Good afternoon and welcome everyone. Thank you for joining us for our H1-2026 earnings call. My name is Nicole Schillinger and I took over as Head of Investor Relations on the 1st of July. I am delighted to have joined such a strong IR team and am very pleased to be hosting my first earnings call with you. Joining me on the call are our CEO, Oliver Durbin, and our CEO, Christian Labona. They will take you through today's presentation and provide an update on our business performance, strategic priorities, and financial development. We will then move into the Q&A session at the end of the call. With that, I head over to you, Oliver.
Thank you very much, Nicole, and a warm welcome to all of our investors and analysts. It's a real pleasure to have you with us today. There are moments when geopolitical decisions translate directly into industrial reality. The NATO summit in Ankara was one of them. The five themes on this slide map onto our business. So let me take them in turn. First, the financial commitments. They confirm a multi-year investment cycle across all our core markets and give us a long-term demand visibility that supports the capacity investments we are already making second the drone edge initiative formalizes counter us as an alliance priority that creates additional momentum for capabilities and already in our portfolio third nato's technological focus on sensors. Radar and electromagnetic warfare align closely with our core technologies. As these become alliance priorities, procurement programs tend to follow. Fourth, digitalization cloud and AI. The future battlefield is networked, data-centric and software-enabled. Whoever sees first and decides faster, prevails. That is sensors plus software, and it is exactly where Hansel is positioned. And fifth, Ukraine support creates a durable service and upgrade pipeline for systems already in operation. Ukraine is today the largest operator of our TML4D radar worldwide. That is a strong validation of our positioning and the foundation for long-term support business. Ankara, to sum it up, did not change the direction of travel. It confirmed and accelerated. The previous slide showed the political frame. This one shows now how our portfolio maps onto the defense architecture that is now emerging. MDO Core is our software backbone for the digitalization of defense. It connects sensors, platforms, and detectors with an open software architecture, which is what multi-domain operations require. platforms matter still but increasingly the network decides in missile defense our position becomes tangible with prayer together with firepoint we are combining combat proven ukrainian technologies with our radar expertise the ukraine connection is deliberate we are integrating proven capabilities and with them operational expertise from a battlefield where innovation cycles are measured in weeks rather than years. Electromagnetic warfare and airborne ISR are equally strategic. Pegasus is a flagship European program and we supply its core sensors and mission system laying the foundation for the upcoming LUVIS program. That role strengthens European technological severity in the domain where independence has become a strategic necessity. We are deliberately extending this position into space. The war in Ukraine has shown that space-based sensing has become an operational requirement. We are building sovereign MDO core-based sensing capabilities that integrate space into the same real-time picture as the land, air, and maritime domains. For company positions as leader at sensor and multi-domain integration, that is the next logical step. Together these positions give us exposure to some of the strategically most relevant defense programs in Europe for the coming decade. Talking about Hensholt's strategic relevance, within one week two federal ministers visited Hensholt. Boris Pistorius, Federal Minister of Defense in Oberkochen, Katharina Reiche, Federal Minister for Economic Affairs and Energy in Fürstenfeldburg. Two ministers, one message. Hensholt is central to Germany's defense and industrial strategy. In the words of Minister Pistorius, I quote, I'm very glad to have such a reliable partner in Hensholt. These visits confirm that our technologies are recognized at the highest political level and that we are ready to deliver at the scale and in the quality Germany needs. That recognition shapes where Germany is placing its bets for the future. CFSM is one of the most significant examples. The combat fighter system nucleus sits at the heart of next-generation air combat, one of Europe's highest strategic priorities. Let me be clear on one point up front. Our position in air combat does not depend on the pace of any single process. ASCAS, even without the next-generation phyton, continues to represent the long-term European vision, and while its future shape is evolving, Germany is advancing sewering technologies through CFSN in parallel. We play a central role in both because our technologies sit at the core of the architecture either way. within cfsn we have been selected to provide the mission sensor system and the initial contract was booked in the first half cfsn is also the first program where our partnership with helsing moves from strategic agreement to operational implementation we are combining software design capabilities with advanced mission sensors in future air combat information security designs the strategic value therefore goes well beyond the initial contract it reinforces our leadership in sensors electromagnetic warfare and system of systems integration and it positions us in the programs that will shape european air combat capability for years to come the f-126 termination has drawn some attention so let me address it directly the financial impact is not material The contract value was just over $200 million and more than one-third has already been recognized as revenue. The remaining share, around $130 million, comes out of our order backlog. There is no impact on our short-term or medium guidance. The fundamentals of our naval business are unchanged. Demand for naval sensors and mission systems continues to grow as European navies modernize their fleets over the coming decades. That structural trend remains intact. Our naval business is built around technology families rather than individual programs. The TRS-4D radar family is deployed across multiple vessel classes, including F-125 and K-130 in Germany. And it has been selected by international customers like Brazil for the Tamandare 3G. Continuous capacity upgrades benefit the entire family and create value well beyond any single platform or single custom. The recently approved MECO A-200 frigates for the German Navy illustrate the point. They open new opportunities in a market where our technology is already established and competitive. F-126 is a data vault. Not a signal about our naval business. our strategy our technology roadmap and our market opportunities remain unchanged previous slides showed our strategic position this one shows how translates into execution across all our four north star axis deliver at scale our electronics production is ramping up significantly printed circuit board output has almost tripled since january from around 600 to roughly 1,500 populated boards per week. What matters is what the number represents. Our capacity investments are converting directly into industrial output. We are no longer building capacity for future demand. We are delivering into today's demand. Pioneer Software Defined Defense. We have expanded the MBO core ecosystem through four technology partnerships, each contributing a distinct capability. We are building an open ecosystem in which integration is a differentiator. That is the neo-system housed in practice. Grow with focus. Our partnership with Bahaat Electronics gives us a sovereign route into India's defense ecosystem and turns local content requirements into a competitive advantage. In one of the world's most important long-term defense markets, that is a strong foundation for future growth. Lead Our Team into the Future is about ensuring that our organization scales alongside our business. Our leadership team meeting aligns senior leaders around the next phase of execution across the room. As we grow across markets, technologies, and geographies, consistent leadership becomes an operational capability in its own right. Now I hand over to Christian, who will give you an update on our financials.
