good digital footprint, you cannot scale. And this will enable us sustainable growth, operational resilience and data-driven decision-making across the enterprise.

And let's now move from systems to execution. And let's be very clear at this stage. We have to manage this ramp-up across the whole value chain. And we have to systematically unlock the efficiency gains to enable scale. And of course, it begins with engineering to make every product designed for manufacturability, balancing cost, quality and time, laying the foundation for an efficient series production. It moves on with sourcing and procurement. The quantities, the things I've elaborated before, stronger volume effects, better pricing and enhanced leverage with suppliers.

It follows with logistics. You can see our rack box automization which are automatic vehicles, streamlining material flow and accuracy in our new logistics center. Factory setup, a dedicated radar production for SPEXER TRML-4D, and we will use tech-based series production decoupled from Ulm to maximize throughput at this stage. And of course, people. We are investing heavily in training and upskilling to prepare employees for new systems and production models, and Oliver will elaborate on this later.

And last not least, production, every step will be optimized with lean methods and new shift models increase and by testing automated test environments, including new test cells for SPEXER and Optimaster automated platform to improve speed and reliability. And those of you who attended the site visit maybe have seen the one or the other automated test chamber.

So these levels are key to now scale efficiently, reducing unit costs and driving long-term profitability. And it's not a single lever that creates the scale but their interaction. The way engineering, sourcing, logistic, production, people and testing reinforce each other. They work by multiplication. If one element fails to perform, the overall effect weakens. And this is why scaling at Hensoldt has to be and will be managed end-to-end -- as an end-to-end discipline. One we have already mastered in the ramp-up of the past 3 years and are now taking our ambition to the next level.

And finally, let's now look at how we manage this transformation with the same financial discipline that defines our company. All our expansion is grounded in disciplined capital allocation. Each project is evaluated for its return profile to ensure that every euro invested contributes to long-term value creation. Our investment approach is backlog driven.

We expand capacity where we have a firm order, a firm customer demand or a very clear visibility. And I think in terms of visibility, Oliver has elaborated that we have a high level at this stage. All major expansion projects are approved and closely monitored by Management Board level, underlining their strategic importance for the company and the governance. Financially, we expect CapEx to rise to around 3% of revenue over the coming years. In addition, we foresee a onetime investment of roughly EUR 80 million in 2026 to support footprint expansion, plus a CapEx buffer of about 1.5% in 2027 and 2028 to accommodate further growth. I will come to that in the finance section.

In summary, we are scaling our industrial and digital infrastructure in a measured financially disciplined way, ensuring that growth remains profitable, cash generating and fully aligned with our long-term strategy. And with that, I want to hand back to you, Oliver, who will outline how our future growth is driven by the next phase of our innovation road map, software-defined defense.

Well, thank you, Christian. When we met at the CMD last year, we spoke about software-defined defense for the first time. At that time, it was still a vision, an idea of how technology could transform defense in a world where threats evolve at digital speed. 12 months later, that vision has become a reality.

Every day, we see how autonomous drones and swarm tactics change the nature of warfare. Protecting people, infrastructure and military assets requires systems that can react instantly and learn and adapt and that grow more capable every time they are used.

Our ELYSION counter-UAS system embodies this principle. ELYSION is modular, already operational with the Bundesware and one of the first systems in Europe that is truly software-defined. New AI models for drone classification can be deployed in hours, not months, sensor networks can be reconfigured on the fly. And by fusing data from multiple domains, ELYSION delivers in real-time AI support and operational picture, providing the information superiority that modern defense demands.

This is what software-defined defense means in practice, systems that never stand still, that continuously evolve and that ensure protection by learning faster than the threat. To understand why this shift is so fundamental, let's take one step back and look at how software-defined defense is becoming the true core of modern warfare.

Modern warfare is a contest of data, speed and decision-making. Every piece of information from radar echoes to infrared signatures or radio emissions originates from sensors across land, air, sea, cyber and space. But the decisive edge no longer lies in individual sensors. It lies in connecting, interpreting and acting on that data faster, faster than anyone else. Software is the enabler that turns raw data into operational superiority. Multi-domain operations depend on connectivity.

Only software makes it possible to link diverse weapon systems at Short notice, exchange data securely and create a unified real-time view of the battlefield. This is what finally delivers the interoperability that armed forces have demanded for decades beyond outdated standards and across domains, in essence, the center of gravity is shifting from hardware that is fixed to software that is flexible, adaptive and continuously upgradable.

That is the paradigm of software-defined defense, and it is exactly where Hensoldt is heading from Europe's leading sensor specialists to a truly software-driven defense solutions leader. Our foundation is unique. Hensoldt is the leading sensor house across all domains, and we understand how data is generated, what it means and how it must be protected.

Now we are extending this strength into the digital space, connecting and fusing our sensor data across platforms and domains. This is how we evolve from a sensor manufacturer into a provider of integrated multi-domain solutions. Our ambition is clear to become the orchestrator of multi-domain operations, the company that enables information dominance through the seamless integration of sensors, software and data. That is our next chapter of leadership.

And we have every reason to be confident in this ambition because we have a clear right to win in software-defined defense. First, we own and understand the data. Our sensors cover every operational domain and decades of system experience give us unique insight into how data behaves in real combat environments. Second, we are independent. Unlike many peers, Hensoldt is platform agnostic and vendor neutral, able to integrate best-of-breed technologies and give our customers true flexibility and sovereignty.

Third, we are sovereign and ITA-free. Our open architectures comply fully with European regulations and scale securely within NATO frameworks and increasingly important differentiator. And fourth, we master complexity. We unite world-class sensor engineering with data fusion and AI expertise, bridging operational and information technology. And finally, we partner smartly. We collaborate where it accelerates innovation with quantum systems in tactical drones or with [ 21 ] strategies in AI, focusing on our strength and complementing them where it creates speed and scale. Together, these capabilities give Hensoldt a decisive competitive edge, our clear right to win in software-defined defense.

This foundation now takes tangible form in a product, the multi-domain operations core or MDO Core. MDO Core is the central integration platform that connects sensors and systems across all domains land, air, sea, space and cyber. It acts as the digital nervous system of tomorrow's network battlefield. It fuses data in real time, generates a shared operational picture and supports the coordinated planning and execution of mission across forces and nations.

The architecture is open by design. Third-party sensors and even full weapon systems can be integrated rapidly into standardized interfaces. It meets NATO interoperability standards and provides ITAR-free backbone for allied operations. Many of the essential building blocks are already in place within Hensoldt from CERETRON and ELYSION to FCAS and Lyncea. We are doing now -- what we are doing now is bridging these elements together within one coherent software architecture, the MDOcore. It serves as a common backbone that enables different systems to communicate, share data and operate as one, turning individual excellence into collective operational power.

The demonstration you saw during today's site tour was the first live instantiation of this architecture, a concrete proof of concept for what MDOcore can do. Within just a few weeks, our engineers connected ELYSION, CERETRON, [ OPTARION ] on the same software backbone, showing how fast interoperability can become a reality. And this is only the beginning. CERETRON is our mission software suite that turns vehicles, ships, aircraft or drones into intelligent reconnaissance nodes.

It connects and fuses sensor data in real time and integrates seamlessly into the MDOcore. We invested a low double-digit million amount in CERETRON's development, and this strategic investment is now paying off. Based on this technology, we secured a major contract for the new Luchs 2 reconnaissance vehicle of the German Army. The initial contract volume is around EUR 850 million, opening a wide range of opportunities in Germany and Europe, leading to roughly EUR 2 billion of potential order intake in the future.

And importantly, the program includes long-term license revenues for CERETRON software upgrades and extensions. So CERETRON is more than a successful product. It is the proof point of our software-defined defense strategy, demonstrating how software investments can create recurring, scalable value and program success at the same time. And CERETRON is not a one-off case. We are already seeing how targeted software investments multiply in value across our portfolio.

Software has become a powerful growth lever for Hensoldt. With relatively small focused R&D investments, we unlock major program revenues, a low double-digit million investment in CERETRON translates into more than 20x that value in program turnover. With ELYSION, a single-digit million investment created over 30x of that amount in orders. The key, ladies and gentlemen, is ownership. Owning the software and the intellectual property gives us control over functionality, security and future upgrades, ensuring that value creation stays within Hensoldt.

In the past, software was a hidden component within a hardware product. Today, it is the defining enabler of capability and increasingly a driver of growth. This marks an evolution of our business model from primarily product-based sales towards a broader recurring and data-driven revenue base. With our smart and connected sensors like TRML-4D, the MDOcore as our backbone for solutions like CERETRON and ELYSION, we are building the foundation for scalable software and database services revenues beyond 2030.

The traditional hardware market will one day reach its natural limits in volume. The future lies in smart and connected sensors that receive continuous software upgrades, keeping platforms relevant and extending their life cycles. At the same time, platforms such as MDRcore enable predictable, recurring license revenues require lifelong software upgrades and data-driven services. This creates resilience and a new quality of customer relationship instead of delivering once, we evolve together.

For our investors, this means a higher share of software and services in our portfolio, stable margins, recurring cash flows and a business model that grows in value over time. And this is not the end of the story. It is the beginning of a new chapter for Hensoldt as a true orchestrator of multi-domain operations. Our path is clear. We combine the deep sensor DNA that defines who we are with the digital intelligence that defines where we are going. Our early investments in software-defined defense have given us a first-mover advantage, as I would call it, we are now scaling up with clear targets over the next 3 years. By 2028, we will have invested a high double-digit million euro amount in R&D dedicated to software-defined defense and core digital platforms. We are building a scalable software and data-centric business with continuous capability upgrades, modular licensing and long-term recurring revenues.

The first contracts are signed. Customer feedback is excellent, and our architecture is ready to scale across domains and across nations. At the same time, we are reinforcing our ecosystem with strategic partners, accelerating integration, adding specialized capabilities and ensuring interoperability across NATO and allied forces. This is how Hensoldt will pioneer software-defined defense by progressively transforming from a hardware specialist into a software-enabled solutions leader. By combining European sovereignty with global competitiveness and by turning data, the most valuable resource of our time into decisive operational advantage.

Ladies and gentlemen, software-defined defense is no longer a vision. It's happening today here at Hensoldt. We have the products, we have the architecture, and we have the momentum to lead this transformation, and we will continue to shape the connected intelligent sovereign defense of the future. So we have seen how software-defined defense is becoming the technological core of our future growth. a transformation that changes how our systems are built, delivered and evolved.

Now let's take a step in the North Star journey and talk about where this growth happens because technology alone is not enough. It's about our commitment to expand globally, but with clarity, discipline and purpose. Growth is not just about doing more. It's about doing the right things in the right markets. Let's begin by looking at our long-term geographic ambition and how we are positioning ourselves to balance immediate opportunities with sustainable strategic reach.

It's fair to say that the massive short-term budget expansions in Europe, especially in Germany will temporarily shift our revenue distribution more towards our home markets. But we are very clear-minded about the long term. Our goal remains 50-30-20, a balance 50% Germany, 30% Europe and 20% strategic regions beyond. Germany will remain our strongest market and strategic base, the place where we develop sovereign solutions for our most important customer and participate in programs that strengthen the Bundeswehr. We deliberately focus on programs open to European allies so that our German innovations can be scaled across Europe. In Europe, beyond our home countries, we concentrate on high opportunity markets in the Nordics, Eastern Europe and, of course, Ukraine. Here, we see strong potential for cross-selling existing Hensoldt products and solutions without developing bespoke systems abroad. p

Beyond Europe, we are focusing on a select number of strategic regions, the U.S., Canada, Australia, APAC, India and the Middle East. We pursue these markets through local partnerships and government-to-government frameworks, leveraging proven products and services.

This approach keeps our footprint focused, our execution lean and our growth scalable in the long term. Of course, such targeted international strategy also need the right structures, clear responsibilities, customer focus and collaboration across the group. Over the past months, we have introduced a new key account management system and adapted our go-to-market approach to support focused growth in our key regions. In Germany, we are establishing strategic account teams for our main customers from the Bundeswehr, B2C to our major OEM partners like Rheinmetall, Airbus and KNDS, B2B. Internationally, we have identified some 30, 40 key accounts across our priority regions. Each one is managed with clear ownership and close alignment between business development, sales and divisions.

Our international sites in France, U.K. and South Africa are also important pillars of this success. In the past 12 months, we have continued to integrate them into our global operating and governance model, leveraging their individual strengths, especially when it comes to deliver at scale. This transformation makes us faster, more customer-centric and better coordinated across markets. It also ensures that every opportunity is pursued with the full strength of the Hensoldt organization behind it. Now while structure and focus matter, what truly brings our strategy to life are our people, our colleagues across the world who represent Hensoldt every day. You will now see a short video with 7 colleagues from around the world sharing insights from their markets and what Hensoldt means to them.

[Presentation]

Yes. We wanted to give you this impression. I have visited in my time with Hensoldt all the sites, and I can just tell you it's really a great team, which I'm very proud of. Every time I meet the teams abroad, I'm reminded of how much diversity, creativity and dedication we have across our global network that has been reflected in the video. These colleagues make Hensoldt more international by the day, and they embody the openness and curiosity that drives our success.

Finally, grow with focus also means expanding our ecosystem through partnerships, innovation and selective M&A. We continue to build on strong network of partnerships to develop new business opportunities and expand market access. You see some of our key partners on the slide from established industrial relationships to new technology collaborations. Let me highlight a few. With Deutsche Flugsicherung, we aim to partner on counter UAS and air traffic control solutions, protecting critical infrastructures.

