Good morning, ladies and gentlemen, and welcome to the HENSOLDT Capital Markets Day. It is good to see so many of you here in London today, and a warm welcome also to everyone following us via webcast. I am Nicole Schillinger, HENSOLDT's new Head of Investor Relations, and it is a real privilege to open today's event. To those of you who joined us for dinner last night, thank you. The HENSOLDT team very much enjoyed catching up with you, the view over the Thames, and the General's thought-provoking keynote on Europe's changing security landscape. When I took on this role in July, my first milestone was learning to speak HENSOLDT. Coming from outside the defense sector with no military background, I was soon confronted with an impressive collection of acronyms. For a moment, I wondered whether I had joined a German company or a command center.
I learned that LBO stands for land-based operations and has nothing to do with leveraged buyouts. PEGASUS? Outside Greek mythology, it is the Persistent German Airborne Surveillance System. Behind all these acronyms is something much more important, a business with a clear strategic direction and significant growth opportunities. That is what today is about. Let me introduce our speakers. Oliver Dörre, our CEO, Christian Ladurner, our CFO, Inka Tews, our CHRO. Oliver will open with a few remarks and then take you through our growth story. Christian will follow with Deliver at Scale before Oliver presents Pioneer Software-Defined Defence. We will have a 30-minute coffee break at around 11:15 A.M., after which Inka will talk about how we lead our team into the future. Oliver will then show you how we Grow with Focus, and Christian will take you through our financials.
Oliver will close with his concluding remarks, and then we will open the floor for your questions. A few practical notes before we start. Today's event is being recorded, and the recording will be available on our website afterwards. If you are following us on the webcast, you can send us your questions at any time via the chat function. Please note the disclaimer on forward-looking statements at the end of the presentation. With that, please join me in welcoming our CEO, Oliver Dörre.
Thank you, Nicole. Good morning, ladies and gentlemen. Thank you for joining us today here in the room and online. A year ago in Ulm, we confirmed our ambition of EUR 6 billion in revenue by 2030, and we showed you the industrial base we are building to get there. You also saw the first live demonstration of MDOcore. Today, you will see how far we have come since then and how far we intend to go. Our title has two parts: Delivering today. Sustaining growth beyond 2035. Delivering today is about our order backlog. At the end of September, it reached a record of EUR 10.4 billion. Behind that figure are systems our customers need in service, many of them within the next few years. Our job is to deliver them on time and in the quality they accept. Sustaining growth beyond 2035 is about the long run.
Many of the programs that will shape our business in the 2030s are being decided now. The platforms they bring into service will need sensors, software, and support for decades. We intend to play a substantial role in them, and we are preparing the company for that today. Our customers expect both from us, delivery at scale now and the next generation of capabilities. We do both. Let me start with where we stand on the four axes of our North Star strategy. Deliver at Scale. It starts with the supply chain, which we have made more secure and more diverse. We are adding substantial production space, and the result is capacity. In 2022, we built three TRML-4D radars. Today, our capacity is more than 5 x higher, and by 2029, it will be more than 10 x.
For SPEXER, we will increase capacity more than sevenfold from today to around 1,000 units in the year 2029. We are getting faster. Our first scale-up took four years. The next doubling will take about two years. We have learned how to do this, and if demand rises again, we will be able to build the next factory even faster. Pioneer Software-Defined Defence. MDOcore has moved from concept to market. We demonstrated it live at ILA in June, and we are negotiating first prototype sales with three customers. We work with strategic partners from IBM to defense technology companies such as Helsing and SE3 Labs, and we are setting up a software factory that brings our current existing software teams together, because we start with these teams we already have. The build-up is fast. Our new Software Development Center in Leinfelden near Stuttgart adds to this.
Lead our Team into the Future. People who join us stay. Our retention rate is 96%, and many want to join. We have already received more than 100,000 applications this year. More than 300 of our new colleagues in 2026 come from the automotive industry. Grow with Focus. On the 1st of January , our new global sales organization starts work, led by Viktoria Stürmer-Kuchelmeister. Government-to-government support from Berlin has become significantly stronger, and our portfolio review shows that around 90% of the assessed portfolio are stars or cash cows. We are streamlining the rest. Our progress, ladies and gentlemen, is real. The task ahead is bigger because the demand keeps on rising. Why are we confident that our strategy fits this demand? Because it starts with our customers. on the left, you see the four imperatives we hear from them, from the bottom up. On the right are our answers.
