In a bid to expand its presence in European radar markets, Leonardo quickly moved to acquire a stake in Hensoldt when KKR moved to divest its holding in 2021.
At the same time, the German government via state-owned Kreditanstalt für Wiederaufbau (KfW) acquired a similar stake, 25.1 percent, in order to preserve national security and better control the sale and export of sensitive military technology.
Leonardo, which has collaborated on numerous programs with Hensoldt, acquired its 25.1 stake for EUR606 million shortly after the KfW purchase. The purchase helps expand Leonardo’s geographic footprint while fostering cooperation and consolidation in the European defense electronics industry. The upcoming Future Combat Air Systems programs in the European Union and the U.K. will be a key area of opportunity, as the systems will require interoperability between the allies.
Because of these stake sales, KfW and Leonardo are now the largest shareholders, holding 25.1 percent each. As for the remaining shares, as of 2022 Lazard Asset Management holds 5.5 percent and a free float on public exchanges accounts for the remaining 44.3 percent.
Thanks to its position as a defense electronics producer, Hensoldt was spared the worst of the COVID-19 crisis. For 2021, Hensoldt reported revenue of EUR1.5 billion, up 22 percent from EUR1.2 billion in 2020. The company posted net income of EUR63 million, compared to a loss of EUR65 million in 2020. The company has maintained a solid growth trajectory thanks to major contract wins such as the award to produce the Pegasus airborne electronic signals intelligence system for Germany. This order, with a volume of around EUR1.25 billion, helped push the company’s backlog to a record EUR5.0 billion. Other key wins during the recent past include an award to supply the radar and self-protection systems for the Eurofighter Quadriga program worth around EUR300 million and a contract for production and delivery of the optronic observation and reconnaissance systems for the Fennek military vehicle valued at EUR75 million. Most recently, the company was awarded a long-term service contract for the Eurofighter worth EUR270 million.
As it looks ahead, Hensoldt can expect the same level of stability. Halfway through 2022, the company reported revenues of EUR682 million (H1 2021: EUR486 million). For the full year, revenue is expected to grow by 15 percent to EUR1.7 billion.
Helping to keep this growth moving has been Russia’s invasion of Ukraine, which has led Europe to quickly ramp up defense spending. One of the critical sectors is ground-based air defense. Here, Hensoldt and Diehl Defence intensified their existing cooperation and quickly delivered the first of four IRIS-T SLM air defense systems to Ukraine in October 2022. As the conflict continues, the need for improved electronic systems is expected to rise as Germany and its NATO allies improve their militaries to meet the threat.
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