With Diehl Defence, we are co-developing software-defined systems, combining sensors and effectors to multiply the capability of European air defense. With Quantum System and Avilus, we are combining mission software and UAV platforms with Hensoldt's sensor know-how, a strong fit for software-defined defense. And with 21strategies, we are advancing third wave artificial intelligence, applying tactical AI directly into defense applications.

We are also deepening our collaboration with Technical University, Munich, connecting to a powerful network of researchers and start-ups. This helps us identify emerging technologies early and engage with founders who might one day become Hensoldt partners. These start-up investments are crucial to keep pace with innovation. At the same time, we remain disciplined in traditional M&A. Our pipeline focuses on value-accretive targets in Germany and Europe, fully aligned with our strategic road map and financial guardrails. It's about expanding intelligently, not for size, but for capabilities, technology and strategic fit. So to summarize, grow with focus means being deliberate. It means leveraging our strong home base in Germany, deepening our European partnerships and expanding selectively into strategic regions. It means acting globally, but always guided by one purpose and one culture.

And that brings us naturally to the next axis of our North Star, lead our teams into the future because growth and technology are only as strong as the people behind them, the leaders and the teams who make Hensoldt what it is today. Let's look at how we are shaping the culture and the people that will carry this company forward. When we speak about growth beyond 2030, we must speak about our people because no matter how ambitious our strategy, no transformation succeeds without a strong team and the right culture behind it.

At Hensoldt, we have built something special, a company that is both high-performing and deeply human. Our people share a strong sense of purpose to make a difference for a safer tomorrow, and that purpose translates directly into performance. That is why we are proud to position Hensoldt as an employer of choice, not only in defense, but in the entire European technology landscape, a place where people find meaning, where people find opportunities and the confidence to grow with us.

This ambition rests on 4 pillars: systematic attraction, development-driven growth, meaningful retention and our leadership in sustainability. That creates a strong fundament for our purpose. Let me start with attraction. The competition for talent, especially in engineering, software and AI has never been fiercer. To stay ahead, we have made recruiting a strategic discipline where we combine targeted campaigns with real partnerships, sponsorships like [indiscernible] that inspire young talent early.

career days and on-site events for technological experts and dedicated campaigns that reach specialized groups from software engineers to former soldiers. Our focus is not on mass recruitment for positions we frequently search for, but on precision, identifying the right profiles, building communities and staying visible in all our home countries and home locations. Our refer a friend program has become a real success story, accounting for around 1/5 of critical hires. Our employer ratings, for example, 4.3 on Kununu reflect how people experience our culture.

And with nearly 70,000 applications this year, Hensoldt is firmly established as an attractive modern employer. Equally important, we are investing in the next generation, 30% more apprenticeship positions since 2023, combined with our Hensoldt fit curriculum that blends technical depth with personal growth because the future of our company starts with the people we train today. The second pillar is development. We believe that learning is not a side activity. It is part of our DNA. Our training portfolio includes more than 600 internal courses and 40,000 participations per year, complemented by digital formats like LinkedIn Learning and mentoring programs that connect experienced leaders with young talents.

We use these formats not only to transfer knowledge, but to build capability in project management, systems engineering, AI and in leadership. Our [ Beyond Horizons ] learning journeys promote an innovation mindset and our professional certification program ensures that our people are globally competitive. Talent identification and succession planning are now fully digital, helping us build a robust talent pipeline and fill key roles internally for sustainable growth.

This is how we create continuity and resilience as we grow and perhaps most importantly, we are strengthening leadership. Our leadership principles, ownership, collaboration, excellence and innovation are not just words on a slide. They are becoming a part of how we lead and decide every day. The third pillar is retention or more precisely belonging. A strong culture is a reason why people stay, perform and grow with us. Our culture evolution initiative drives this forward, combining top-down leadership development with bottom-up initiatives that encourage collaboration and innovation. We also take well-being seriously in those stressful times.

Our new health and leadership survey connects leadership behavior directly to employee well-being because sustainable performance depends on balance. As a result, health-related performance losses have gone down significantly in the past year. And in addition, our employees perceive leadership at Hensoldt to be stronger than in other companies. We offer flexible work models, targeted benefits and a growing employee share program.

Today, 2/3 of all Hensoldt employees are also our shareholders. That is a powerful sign of identification. And with a retention rate above 95%, our people are not just staying, they are choosing to stay. This is what it means to lead our teams into the future to combine ambition with care, performance, purpose and leadership with humanity.

Our sustainability strategy is built on 5 pillars. Climate, society, compliance, innovation and diversity. Together, they guide how we operate, how we invest and how we measure our impact. Let me briefly walk you through these 5 pillars. Climate. We are on track to become carbon neutral by 2035. Between 2020 and 2024, we reduced our direct Scope 1 emissions by 22%, and we now use 100% green electricity in Germany, France and U.K.

Last year, we calculated our full Scope 3 footprint for the first time, an important step towards reducing emissions across our value chain. Society. We take our role as a responsible industrial citizen seriously. Through initiatives such as Made for Germany, we engage in constructive dialogue with policymakers to strengthen security and innovation. At the same time, we continue to focus on health, well-being, integrating these topics into our leadership and employee surveys.

Compliance. Our business is grounded on integrity. We have reinforced our global ethics and compliance program, introduced a 24/7 whistleblower tool and continue to provide mandatory anticorruption training for all employees and partners. Innovation. Sustainability now starts at the design table. We evaluate new ideas using sustainability criteria, invest in eco design and develop digital road maps that make both our products and our operations more efficient.

And last, diversity. We are making steady progress. Women now represent 25% of our leadership team, and we have rolled out group-wide unconscious bias training to ensure equal opportunities for all. Our consistent efforts are reflected in our external ratings, a benchmark we take very seriously. In 2025, we achieved a Sustainalytics score of 21.5, ranking second in the global aerospace and defense sector. MSCI rates us A, positioning Hensoldt among the industry leaders. S&P Global places us well above the sector average with 45 out of 100 points. And EcoVadis awarded us a bronze medal, putting us in the top 35% across all industries.

These results matter not only as a recognition of progress, but as a clear sign to our investors and partners that Hensoldt operates responsibly, transparently and sustainably. Strong ESG performance reduces risk, enhances resilience and strengthens our reputation. In short, it's good for the business, and it's the right thing to do. Our people and our sustainability strategy are 2 sides of the same coin. They secure the future of Hensoldt, building a company that performs, endures and inspires. With that, let's move now how we lead our teams and how we deliver financially. And this is over to you, Christian.

Ye,s. Thank you very much, Oliver. Yes, what we've seen is just and underlines the truth is central for Hensoldt's success, and our performance is built by people and proven in numbers. So let me now take you through how that performance translates now into financial results, our outlook and how we continue to balance growth on the one hand, profitability, but also resilience, which is key for our business.

So now first of all, a quick recap, first 9 months, strong across all key performance indicators. So we have achieved an order intake of more than EUR 2 billion, driven by our air defense radar programs, Eurofighter and the U212A submarine program. Group revenue reached over EUR 1.5 billion, representing a 14% increase in core revenue.

Our Optronics business continued its strong momentum, while Sensors gained significant traction in the third quarter, exactly as anticipated following a slower start in the first half. Backlog rose to EUR 7.1 billion, a new record, resulting in a book-to-bill ratio of 1.3x. And our profitability reflects this healthy top line performance. Adjusted EBITDA increased by 13% year-on-year to EUR 211 million with a strong margin of 13.7%, slightly better than last year.

So in summary, we are firmly on track to meet our full year guidance with strong growth, robust margins and a solid balance sheet, an excellent foundation as we are in the final quarter of the year.

Let's now have a closer look at our segments, how they developed and the performance where it's coming from. Starting with Sensors. Order intake reached EUR 1.7 billion, exceeding last year's high comparison base. That corresponds to a book-to-bill ratio of 1.3x. And the growth as in orders was driven by major orders from Eurofighter rebaselining, the [indiscernible] program and TLM 4D radars for Ukraine. Revenue increased to over EUR 1.3 billion, fully in line with our expectations and excluding the declining share of pass-through revenue, core revenue grew by 12%.

Adjusted EBITDA improved to EUR 199 million with only minor product mix effects. Some temporary dilution came from the ramp-up of the new logistics center in the first half as elaborated, and an investment that will pay off in the future in productivity and scalability in the months and years ahead. Turning to Optronics. We achieved a strong order intake of EUR 328 million, corresponding to a book-to-bill ratio of 1.4x, driven by the orders of U212A submarine program, retrofit, gimbals and sites for ground-based systems. Revenue performance was excellent, continuing the strong momentum of previous quarters. And the German entity stood out with 27% growth in the first 9 months, driven by accelerated production in ground-based systems.

And as outlined before, we reached an important milestone, the transfer of ground-based business [indiscernible] from the [indiscernible] size building to the new optronics campus. And this will provide the space and the efficiency needed to sustain our growth in this area. Adjusted EBITDA in Optronics rose to EUR 12 million, reflecting higher volumes. Overall, both businesses, both segments are performing well, delivering growth, profitability and operational resilience.

And now let's turn to the full year guidance and our midterm outlook. So following the parliamentary approvals following the processes we have seen in the last weeks and several major procurement programs in Germany, we have significantly raised our book-to-bill guidance from 1.2x to a range of 1.6x to 1.9x. As Oliver has mentioned earlier, key programs -- we expect to book key programs such as Eurofighter tranche 5, the Luchs 2 reconnaissance vehicle in the coming weeks, both of which will have a substantial impact on our order book.

And we also specified our revenue guidance for EUR 2.5 billion in full year. And of course, the rollout of the new logistics center plus the move of the ground-based system business and new facilities represent a long-term investment in our competitiveness and into our efficiency. And while it temporarily moderates revenue recognition, it's an essential enabler for future scalability. We are guiding to an adjusted EBITDA of 18% or higher, maintaining the strong profitability as we expand capacity. Free cash flow conversion remains at 50% to 60% and net leverage target is unchanged to 1.5x, underlining our disciplined balance sheet management.

Dividend payout will also remain at 30% to 40% of adjusted net income, fully aligned with our commitment to shareholder returns. And now from short term to medium term, let's now look how our expectations and beyond look like. In 2026, we expect the momentum in our [indiscernible] order book to continue. We expect 1.5x to 2x book-to-bill ratio, ongoing demand and order momentum. Sales are expected to grow by around 10% EBITDA margin improvement of 50 basis points, driven on the one hand, operating leverage, efficiency gains, but also efforts for production capacity.

Given the ongoing CapEx for infrastructure expansion, we mentioned this EUR 80 million, the cash conversion will be a little bit lower to around 2026, a temporary effect we have planned for. And let me also highlight that we will not show it in the one-offs. We will put it in our recurring figures to make it more transparent also for you guys. Also some words then will follow. At the same time, we continue to reduce net leverage and maintain our disciplined balance sheet approach. For the midterm, we expect order intake to continue outpacing revenues, translating into an average organic growth of around 15% to 20%, slightly more back-end loaded as the large programs, as I've outlined in the beginning, ramp up.

Margins will continue to expand by about 50 basis points per year, reflecting scale and productivity gains, while cash conversion normalizes again to around 50%, coming back to 50% to 60% from 2028 onwards. Again, here, 1.5% CapEx reserve planned in the normal cash conversion.

Dividend policy is unchanged, 30% to 40% net income payout ratio, supporting both investor returns. In short, the outlook combines strong momentum with sustained profitability and disciplined financial governance and from the near term to our long-term ambition and the confidence behind our 2030 targets.

So as explained earlier, we confirm the ambition to achieve EUR 6 billion revenues in 2030. And our confidence in this goal has only grown since we have [indiscernible] this guidance by EUR 1 billion in May. This increase across defense budgets across Europe has now fully materialized, especially in Germany, which continues to lead the way in modernizing its armed forces. And this provides sustained tailwind for order pipeline and long-term demand visibility. We are seeing that this translates into firm orders for key products from air defense radars to ground-based systems. And all of this strengthens our belief in sustainable organic growth supported by demand on the one hand, technological leadership, strong market visibility and which could lead, I have to say, on an even higher organic revenue growth that assumed until now.

By 2030, we expect an adjusted EBITDA margin of 20% or higher, reflecting both scale effects and the efficiency gains achieved via operations 2.0. And importantly, our journey will not end 2030. We see a smooth, sustainable trajectory beyond driven by next-generation technologies as outlined today, the growing service business and software-defined defense. Let's now take a moment to look what underpins this confidence in hard figures, meaning revenue visibility, revenues backed by order backlog. We expect order backlog to reach EUR 8.5 billion by end of this year, the strongest in our company's history.

This gives us visibility we need to go for capacity expansion. Around 91% of our 2026 revenue will be secured through both long-cycle orders and recurring short-cycle business. For 2027, it will be 65% of revenues already presecured. And for 2028, roughly half of our expected revenues is already covered by existing contracts. And this visibility is a major asset, one that few companies in our industry can match. And now let's know how this growth turns out into across our segments and across our technology. So while sensors has driven our growth in the last 3 to 4 years, clearly, now we move to a more sustained and balanced growth ahead of us. Sensors will stay and continue to grow by air defense, Eurofighter and PEGASUS.