Some of them sit between the two imperatives because they serve both. First, they need to scale capabilities they already have, more of the systems they trust delivered faster. Our answer is smart scaling of production. Our smart and connected sensors serve the first and the second. They make existing systems better, and they open up new capabilities. Second, customers need sovereign and new capabilities. This is where MDOcore, our software backbone, comes in. Third, they need higher availability. Systems and service have to be ready when they are needed. Our service strategy, including software services, addresses exactly that for the systems our customers have today and for the new ones of tomorrow. Fourth, they need new models of cooperation.
Software makes other business models possible, from licenses to services over the life of a system, and customers are prepared to give industry more responsibility up to operating capabilities on their behalf. Examples are secure data centers or the sustainment infrastructure that keeps their systems ready for use. Together, these capabilities form our Neo-System House approach. We combine sensor software integration in an open architecture that works across platforms. This is our path to EUR 6 billion of revenue in 2030, an ambition we reaffirm today. The path continues. For 2035, our new ambition is EUR 10 billion of revenue. Later today, I will show you where this growth comes from. The question behind everything we show you today is simple: Where does our growth come from, and how long will it last?
We see a sustained need for the capabilities we provide, more sensors, better protection, and the software to connect them. Defense plans in NATO and elsewhere now give this need a much stronger financial basis. I will show you where that becomes an opportunity for HENSOLDT, which programs are already taking shape, and how we intend to turn them into business. Russia's war against Ukraine is in its fifth year. Its consequences reach well beyond the front line. European armed forces must prepare for a lasting threat, while drone incidents and sabotage make the vulnerability of our infrastructure visible at home. Conflicts in the Middle East and tensions in the Indo-Pacific add to the demands on our customers. For Europe, the central task is to rebuild the ability to deter and, if necessary, defend. That requires more equipment, but also better warning, faster decisions, and the capacity to sustain operations.
We at HENSOLDT are proud to support our customers across a broad range of capabilities, sensors that give forces a reliable picture, software that makes information usable, and industrial capacity to deliver and to support both. The budget outlook reflects the increased threat situation. At the 2025 summit in The Hague, NATO allies committed to invest 5% of GDP in defense and related security needs by 2035, including at least 3.5% for core defense. The chart shows how sharply Europe, and Germany in particular, is changing course after many years of much lower spending. On the right, you see the expected growth until 2031, 9.4% a year in Germany, 7.3% in the rest of Europe, and 5.3% in the United States. Our German home market grows at the fastest pace. Germany has also created financial headroom for defense by exempting relevant spending above 1% of GDP from the debt brake.
Its financial planning points to more than EUR 180 billion for defense in 2030, up from around EUR 180 billion this year. This including the special fund. That strengthens the basis for procurement. Our task is to win the programs that turn this funding into usable capabilities in Germany and abroad. Existing contracts give us visibility over the coming years. The capability requirements and programs I will show you explain why we see further potential beyond that. For us, the relevant figure is the defense electronics market we can actually assess. That depends on our products and our market position in each country. Our larger defense budget matters only if it creates demand we, as HENSOLDT, can serve. We estimate that this market will grow from around EUR 46 billion this year to around EUR 76 billion in 2031, around 10% a year.
In this analysis, Germany grows by 18% a year, the rest of Europe by 11%, and international markets by 8%. We enter that growth with an established position in Germany and longstanding relationships with the Bundeswehr and with the armed forces abroad. Why does electronics grow faster than budgets? Because a new platform needs more than additional hardware. It needs sensors that detect a threat, connections that share the information, and software that helps crews to understand it. The value of that chain becomes clear in air defense, which I will come to shortly. Among the technologies, electromagnetic warfare grows fastest at more than 12%. Radar grows by 10.5%, optronics by 8.5%. The full additional potential of MDOcore is not yet quantified in this market analysis, but we expect it to grow much faster. It will explain the reasons in our business model in our Software-Defined Defence chapter.
Let me distinguish the business we have won from the opportunities we are pursuing. Last year in Ulm, we expected an order backlog of EUR 8.5 billion at the end of 2025. We closed the year at EUR 8.8 billion. For the end of this year, we expect around EUR 11.2 billion. This is business we must deliver over the coming years. Our unweighted pipeline is a different measure. It covers identified opportunities for which we expect tenders over a six-year period before allowing our chances to win. The slide compares around EUR 70 billion for 2026 to 2031, which we presented at our Capital Markets Day last year, with around EUR 110 billion for the six years ahead as of today. In just one year, the opportunity has grown by around EUR 40 billion. The pipeline gives us a quantified view of the next six years.