Thank you very much, Oliver, and good afternoon, everyone. Let me now walk you through our financial performance of the first half of 2026. The key message is pretty straightforward. Hensel delivered a record first half with strong growth across all major KPIs. Most importantly, we continue to translate our strong market position and robust customer demand into tangible financial results. Starting with Allente, the first six months of the year were outstanding. Allente doubled year-over-year to more than 2.8 billion, lifting the book-to-bill ratio to 2.4 times. This strong performance was assumed by several major contracts, particularly armored vehicle programs and the Europhile NPL-1, with initial contributions from the MyFISH program and additional TNM-40 radar orders. This underscores what we have consistently highlighted over the past several quarters. Strong defense procurement dynamics continue to translate into robust water intake and long-term program commitments. Revenue increased by 24% in the first six months to more than $1.1 billion. Growth was driven primarily by the continued rapid electronics and sustained strong execution and edifice. As expected, successful milestone achievements in our key programs, MK1 and Pegasus, resulted in higher pass-through revenues, which will gradually phase out over the second half. Core revenue, that is without pass-through, gained further traction and increased by 18%. underlining the moment of our core business. On our backlog, increased by 46% to a new record high of over $10 billion, providing excellent visibility for future growth. Importantly, a significant share of secure contracts extends well into the next decade, reflecting our strong positioning in major European defense programs. To sum it up, increasing defense spending by our German international customers continues to translate stronger intake, accelerating revenue growth, and long-term revenue visibility. Let me now turn to our earnings and cash flow performance. Alongside our strong business growth, profitability increased at an even faster pace, underscoring the quality of our growth and execution effectiveness. Adjusted FTA increased by 29% to $137 million, corresponding to a margin of 11.8%, that is a plus of 0.5 percentage points. This strong performance was primarily driven by higher volumes, particularly in our product segment. The sense of profitability benefited from revenue growth, too, but it was temporarily compensated by higher parcel revenues as well as increased R&D spending. Our adjusted EBIT increased to $70 million, driven by the same operational factors. With depreciation and amortization growing at a significantly lower level than revenue and adjusted EBITDA, the adjusted EBIT margin expanded by even 0.9 percentage points to 6.0%. Turning to cash flow, performance was in line with the usual seasonal pattern, reflecting our investing in working capital and infrastructure to support future growth. Higher advanced payments levels provided the financial flexibility for these investments, leading to an adjusted free cash flow improvement of 25% year-on-year to minus 136 million. In summary, profitability is well on track and set to gain further momentum as the year progresses. Turn now to our segment starting the census. The census segment delivered a record first-half performance with strong momentum across both order and signal value. Orders accelerated significantly in the second quarter, resulting in almost 2 billion euros of new orders in the first-half, present six. Consequently, the backlog increased to more than $7 billion, providing long-term visibility. The strong momentum was primarily driven by major contracts for Eurofighter, initial contributions from the MyFish program, as well as TLM-4 derails. Revenue increased by 17% year-on-year to $955 million, supported by accelerated dynamics and add-defense solutions, particularly TLM-4 derails. Our integration business, resulting from the former ESG acquisition, as well as our service activities, each contributed double-digit million euro growth. As highlighted earlier, my achievements in the MK1 program drove pass-through revenues in the first half. We continue to expect a full-year contribution of approximately $150 million from this. Excluding pass-through revenues, core revenue increased by 10% to $844 million, demonstrating the underlying strength and momentum of the business. This growth translated into healthy profitability. Adjusted equity increased by 8% to $113 million, corresponding to a margin of 11.9%. Segmental profit benefited in particular from high values in TLM4DE and our integration business. At the same time, the margin was temporarily diluted by a higher share of partial revenues and continued R&D investments. Overall, Census continues to benefit from strong demand across the portfolio, combined sustained profitability with a record-order backlog, and a strong foundation for long-term growth. Moving on to our Optronics segment. Optronics continued its strong momentum and delivered another strong set of results in the first half of this year. Audiences increased significantly to more than 900 million in the first half of the year, representing an almost six-fold increase compared to a prior year period. This exceptional performance was driven by major armored vehicle programs, including Chakal and second batch of Puma. These orders further strengthen our key position on key European platforms and enhance long-term revenue with a big team. Sales increased substantially by 63% year-on-year, supported by strong growth across all businesses. In particular, round-based systems sustained their momentum, while also additional revenues from the Lux2 program further contributed to segment growth. The strong top-line performance also translated into significant profitability improvement. Adjusted EBTA increased to $24 million, resulting in a margin of almost 11%. The significant uplift was driven by continued revenue momentum across the business and increasing economies of scale. Overall, Optronics demonstrated its ability to convert a special order backlog of more than $3 billion into strong operational performance. With continued demand across key European land platforms, the business is well positioned to sustain its growth trajectory in the coming years. Let me now turn on to our guidance and outlook for the remainder of the year. Building on a very strong first half, we remain firmly on track and therefore reaffirm our guidance across all key paid