Optronics will grow even faster, supported by strong order back book, the ramp-up in ground-based systems first and foremost, driven by Army programs. In addition, software-defined defense is now contributing to our top line and will account for around 8% of total revenue by 2030. This diversified growth across both segments, complemented by digital and software-based revenue streams creates resilience and long-term profitability. And as you know, innovation is the backbone of Hensoldt's growth story. And so now let's look at how R&D investments look like. Innovation has always been and will be Hensoldt's DNA and remains the foundation of our competitiveness on national, international and global markets.

We stay with our investment policy, 5% to 6% of our revenues, we will invest into self-funded R&D. Customer-funded R&D has risen from 8% in 2020 to 15% in 2025 and will continue to grow on an absolute level. In absolute terms, this means at the end of the day, a sustainable increase in total R&D funding, and it also shows that customers trust Hensoldtby these pure figures, giving Hensoldt more and more R&D funding to be done. Within the R&D portfolio, we are increasing focusing on software-defined defense, digital architecture, AI-driven capability and ensuring that the technologies remain at the forefront of customer needs in all of our key products.

And this will secure technological sovereignty, global competitiveness and sustained growth potential.

And now let's have a look at the second basket of investments on CapEx and how we are investing now in the physical backbone of our growth. And as you can see on this page, we have steadily increased CapEx to support footprint expansion and capacity growth. As you have seen, new logistics center.

And let me show you 2 ways of CapEx. The one will be the base CapEx for maintenance and ongoing expansion, which will grow a little bit across the horizon until 2030; and on the other hand, we will have infrastructure. We have moved -- we have seen 2024-2025, CapEx level are elevated as we complete this key infrastructure investment, logistics center as you can see.

And now for 2026, we will have this new radar production site and this is why CapEx will peak to approximately 6% next year. From 2027 onwards, we have elaborated that we have some ideas. Additional logistics is the one, additional capacity for ground-based systems is the other. Nevertheless, it's not concrete yet, but we have planned with a capacity and CapEx reserve for approximately 1.5%, which should be sufficient and CapEx normalizing to 4%.

And also on this stage, from 2027 onwards, we will also shift our one-off policy in this regard that only S/4HANA will stay in as a one-off, but all other one-offs will be removed to be more clear in our quality of earnings. All these investments are fully aligned with deliberate scale, building the industrial and logistics capacity to fulfill the growing backlog efficiency.

And now let's move on to the next enabler of growth strategy, our financing structure. And in summer of this year, most of you know that we successfully refinanced our syndicated loan through a new syndicated facility and promissory note, and thanks also to the partners here in this room who have supported us. And this is complemented by a EUR 400 million bank guarantee line.

This was a decisive step for Hensoldt, strengthening the independence, flexibility and resilience. And key highlights include that we got the release of legacy securities from previous leverage buyout structure. We financing has secured until 2032, long-term stability. We have improved the margin ratchet, and we have a more diversified debt profile, reducing risk and increasing resilience.

And in short, this new structure gives us an excellent foundation to continue executing our growth strategy confidently and independently. And with that in place, let me conclude the financial section with our capital allocation priorities, which are more or less unchanged. First, fueling the growth. We will continue to invest, as you see in the figures in HENSOLDT 2.0, scale in production, strengthening technology and developing our people.

Secondly, sharing the growth, we maintain a dividend policy of 30% to 40% payout of adjusted net income that our shareholders will anticipate and participate in our success. Strategic acquisition. We pursue value-accretive M&A, particularly in Germany and Europe, focusing on technology and markets, but also now on the value chain. And last not least, financial discipline.

We adhere to a conservative debt profile, maintaining flexibility on the one hand and resilience on the other hand. And this disciplined framework will ensure that we can invest, that we can deliver and then we can reward on a sustainable ongoing basis. Yes, coming to the financial takeaways. Last not least, First, we have a very strong order book, and this provides us with an excellent visibility and the decisions we take are well balanced.

We are operating in markets poised for sustainable multi-decade growth. We combine profitable expansion with disciplined cash generation, enabling reinvestment, dividends and value-accretive M&A. And we remain deeply committed to innovation, investing in R&D and leading the transition to software-defined defense. And with that, we are absolutely confident in the path ahead, a path of disciplined growth, technological leadership and long-term value creation.

And with that, back to you, Oliver, for the wrap-up and closing remarks.

Let us have a look at what drives our business in the future. Beyond 2030, we see continued sustainable growth supported by both geopolitical need and technological transformation. Geopolitically, hybrid conflicts have become the new normal, reinforcing the political consensus around credible defense and deterrence. NATO's 5% of GDP target, including 3.5% for core defense investment will ensure a high sustained spending.

Technologically, growth will be driven by massive investments in conventional capabilities, long-term service and upgrade cycles and the rise of software-defined systems. These elements ensure recurring revenues and long-term customer engagement with our technology, customer intimacy and delivery capability, Hensoldt is right at the core of this transformation.

Ladies and gentlemen, when we called this Capital Markets Day, delivering North Star a new era for our business, we meant it because what you have seen today truly marks the beginning of a new chapter, perhaps even a new book in the Hensoldt story. We have evolved from being pure-play defense manufacturer of defense electronics to become a leader in multi-domain solutions from building sensors to building connected systems that see, understand and act across the domains, land, sea, air, space and cyber.

This is what it means to deliver North Star. It is not only about growth, it's about transformation of our technology, our business model and our role in Europe's security architectures. At the heart of this evolution lies software-defined defense and our new solution, the MDO Core. They make our systems adaptive, networked, upgradable, turning sensor data into operational insight and insight into action.

With them, Hennsolt moves from supplying components to enabling decision superiority. And that brings us back to the idea I introduced earlier today, fight tonight and fight tomorrow. Our customers must fight tonight, meaning they must defend themselves with the systems already in service while preparing for the next generation to arrive against an adversary with mass, they need more class and they need it fast. That means software-defined data-driven solutions that connect sensors, extract meaning and create shared situational awareness on the battlefield.

But it also means delivering hardware at speed, upgrading and ramping up production to keep their systems combat ready. So even as we innovate through software-defined defense, we are stretching our operations to the limit to deliver at scale right now because speed of delivery has become as decisive as technological superiority. At the same time, we are preparing to fight tomorrow, expanding capacity, industrialize at a pace to meet the rising demand from 2027 onwards, this new generation of systems will begin to enter service and ramp up towards 2030.

And when they do, they will already be enabled by our SDD and MDO solutions, more connected, more autonomous and more effective from day 1. That is what delivering North Star means in action, fighting tonight with intelligence and speed, fighting tomorrow with scale and innovation and building a future where both come together seamlessly.

Our future business model is built on exactly this foundation, smart and connected sensors, leadership in multi-domain operations through software-defined defense and recurring higher-margin revenue streams from services and data-centric software. We will maintain and evolve our growing installed base while developing new models such as Software as a Service and digital mission enablement.

But this transformation does not happen in isolation. The entire defense industry is changing. New players are entering the market, companies like and the Schwarz Group bringing fresh technologies and new perspectives, start-ups such as Quantum Systems, Stark, AC or Titan are accelerating innovation and challenging traditional boundaries. And major OEMs like Rheinmetall are expanding their reach across domains, redefining their roads. In this dynamic environment, Hensoldt stands confident and clear. We master scalability and multi-domain operations.

We are becoming increasingly software-driven. And we act as bridge builder between established and emerging players, shaping a new European defense ecosystem built on collaboration, openness and trust in Europe's own capabilities. That is why HensoOLt is stronger, more agile and more future-ready than ever before. We are scaling, we are connecting, and we are shaping the future of Europe's defense. We are delivering on North Star with purpose, with rigor and with a determination to protect what matters most. Europe's freedom and security.

Thank you very much for your attention.

Thank you, Oliver. Thank you, Christian. We are happy to take your questions now. [Operator Instructions] And we start with Sash.

It's Sash Tusa from Agency Partners. Three brief questions, 2 of which are probably interlinked. Your slide on partnerships, did not include Leonardo, which is one of your second largest shareholder. And when they acquired their shareholding in you, they made a lot about a partnership there. You don't seem to reciprocate on that. I wonder whether you could talk about your relationship with them at the moment.

And then -- and this may or may not be related, the very little reference to FCAS in your presentation. Where do you think the whole FCAS program will go? And what is your plan B for if France or Germany can't agree? And then the final question is just on M&A. I just wanted to check that I understood what you say about possibly buying into your -- into the value chain. Does that mean that you would expect to buy more of your -- or some of your suppliers as a means of strengthening your own resilience?

So thank you very much, Sash, for asking these questions. A good opportunity to bring the elephants out of the room. So LEONARDO. Well, LEONARDO was not mentioned on this slide, but that is not a message in that regard. I mean, traditionally, we have a very strong relationship with LEONARDO. Yes, they are our shareholder, but also on project program level, we do cooperate very well.

Best example is the Eurofighter. So ever since I joined as CEO, I'm in a regular exchange with LEONARDO. So we have also regular strategy meetings. Unfortunately, some of the, let's say, programs, which bear a lot of opportunity, including the program of Italy, didn't really mature to crystallize or catalyze this good cooperation, which is still in place.

So earlier this year, we had a German, Italian roundtable with the government. And I think that is probably the paradigm when LEONARDO entered as a strategic investor into Hensoldt, it was before the vendor. At that time, I think it was very clear that we were heading for a more European approach on defense. Ever after the vendor, it is also that we see a strong impetus, which, of course, Hensoldt takes profit from that we look at national sovereign capabilities.

And that's probably why recently, there was not a big momentum despite this very strong cooperation that we do have with LEONARDO. That's why we didn't see this as a, let's say, strategic relevant element to put on this slide where you have the dynamic players like start-ups, new partners that are opening international regions to us. But again, the message is not that we put that at stage. So I think the future of LEONARDO and Hensoldt is very much connected to how does the European also G2G political network evolve?

Are we willing to work together in some of the programs? And then I think LEONARDO and we, as many other European players, and so on, we are ready to give the industrial dimension to it. Probably that leads the way to FCAS.

Yes, at the moment, I think the press is full, probably also read one of my quotes where I said the behavior of one of the partners is rather irritating because personally, I still am a strong believer that Germany and France as the strongest nations in Europe need to join forces to drive things forward.

And also looking at the sensor pillar, which is the core of what Hensoldt is doing in FCAS together with Thales and Indra, I think here, we have the opposite picture of what we see between Airbus and Dassault on the level of the next-generation fighter. We had a very trustful and also very innovation driving partnership with our competitors, Thales and Indra in that pillar because we had engineers coming together that really were driven by joint innovation driven by bringing technology forward.

And I think on the very top level, that's why this political will doesn't yet translate into a concrete program is we see and that aligns with what I've said before, there is no real willingness on compromise. And as long as we have this confrontation, we have to see how this goes out. The Chancellor Merz took it as a topic. So as we -- and you know from the media, there will be meetings in December where actually I think there remains a strong will to secure, to rescue this program, which is heavily under stress at the moment.

Going forward, I believe that probably it would not die, but it will take a total different form. We hear the stories that probably the focus shifts from the fighter to the system of system, where we have manned, unmanned teaming, where we have networking of sensors and all of that. And I mean, you heard the story about MDO Core and also part of the MDO Core IPR is based on what we did in FCAS.

So I think in that regard, I have no real concern despite as a European, I would regret if this opportunity disappears. But from the Hensoldt perspective, we see that in every new form of FCAS, we will have our share. And also looking at manned unmanned teaming, looking at Forton UCAV, which is currently under discussion in Germany, probably also while FCAS was struggling, the focus shifted technology-wise. And in all these programs, we are very present, and I see a strong future for all the engineers that so far have worked in FCAS.

Yes. And your question regarding the value chain. So the answer is clear, yes. And why it's yes? First, we have to understand that it's not only Hensoldt, there are also the big other OEMs, 65% approximately of the revenue is sourced. That means the value chain as such is one key success factor or key decisive factor in order to maintain this ramp-up besides investing in people, capacity and so on.

And this leads me to the fact that transparency on the value chain is key, where we are building up the necessary tools that -- and then there has to be a good screening who of the investors and who of the suppliers is willing to ramp up, who is able to ramp up with the structure, also understanding that 80% of ours and also of other OEMs are small and medium-sized companies. And there are then this goes along with challenges on the one hand, but also opportunities.

And there might be the one or the other critical supplier for us where it makes sense that we go for vertical integration to secure, on the one hand, supply, but also secure capacity to be more balanced in this regard. Certainly, yes.

Ross, go ahead.

Ross from Morgan Stanley. Three questions on your 2030 targets. First of all, on the EUR 6 billion, I think you previously kind of tagged this to an assumption of 2.5% of GDP in Europe. But in your slides, you think Germany is going to be at 3.5% and the rest of Europe is going to be at 2.5%. So why is the EUR 6 billion not higher? Or is this just a timing issue with the ramp-up?

Secondly, how much of the EUR 6 billion is M&A? Again, I think you previously said it was around EUR 600 million, but I couldn't get the ruler out to work out on this slide how much that is.

And then lastly, just on margin, obviously, at least 20% EBITDA. How should we think about this at the EBIT level?

Yes. Maybe to start with your second question. I think when you calculate these figures through, I think we end up now in a figure of approximately EUR 5.7 billion by 2030. So it's a little bit higher than before. when we ended up in 5.4%. So this is what we also indicated that we see more room for organic revenue increase. So this is the first answer.