We expect growth to continue in the years after or even to accelerate. Because defense programs have long lead times, the orders in this pipeline will generate revenue well into the next decade. That gives us the confidence for 2035. To turn this opportunity into orders, we have to offer the right capability at a competitive cost and demonstrate that we can deliver it. The next slide makes the pipeline more tangible, showing programs, their status, and the expected timing of orders. Here on this slide are eight key programs and campaigns sorted by when we expect orders. Short terms means within two years, midterm within three to five years, and long term beyond five years. The status matters. A contract extension built on existing business, an opportunity rests on a concrete tender or an existing contractual basis. A prospect is at an earlier stage.
The amounts are unweighted order potential. The German follow-on opportunity for PEGASUS sits in the short-term group. We are the general contractor for this signals intelligence system. The total potential of around EUR 5 billion also includes the extension of the German order and exports, which have their own timeline. The other short-term area is electromagnetic warfare with potential of around EUR 3 billion. Three are midterm opportunities. LuWES with more than EUR 3 billion, which I will come back to in a moment, MDOcore with more than EUR 1 billion, and the Combat Fighter System Nucleus, CFSN, together with the next-generation fighter with more than EUR 2 billion. Three are long-term prospects, the next-generation main battle tank, the expansion of our naval business into mission systems, and space, with more than EUR 8 billion together. Our platform-agnostic approach connects these opportunities.
We develop sensors and software for use across different aircraft, vehicles, and ships, working with the platform manufacturers our customers choose. That broadens our route to market. A radar family can serve several programs. Software can add function to equipment already in service. A delay in one program still matters to its revenue timing, but the whole business does not rest on the success of a single platform. LuWES shows how far a program can move in one year. First, the capability. LuWES is an airborne electromagnetic warfare capability, an airborne stand-off jammer, and I think General Gräfe outlined yesterday how important these force multipliers are for future operations. Its central role is to disrupt enemy air defenses from a distance. The aircraft carries the capability. The payload determines what it can do. Second, the payload is ours.
It is a sovereign key technology developed over many years, which we can adapt for crewed and uncrewed applications. Third, the team. With Lufthansa Technik and Bombardier, we have built a common approach through PEGASUS, our mission system, their aircraft, and integration expertise. We can draw on that experience for luWES. With these three strengths, we believe we are far better placed than our competitors. Fourth, Germany has included this capability in its NATO planning for the early 2030s. That gives the program a clear military requirement, and it gives the program urgency. Beyond the German requirement, we see export potential and related applications, including stand-in and escort jamming, and payloads for uncrewed platforms and other aircraft. The German opportunity represents more than EUR 3 billion of potential business for HENSOLDT. Export and further applications are additional opportunities. That is what I mean by EUR 3 billion plus X.
We have now, and that is brand new, received the request for proposals, and it will be a competitive process. We are now preparing the luWES team and using our PEGASUS experience to identify integration and deliver risks early. Let me turn to air defense, where our growth is most visible today. The photo shows an attack on a bridge in Kyiv. During my visit in Ukraine in October, President Zelenskyy asked us to protect these bridges. They carry people to work, keep supplies moving, and connect families. I feel personally obliged by that request. For our company, it gives the mission a very human meaning. Our TRML-4D radars have supported Ukrainian air defense as part of IRIS-T SLM and standalone since 2022. The lessons reach beyond Ukraine. Mass attacks with drones and decoys need layered air defense so that no layer is saturated.
At the same time, the threat spectrum widens at both ends, from small drone swarms to hypersonic missiles. Both put the sensors under pressure. Forces need to distinguish threats quickly, share what each sensor sees, and decide which countermeasure is appropriate. That requires a resilient connected sensor network, including mobile sensors. Our radars feed the air defense networks that the Bundeswehr and NATO already operate, and the new short-range air defense will make this network even denser. A common air picture helps operators assess the threat and coordinate their response. It also helps them avoid committing a scarce interceptor to the wrong target. Better information makes the available defenses more effective. That is why I say effectors are the bottleneck, sensors are the multiplier. Only a connected air picture puts the right effector on the right target. There is also an economic logic.