KPIs. As you are aware, business activities typically waded towards the second half of the year, particularly in the fourth quarter. While our strong H1 performance provides a solid foundation, we remain focused on delivering our targets for the second half. Starting with all intake, we continue to expect a population ratio between 1.5 and 2 times, supported by sustained defense procurement dynamics across our key markets. For revenue, we continue to expect it rose to approximately 2.7 billion euros. We forecast an adjusted LTA margin in the range of 18.5% to 19%, reflecting our continued focus on profitable growth. As updated on June 1st, we expect cash conversion of approximately 50%. This reflects continued positive impact of customer advance payments, which support our investments in capacity expansion, including our new radar production facility in the near Finally, we continue to target net leverage around 1.5 times, while maintaining our dividend policy of distributing between 30% and 40% of adjusted net income. For the midterm, we expect audiences to continue to outpace revenue growth, translating into average annual organic revenue growth to around 15 to 20 percent. Again, growth is likely to be more back-and-loaded as large programs wrap-up. Margins are expected to expand by approximately 50 basis points per year, supported by scale effects and productivity gains, while cash conversion normalizes towards 50 to 60 percent.
In summary, our auto combines strong top-line momentum with sustained profitability and disciplined financial management and with that i will hand over back to you oliver for an update on key orders 2026 and beyond well thank you very much christian since our last analyst call we have seen tangible progress across our sensor pipeline with several key opportunities converting into book business euro 5 is one example orders for the mk1 rebase line the spanish alcon program and from turkey have materialized contributing around 580 million euro of booked orders tml4d and knifefish are following a similar path with initial tranches already secured and substantial opportunities ahead picados remains one of the largest opportunities in front of us with a potential order volume of around 900 million euros for the second German badge. One program deserves a particular mention, LUBIS. Building on the technology and the operational experience we have gained through Pegasus, we believe we are very well positioned to play a leading role in this program. The overall opportunity ranges from several hundred million euros up to billion euro levels. All in all, the message is clear. our census pipeline remains broad and continues to convert into high quality order intake across multiple programs turning to optronics we continue to see a very strong momentum with a significant share of the expected order intake already secured the largest contributions come from puma and shaka together these programs amount for around 800 million euros of booked orders and are now firmly in execution. This underlines the strength of our position on two of the Bundeswehr most important land platforms. Following the last German order last year, LEPA 2 now provides further upside into international markets with the first 20 million Euro already secured and reflected in order intake. U212 CD highlights the breadth of our portfolio in optronics. TKMS has been selected in Canada as preferred bidder, and our optronics mass systems will be part of the offer. Taken together, these programs provide a strong foundation for continued growth in our optronics business across the full range of platforms that define European conventional capabilities. Before we come to the key takeaways, let me share one broader observation. We are often asked whether defense spending is shifting from conventional capabilities towards the next generation systems. That question is built on a false premise. A tank cannot be replaced by a drone, but a drone changes how a tank is deployed, protected, and supplied. The two are not substitutes. They are parts of the same system. Modern armed forces need both, at scale, connected, through an architecture that processes information and adapts faster than the adversary. Three conclusions follow for hands-on. First, conventional and next-generation capabilities are complement. Our sensors provide the situational awareness on which drone operations, air defense, and software-defined command all depend. without the sensor layer the software layer has nothing to work on second our positioning across technologies platforms and domains structurally reduces program risk we have seen that from several angles today in the parallel development of SCAS and CLSM and in the F126 termination our investment case does not rest on the trajectory of any single program or customer first defense spending is expanding across conventional platforms and next-generation capabilities at the same time the company positioned in only one of the parts of that spectrum captures only part of the opportunity we are positioned across both today the constraint is no longer defense budget is industrial capacity and technology innovation that is precisely where we have invested and it is where we continue to execute let me conclude with a few takeaways the first is that our operational execution is progressively translating into measurable results record order backlog of more than 10 billion euros provides excellent visibility revenue growth is accelerating and higher production volumes are driving improved profitability at the same time the investments we have made to deliver at scale are increasingly visible in our industrial performance. Second, our strategic positioning continues to strengthen. We are expanding the software-defined defense ecosystem through new technology partnerships, while our platform-agnostic approach is proving its value across programs, technologies and domains. That gives us resilience as well as access to a broader set of opportunities. Third and finally, the long-term demand environment remains highly supportive. We continue to expect major contract awards. Our industrial footprint expansion is progressing as planned and the NATO summit has further reinforced the multi-year investment cycle across our portfolio and core markets. Taken together, these developments demonstrate our ability to convert structural demand into operational performance while continuing to strengthen our strategic foundations. And with that, we are happy to take your questions.