The second is, yes, why are we not increasing? I think -- so let's be honest, Germany is really the forefrontner, and it's really materializing, but also be honest, the one or the other European member who has even signed off this 3.5% is some are hesitating. So we do not see the same maturity level as we do in Germany. So there is for me, the one or the other question mark. And we have to look at 2026, 2027, how this turns on, if there is more upside also from states who are currently a little bit under pressure, it could be -- it could give us further tailwind, but this is how I look at it currently. And also maybe Oliver to add.

Yes. Maybe what we have to consider on this one is, yes, indeed, we have the clarity on the 3.5% GDP spending. We have the 5-year cornerstone paper, which reflects a spending of EUR 152 billion, if I remember well, in 2029. So the money is there. But the problem at the moment is that we don't have the clear visibility what will be the contracts, especially in the outer years.

At the moment, actually what happened, and you saw it with the looks that we jumped from 90 to almost 300 vehicles because what the customer did, they raised the quantities in existing programs, exploiting the full quantities of the framework contracts. But the next phase will be how do we build new capabilities with these -- with the money that is truly available.

And that is for us, which does not make it very easy for us to do the math at that stage. What is the addressable volume of these shares, especially when it comes to new capabilities. The only thing what we can say today, and that is what we try to present to you during the Capital Markets Day, these new capabilities will be a lot about multi-domain operations, how can we connect how a new class for the battlefield. And that's why we're investing now. That's why we are an early adopter on this MDO core principles because I think that will bring us into a very good position to participate in the future new capability procurements.

Yes. And your last question, EBIT. The difference between EBITDA and EBIT is approximately 4.5%. So we had a little bit more because we started to amortize this capitalized R&D. But going forward, I see it in a more stable way. So 4.5% between EBITDA and EBIT is for me the right figure to model.

Let's move on to Sebastian.

Sebastian from BNP. I also have a question on margin. And you apparently did guide to, I think, rather 21% by 2030 because you also made a remark of 50 bps increases. You also said last week on the quarter 3 conference call that optronics you'd see to go back towards 20%. So implicitly, that means there is not that much of a margin expansion in sensors, and that's not necessarily intuitive if we think about the growing contribution from service and the software stack that comes with it, the phaseout and also of the headwinds that you did face in the year '25. So if you could just walk us through what the sort of key elements are, that would be great.

Yes. First of all, I'd like to reiterate that. So we see end of this year, Optronics 14%. We went into this year with 10%. To be honest, also having some unclarity about the move, how will this phase out, how are we able to produce under these circumstances. And this is for me now a very good sign. Going forward, I see every year approximately 2% in EBITDA improvement because now we come to volume-based business in Optronics. It is a classic production-based business.

If we ramp up, we get economies of scale out. And by 2028, I expect that margins from Sensors and Optronics will be comparable on the group level and going forward. So what does this mean in sensor? It was the driver the last 3 to 4 years of extremely margin expansion. But now we are -- have to include things like product mix.

TRML-4D will be still a driver, but there will other aspects. If there is a second Pegasus, we know that it's lower in margins, a very important program, but lower. And of course, solutions and software-defined defense come in the first stage with some development effort, which weighs a little bit on the margin in the front years, but gives us room to improve also in the future. And this is how I currently think about that.

Let's also be clear in the last year, we were always able to do some things on the margins. And -- but I'd like to stay with that level of doing the homework, delivering and then see how margins progress. And I think the last 3 years, we were quite successful to also expanding margins beyond a certain level of guidance.

May be just quickly follow up on the Pegasus comment you made. So there is an element of Pegasus included in the EUR 6 billion now or how should we think about that?

There are -- is a further batch included. Yes.

We'll take Aymeric next.

Yes. It's Aymeric Poulain from Kepler Cheuvreux. You give this guidance for service increasing from 1% to 8% by 2030, but do you have a target also an ambition for the next decade? And I think you mentioned something about services overall in the U.S. maintenance and services being 50%. Is that part of an ambition to rebalance the portfolio in that direction?

And then you said it won't -- this increased service will not be accretive in the first part of -- I mean, in this decade on the service increase, but what about the next decade? Do you see the software services revenue being more profitable than the hardware business today?

And then last on the PEGASUS, the next 3 batch, the first orders were obviously including development costs, so EUR 0.5 billion per PEGASUS, so it's a very big number. For the next one, what would be the right level of revenue per unit, so to speak? And how much of that would include services, please?

Okay. I think, Aymeric, first of all, we have to be clear. So software-defined defense is not the same as service. So software-defined is what has outlined today and what Oliver has elaborated. Services for me, maintenance, MRO, spares and something like that. And in this regard, we were at around 17% 2024. I think this year will be in the same range. And going forward until 2028, 2029, we will be approximately at 20%.

On the one hand, we have an increase in service business. But with the laid out budgets, also the core, I call it, core programs in radar and optronics will grow even faster. But with having more platforms in the armed forces and on the same hand, requiring the circulation reserve, Ulamla availability of systems going beyond 90%, which is comparable with car industry, which is beyond 95%, we will see an enormous recurring business in the service.

And I -- from my point of view, I estimate that service will be from 2030 onwards more in 25%, 30%, at least, as Oliver has outlined, from a pure mass of platforms in the forces and having this business on.

There's one element to it also. And probably that is, as I explained before, for calculating the guidance on revenues and so on in service, I see a strong, let's say, paradigm shift in how the armed forces are thinking about service. So I come from a time, most of you know that I have been a professional soldier in air defense. At that time, we had a 10-minute status, and we had spare parts even delivered by helicopters to the site to keep the systems up and running.

The past 3 decades, it was like that the customer hardly ordered because he had scarcity in budgets, hardly ordered any spares. They said we can buy it just in time because they could afford to have a tank, a vehicle or an airplane to sit on the site and be down for operational service or technical service. So in the discussion with the customer, we see that this is changing massively.

So the first wave is that we see a growth in ordering spare parts, which is along with the product margins and so on. But I think there will be a new definition of how service will be done, and we have plans under discussion with the customer of even building mobile service troops where we go to the customer side to do the servicing for the vehicle, for our product and so on, which, of course, also comes with some investments, some conceptual changes in how we do it.

So that is probably the variable in really defining the margin where on the short term, we said, okay, there will be some efforts. But in the long term, once this new service system, which is definitely a part of Operations 2.0, once our new service system architecture is in place, then of course, we can gradually improve.

Yes. And then last question was on PEGASUS. I think when we go for another batch, I think a figure around EUR 1 billion is the right estimate, taking into account that some of the predevelopment was done already. So this is how you should -- how you could model.

Then I think Charles is next.

Charles Armitage. A couple of confirmation questions really. Your guidance for the full year was unchanged, except for the book-to-bill. Why didn't your CapEx -- sorry, your cash conversion go up with that? Was it the CapEx coming through already? And then the second one is medium term versus long term. So over the medium term, you've got by far the strongest growth in Germany, yet I think over the long term, you're going from 57% of sales in Germany to 50%, which kind of doesn't make sense arithmetically.

Yes. Maybe first question, why did we not improve cash conversion? I think there was a similar question on Friday because there are no advanced payments. So the good news is that we have advanced payments. The bad news is it's not a given. So it's still on a contract-by-contract decision negotiation, heavily arguing in each program to do that. So currently, what I see as we had in the last 2 years that the increasing working capital we need to grow is balanced by advanced payments.

However, not more, but it gives us a cash conversion performance, what I see this is balanced. Yes. So a second and maybe Oliver, you can contribute. Of course, there is much potential also go beyond 2030 with respective growth rates. But let's also be clear, we are now in 2025, 5, 6, 7, 8 years. It's a very long time that there is enormous potential in terms of service, software-defined defense, other areas for sure. But my perspective is let's look at it step by step as we move forward and then adapt in a certain direction, but tailwind is there for sure.

Further questions? David?

Just one slightly boring one, Christian. Just because it gets a bit hard to know what you have and included in free cash and what you haven't. Have you got a guidance on net debt for '26?

Yes. I think from a pure cash performance, I think that net leverage will be 0.3x less, something like that on a pure cash performance. But I have to say we have to also have a look at lease liability. You know this IFRS 16 standard where you are required to put in more liability in a phase where you rent more space, what we currently do.

So it could be that the pure cash performance is then somehow eaten up in the leverage. by a lease liability. But on a pure cash performance, I would say that 0.3x lower net leverage is a good estimate.

Okay. And then just, I guess, related to that, I guess to get to those numbers, you need quite good working capital inflows in '25 and '26. Is that what you're assuming?

Yes. I think that as we also did in the last year that we are -- with these advanced payments now in place, we can outbalance working capital requirements.

Further questions? Afonso?

It's Afonso Osorio here. Just one follow-up on the growth beyond 2030. I know you said that it's 5, 6 years down the line, but is it going to go from 20% plus in 2032. Is that a peak in terms of growth? Or is that going to normalize? You're going to say 20s going to be high teens, low double digit, high single digit?

How do you think about -- without putting a number 2035, how do you think about the growth and the phasing of growth into the next decade according to the pipeline you just showed as well?

Maybe to give you some indications on that because it's really far away. But when I look at the current Army programs, so what is envisaged and Oliver, you know it quite better than me, the contracts which will be placed now and also 2026, they do not last until 2029. The last until 2033, 2034, something like that. And this gives you maybe an impression that the growth rates we see between 2028, 2030 could be also there beyond 2030.

So this is for me a kind of an indication because many people now currently think that German Armed Forces contract until 2029 and then it's over. But when you look at the contracts with the sizes over the years being deployed in sites and aircraft and also our negotiations with the OEMs, they go far into the 30s.

Yes. And probably one thing to add, that's why we stayed so strong on our growth ambition in grow with focus. I mean that's why we're investing. That's why I'm seeing these teams, and you saw the video with the strong teams that we have there. And they are building the relations at the moment to sell whatever we have across Germany and Europe also abroad. And that is a potential.

But still, we are building those relations and we are understanding the needs in a global defense and security market. But at least from first guess, I would see that given that the company gets more international, then as we go forward, I think we are ready to sustain this growth also over time, the strong growth also over time.

And just a quick follow-up to that. Like in terms of the 10% international revenues, like what would be the key contributors in terms of countries? I mean can you have a sense of the speakers that you put in the video on the key countries, but can you just have a sense of which countries specifically within that 10% share of international revenues would be the key contributors to that?

Yes, it's really the key countries. And as I have outlined, we're trying to align that with G2G agendas of the German government because one of the challenges along with international sales is always export regulation. Going into countries where also I have been visiting I recently end of last year, I went to India together with the former Chancellor Schulz.

I have visited Ukraine recently with the minister. We had also a delegation with Minister the Foreign Affairs Minister in India, again. So we try to align that, and that gives us, I mean, a very good credibility or trust that those agendas are sustainable. So it's India, where also we see that the team is making very good progress at the moment. We still see Middle East, and that goes beyond UAE, it's Saudi Arabia, looking at the Eurofighter. I think here, we see a strong change also in the position of the German government. It is the U.S. and had outlined, I recently visited we're probably also in the discussion on tariffs.

We see -- and also the strong bias that Germany made on the P8, on the F-35s, on the CH-47 that there will be some return. I met with the ambassador in Washington, where we actually discussed how can we take momentum out of all the money that Germany is bringing to the U.S. to support German companies also in their endeavor to sell into the market.

And with our strong reference on the tanks, we are at the core of the U.S. war fighter. We have a strong interest of the FAA in passive radar. Our radars seem to sell very well, also talking to Lockheed Martin and some of the big primes. It seems they have a gap in this rather medium short-range part of the radar and sensor portfolio. And that's why it is very promising. In Asia Pacific, we're already, very strong in Japan, in South Korea.

Also considering that South Korea is really maturing as a key player. You saw the Poland buying the tank. So that's why we put a lot of effort there. And all of this activity, which at this stage, given the size of our engine is rather slowly, rather sustainably building those relations -- but once we have built the engine and once we would see a bit of a downturn in Germany, we are ready to sell across the globe.

Tim, do we have any questions from the online audience?

Yes, we have one question. The question is, could you explain why the revenue growth in 2026 is expected at around 10% year-over-year? So what factors are moderating this outlook?

Yes. I think there is one decisive topic, and this is simply lead time. So in our industry, also in our business, including also slowdown from OEMs, we have to assume 1.5 years approximately lead time from having a push in our order books until it's reflected into revenues.

And this is why I see the scheme of the last 3 years as we had this 8% to 10% growth per year also for next year. I think with the book-to-bill, we guide now for this year and rising order book next year, the are done and to go for this additional step. In addition, we have -- will have then more capacity for radar production from 2027. And this is why 2026 is, for me, a year of building up the lead time and from 2027 onwards delivering.

Thank you. I think, Yan, you have a question.

Yes. Yan from ODDO BHF. Just 2 follow-ups. The first one on R&D. Can you give us some indication regarding the evolution of the share of capitalization over the next 4 to 5 years? And maybe going back to SDD software defined. Can you help us understand the ramp-up of the new contracts, maybe using the contract. Can you give us maybe, for example, the share of the license revenues? I think the amount of the contract is EUR 850 million. So what is the share of the license in this amount?