An interceptor is used once, a radar serves for decades, and software updates help to keep it at pace with new threats. For our customers, an investment in sensors pays off over many years. This creates demand across short-, medium-, and long-range air defense, and let me show you where our sensors contribute. Medium range, roughly 15 km-100 km, is our foundation. TRML-4D has proved its value in Ukraine as the radar of IRIS-T SLM, and it has paved the way into the European Sky Shield Initiative. Software allows us to extend its functions. Weapon location is one example, and fire control and missile guidance, including against ballistic missiles, are on the roadmap. TRML-4D is the most purchased radar of its class in Ukraine. The memorandum we have signed with Ukraine in October is a further step in developing the relationship.
It is part of a wider demand picture in Germany, Europe, and the Middle East. Short range, up to 15 km, is becoming a new volume market. SPEXER detects and classifies small, low-flying drones, and it now delivers its full radar picture on the move, which is decisive in Ukraine. Next on its roadmap is the detection of drone swarms. It is also being prepared for integration with laser weapons. SPEXER has been selected for Rheinmetall Skyranger 30, the successor of the Gepard. Our wider approach, though, is to make the radar available for different air defense systems and effectors. That gives us several routes to serve the growing demand for mobile drone defense. Beyond Skyranger, SPEXER is also part of Diehl Defence's GARMR system for the Bundeswehr. We see potential demand in the thousands across multiple applications. Both radars also go to sea.
SPEXER has a naval version, and TRS-4D, the naval sibling of TRML-4D, equips frigates. Now to long range, beyond 100 km. This adds a new capability to our portfolio. TRL-4D LR is intended to provide early warning and tracking at ranges of more than 400 km, including ballistic missile threats, independent of any specific effector. Because it is fully digital, it can be adapted as ballistic threats evolve. With our partner, we are working to develop this business from a project into a joint product roadmap. This technology is already in delivery in Germany for the F124 frigates and for the air surveillance radars of the German Air Force, called the HADR program. Long-range radar also opens new operating models. We can operate radars on behalf of our customers and feed the data to the Bundeswehr and NATO with MDOcore as the backbone.
One more sensor completes the picture, Twinvis, our passive radar. It transmits nothing and tracks aircraft using radio and television signals that are already in the air, so an adversary can hardly find it. At the German Air Force exercise Timber Express this year, Twinvis proved its strong performance. Twinvis already has customers in several countries, most recently two in the U.S. The change for HENSOLDT is the breadth of the opportunity. TRML-4D remains our foundation. SPEXER adds volume in mobile defense. Long-range radar opens another market, and Twinvis adds a passive layer. How big is this opportunity? The air defense market is worth around EUR 9 billion a year, excluding the United States. By 2031, it is expected to reach around EUR 25 billion, almost 3 x as much. That is growth around 22% a year.
Europe accounts for the largest part, around EUR 7 billion today and around EUR 19 billion in 2031. Not all of this is our market. Launchers and effectors currently take the largest share. We address the sensors and the tactical command and control, radar, EO/IR systems, and the C2 that connects them. This addressable part grows from around EUR 2 billion to around EUR 6 billion, at around 25% a year. It grows faster than the market as a whole, increasing the share of sensor content of the overall air defense market over time. There are three reasons for this, and you see them on the right of this slide. Customers need many more sensors, from drone defense to long range. Every sensor has to work as part of a network, and the sensors themselves are becoming more sophisticated because the threats are. These are the capabilities I have just shown you.
Let me close our look at air defense with one observation that applies to our whole business. No single company delivers these capabilities alone. That is why we work with partners, including many startups and scale-ups. The slide shows them in three fields: software, AI, and multi-domain integration, uncrewed platforms, and air and missile defense, including counter-drone. With some, we develop joint applications. In selected companies, such as 21strategies, Quantum- Systems, and Project Q, we have also invested, and we have just added a fourth investment, which is still undisclosed. Let me give you three examples. Helsing, a scale-up, uses our radar, optronics, and MDOcore software for its CA-1 Europa, and we work closely with Helsing in MDOcore. Project Q, a startup we have invested in, is also a partner in MDOcore, contributing its HYDRIS integration layer for multi-domain operations.
With Fire Point from Ukraine, we are working on FREYJA, a ballistic missile defense system that combines our TRML-4D radar with Fire Point's FP-7.x interceptors. These are practical examples of how a specialist contribution can become part of a larger capability. For investors, the point is access to additional applications for our technology. Partners gain sensor and integration expertise while we gain complementary technology and new platforms for our products. Partnerships also open up new sources of data. Quantum- Systems drones, for example, are integrated with our CERETRON software, so their sensor data feeds into the operational picture. Now to a business that grows with everything I have shown you so far, service and training. Six levers drive it. Customers need higher availability, which creates more maintenance and repair work. More intensive use increases wear and tear. Every delivery enlarges the installed base. Training and simulation requirements rise.