Operator
And where the first question coming from Marco Vitale from Mediobanker. Please go ahead.
Thank you. A couple of questions from my side. The first one is you could provide us an update on the naval pipeline after the f126 cancellations also if you would quantify the the magnitude of opportunity you see for the say you to want to see the uh campaign successful campaign of canada uh second one is uh on space uh that you mentioned during the presentations uh could you provide us with additional comments whether you want to pursue this opportunity with a maker by strategy and what would you be interested in adding this domain thank you can can marco i i can you please repeat the question so for the first one i've understood
it's a little bit on the consequences of f126 and the naval market in general or I'm very sorry, there was an audio problem here.
Oh, yes, no problem. Yes, we'll just go question the pipeline that you see on maritime after the frigate cancellation, what could be the opportunities you are looking at also, and if you could provide or try to quantify the magnitude of opportunity that you see from the export orders from canada for the submarine one recently won by distant cruise marine and then the second one if you could add comments on space that you mentioned you're very interested in expanding this domain uh what could be the strategy and also how do you want to pursue this opportunity from an organic standpoint or mna thank you okay i mean i i start marco with the uh
naval opportunities. So, I mean, I won't repeat what I said during my presentation. So, again, F-126, yes, there is a decision which is still evaluated. I think also on the customer side, a lot of, let's say, administrative formal legal work has to be done. You read the media that the prime went into it. You know, in a more conservative approach, I think we digested the financial impact, and as we outline very clearly, no material impact on our financial performance or guidance. The strategy, and I just want to stress that point again, the strategy for the naval market is still on. First of all, I think we have a very competitive product with TRS-4D, which, by the way, was a mandated product in the F-126 campaign. And definitely we see that the concept of having a harmonized radar family within the German Navy is on, and also international campaigns in Asia-Pacific. I mentioned the Tamandare case, where, by the way, Tamandare is a MAKO-200 kind of derivative where we have put our radar as well. So I think that also opens opportunity for additional batches of MAGO 200 in Germany. The second topic, which I think underlines that our naval strategy future opportunities is strong, is that we have a strategic cooperation with Lockheed Martin Canada. We are the strategic partner of bringing this system, CMS-330, to Germany. And also what has been confirmed to us is that the F-126 decision, which actually had a TALIS combat management system, that this has no impact on the confirmed strategy of the German customer to harmonize their combat management systems across the feed. and the CMS-330 from Lockheed Martin has been pre-selected. And I think that, again, confirms a broad range of opportunities in the German markets, but also being well aware that Germany, and that probably leads to the U212 CD, that this cooperation with Canada, where I would see U212 CD only as a first step, opens a broader corridor for corporations. And I think, first of all, U-212 CD is roughly 200 million. But of course, we have to accept that TKMS so far has only been selected as a preferred bidder. So the negotiations will start. so so that is the the rough magnitude of the opportunity 200 million as I outlined but again there are ideas of opening bi-directional streets bringing Canadian technologies to Germany bringing German technologies to Canada where of course with a German with a footprint that we do have in Canada we see also a lot of opportunities coming up and for the second one is it Louvess that actually you want a bit more of color I was actually interested in hearing your thoughts on space domain on page four okay yeah exactly thank you yeah okay so so basically and I think it was public I I joined our Chancellor and also Minister Pistorius when they visited Andoya as part of G2G discussions. How could Germany and Norway combine their strengths in actually building an ISR space constellation? So these discussions are ongoing. At the same time, you've heard of a German program called SPOC, where the first batch has been awarded to Rheinmetall with ISI, but again it's fully open how SPOC II, the broader ISR constellation, would be awarded. So this could be a competitive tendering and that could even move into a broader kind of also time-sensitive targeting capability and we have joined forces we have teamed up as we also made public with OHB with Helsing and Kongsberg we have agreed that HENSOID would provide the sensor capability and that ranges from synthetic aperture radar capability actually we have a clear technological product roadmap to bring our precise radar which has a lot of interest in the market and advanced synthetic aperture radar into space so So that is part of the sensor package. Also, we are very strong in bringing electro-optical, infrared capabilities into that market. And what we also see is, talking about Pegasus, that some of the sensors, the signal intelligence sensors, would also not only be employed across the naval, land, and air domains. I think talking to our customers there's a significant need to bring signal intelligence, electromagnetic warfare also to space and that will be part of our value proposition.
Operator
The next question comes from Ben Brown from Jefferies, please go ahead.