Maybe first question, I think approximately 60% is capitalized. I think this is a good estimate also for modeling. And for the service based, I think we do not yet have it in our contracts that there are special licenses for software. This is, as has outlined, this is a concept of the future. So when will be fully rolled out and the platform is there, I'm sure there will be potential for the software-based topics or maybe also in PEGASUS or other programs, also combining it with MDO Core. But until now, it's not yet part of the business model. It's more a concept of vision for the future.

So I think -- just to complement, there are 2 elements, as you hopefully understood with the presentations we had today. So is a sub-element of the MDO core. So of course, from the program, as we are rolling it out, we will get constant flow of innovation into the MDO core. That's one element.

The second element is that looking at the and the various sensors that are put on this platform, there is a possibility to take the and roll it out, and that would be the software license, not in the core of the it would be rather with the Leopard, the Puma, the Shakal and all the other vehicles that are out there that have our sensors and third-party sensors.

They have actually a communication, a system or radios. So all of these have edge computing and storage capabilities. So we could just purely take the software and roll it out across all the landscape of German vehicles. And that would open up opportunity of those software licenses with a good revenue and profitable margins coming out.

Yes, but this is where we are currently in the concept phase. So where will bring -- make it a reality. We have first discussions with the Chief of Army, where we see a very strong shift, and that is also inspired by the battlefield of Ukraine, where Germany is leaving the idea of having dedicated platforms, functional platform, one for air defense, one for reconnaissance, one for this and that.

They are rather thinking, and that's where our MDO idea where could be a reference case jumps in that we rather disconnect sensors, effectors and C2, we spread the various sensors across the battlefield, we have various effectors on the battlefield and we could just decouple that from the platforms and develop this functionality across the battlefield, including then MDO assets that would fly in the air above from drones over aircraft up to satellites.

Any further questions here in the room? Tim, are there further questions coming from the online audience?

Yes. We have a follow-up question regarding the 2026 guidance. Is there any potential for upside beyond the projected 10% revenue growth in 2026?

For sure. Yes. So no, let's be clear. I think -- or maybe one step back. So 2025 was -- and we said it already in February when we laid out financials 2024, that 2025 will be a year of operational transition. New logistics center with all difficulties, to be honest, in the first quarter, and we have outlined, we have stabilized it.

Secondly, biggest transformation program in our company. And these 2 are now stabilizing and coming to a stage where we say, okay, we see that the motor is now getting up speed. So next year, I think we will be much more stable in logistics, we'll be much more stable in We will have some lead time effects from the programs which now come in now, and we have to build up capacity for further production.

So everything is in place that we could go beyond, but let's let's stay with the Hensoldt policy, starting with a realistic view and doing everything, doing our homework and then look quarter-by-quarter how this phases out.

And I think that I would say it in different words. And I think the conservative way that we have looked forward, and that's a good news despite that probably some of you are not satisfied with that outlook. But the good news is really we considered all the risks that we see also based on the experience of the ramp-up we had this year.

So that's why this is the conservative approach. And the good news is that there's opportunity inside. The opportunity is that the ramp-up will come. The opportunities is that with some of our OEMs in the deliveries, we are faster with regards to the lead time that also as we did, for example, with Pegasus, so we're still counting on a contract change later this year, where we see that the customer is trying to look in the past, we had early operational capabilities.

At the moment, he's even looking at very early operational capabilities, which would help us to build revenue milestones in the earlier sides of the program. That's the discussions which are ongoing. And last opportunity is for sure, MDO Core, where at this stage, we are really in very fruitful discussions with the customer, where based on some available budgets.

But here, we also have the planning process of the customer where normally he needs some headsite to allocate budgets -- but I would see with the pressure from the evolving threat that probably he would go into -- in the true sense of the word in building a war chest where he could finance such solutions as MDO Core. And if these opportunities flowed in, we are ready, of course, as we did in the past to share this with you to update the guidance and everything.

But again, I'm in full alignment with Christian and even with Lars and our team here, we follow this conservative approach, probably like some of the others on the market. And so far, it is always that we delivered on our promises, and that is what we want to do in the future.

So further follow-up questions on the '26 guidance or any other questions? Tim also checking on the online audience.

There are no further questions from the online audience.

So yes, big thank you to everyone. With no further questions, we would all like to thank you very much for coming to today, both here in the room and also virtually. Yes, have a safe trip back home. Have a wonderful evening, and see you soon. Thank you.

Thank you very much.

Thank you.

Good afternoon, everybody, and welcome to Hensoldt's 9M 2025 Results Call. Thank you all for joining us today. I'm Veronika Endres, Head of Investor Relations at Hensoldt. And with me today is our CFO, Christian Ladurner. Christian will guide you through this presentation today, which will be followed by Q&A. And with that, over to you, Christian.

Yes. Thank you very much, Veronika, and a very warm welcome to all of our investors and analysts following our company. It's great to have you with us today. I'd like to begin with a quick update of this time line, which you may remember from our recent analyst calls. Since then, our assumptions have further materialized. Right after the adoption of Germany's 2025 defense budget in September, the parliamentary sessions for procurement approvals gained strong momentum.

By the end of 2025, a total of more than a double -- high double-digit number of so-called EUR 25 million approvals will have been passed, many of them with direct Hensoldt involvement. The first tangible evidence was our recent guidance upgrade for the 2025 book-to-bill ratio published 2 weeks ago. While the majority of expected orders is still anticipated to enter our books in 2026, the increased guidance for this year already reflects the early materialization of these strong dynamics.

This sets the stage for a strong finish to 2025 with significant orders to be expected in the near term. Let me start with the Sensors segment. In October, we booked a major sustainment contract for the German P-8 Poseidon program worth EUR 130 million. Alongside the procurement of the German Eurofighter Tranche 5, the contract of our Mk1 radar is now in the flow down, and we expect to book the order with approximately EUR 180 million shortly.

The same applies to further orders for TRML-4D air defense radar for Ukraine, for Switzerland with a combined volume of around EUR 200 million. Notably, the Optronics segment will contribute significantly to our order intake in 2025, combining both upcoming and recently booked contracts with approximately EUR 1.4 billion. This is predominantly driven by the land domain. The contract for the new reconnaissance vehicle named Luchs II is currently in the flow down process. This landmark order represents a volume of approximately EUR 850 million for Hensoldt. In addition, we anticipate further orders for the Leopard 2 main battle tank and for the Schakal, the Boxer platform equipped with the PUMA turret. The latter we expect in 2026.

Further key contributors are projects for Algeria's border surveillance as well as upgrades for the German U212A submarines, both recently booked. I will give an overview of how these orders will contribute to our raised book-to-bill guidance for 2025 in a minute. Of course, all of you know that ramping up capacity is key to meet increased customer demand. Therefore, we have started our Operations 2.0 initiative, which we have introduced in H1 of this year. Since 2022, we have been expanding production capacity through continuous improvement, automization and outsourcing, integrated into our annual CapEx plan, and this will continue.

And of course, we will provide more details at our Capital Markets Day next week. Nevertheless, our first concrete initiative. This is our new production site, which will significantly increase our production capacity for air defense radars. This strategic capacity expansion will enable us to substantially ramp up production from 2027 onwards, especially for TRML-4D and Spexer radars. We are investing around EUR 80 million in this rented site, combining resilience with synergies across our existing footprint.

Let me now come to our financials for the first 9 months of this year. After outlining our promising growth outlook, let's now shift to what we have accomplished so far. So let me walk through our financial results for the first 9 months. To begin with, I'm very pleased with the performance we have once again achieved. Order intake developed as planned, reaching more than EUR 2 billion. Also this year's orders placement from Germany are heavily weighted towards year-end, we exceeded the high prior year figure by 9%. Key drivers behind this performance was the Eurofighter program as well as TRML-4D radars.

Revenue performance was strong, increasing to EUR 1.5 billion. Optronics continued its strong momentum, while Sensors further gained traction in Q3 as anticipated following a slower start in the first half of the year. Passthrough revenue continued to decline in line with our planning. Excluding parcel revenue, core revenue grew strongly by 14%, reflecting the strength of our underlying business. With a book-to-bill of 1.3x, our order backlog again reached a new record level of EUR 7.1 billion, providing us with an excellent visibility.

To sum it up, the increasing investments in defense by our German and international customers continue to translate into higher order intake and revenue. The strong performance of our top line is also reflected in our profitability. Adjusted EBITDA increased to EUR 211 million with an adjusted EBITDA margin of 13.7%. The increase was primarily driven by higher volumes in the German Optronics business. In the Sensors segment, product mix effects partly offset this growth, while the impact on margin from the logistical ramp-up has further diminished.

Additionally, we continue to capture cost and revenue synergies from the ESG acquisition, further strengthening our bottom line. Adjusted EBIT increased to EUR 122 million in 9M 2025. Cash generation was excellent in Q3. Adjusted free cash flow increased to minus EUR 119 million per 9M 2025, supported by advanced payments received. While on the other hand, investments in our working capital continued as planned to manage the business volume in Q4. To conclude, our bottom line is on track and set to gain further momentum as the year progresses.

Now let's have a look at our segments. The Sensors segment delivered a solid order intake of EUR 1.7 billion, exceeding previous year's high comparison base. This corresponds to a book-to-bill ratio of 1.3x. The development was driven by orders for the Eurofighter re-baselining and Halcon program as well as TRML-4D radars for Ukraine. Revenue in Sensors increased to EUR 1.3 billion. Despite the slower start in our radar production during the first half year, revenue growth was strong and fully in line with our expectations.

Excluding the declining share of parcel revenue, core revenue in sensors rose by 12%. Adjusted EBITDA in Sensors increased to EUR 199 million. Product mix effects had a minor impact, while the effect of the ramp-up of the logistics center in H1 is further diluting. This is reflected in the adjusted EBITDA margin of 15.1%, catching further up as the year progresses. As mentioned, cost and revenue synergies from the ESG acquisition contribute to this as planned.

Optronics realized a strong order intake with orders summing up to EUR 328 million, resulting in a book-to-bill ratio of 1.4x. This was primarily driven by orders for the U212A submarine retrofit, gimbals and site systems for ground-based systems. Revenue performance in Optronics was excellent, continuing the momentum from the previous quarters. This was boosted by the sustained strong performance of the German entity, which achieved revenue growth of 27% in the first 9 months. Main driver was accelerated production in ground-based systems.

At this stage, we are also pleased to have successfully the first step of the move of the ground-based systems business in the Oberkochen, from the former Zeiss building to the new build Optronics campus. This milestone will provide our business with the capacity to continue the strong growth path ahead. In terms of margins, Optronics continued to show a significant improvement compared to prior year with adjusted EBITDA reaching EUR 12 million. This development was driven by higher volumes from the German unit.

Let's now have a look how our order book will develop until year-end. In addition to the orders mentioned at the beginning, we are preparing for a broad series of additional contracts across our business areas such as for air defense, the Eurofighter program, our naval business as well as self-protection systems and services and integration. To sum it up, we are very well on track to secure major orders that will drive our order intake from around EUR 2 billion in the first 9 months to approximately EUR 4.4 billion per year-end.

Let me now come to our guidance for 2025 updated 2 weeks ago. First and foremost, order intake. Following the recent development, we have significantly raised our book-to-bill guidance from around 1.2x to a range of 1.6x to 1.9x. As highlighted earlier, we expect to book key programs like Eurofighter and Luchs 11 already within this year, pushing the book-to-bill notably upwards. Furthermore, we specified our revenue guidance to approximately EUR 2.5 billion.

As outlined in our recent analyst calls, the rollout of our new logistics center represents a strategic investment in long-term competitiveness and operational efficiency. While this go-live has temporarily moderated the pace of revenue growth in 2025, it is a critical enabler of sustainable growth and scalability in the years ahead. For adjusted EBITDA margin, we specified our guidance to 18% or higher. This reflects our focus on sustained strong profitability by investing in our capacity to secure long-term success.

For adjusted free cash flow, we continue to expect strong performance with an unchanged cash conversion target of approximately 50% to 60%. And our net leverage target remains at around 1.5x, reflecting our disciplined financial management. Finally, our dividend payout ratio will continue to be in the range of 30% to 40% of adjusted net income, in line with our commitment to shareholder returns. So coming now to a conclusion, let me mention the following key takeaways. The ever-increasing demand for our products and solutions is reflected in substantial order intake across both segments, driving order book to a record high of EUR 7.1 billion. This continues to provide excellent visibility for the years to come.

Our revenue performance remains strong, driven by sustained high momentum in optronics and accelerated growth in sensors during the second half of the year. This is reflected in our solid profitability, supported by higher volumes in Optronics, while the impact of Sensors margins from the logistical ramp-up is further diluting. Our outlook remains promising, and we are strongly positioned for the upcoming growth. Germany is taking the leadership role for defense in Europe, and Hensoldt has the right strategy, products and capacities to play a major role in upcoming German and European procurement programs. This is now increasingly reflected in concrete orders, driving our book-to-bill guidance significantly upwards and with further major contracts on the horizon.

So in short, Zeitenwende 2.0 starts to materialize. Through targeted investments in capacity and processes, we are safeguarding our delivery capability. We proactively secured the further ramp-up of our air defense production from 2027 onwards, safeguarding our delivery capability and long-term sustainable growth. Thank you very much for listening. And with that, I'm now happy to open the floor to your questions.

[Operator Instructions] The first question comes from Sebastian Growe from BNP Paribas Exane.