Software adds upgrades and database services, and customers increasingly look to industry for support, including contracts that pay for availability. Larger spare part stocks support that readiness. The link is straightforward. Delivering another radar adds equipment that must be maintained and upgraded for years. As threats change, the customer may need a new software function, operator training, or an additional sensor. An installed system becomes the starting point for further work throughout its service life. That is why the production ramp-up also builds our future service opportunity. Today, service accounts for 16% of our revenue. In the midterm, by 2030, we expect around 20%. In the longer term, around 25%. Service gives us work over the lifespan of a system, often for decades, maintenance upgrades, and support for its users. Some of it is covered by continuing contracts. Other work comes through additional orders.
That extends the customer relationship well beyond the initial delivery. We are building the capacity for it, including a new service center for optronics that is designed for exactly this business. All of these developments are coming together inside HENSOLDT. First, Deliver at Scale. Serious production of radars, optronics, and self-protection systems at high rates with significantly higher quality. Second, at the same time, we are developing Software-Defined Defence. MDOcore provides a common software architecture to connect sensors, platforms, and effectors, and decision-makers, while our product teams add new functions to the equipment itself. We call the combination a Neo-System House. Deep sensor expertise, software, and the responsibility to integrate a solution with partners. We build from the capability the customer needs across platforms and across domains. What does that mean for our customers?
We combine our own top technology and our integration skills with the capabilities of our partners, and we take responsibility for the overall result. The customer should never have to mediate between suppliers when every component works, but the system does not. We are reshaping HENSOLDT while it runs at full power. This slide shows how we grow into the role of an ecosystem orchestrator. We start at the sensor and its data, then add software and integration around the mission. Smart and connected sensors are the foundation. Software combines their data and makes it usable through fusion, AI, and common software suites such as MDOcore. Integration, including third-party interfaces, sensors, and systems, connects those capabilities across platforms and domains. An open partnering approach brings in technology that complements our own. The four elements reinforce each other.
For a customer, the result should be a better capability from the equipment they buy. For us, understanding both the sensor and the system creates more opportunities to contribute, from the initial product to integration and later upgrades. Everything I've shown you so far is about sustaining growth beyond 2035. That only counts if we deliver today, and that is the first half of our title. Christian will now show you how we turn our order book into revenues. Christian.
We at HENSOLDT will drive a step change in operational excellence to meet our volume and performance requirements.
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Good morning, everybody, and also a big welcome from my side. The video you have just seen captures what Deliver at Scale is about. Turning the right demand you have heard about today and the backlog we have built into deliveries and ultimately into financial performance. Let me start with the question you, at the end of the day, came for today, how much more we can build. This graphic is, from my point of view, very clear. On the left-hand side, you see what we have achieved since 2023. On the right hand, you see what lies ahead of us until 2029. Take TRML-4D, our air defense radar. In 2023, we built eight, and this year we will be around 20. SPEXER, we went from 24 units to 130.
In optronics, our commander sights grew from 50 to around 130 a year, and our gunner sights from 33 to around 100. This first ramp-up has given us more than additional capacity. It has given us the experience and the confidence that we can do the next step. As Oliver has said, we are now getting significantly fast in scaling, building on what we have learned. By 2029, TRML-4D goes to around 35 radars a year. SPEXER goes from around 130 to around 1,000 units, because drone defense needs sensors in large numbers. Commander sights grow almost fourfold to around 500. These volumes come from our order backlog and our business plan. We are not building capacity for demand that may or may not come. We are scaling against demand that is already visible in our backlog and in our customer pipelines.
For me, as the CFO of this company, this is the most direct way to turn backlog into revenues, more units of products our customers have already ordered. These numbers also make one thing very, very clear. It is not simply about producing a few more units. Across several of our key products, we are moving to a fundamentally different scale of production. Getting there requires us to change the way we operate. The first ramp-up showed us exactly where our limits were, and now we remove them one by one with industrialization, new space, more shifts, and suppliers who can grow with us. Importantly, these measures reinforce each other. More factory space alone does not increase output if the processes, people, or the suppliers cannot keep pace. That is why we are scaling the entire industrial systems. Volumes like this need different industrial systems.