Hi, good morning guys, thanks for taking my questions, I have two if I may. The first is if I look at the revenue guide, it implies a slowdown in h2 versus h1 i assume a proportion of this is on the on the lower pass throughs but if you could give us some help on some of the other moving parts here that would be great and the second question is on the sensors margin um the decline year on year i know it's a lot of a lot of pass throughs in there but if i also look at excluding pass throughs there's a small decline as well i know you tend to have an acceleration in the in the second half and pass-through should be lower, but again, how should we think about the moving parts for achieving the 19% margin target you've previously pointed to? Thank you very much.
Hi, Ben. Thanks for your question. So the first question, two comments on that. Of course, pass-through will slow down, and in the rest of the year, we approximately think that we will be around 170 million in past revenues that means people only make another 50 to 60 instead of having the same amount also in the half year so this is one effect the second is let me clearly point it out the first half year gave us excellent savings for the second half year nevertheless we're 60 ahead of us and maybe we are a little bit cautious in this moment, but I see a very good baseline to deliver on our full year guidance and maybe a little bit beyond. Regarding the census margin, yes, we have a little bit of a slowdown, but this is due to the fact that costs always run in a linear mode, while revenues especially in the census segment one exponentially to the q4 and we have some investments the one is for the rds 44 so for the second production line here then for the inspector most of cup is capex but there are also costs for hiring people training people without having any coverage for projects before they can work their next year on it and the next thing is that we've clearly committed to spend for r d so Oliver has mentioned MBO Core will be significantly and this investment weighs on H1 sensors but I'm absolutely sure that it will phase out until year end and the revenues kick in in this segment we will be well on track to deliver on our margin patterns.
Operator
Thank you very much The next question comes from Sebastian Groh from BNP PowerPulse Please go ahead Good afternoon, hi Oliver Hi Nicole and also Christian.
Two questions, one said more on the order pipeline and the other on the guidance, maybe we can separate the two. So if I may start on the orders, I've noticed that there has been an upgrade by around 80 million for the Eurofighter part in the order pipeline as opposed to what you had disclosed in quarter one. So what's been the driver here? And I was also wondering whether there's a similar potential for other programs that you might see. And then have a couple of questions related to Pegasus in particular can you remind us of the potential there for export contracts more specifically which milestones would have to be passed here or are you already actively offering the solution to potential export customers and lastly how might the margin profile differ between domestic and export at least indicatively yeah if we could start there please yeah Sebastian hi thanks for a question so first of all what will the order pipeline look like in the second half year.
So we have now collected 2.8 billion, whilst 1.9 billion amounts to sensors, and approximately this is 1 billion to products. We see especially some more orders in the Eurofighter program. It will be an order due to the fact that we have still some legacy topics in the MK1 radar. so the sdc the power unit which is in and germany and spain have both decided that they will be replaced and it will be a significant one in the second half year so approximately two three hundred million euro amount which we will see a second uh thing is of course the nexus program it's an ew new program for land forces, a combined multinational program where we equip the Pyramia platform with our EV capabilities, and we also expect this program in the second half of the year, which also will be a triple-digit million amount coming to our order book. Then we see some more demand for air defense, CLM-4B, especially from the Ukraine, where we see another batch coming up in autumn, which will give us some more orders. I think we've elaborated in a chronic segment that there will be some leopard international programs, which is another bulk. And then, of course, the last big one is the Pegasus. Maybe I start with the current situation around the second batch and that Oliver continues with export. So we have now, we have the request for proposal done we will give our bid in the beginning of next week to the customer and then again a negotiation phase starts so that we are very confident that we can do this in this year but time is running i have to say that it will be a yeah a december race so let me like this we say it like that but currently all the forces work like hell that it works for second lot and these are the big bugs we see in the order pipeline for this year um and maybe with that i hand over to oliver for the export campaign to pegasus
yeah absolutely uh sebastian so talking pegasus uh i make a preliminary remark so what is worse to note is that the the program is is is really on a very good track as far as the remaining milestones for this year are concerned and it's not that we have no doubts we are absolutely confident that we will hand over the first capability to the customer mid-2027 which is a bit earlier than initially anticipated and that's based on the contract changes we have agreed with our customer end of last here and of course that that good news spreads to our customers so our export campaigns and and please understand that I cannot name the countries but what I can say that we initially started our export campaigns with three global customers partially also with the support of the German Air Force at the exhibitions and special venues looking at asia pacific and so on but at the moment and that is since quarter four last year the focus shifts on three european customers two of them with a very strong g2g agenda between the the respective air forces so in that regard still having a full priority on execution in our ongoing program and on the the amendment the the extra batch that Christian talked about I definitely see that the export campaigns are maturing and that we would see next but most probably the year after the first of those campaigns coming into our books. Margin-wise, it is worth to note that also the team that we have set up for Pegasus, Hensolt, Lufthansa Technik, Bombardier is really strengthening the tithes, also with the perspective of Louvers, and looking at all the experience, the maturity we get into our our industrial capacity relating to the antennas that are part of pegasus considering that part of the mission system is software that would need to be multiplied then with our customers i'm pretty confident and i have to go from christian that the margins will go up encouraging so to just clarify that i've got this right so export contracts might be received by 27 for the first time that's the message right a bad case late 27 but i mean we definitely need to consider it's a complex problem but but i mean looking at the speed to be honest with you that we picked up since quarter four last year especially related to these new european customers uh uh i i i'm confident realistically and you know we are taking more conservative approach i will see it in 2028. okay that's helpful and then talking about conservatism