The first one would be on the Optronics segment. And apparently, the segment is outpacing the earlier indicated 10% EBITDA margin for this year. And against the backdrop, where do you see the segment trending both in '25 and particularly in the midterm, i.e., do you eventually see scope to return to the 20% plus levels that you achieved in 2020? And as a follow-up to this, as Optronics is going to roughly double its order backlog based on your statements. How should we think about the growth cadence in the outer years, i.e., would you agree that optronics might ultimately outgrow the Sensor segment?

Sebastian, many thanks for this question. So yes, a very good question about Optronics margin. You're right. So we guided until half year 10%. I have to say, currently, we see with the positive development, a figure which goes more into the direction of 14% EBITDA at the year-end. With having said that, we see every year a figure of around 2% in addition. And of course, in the midterm 2027, 2028, we expect that figures at the profitability of Optronics will be in this year, as you have mentioned, so for sure.

And the second question, yes, you're also right. We see more momentum now from the optronics. We have to keep in mind that sensors is a classic project business with heavy also engineering load in the work, whereas Optronics is a delivery business. That means if we have everything in place and industrialized products and the demand is there, which is currently there, we are able to ramp up more intensively. And for, I would say, more concrete numbers, I'm happy to share with you on the upcoming Tuesday that we will give some more insights how the segments will progress.

Makes sense. I won't stretch my luck too far. Just one other quick one, if I may, on some comments we heard recently from your second largest shareholder. Those very comments suggest that there might be scope for an expansion of the cooperation between the -- as you referred to legacy part of the product offering. And I was just wondering considering also that there are so many cooperations happening in the defense sector, in which areas might you see headroom for more cooperations and that could either be then with the Italians or then eventually also other partners?

Yes. Thank you very much. You're right. The dynamics is quite high currently, and Leonardo has stated that there is a good collaboration with our company up to now, especially we have currently in the Eurofighter and also in the air defense topic. I see within -- with Leonardo, there are, of course, also opportunities in the land platforms to go for more cooperations even if there is nothing material yet. And of course, I think with the increasing budgets coming from Germany and acting Germany as a frontrunner, of course, other companies are interested in participating of this growth and then going to partnerships with German OEMs, but also in Hensoldt.

And when you have seen now the Luchs II contract, which is at the end of the day, a cooperation between GDLS (sic) [ GDELS ] so General Dynamics Europe Landsystems (sic) [ General Dynamics European Landsystems ] and Hensoldt gives you also a concrete example where this successfully happened. And going forward, we see also possibilities in the land platforms, for example, also in space, also in air defense in all ranges. So there is more to come. And also here, we will give you some more details on Tuesday in the Capital Markets Day.

The next question comes from the line of Ross Law from Morgan Stanley.

So the first one, just on order intake. Obviously, it continues to track strongly. And obviously, you've raised full year guidance quite materially. What's a little surprising is that your cash guidance is unchanged. Can you maybe just flesh out the moving parts there into year-end as I would have thought that you're going to get a reasonable amount of down payments like you've noted for the 9 months? And then just on the outlook, you've confirmed your 2030 sales guidance. Can we also expect you to provide 2030 guidance for other metrics like margin at next week's CMD? And given the strong visibility from Germany specifically, can we expect you to provide some indications of growth for the group beyond 2030 next week?

Yes. Thanks, Ross. So in terms of down payments, first of all, it's a good progression we have seen now in the last year when we compare 9M 2025 with 9M 2024, we have EUR 200 million more down payments on balance sheet. On the other hand, I have to say we are heavily further investing into working capital. That means the strategy, and this is also seen in the figures is clearly to go for pre-investments in working capital to further deliver and outbalance this advance payments. So this is why I do not really expect an increase now of cash conversion by year-end.

And regarding 2030, yes, we will give some more insights how we think about this EUR 6 billion figure on Tuesday and also some bottom line figures for sure, and also some aspects how we think the company will grow from 2030 onwards. I think it's not a secret when you now currently look how Germany will behave from this and next year onwards that most of the contracts will not only last 5 years, they will 5 to 8 years. And then we are at the beginning in the mid of 2030. And on top of that, there will be service business due to that the availability of services of systems in Germany has to be increased massively. So there is room and there will be more details on Tuesday. Yes, clear yes.

Great. Thanks Christian, see you by next week.

[Operator Instructions] Next question comes from the line of Christophe Menard from Deutsche Bank.

Two questions on my side, just on the updated 2025 guidance. The revenue growth you have in Q4 is actually a bit softer than usual. Is it only linked to the logistical center? You're going to be growing more or less in line with what we've seen in the first 9 months. Usually, it's a stronger quarter. So the question is, is it just that phasing? And will -- should we resume kind of that accelerated growth in Q4 as of next year?

The second question is on the margin. You stated 18% plus. As you previously outlined, Sensors was doing very well in the first 9 months and in Q3. What about -- sorry, Optronics, you talked about optronics. And my question is about sensors. We also had a very good performance on sensors. How can we think about the margin performance of sensors in the full year?

Yes. Thanks, Christophe, for that. Yes, you're right. It should be a little bit weaker. I think especially in sensors, when I look at the key products such as Eurofighter and TRML-4D, there are fewer figures now planned for Q4. But nevertheless, we see an increase. I think when we talk about 2026, we will be in a normalized Q4 again, which will be stronger from my point of view because then the logistics center effect will be fully phased out next year. So this is the picture I currently have. So in terms of margin, I've outlined 14% for Optronics for this year in the sensors, I expect approximately 19%, which is then in the sum around 18% to 18.2% and which gives us confidence to reach our guidance for the full year.

Next question comes from the line of David Perry from JPMorgan.

Christian, look forward to seeing you next week. I was just going to ask you to unpick this big jump in the Optronics margin, the 14% so basically you're double year-over-year. Just how much of that is that R&D has dropped? How much of it is kind of one-off self-help, say, South Africa or something like that? And how much do you think is related to the volume? And then just to square the circle on it, can you just tell us where you think the revenue ends up for this year in Optronics, please?

David, many thanks for the question. I see currently that it's solely volume-based. So R&D, we are still in the digitalization of periscope and the WAO for the Puma. So this will last until 2027 because these figures go down. We are still at Ceretron. Ceretron is the sensor suit for the Luchs II, which has to be finished until 2027 until the first systems are to be delivered to GD. So this will stay at a high level. And as I said before, this is volume-based. South Africa is more or less on the level of the prior year. So this is exactly volume-based. In terms of revenues, I see approximately EUR 420 million to EUR 430 million for the Optronics segment. I see EUR 2.07 billion to EUR 2.09 billion in the Sensor segment, which then comes up to the group guidance.

We have a follow-up question from Sebastian Growe from BNP Paribas Exane.

So the first one is on Sensors, and it's actually then a follow-up to Christophe's question. I think if one looks at the 9-month period, then I take the point that the dilution effects from the logistical ramp-up were quite significant. But if one singles out quarter 3, then apparently it's the first quarter where you're up like 200 basis points year-on-year. So the question that I have -- it's 3 questions actually. So the first one, is this logistical ramp-up fully digested by now as we speak? And conversely, it appears really that the ESG business is performing way stronger than potentially expected. So can you provide some color with regard to the trends in the, a, core and, b, then ESG business, please?

Yes, for sure, Sebastian. So first answer is clearly, yes, we have digested that effect. Nevertheless, I see approximately EUR 10 million of effect we will have. We had this EUR 10 million effect in Q1, which is from an absolute term still in the figures. Relatively, it phases out, as you have seen through Q1, H1 now 9M and also Q4. So this is clear. And ESG, yes, we bought this company for approximately 14% EBITDA. We see currently a figure which is around 15%. So this -- the cost synergies have completely realized as we have planned on a pro rata basis. So these are the 2 figures.

Okay. That's helpful. And then just finally, again, on the order pipeline and in addition to Ross' question. So I know it's hard to compare you guys with Rheinmetall, for instance, but they hinted at around EUR 20 billion in quarter 4, another EUR 40 billion, EUR 50 billion potentially in '26. And again, I appreciate that apparently, there are differences in both the business mix, the regional mix and whatnot. But from the sort of cadence and general sort of dynamics, would the sort of potential rule of thumb like seeing a doubling or so from the quarter 4 dynamics be directionally also the right yardstick for you? Put differently, what are you seeing recently from the order pipeline perspective going into '26?

Yes. Look, I expect in 2026, especially in the land platforms where we currently talk about these thousands of Boxers, Pumas, Leopard and so on. So from my point of view, there will be big dynamics in 2026 in the land platforms also in our business. And I think the book-to-bill we currently guide for this year, I see at least also for next year. This is simply due to the fact how the structure is currently working in the German parliament with having now the budget in place 2025 and 2026. So this is my view currently. We have to keep in mind that, of course, every special land system goes then by OEMs. That means there will be a kind of a flow down process between the OEM to receive the contract. But also next year, I see in terms of book-to-bill, a figure which will be similar as the figure we have now updated for this year.

Very helpful, thank you so much, and see you next week then.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Veronika Endres for any closing remarks.

Yes. Thank you all for listening today. As always, should you have any further questions, the IR team is around all day to follow up. And as Christian mentioned, we are very much looking forward to welcoming you at our CMD event next week. Have a great weekend. Thank you, and goodbye.

Ladies and gentlemen, welcome to the Hensoldt AG H1 Results 2025 Analyst Conference Call. I am Hillie, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Veronika Endres, Head of Investor Relations. Please go ahead.

Good afternoon, everybody, and a warm welcome to Hensoldt H1 2025 Results Call. Thank you all for joining us today. I'm Veronika Endres, Head of Investor Relations at Hensoldt. And with me are our CEO, Oliver Dorre; and our CFO, Christian Ladurner. Oliver and Christian will guide you through this presentation today, which will be followed by a Q&A session. And with that, over to you, Oliver.

Well, thank you very much, Veronika, and a very warm welcome to all our investors and the analysts following Hensoldt. It's really great to have you with us today. I'd like to start with a quick snapshot of where we stand on the 4 axes of our North Star strategy. Overall, we are progressing strongly. The 8 major transformation programs steered by our group transformation office are advancing as planned and already making an impact.

Let's begin with grow with focus. We have essentially completed the sales transformation. Resources and priorities are now fully aligned with our strategic goals. Germany is and will remain our anchor customer, forming the foundation of our business supported by Europe and selected international markets. We are appointing our first key account leads, embedding customer centricity even deeper into our organization. Going forward, it's not just about selling, it's about serving our customers better than anyone else.

On deliver at scale, this has become a clear imperative, underscored by the recent statements from Chancellor Merz and Defense Minister Pistorius. I will elaborate on this shortly, but one thing is clear, the chimneys at our factories are smoking. We have stabilized the operation of our new logistics center and are systematically clearing production backlogs, running electronics production in 2 shifts and logistics in 3.

The move to our Oberkochen site is well underway and on schedule. On pioneering software-defined defense, I'm pleased to announce that Sven Heursch joins Hensoldt tomorrow as our new Head of SDD and Digitalization. As a former German Air Force Officer, Sven brings deep operational expertise that will significantly accelerate our progress here.

Finally, on culture, which is crucial as we grow, I left our recent leadership team meeting inspired and proud. Among our top 80 leaders, there is no strong shared determination to take Hensoldt to the next level together.

Turning to the geopolitical landscape. The NATO Summit in June reaffirmed what we expected. Despite doubts earlier this year, the alliance is united and determined. There is a broad consensus that defense spending must reach 3.5% of GDP and NATO is clearly preparing for the possibility of conflict with a peer adversary. From where I stand, it's evident that Germany is stepping into its role as the frontrunner of NATO's European pillar with far-reaching implications. The sharp increase in Germany defense budget will set procurement benchmarks for Europe and drive a de facto consolidation in our industry. With our deep roots in Germany and unmatched customer intimacy, Hensoldt is ideally positioned to play a central role in this development.

You may recall this time line from our Q1 call. And since then, our confidence has only grown that Germany's 2025 defense budget will be approved right after the summer break. The government's Eckwertepapier, the cornerstones of the budget, are already outlined and they set clear priorities. We expect OEM level orders to start arriving by the end of this year. And with the usual downflow, these will start appearing in our order book no later than mid-2026.

Here, you see the trajectory of Germany's defense budget over the next 5 years. It will more than double, reaching 3.5% of GDP, about EUR 160 billion, including support for Ukraine by 2029. To put it plainly, while others are still reading the timetable, Germany's train has already left the station and it's picking up speed.

Importantly, it's not just about more money, it's about focus and purpose. Chancellor Merz has promised to build the strongest conventional army in Europe, and procurement reflects that ambition. We see a dual approach. On one side, a massive ramp-up of conventional capabilities with, for example, armored vehicles orders reaching 5-digit numbers through high-volume frame contracts. On the other, increasing investment in technological sovereignty with significant R&D spend on advanced capabilities. As a high-tech solution provider, Hensoldt is perfectly positioned to benefit from both trends.

Looking at our order intake in H1 2025, Eurofighter and TRML-4D once again drove sales to a strong EUR 1.5 billion, lifting our order backlog to a record of EUR 7 billion. We are particularly proud that Ukraine will soon receive an enhanced TRML-4D capable of detecting enemy artillery and mortar sites, proof of how our software-driven products can deliver new functionality rapidly.