That is the purpose where we have founded Operations 2.0, which we have presented you to last year. It has three goals, as you see in the slide: scalability, resilience, and efficiency. Let me spend a moment on the third one. Efficiency includes capital discipline, and that matters. We built capacity on the basis of the order backlog, more than EUR 10 billion. That visibility allows us to invest ahead of demand while remaining financially disciplined. I was a soldier myself. I know that behind every delivery date, there is a unit that plans with it. That is the standard we hold ourselves to. Let me now show you how we are putting this into real life, into practice. As we move from small series to much higher volumes, one thing becomes critical: getting it right the first time, or as we call, industrialization.
A key metric we use to measure this is first-pass yield. It tells us how many production orders we complete without rework, without repair, or without any scrap. For TRML-4D, when we started to introduce this measure and this methodology, we started with around 60% in 2025. So, you can count how much extra work we have to do to manufacture one TRML-4D. Today, it is around 90%, and our target for 2027 is 95%. This is a significant improvement for our industry, and it matters because rework simply does not scale. At the volumes we are targeting, we need stable processes, consistently high quality, and repeatable production. So, how did we get there? We brought together program, engineering, production, and supply chain, and integrated teams for each product. We redesigned parts of the legacy products. We improved our production process and worked with our suppliers to improve quality.
Importantly, new products are now designed for industrialization from the start, and it is part of our R&D roadmap, including planned costs. So, you can see the impact of the same approach in our electronics production. These PCBs go into almost every radar we deliver. In 2025, we produced around 500 printed circuit boards per week. Today, it is around 1,500. By 2027, we target 2,000. So within two years, we will have quadrupled our weekly output. This is not simply about adding people. We now operate three automated production lines for printed circuit boards in Ulm, supported by automated testing systems. This is what industrialization at the end of the day means for us: higher output, greater optimization, and more repeatable processes. The benefit is clear: less rework, less time, and much more capacity for deliveries.
This is how industrialization translates into productivity and in margin performance. TRML-4D has become a blueprint for this approach, and we are now applying that same principle across optronics and, of course, across all our key products. Industrialization needs space, but it is not simply about more space. We are building the infrastructure for a different level of production. Since 2023, we have added around 49,000 sq m. That includes a new logistics center, more warehouse space, our new sites in Oberkochen, and in Wetzlar, and Nedinsco in the Netherlands, which became part of HENSOLDT with the acquisition in June. From 2027, we add another 46,000 sq m. Our most important project right now is the additional air defense radar site. It will build TRML-4D and SPEXER, first and foremost, in series, with a logistic concept designed for takt-based production.
Production starts in the second quarter of 2027, so we are absolutely on track with this project. In parallel, we are building a service center for optronics. This is important because scaling new production is only one part of the equation. As our installed base grows, our service capacity needs to grow with it. This facility will go live in the third quarter of 2027. We are not starting from scratch. Oliver, I know over the past years, we have learned what it takes to build ramp-up production at scale, as Oliver has said. We are taking these lessons learned directly into the new radar plant, designing the processes and production flows for scale right from the start.
These two facilities, the one for the radar production and the optronic service, are the main reason why our CapEx peaks this year, and I will come to that later in the finance part. We do not have to build everything ourselves. Where partners can add capacity faster, we work with them. Where it makes strategic sense, we continue to consider selective acquisitions. Buildings are one side of capacity. People and shifts are the other. First, we are adding people at significant scale. This year, our production staff grows by more than 20% in Ulm, by around 20% in Oberkochen, and by more than 30% in Wetzlar. We are bringing these teams on board now because we need them for the next step of the ramp-up. These teams will run the second radar production line and the optronic service. That means we do learning by practice.
Inka will show you later how we find this workforce to support this growth. Second, more shifts. In Ulm, we are building TRML-4D and SPEXER. In Oberkochen, we build ground-based optronics. We have introduced additional shifts. Wetzlar for sights and optics is then the next. This allows us to get more output from the capacity we already have, but at the same time, we prepare our organization for the new capacity that is coming online. Now, to the part of this ramp-up which happens outside of our own walls. In Optronics, we buy around 70% of the value to be delivered. In Sensors, it is around 40%, and it is rising. So, our suppliers have to scale with us reliably and at the same pace. We work, as you see on this page, on six fronts, and it starts with resilient sourcing.