and let me then move to the guidance um what i've noticed is apparently that your guidance now implies quite meaningful deceleration and top-line growth in the second half of the year compared to what you printed in the first half so i was just curious to hear if this is mainly project or phasing related or do you feel more confident with regard to that very safe target now after how the first half has played out thank you yeah of course one is clearly i've elaborated on faster which really significantly lower but let me face it like that i feel very comfortable for the second half year as it is h1 all right thank you the next question comes from sashtusa from agency
partners please go ahead uh thank you good afternoon um i've got a number of questions um the first is just on your confidence on naval um and particularly on the uh miko 200 frigates i'm rather struck by the fact that tkms signed a contract with saab about two weeks ago specifically to fit out the first MECO 200s with Giraffe flat-faced radars, Giraffe 1X, 9LV combat systems. So what, and yet you still seem to think that the whole MECO program is up for grabs. I wonder if you could explain the difference between your confidence that you can get onto of the MICO's and TKMS's confidence that it should go with Saab as the supplier for those systems. Because it seems to me that that pretty much fills out all of the slots that you would otherwise be bidding for. And then the second issue on LUVES, I wonder if you could explain how the requirement is changing. I think if I heard you rightly, you said that your opportunity somewhere between hundreds of millions and a billion or thereabouts. That seems to be a much smaller program than when you were talking about it at the Capital Markets Day last December. Has the program shifted from being a standoff, stand-in jammer based on a Global Express to just being payloads?
Because it seems to be a much smaller program than Pegasus in terms of the um the value per aircraft thank you okay so uh sesh let me start with uh the question on the mako 200 so yes indeed i'm i'm i'm i'm also reading press releases uh but i i think definitely why are we still confident is because my understanding is very clearly that what is contracted and awarded now is the first batch and i fully acknowledge that this first batch also like the f123 today is with a a a sap mission suite but again also following the parliamentary decision There is a clear conditional approval which kind of guides that the future batches also need to consider some of the suppliers from the F126. So that is one thing, but more importantly for us, it's definitely the reconfirmation that we have achieved from our customers that the family concept TRS-4D is still on. And then also the concept of having a harmonized command control system or battle management system, which is a CMS-330, which is selected, is needed. And why is that confirmed? Because it's not only about buying new ships. I think the key role, and I'm talking to the senior leaders of the German Navy, the key element is also to maintain and operate the fleet. And if they would have a heterogeneous landscape of systems under, of course, the time pressure that they see today, then they would have really a hard time to operate them. And that's why we think that at the moment, and it's more than we think, the discussions we are having at the moment, is that also the F-126 decision triggers, and you read a couple of articles on the F-127, triggers a discussion how would a more modular, scalable fleet of the German armed forces look in the future. And that is why we see the picture a little bit different, especially looking mid to long term and that includes the batch 2 of the MECO 200 and what also and that is confirmed by TKMS fuses our confidence is that the CMS 330 as well as the TRS4D are already integrated. We have references on the MECO 200 so time is not an issue and we consider ourselves, also based on market information and other tenders, to be very competitive on pricing vis-a-vis SAP, and we are already more than ready and determined to enter that battle. Sorry, just to be totally clear, so your confidence is about the second four ships of the MECOs. you think that the first four ships are effectively an interim batch and then there will be a change of systems to to ensure the commonality with with f127 okay thank you exactly the next question comes from oh sorry yeah there was a luvis question on the on the requirements and i i can make that very short uh as as and that confirms that also on luvis we have a very strong dynamics So if we are successful and NUVUS comes, I would see the order integrata at the upper end of what we have just described. and and the question why we went into that kind of corridor approach was we were not so clear at that time would we be ready to approach also based on internal process and so on to approach that one on the top level as I would say as a kind of prime or consortium partner in a broader sense and and that of course has an impact do we only deliver the payload or team do we take responsibility on the overall program and as we are advancing so we expect the tender to be out somewhere in August as we are advancing in the campaign definitely our ambition is to go for taking a broad responsibility and that's why we will end up in the upper corridor of what I've just said before.
And so just to confirm, the upper end of the corridor is one billion or billions? It's a billion, multi-billion. Great. Thank you so much.
Operator
Okay. The next question comes from Ross Law from Morgan Stanley. Please go ahead.
Hi. Good afternoon. Thanks very much for taking my questions. So two quick ones, please. Just on Oktronics, another quarter of better performance in Q2. Can you just confirm what you're expecting in terms of margin for the full year and also the expansion over the coming years? And then on your Freya program with Firepoint, could you just give us an idea of what this might do or contribute in terms of revenues medium term? I apologize if either of these questions were already answered in your opening remarks. I joined the call late. Thanks.