The outlook for the second half of the year remains bright, and we see the strong momentum continuing for the rest of 2025 with a series of key orders on the horizon. We expect major contracts across air defense radars, Eurofighter programs, ground-based systems and sustainment projects like the German P8 Poseidon. Notably, we anticipate orders exceeding EUR 500 million for optronics and self-protection systems for platforms such as the new reconnaissance vehicle Korsak, Leopard 2 tank, and Boxer RCT30. Our radars continue to sell exceptionally well with additional orders for TML-4D and Spexer coming up. New projects for the Eurofighter and Algeria's border surveillance will further contribute significantly.

Finally, a quick outlook at how we are ramping up capacity. Since 2022, we have been expanding production capacity through continuous improvement, automation and outsourcing, integrated into our annual CapEx. This, of course, will continue. Our new logistics center and the Oberkochen move are transformative, laying the foundation for scale, efficiency and profitability. Thanks to these initiatives, we have sufficient capacity for the next 2 to 3 years. But with the German defense budget rising and visibility on future orders improving, we are preparing a step change in our operations, fundamentally transforming our industrial system to ensure scalability, resilience and customer service excellence.

And with this view, what lies ahead, I'll now hand over to Christian for a closer look at the numbers, and thank you very much.

Yes. Thank you very much, Oliver, and I'm now happy to provide you with our financials for the first half of 2025. Once again, we achieved a solid top line performance in the first 6 months. Order intake developed as planned with orders totaling EUR 1.4 billion. Oliver has already elaborated on the main drivers. Group revenue increased by 11% to EUR 944 million and was driven by sustained strong momentum of our Optronics business.

Revenues in the Sensors segment were solid despite anticipated slower start caused by the ramp-up of the new logistics center, particularly in Q1. The level of pass-through revenue further declined in line with our expectations. Excluding pass-through, our core revenue grew strongly by 14%. With a book-to-bill of 1.5x, our order backlog reached a new record level, exceeding EUR 7 billion for the first time, providing us with an excellent visibility.

The bottom line met our expectations, too. Adjusted EBITDA increased EUR 107 million with an adjusted EBITDA margin of 11.3%. The development was driven by product mix effects as well as the ramp-up of our new logistics center, which led to a temporary lower productivity within the Sensors segment. These impacts on margin from the logistical ramp-up have eased in Q2 and will further dilute as the year progresses.

In addition, we are seeing the realization of cost and revenue synergies from the ESG acquisition, which are beginning to contribute to our operational performance. Adjusted EBIT was impacted similarly by these effects, amounting to EUR 49 million in H1 2025. Cash flow followed our usual seasonal profile with an adjusted free cash flow of minus EUR 181 million. The development was driven by investments in our working capital to manage the planned business volume in the second half of the year. To conclude, our bottom line performed in line with our expectations and is set to gain further momentum as the year progresses.

Let's now have a look at our segments. In the Sensors segment, we achieved a solid order intake of nearly EUR 1.3 billion, on par with previous year's high comparison base. This corresponds to a book-to-bill of 1.5x. Revenue in the Sensors segment increased to EUR 817 million. Despite the slower start in our radar production, revenue performance was solid and in line with our expectations. Excluding the decline in share of pass revenue, Sensors core revenue increased by 13%.

Adjusted EBITDA in Sensors amounted to EUR 105 million. Besides product mix effects, the margin development reflected the lower productivity in the Sensors segment due to the ramp-up of the logistics center. As mentioned, the temporary effects from the logistics ramp-up are expected to further dilute during this year.

Optronics achieved a strong order intake with orders summing up to EUR 164 million. This was primarily driven by sites for ground-based systems as well as self-protection systems. Revenue performance in Optronics was excellent, continuing the momentum from the previous quarters. This was boosted by the sustained strong performance of the German entity, which realized revenue growth of 28% in H1. Main driver was accelerated production in ground-based systems.

As shown in light green on the slide, the South African entity achieved modest growth in order intake. Revenue development, however, continued to reflect the effects from the ongoing technology change and strategic realignment. In terms of margins, Optronics continued to show a strong improvement compared to prior year. This was driven by our volumes in the German units, supported by lower OpEx. Also, the South African business was still impacted by lower volumes, the action plan we have implemented continue to show results. Overall, Optronics realized an adjusted EBITDA of EUR 1 million.

As announced last week, Hensoldt has now successfully issued its promissory note loan. By replacing the previous bridge facility, we have reached the final milestone in establishing our long-term financing strategy. With the placement, we took advantage of the new funding channels unlocked by our recent refinancing, and the result speaks for itself.

The significantly oversubscribed placement attracted a broad base of investors, and we secured EUR 300 million at the lower end of the pricing range. With our comprehensive refinancing now complete, we have significantly strengthened our capital structure, gaining higher financial flexibility, reducing costs and achieving greater independence through a diversified debt profile. At the same time, we remain committed to our disciplined deleveraging path, confirming a leverage of around 1.5x for this year.

With this solid financial framework in place, let me now come to the guidance for the fiscal year 2025. First and foremost, we are fully on track to achieve our 2025 targets and hereby reaffirm the guidance we published in February. We continue to anticipate strong order intake in 2025 with a book-to-bill ratio of approximately 1.2x. As Oliver highlighted earlier, we expect strong additional demand driven by the increased defense budget. While we currently foresee most of these orders being placed in 2026 or beyond, there is potential for some contracts to be awarded earlier, which could provide further tailwind to order intake and book-to-bill ratio. However, as of today, there are still uncertainties around the order flow and exact timing. We expect to gain more clarity on these issues after the German budget is approved in September, followed shortly by parliamentary approvals for defense procurement projects.

As outlined in February, we expect revenue in a corridor between EUR 2.5 billion and EUR 2.6 billion. That said, the rollout of our 2 transformation programs, the new logistics center on the one hand and the new site, Oberkochen, on the other may temporarily slightly moderate the pace of growth, resulting in revenue being towards the low end of our guidance range. These initiatives are strategic investments in our long-term competitiveness and operational efficiency. While they may slightly impact short-term top line performance, they are key to drive sustainable growth over time.

We forecast an adjusted EBITDA margin of around 18%. And for our free cash flow, we expect continued strong performance with a cash conversion target of approximately 50% to 60%. Net leverage is expected to remain stable to around 1.5x, reflecting our mentioned disciplined financial management. Finally, our dividend payout ratio will continue to be in the range of 30% to 40% of adjusted net income and in line with our commitment to shareholder returns.

Coming to a conclusion, let me mention the following key takeaways. The ever-increasing demand for our products and solutions is reflected in the substantial order intake across all Hensoldt divisions. Our order book exceeding EUR 7 billion for the first time, a great milestone achievement that continues to provide further excellent visibility for the years to come. Paired with solid revenue performance, we're confirming our growth trajectory and guidance for full year 2025.

Our outlook remains promising, and we are strongly positioned for the upcoming growth. Germany is taking the leadership role for defense in Europe, and Hensoldt has the right strategy, the right products and the capacities to play a major role in upcoming German and European procurement programs, and we expect to have high visibility on additional orders towards the end of this year. Based on the planning security, we are ready to take strategic investments to secure long-term success.

Thank you very much. And with that, we are now happy to open the floor to your questions.

[Operator Instructions]

The first question comes from the line of Sebastian Growe, BNP Paribas.

The first one would be just to pull check post the NATO Summit in June. So with the quarter 1 results in May, you had raised the 2030 sales goal to EUR 6 billion, and that was based on a 2.5% related GDP defense spending. So in the meantime, and as you also mentioned yourself, apparently, we had NATO agreeing upon 3.5%. We had Germany forging ahead with the 3.5% by '29 already. And also your pipeline, for instance, for the TRML-4D radars keeps selling every quarter. So how might the recent changes impact your business and midterm plan? And if we could start there, please.

Yes. Thank you very much, Sebastian. This is Oliver speaking. Indeed, and I think we stay to the reasoning that we put on place when we raised it to EUR 6 billion. Indeed, I see that the confidence is progressively improving on really those orders coming in. But still, we are in the dynamics on putting all these order offers with the customers. And as Christian and I have outlined in the presentation, based on the confirmation of the annual budget in parliament in September, that's the planning for 2025.

And then the budget for the years to come, which will be '26 forward then in November, I think that is about the time when we have the visibility to, of course, reevaluate this 2030 ambition. Again, yet, a very promising, confident-raising discussion. But as a matter of fact, we stick to our conservative approach. It's discussions and not yet in writing. Once it is in writing, of course, as we announced many times, we will revisit our future guidance and this ambition.

That's understandable on one side. And maybe can you, however, shed some light around you have seen more especially also outside German interest in the meantime? Or how is the regional overall pipeline discussion unfolded?

Well, very clearly, Sebastian, and I think Christian outlined it, the focus at the moment -- I mean, all this growth, all this market potential is developing really well. Our focus as a management at the moment is really to set the prerequisite that we can digest these massive orders, which we expect from the market. So it's really about our production, about our infrastructure and all of what we have in place.

So the past weeks, we have started, as Christian outlined, Operations 2.0 to really look at the next step. Still, of course, not being under pressure because with the recent investments since 2022, the EUR 1 billion, we're well positioned for '26, '27. But as you say, I mean, the past 3 months, the market demand, especially Germany has developed significantly, especially on land systems. We see the next Eurofighters under discussion, and that is not only Germany, I think Europe, the same.

However, the maturity level in Europe is a different one. I mean, here in Europe, some of the nations funding their defense spend are looking on loans. That is what we hear in the news. And so I would see that Europe part comes a bit later, which perfectly matches also our planning as at the moment, we are working with our teams to prepare the planning for the years 2026 following.

More concretely, we see first the initiative of Minister Pistorius that Germany is really pushing for framework contracts, also offering other nations to join. So one example is the Leopard tanks, where at the moment, on top of the 103 German tanks, we see the Netherlands, Hungary, other nations coming up to see that they want to join these frameworks. Same applies for air defense. Probably you saw the news that BAAINBw is facilitating contracts for Denmark, joining ESSI now.

So for sure, especially in ESSI, we see a lot of momentum. You have might also read the news that deal has negotiated with Switzerland, with Sweden and then Denmark. So all of this, of course, will be down flowing to us. Next part is Pegasus. You know on Pegasus, which is really also progressing on project level. We have passed the CDR in June for the payload. And also here, we see now with the U.S. assets probably being not that available anymore as in the past, that those strategic assets like second aircraft are addressed. So far, the demand came rather from rest of world, far countries, but now we see a massive demand coming up in Europe. So maybe that's 3 examples. And hopefully, with that, Sebastian, I answered your question.

It does. If I may just quickly come back to the quarter 2 or H1 performance, and let me start on the Sensors segment. You pointed earlier on to the revenue and cost synergies that we have seen with ESG. Can you quantify what the overall impact of ESG was in the second quarter because I'm apparently also interested in the underlying development in the core business?

Yes, Sebastian, thanks for this question. I think let's be clear, I think it's absolutely fair to separate Q1 because technically, we accounted this last -- this year, which we did not do for last year. But when we come to Q2, I have to say this business is more and more integrated. It's part of the multi-domain solutions business. And we see the synergies coming up. But when I especially look at cost synergies, these are only possible because it's now one group and also in terms of 2 or 3 concrete programs such as counter US tariffs, we see this is only possible within the group. So it does not make sense for me to really outline this Q2. It would not create a solid picture. So this is why I see Q1 sensefully showing separately, but from Q2 onwards, it's an integrated company.

I would even add, I mean, part of the post-merger integration and really the successful work we have done with the team, we also moved some business units and so on. So we -- it is hard to identify the ESG structures as part of our Hensoldt 2.0 that we started January this year. I think we would compare apples and peers if we look back into the past structures.

Okay. Got you. And the last question for me is just quickly around the Optronics business here and the South African entity. So I appreciate it's a relatively small business per se. But nonetheless, we have seen orders indeed inflecting quite a bit. I think first half has been around 2x book-to-bill. So my question is simply, when will we really see then also the revenue bit accelerating? And if you could also shed some light around what you expect in terms of the profitability, i.e., when it's swinging back to profit? And could we also think of this business becoming a double-digit EBITDA margin business over time?

Yes. Sebastian, my view on that, let's be careful on that. I think we have outlined that we are carefully rethinking strategic options and they were also in the press. So this is why I'm currently a little bit hesitating to give more details on that. I think the increase in orders was, yes, a good sign, but how it then will reflect in revenues and profitability, let's see. So I'm a little bit hesitating on that to provide more details, I have to say.

We now have a question from the line of Aymeric Poulain from Kepler Cheuvreux.

The question is a follow-up on the ESG contribution. So now you don't report it anymore, but could you give us an idea of how advanced you are in terms of extracting the cost synergies that you were earmarking when you made that acquisition? And indeed, just to get a feel for the outlook of the RDT&E market that it serves. Is it the same as it was before the acquisition? Or has it been enhanced by the market size that obviously will be a lot bigger? So that would be the first question.

And secondly, you mentioned the opportunity and the size of potential investment that you need to do a bit in working capital or CapEx for capacity and potentially also M&A. So how do you plan to fund it? Do you expect more advanced payments from the German government? Or will it have to come from the cash flow of the group?

So maybe I'll start with the market potential, and then I leave the room for Christian to go a bit more in the number crunching, so to say. Of course, I would, at that stage, definitely say that with the dynamics that we see on the market and the assets and capabilities we have with ESG acquired with ESG, we see strong opportunities as far as market potential is concerned.