We prefer European and trusted partners to reduce dependencies, protect sovereignty, and secure supply. More than 90% of our Tier 1 are European and German suppliers. One example for long-term agreements with UMS is 900,000 gallium nitride chips for our radars by 2030. This secures critical capacity already now, as global demand continues to grow. We also reduce dependency on critical raw materials. For germanium, which we need for infrared optics, we have qualified now second sources and built up strategic stocks. Beyond our direct suppliers, we increase transparency down to Tier 2 and even deeper, together with our key suppliers and supported by data analytics and AI. We identify capacity risks and bottlenecks early before they can, at the end of the day, affect production, because then it is too late. We also need to support products that our customers will operate for decades.
That is why we secure long-term component availability through dedicated inventories and long-term supplier commitments. We actively engage with industry associations and government on critical supply topics. Germany is developing a highly strategic approach to secure critical materials and components, and we are contributing to these efforts. Last but not least, we selectively strengthen critical capabilities by M&A. Our recent acquisition, Nedinsco, adds highly specialized capabilities in optomechanical and optronic systems. By integrating these capabilities, we gain more control over subsystems and reduce dependencies in an increasingly constrained supply environment. All these measures support one clear target, more than 95% on-time delivery from our suppliers for our key products. From a financial perspective, resilience has a price. A second source has to be qualified, and higher stocks tie up capital. But we weigh that very carefully.
This is why we invest in resilience, where it protects what matters most, our ability at the end of the day to deliver. Growth at this pace also needs a digital backbone, and we are very convinced about that because it is one of the key enablers in this game. As our volumes increase, we need common processes, common data, and much greater transparency across the group. This is the purpose of our project, oneSAPnow, our move to S/4HANA. We have now built the global template with more than 600 defined processes. We have tested it in two integration cycles with more than 5,000, [4,000] test cases. The technical go-live is done, and our CRM and our HR modules are already live, and Inka can show you some more data because of this system.
In September, we started the rollout in Optronics, our fastest-growing segment, with the fit to global template phase. Optronics is scheduled to go live at the start of 2028, and Sensors will follow, and ESG and our international companies by 2030. Why should this matter to you? One set of processes and one set of data makes us faster and more predictable. There is a second reason. Structured and consistent data is the basis for automation and a prerequisite for using AI in a serious and scalable way in the future. As we expand our physical production capacity, we are building the digital backbone to scale with it. S/4HANA will be the core of how we manage our operations and our deliveries. Here finally is our plan, how Operations 2.0 structured in three phases. In 2025, we laid the foundation. We prioritized, we had to prioritize products.
We defined our target picture for operations and launched the major site projects. We are now in the second phase, 2027 and 2026. We ramp up our key products to end and introduce the new operating model across the organization, and capacity grows step by step. The new logistics center is running. Additional shifts and production capacity are coming online. In 2027, the additional radar plant and the optronic service center will again take us to the next level of industrial scaling. From 2028, the goal is sustained performance, stable high-volume operations with all sites working to one rhythm. Importantly, we do not wait until 2028 to see whether this plan works. We steer the ramp-up every week with a small set of operational KPIs, and of course, first-pass yield plays a key role until on-time delivery to the customer.
They tell us exactly where we are and where we need to intervene, and that is how we turn this roadmap at the end of the day into execution. Let me now sum up what you have seen until now. Our capacity for key products like TRML-4D has grown fivefold in three years, and it will double again over the next two, and we are laying the foundation for that. We are continuing to scale. By 2029, we will build around 35 TRML-4D radars and approximately 1,000 SPEXER units a year. First-pass yield for TRML-4D rose dramatically from 60% to 90%, with 95% targeted for 2027. We are building infrastructure for the volumes ahead. We have added 49,000 sq m, and another 46,000 will follow 2027. We know how to do this.
The ramp-up has given us proven know-how that we can take to new sites at home, or if it is necessary, also abroad. Inside HENSOLDT, we as the management team, we keep repeating one sentence: Delivering is key. Delivering is key. Delivering is key. Our order book is a promise to our customer. With what our teams are building, we will keep it. Thanks for this part right now, and Oliver will now take you through Pioneering Software-Defined Defence. Thank you.
HENSOLDT digitizes and enhances platform-independent core products. We integrate data-enabled solutions across domains and expand into new data services.
[Non-English content]
Last year in Ulm, you saw the first live demonstration of MDOcore. Today, I want to show you what has happened since and what it means for our business. Our sensor expertise is the foundation. Software expands what those sensors can do, connects them with other systems, and creates additional business. Let me explain the capability first and then how we earn revenue from it. When we developed North Star, we already knew how important data and software would become for future operations. That is why Pioneer Software-Defined Defence is one of our four strategic axes. Military leaders underline a clear need for this. General Carsten Breuer, Chief of Defense of the German Armed Forces, has emphasized the growing importance of data for future operations.