Hi, Russ. Thanks for the question. I started with optronics. Yeah, you're right. Second quarter as strong as the first one. I have to say there were some revenues in which I do not see in the second half year. So, 60% I do not see year over year for the full year. I see approximately 500 million of revenues, maybe a little bit more in this regard, in this in the segment and i see still 60 maybe to 17 percent of margin in the segment for this year we have assumed in our midterm plan that we increase the margin two percent per year i think this is a very solid assumption but i'd like to now move on until the end of this year review how we ramp up with the ground-based system delivery and when we are very stable when all the measures we currently take in productions multi-shifts and so on pay off we again have another industrial base very solid to go ahead but for the time being I would like to stay with that.
Okay so I think the second one on Freya and maybe up front please also understand that that we cannot disclose too much on the content and and and for operational security reasons however what I can confirm is that ever after we have signed the MOU with firepoint at Eurusatory we have seen a unprecedented dynamics on the topic and that was also driven by the Ankara summit where we actually also the US gave its approval that the German Europe would work on a kind of Patriot like ballistic missile defense system and based on the dynamics that has been created in Ankara there was a side meeting at the coalition of the willing meeting of the senior leaders in Paris prior to the 14th of july the national day of france where i have been invited amongst a handful of industry leaders and and where we received a big push to to to bring this envisaged capability on ballistic missile defense to the battlefield in ukraine and with that also providing a unique capability to the Europeans. I had a personal opportunity to meet President Zelensky during this event. So the political push is very strong, of course. Industry cooperation is as strong as the political push, but I would see that this moves into 27 for the first things, but it would be absolutely premature to see how that would feed into revenue strings what I can say that this will be about of course the radar capability that we already deliver into Ukraine and and the investments we are currently taking to upscale our production capacity which will be be in operation early 2027 that that perfectly fits because it gives us the scale to answer this demand and then it would be also about widening the the capabilities uh to have more strategic more long-range uh radar coming into the game uh and and and that's the background but again premature to really build that into concrete revenues and planning understandable thank you for the color the next question comes from christophe mena from deutsche bank please go ahead uh yes good afternoon uh thank you for taking my question i had two actually on sensors uh the first one is um i mean you highlighted your win with um the turkish order for mk1 um actually mk1 seems to be a little bit the radar
of choice on Eurofighter of late. I mean, you had the, well, German, Spanish, now Turkish order. I mean, for future orders, if there are any for Eurofighters, should we assume that MK1 is best positioned so it will kind of de facto go to you? I mean, considering I think there are three rated choices on this one. And the second question is on GCAP. We heard yesterday from um well from bae that the window for germany was closing soon uh if they want to join um how would it work actually for you because um is if airbus joins are you automatically joining or you also need to negotiate with um uh with the consortium to be able to enter a gcap or would it be through leonardo thank you very much okay on on the first one uh of course it's a difficult question.
So I'm a bit bold on this one also to support our engineers. I think MK1, MK2 and that's actually what we need to look at because MK0 is the baseline capacity where now as we have the hardware under delivery as the software is ramping up for sure whenever we will be selected for the radar it will be mk1 and what i would would boldly claim is that that looking at the the cycles of development also at the technical maturity we are advanced compared to what we see on the other radars But in the end, and that's why probably it's rather a question you need to ask to our customers, the Eurofighter program is also very, let's say, influenced by political minds. It's a four nations program where, of course, the industries representing their nations have some, let's say, also political arguments, which would be the one of choice. but purely from a competitive positioning i think our mk1 is proving the putting and and it's really the the radar of choice at the moment on on gcap and christoph you are at least i don't know what what david will ask us but that's a tough question and as this is a a total let's say political discussion at the moment and and to be honest it is absolutely not clear which direction our customer the German government will take on future cooperation so I think definitely what we saw in ELA is that the team generation six that uh where where handshold of court is part where airbus at that stage i would say is not a kind of prime but a primus inter paris uh leading the story so i'm very much eye level with the ceo we're approaching that point and i'm very happy that at least we got the clarity that the next generation fighter would no longer be a cooperation between Germany and France. But also here, ever since, a lot of discussions are taking place, some of them looking at continuity, how would we sustain the engineering force, which is significant, not only in Hensault, but across this team generation six. And there are a couple of ideas on the table. how would we strengthen from the sovereign but also with the other partner the spanish partner how would we strengthen our value proposition for any program that we might join and here of course we have the nordics we have saab we are also looking at a broader g2g we see strong things we have gcap which is considered or other options which might build up so hands-on is well prepared Again, we will see what kind of contractual models would arise, but I think the discussion that we are having at the moment is very transparent and led on eye level by all the players in the room. And as I outlined in my presentation, what is, I think, important for us, for the resilience, for our future guidance, while we are approaching in that direction, the next generation fighter, whatever partnership and contract that will be, is one thing. CFSN and our position for the CCA, for the collaborative combat airframe, with CA1, with Helsing, but also the MOU we have signed with Boeing on the MQ-28, I think also in that segment, that new segment, which sees a lot of dynamics, hence all is strong. And on top of that, and that's the third part, independent, because all this dynamics that we see in the programs hands-on is reacting and we are driving our radar agenda to also be prepared to answer any kind of platform that we would see in the airborne segment in the future. So that is probably giving you a little bit of additional light to the situation, which indeed is not yet 100% clear. A lot of political and also media claims. But again, we need to now look into all those different elements.