Three elements that probably as examples, I would highlight. First thing, is the U.S. programs supporting exports. So that's why the tariff discussion and everything we saw recently is, of course, looked at from a German perspective with some question marks and quite critical. But on the other hand, for us, it also bears a huge potential. As you know, we're with ESG heavily engaged in P8 program with Boeing in the F-35s, in the CH-47. And coming back to my visit at the Paris Air Show recently, we definitely see that now the discussion framework with those companies is opening up. and F-127 Lockheed Martin would just be another example where definitely we see a growing potential where we take the commercial power of Hensoldt combined with the capabilities of ESG, where especially also in the maritime domain, where so far we haven't been that strong, we can take a stronger role.

Second thing is, of course, the IDEA solutions, which is around our pioneering software-defined defense approach, where also we see a couple of initiatives now under the new procurement plans of Germany where ESG, I would say, is the perfect lead within the Hensoldt organization, combining our products with third-party products. And that is, for example, in the recent cooperation we have started with Quantum, where ESG is now the point of context of bringing Quantum UAV solutions, MOSAIC, their AI stack together with the solutions we have in Hensoldt. And that is the way of business that ESG has been used to, which we can now significantly leverage on.

And the last part is probably very fresh, but it's the element of logistics. As you know, also in Q1, we had reported the ZEBEL contract, our support to the German logistics system. As we are discussing a return to conscripts and looking at the scarcity of personnel in the German armed forces, we see a growing discussion on how industry could step in and give logistical support, IT support in kind of shared approaches to the customer. And that is something where also with the capabilities of ESG, we are very well positioned.

Of course, all of that, too early to quantify. But qualitatively, it's, again, an opening perspective, which confirms us in really doing this acquisition, which I think can be considered as a very strong success.

Yes, Aymeric, just to add, I think we've outlined in our analyst call when we acquired ESG, this EUR 19 million cost synergies run rate until 2028 and a similar figure for revenue or EBITDA impact from revenues, there we are fully on track, I can say. So when you look at the actual figures, the pro rata figure flows in quite well.

And maybe some comments on Operations 2.0 and how we will fund that. I think let's be honest, the situation we currently see, which is very promising is now, I would say, 2 months old. That means when you look at Slide 10 of the presentation, we are now really designing Operations 2.0. And formally, we will kick off this process in September. And then I think around the Capital Market Day, we are in a position to give you some more details on that, how the layout can look like and then also some figures.

So this will now last a few weeks. I think the good news is what you also see on Page 10 and what Oliver has outlined that with the recent decision we have taken in the last 2 to 3 years, we are well on track until 2027-2028. That means we have enough time now in the next 6 to 12 months to come out with a good concept and then go in the realization phase that then by 2027-2028, we have the infrastructure in place to have that.

And in terms of funding, please be a little bit patient. I cannot comment on that yet because it will also depend on how we model this. Will we have a turnkey infrastructure where we can move on? Will there be investors which are currently asking us to work with us together who fund the infrastructure and we only go in with our technology, then it will be rather different than funding it all on our own. But nevertheless, let's be clear around the Capital Market Day. There will be some more details also around funding.

Maybe to add on this one, we -- last week, I attended a roundtable with Minister Pistorius and roughly 40 leaders of the German industry. That was along the signing of the new planning and procurement acceleration law through the German cabinet. So we expect that law to be endorsed by the parliament after the summer break. And part of that discussion, which, of course, is in a very early stage, the government is also asking, and you also saw that the Minister of Economy, Reiche, is establishing this senior expert group.

So part of that discussion is also how could government support. And we made very clear, it's not about loans. I mean, with access to the financial market, and we saw what Christian and his team have achieved, which I think is a very much success. I mean, we made very clear to the government, we need more concrete support. That message is out. And I think also here, we shall expect some contribution. And putting all of that together, I agree with Christian that around the Capital Market Day, we can probably deliver the clear perspective on this one.

The next question comes from the line of Christophe Menard from Deutsche Bank.

Yes. I had 3 questions. The first one is on Optronics and the German entity. The incremental margin that you're incurring on this entity keeps improving, I mean, between H1 and Q1. I mean, I just wanted to understand what -- I mean, if we forget about South Africa at the moment, when do you think we're going to have a good idea of where the margin could stabilize on that? Because I think we had -- you guided us to a progressive recovery in margin in Optronics, but it seems to me that there is a pretty good improvement quarter-on-quarter. That's the first question.

The second was on free cash performance. In the number you reported, which was down year-on-year, is there anything that is related to some inventory buildup ahead of the logistics center moves so that we better understand the swings?

And the last question is kind of more broader in general. You mentioned at the very beginning of the presentation, the new sales and business development team that has been put in place. I was wondering what is their mandate? I mean, is it chasing export contracts? It seems -- I mean, you always need sales, but it seems that at the moment, order intake will not be an issue for the future. So I was wondering about what was their mandate within the organization for the coming years?

Thanks, Christophe, for your question. So first question, Optronics. Yes, as you say, we are proud that we have this quarter-on-quarter performance. I think we will have this, I would say, underlying performance moving on, but we should not forget that in the second half year, we have now the movement of production from the [ Karl ] site area to the new site. And this could impact, of course, a little bit margins, and this is why I'm still a little bit careful on that.

But the good news when you look at how we manage our logistics center that we -- that this margin is diluting that we are contributing. And I was always saying, "Okay, look, last year, we were around 7% in this segment, that a figure around 10% is realistic from my point of view to reach within this segment for this year."

Second question, working capital in connection with logistics center. Yes, I would assume that a figure around EUR 20 million is there, which was built up around logistics center on the one hand and some productivity impacts, but this will fade out also during the year as we have seen also in H1. So this is my view on Optronics margins and on working capital.

Yes. So on the new business development team, as a matter of fact, I have to say this is not new in that sense that we are building up a huge force or something like that. It's rather of better orchestrating what we have. And I would -- in explaining what is a task, what is the mandate, I would mention 3 elements.

The first one, it's about a new operating model where we manage better our central, which is more about account management, political affairs and so on, our central sales functions with the decentral sales functions, which are in the divisions. So this is a lot about efficiency, but it's also in a growing market environment, managing, orchestrating demand. Where are the priorities? Where do we sell the TRML-4Ds, the various products. We have, of course, the fast, the quick sellers, the ones which go at a level of scale. And then we have others which also need lead time. So that needs some orchestration between the divisional, which is more product project oriented and the central sales, which are managing our customer relations.

The second element is the account management. So very clearly, we have identified strategic accounts, and I think we highlighted them. It's about KNDS, it's about Rheinmetall, the big vehicle OEMs; but it's also about shipyards, it's about Airbus, Airbus helicopters. And we put strategic account managers in place, and that is really to nurture those customers, penetrating those customers, which in some parts are only with one product, but we have the possibility to really penetrate those customers with a full portfolio, but it's also shaping our future where we see that those customers are significantly important to shape our product road maps, which so far has been more opportunistic. So it's really an investment into our future.

And last but not least, in times where we see this ever-increasing demand where, for sure, and we experienced it earlier this year with the ramp-up of Laichingen, it's also about to manage customer relations and customer satisfaction. To have a close alignment on the delivery milestones in a system that is really under challenge. And here, this account management -- strategic account management will be a strong benefit on how we do our sales and interaction with our customers.

And the last one is a regional focus, where now we have agreed on those 5 worldwide regional clusters. And probably coming back to an earlier question of Sebastian on the international business, we see definitely based on G2G agendas, that we -- there is a strong G2D agenda between India and Germany. So I have just recently traveled to India, also did it last year with the Chancellor. So that is really where we are paving the way in a more strategic manner to opening new markets for us. Same applies to Singapore, where we have a strong outlet into the Asia Pacific market.

And this is more in a sense of building a sustainable path than now harvesting and getting opportunistic orders in. That's the transfer. And I think that is really about now with the peak that we are expecting to happen in Germany and Europe, that also with the industrial setup that we are building up that we can sustain this growth then with complementing orders coming in internationally, and that's what our sales transformation is about.

We now have a question coming from David Perry from JPMorgan.

Three, please, as well. So sitting here in London, we keep seeing these incredible stories on Bloomberg and Reuters about the number of armored vehicles Germany is going to buy. And I know it's not locked down in law yet, but I think 2 nights ago, it was 3,000 Boxers and 3,500 from Patria, et cetera. Can I just check on these German vehicles, will you always do the periscope, or are you going to have to compete with someone else? That was the first question.

The second one is, if it's always hence, and I know you've asked us to be patient about Slide 10, which is a very good slide. But does Slide 10 mean that middle bit, new site Oberkochen, do you need a second Oberkochen to do this would be the related question.

And then my third one is just TRML continuing to win orders, the Ukraine one. I think you've talked about going up to 30 units in '27, but any thoughts about potentially how many you could build thereafter '27 on an annual rate?

David, thanks for the question. I shall start with question 2 -- answering question 2 before I hand over to Oliver for 1 and 3. So no, we do not currently see a second site of Oberkochen. We are just finishing the first, and then we will see. So again, here, I think around the Capital Market Day is the right moment to put more figures on the table. But nevertheless, there are 1, 2, 3, 4 ideas already there, but let's see. But I do not think that a second Oberkochen this size and magnitude will be needed. And also in terms of resilience, might be adequate. So here, we will go other ways from my perspective.

Of course, David, now going into all these vehicles, we could spend the afternoon talking about it. But at least I will try to give a shed of light on what is happening. Indeed, we need differentiation. I mean the 8,500, so that's talking about 5,000 boxes and 3,500 from Patria, plus 1,000 Leopards, which are in the room. On top, we have the [indiscernible] and all of that. I think for each and every project -- and that's part of also why we cannot tell you at that stage what is the future ambition, the guidance and all of that because that is what we're still sorting out with the OEMs.

What is clear, and that's why we have quite a clear perspective is that for the Puma and the Leopard, we do the weapon sites and the periscopes. And that is clear, that is under negotiation. So that's kind of set. I mean, despite that there is competition on the market in -- with Elbit, for example, Israel; also with Thales, but Thales U.K. rather on these ones. I mean that's really an integral part of the systems. And in that regard, I think we don't have any risk related to those orders.

The second element is now the new wheel-based infant refighting vehicle, the Boxer or they call it RCT30. In the past, it was called the PuBo, comes from the Puma and the Boxer because they will put the Puma turret on the Boxer vehicle. Also here, I think as we take the turret from the Puma, our weapon side as well as the periscopes are definitely set. So that is the strong part.

Korsak, I think we have mentioned that. That's a new reconnaissance vehicle, where we also see a massive discussion on additional quantities. That is a fully new one where also Hensoldt is now stepping up into bringing all those sensors together. And probably that's a growth area for us in this vehicle market as we go forward because so far, the sensors within the vehicle have been designed for a specific function and purpose. There is hardly any integration on the vehicle between the various sites. And as you can imagine, bringing a good order of battle, a good situational awareness, it would be great if we could combine all those sensors together. And that's actually what we're doing with the Korsak at the moment with our Ceretron software.

And the big opportunity is once that is done, given the fact that with several sensors, we are across those platforms, we can then augment and that is a good example for the software-defined defense approach, a communication platform, the C2 computers in those platforms could host that additional software where we could connect those various sensors together. And that's the growing part.

And then you have many other smaller vehicles where we see, like, for example, the remotely controlled Howitzer, the vehicle Howitzer where we put driver sites, where we can put see-through armored systems, a new 360 degrees. And all of this is upsell potential across. But again, yet it's across those various vehicle types, a very different maturity of the discussions we are having. If you see the Boxer -- the Puma or Leopard where we have a full visibility. But for all those others, partially, we are also in competition, of course. But I would definitely say in Germany, we have a unique positioning as the national sensor [ house ].

That's very clear. And just the last one was the TRML opportunities longer term, please?

Yes. So again, I mean, that's part of the discussion that Christian was referring to. For sure, at the moment, [indiscernible] SE is really lifting up. And I think in some of the previous calls, I told you about a EUR 2 billion potential selling those TRML-4Ds across Europe, which is maturing. Germany, looking what we have under contract so far, we have the discussion. And if we look only at Germany talking as a former Air Defender, of course, not being the military responsible, but I would see a potential between 40 and 60 radars to cover full Germany with air defense.

However, this demand is not yet clearly in writing on the table. If we look at what is on the table, I think we're well positioned with what we did with [indiscernible], with the incremental improvement with an annual capacity of up to 30, which is absolutely not only feasible, but which is clearly in the planning with what we have set up. And part of the Operations 2.0 that Christian is referring, of course, we look at what would it need in the sense of augmenting existing capabilities, but also building, extending our TRML-4D production, probably in synergies with other elements.

And last but not least, what we as Hensoldt see as a business potential for the future doing build-to-print for radars of Lockheed Martin, we are doing that for [indiscernible] Alta today, we could also consider going into partnerships with other industry and have them build or at least finally assemble our TRML-4Ds. So we have a broad spectrum of possibilities. We, I would say, have a good visibility on the quality of demand, which is progressively increasing, but yet we are not sure on the exact quantities. Once this is clear, we will share one of the other scenarios that I've outlined.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Veronika Endres for any closing remarks.

Thank you all for listening today. And as always, should you have any further questions, the IR team is around all day to follow up. With that, have a great day. Thank you, and goodbye.