Hensoldt AG expects rising orders for its medium-range air defense radar this year as the system helps Ukraine intercept more than 90% of enemy aircraft over its skies.
(Bloomberg) — Hensoldt AG expects rising orders for its medium-range air defense radar this year as the system helps Ukraine intercept more than 90% of enemy aircraft over its skies.
The German defense contractor, which generated €1.7 billion ($1.9 billion) in revenue last year, expects a three-digit-million euro volume of orders for the TRML-4D, Chief Executive Officer Thomas Mueller said. In addition, the company anticipates it will get orders this year for other systems also valued in that range.
The shares rose as much as 4.6% following the news to a new record high. Hensoldt has gained 65% since the start of the year.
The company has delivered four truck-mounted radars to Ukraine, which uses them as part of the IRIS-T air defense missile system produced by Bavarian-based Diehl Defence.
“It’s currently the best medium-range radar in the world,” Mueller said in an interview, and the company will deliver another two radars later this year.
Confident of future demand, Hensoldt is manufacturing TRML radars ahead of orders to ensure faster delivery, a practice Mueller expects to continue as Germany increases defense spending. Ukrainian officials have praised the combined system’s performance. “Our military is thrilled with IRIS-T,” Kyiv Mayor Vitali Klitschko told Germany’s RND last month. “Every shot is a hit, none misses.”
Germany is negotiating with Diehl Defence to procure as many as eight IRIS-T anti-missile systems for its planned European Sky Shield initiative, Bloomberg reported in February.
German Chancellor Olaf Scholz announced a €100 billion fund last year to modernize the armed forces and has pledged to boost defense spending to at least 2% of gross domestic product annually. Germany spent 1.49% of GDP last year, according to NATO estimates.
“The Ukraine war caused a 180 degree change in public opinion toward the defense industry,” Mueller said, adding that Hensoldt expects Germany to keep increasing its military budget in coming years.
Rising spending will see Hensoldt’s biggest customer account for half of sales in the next few years, according to Hensoldt Chief Strategy Officer Celia Pelaz. Long term, Germany’s share will fall to about a third as military expenditures in other parts of the world rise, she added.
Diminishing governance and social sustainability concerns that previously limited defense companies’ access to capital are helping to improve funding options, according to Chief Financial Officer Christian Ladurner.
“Banks have told us they want to fund us,” he said. “People now realize is that if you don’t have security, nobody cares about sustainability.”
(Updates with share move in third paragraph)
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