Operator
The next question comes from David Perry from JP Morgan. Please go ahead.
Yeah. Hi, Olivier. I'm Christian. Hope you're well. It's late on a Friday, so I hope my questions are not annoying in a busy week for everyone. For you, Olivier, thank you for the slide on the beyond tanks or drones and just how Hensault is positioned. And I agree with everything you say about that you're very diversified. It doesn't matter so much for you. I'd just be really interested in your perspective on the debate that may or may not be happening in Germany, whether you think the uh the leaders the generals the politicians are actively rethinking where they allocate money or whether you think the plans the current plans are quite firm and then my second one and this is the annoying one christian everyone's asked you about the second half guidance because you know us analysts we all think the same um it does look very conservative i guess my question would be this i mean if you have a a semi-reasonable q3 in terms of growth you're probably going to be down uh in q4 year over year uh in one or both divisions so i just wondered if there's anything you can see or you know today that's making you so cautious on the sales guidance because kind of i guess all the logic from all the other analyst questions we all seem to think you're going to do a lot better than the 2750 if i could put it that way Okay, so I start with the first one, David, and maybe a preliminary remark.
Yes, it's a Friday afternoon, but just to give you a glimpse of how endurant Christian and I are, we started this day with our supervisory board this morning and, of course, the pre-supervisory board committees yesterday. Then over lunch, quickly, we took a visit of the Minister-President Cem Özdemir from Baden-Württemberg, which was on top of Katharina Reiche, Boris Pistorius, a great success underlining the political backup that we have. And now we are taking your analyst call, and I hope you still see that we are on. And I would say that is also an element of the resilience that Hansel brings to the game. But to be more concrete on your questions, tanks and drones, indeed, I mean, that was a main theme when Boris Pistorius visited us, and I think that was really eye-opening to him, and he made some statements when he left the company here, realizing that really we are bridging the two elements that are of utmost importance to the German armed forces these days. First of all, with many of the contracts we have in our books and more to come, they are scaling up their order of battle, as I would say, because credible defense and deterrence only comes if the German armed forces have the major weapon systems in Germany and at the borders to support. and here definitely air defense, looking at what we see in Ukraine, looking at what we see in Europe with EFI, it is also very clear that Germany in itself is lagging behind and that we should expect a lot more orders on air defense in Germany as we go forward. So in that regard, I see that this will continue, and that's why Boris Pistorius keeps on stressing over and over again. It's not tanks or drones, it's both. And the best is if both are connected and what he realized is that Hansel is really making significant progress on connecting those things. I mean, we shared with you at the Capital Market Day, our MDO core, and what I can share with you, we presented that on the exhibitions And ever since, we are at the moment offering to two global customers first prototypes. So there are contracts, sole source contracts ramping up to buy our software stack. And we have just recently entered a tender in Germany, which is looking for a, and I stated clearly, a Palantir-like solution. We have the press with us with Shem Öztemir today and probably you will read in the media tomorrow That really we're positioning in that direction And I would say not only with papers what we showed to our customers in these discussions at the exhibition The software is there and why is it there? Because we bring on our experience on sensors multi domain multiple platforms all the know-how that has grown over years but in order to be quickly in the sense of time to market we work with partners as you know with Schwartz Digits we work with IBM we are really intensifying our cooperation with Helsing we have small startups with Agile and with agentic AI and all of that is very dynamic at the moment. So that's why I would see while the balance is coming, Germany investing into existing capabilities, exhausting their, exploiting their framework contracts, all of that, which will continue some way, but also with LUVEST and the software data driven topics we see that all these new contracts and tenders are out and I would see us the based on also our sovereign core technology proposal that that in many areas we might be even sole source trusted partners of our customers
and and and and that is is kind of a bit a little bit more more more story to to what we have explained in our presentation yeah and the second question David your questions are never known anyway they come to the point so so what drives me currently first is that when I look at H1 and you've seen 18% core revenue growth that approximately 20 25 million are spillovers for 2024 for 2025 than to this year which we could not make at the end of the year let's spillover effects um and we have to take this to account when you go for h2 nevertheless i think the base is excellent and again we have also some one-off opportunities in the second half year so the start the tailwind is excellent and maybe we are very conservative at this stage but i think i think september is the month where we will see that these opportunities will pay off or not and then i think it's the right moment to update in this regard okay all right that that is helpful and clear thank you appreciate it have a great summer there are no more questions at this time i would now like to turn the conference back over to nicole schlinger for any closing remarks thank you very much for your questions and for taking
the time to join us today should we have to follow up questions the ir team and i will of course be happy to assist we look forward to speaking with you again soon have a great day