At the Warsaw Security Forum on the 12th of October, NATO's Supreme Allied Commander Europe, General Grynkewich, described how the alliance draws on intelligence from many sources and uses advanced algorithms to turn data into insight. That is the requirement we are working to meet. A sensor detects something, the operator needs to know what it means and how it changes the situation. Connecting those observations so people can decide sooner is the purpose of our Software-Defined Defence approach. We develop our portfolio in three streams that reinforce each other. First, smart and connected sensors. Software expands their functions. Processing data at the edge means that useful information can be extracted close to the sensor before it enters the wider network. We also provide access to third-party sensors. Second, software products and solutions. MDOcore is the central stack and our common software backbone.
Dedicated products serve particular missions: CERETRON for land vehicles, Elysion for counter-drone defense, and other products such as OPTARION and MissMarvin. Third, digital services that keep capabilities current over their entire life. Software updates, predictive maintenance, and lifecycle services. This leads to three results. We differentiate our products, we move up the value chain towards responsibility for the mission system, and where the mission system is large enough, towards prime responsibility. We expand our services with new business models. Where does this put us? Between two groups that are moving towards each other. Platform manufacturers bring knowledge of their aircraft, vehicles, and ships. Software companies bring tools for processing and using data. Our starting point is the sensor. We understand how the observation was made and what the data can reliably tell an operator. That knowledge matters.
The position of an object, the time of the observation, and its uncertainty have to remain clear as information passes through the system. Our sensor expertise and MDOcore architecture are intended to preserve that context and make it usable across platforms. Digital sovereignty and open interfaces are central to the design. This gives us a strong place in the value chain. We can work with platform makers and software companies because our contribution connects their worlds. The question is how well we make the complete solution perform. MDOcore is being developed as our common software backbone for multi-domain operations. The architecture is open, modular, and scalable. Its purpose is to connect distributed sensors and mission systems, fuse their information, and make a shared picture available to the people who need it. We bring substantial experience to that work.
PEGASUS, Elysion, CERETRON, and SBMS serve different reconnaissance, counter-drone, and mission system requirements. MDOcore brings common building blocks to this portfolio. The outer circle also shows future opportunities, including luWES fighter programs and space-based surveillance. The starting point makes a difference. In a new luWES program, we can plan for a common architecture from the start. With an existing solution such as Elysion, we focus on connecting the system with other systems and domains. MDOcore again provides the common backbone for both approaches. Open interfaces allow us to work with third-party systems and complementary software. The customer gains more choice, and we can offer a wider solution with partners. Each connection still needs engineering and testing. That work is part of our integration capability. In the past, we showed how the number of sensors on each platform grows.
Today, value is created on the platform and increasingly beyond it. Let me make this concrete from the edge to the whole force. It starts at the edge, at the sensor itself. With smart and connected sensors, we bring software, processing, and connectivity closer to where the data is generated. Depending on the sensor and the platform, these capabilities are embedded directly or added through an edge computer. This applies to our own and to third-party sensors. It is an approach we can adapt from a small vehicle to an aircraft environment with the integration and certification required for each application. On the platform, take LUCHS 2, we have won the contract to provide sensor technology and CERETRON for the new reconnaissance vehicle. CERETRON is designed to combine the onboard observations into a common picture for the crew.
Instead of interpreting separate sensor displays, the crew can work from information brought together in the mission system. Additional services can put support functions such as maintenance or vehicle status. CERETRON also connects to battle management systems such as SitaWare, which link the vehicle into the wider command and control structure. Across the force, MDOcore is intended to link mission systems from different platforms and domains. The aim is to share a picture built from distributed observations so commanders can access which platform and effector are best placed to respond. Software supports that judgment. People remain responsible for the decision. A vehicle retains the protection and mobility that make it useful. Connected to other platforms, it can also contribute information to a much larger picture. This is what I mean when I say the battlefield becomes a continuous system of systems. How does this create revenue?
There are three parts, and the same program can involve all three. First, the license entry. The initial sale of a software product or a module. In luWES, for example, standardized and reusable MDOcore software is planned as the backbone that we license and build on. Software also adds value to products already in the field. Weapon location for TRML-4D is a good example. A standardized software release adds a new capability to an existing system. Second, customer adaptation and system integration. In luWES, this would mean integrating the software into the aircraft environment, configuring workflows, interfaces, and data models, and developing customer-specific function. That is additional software and integration work which we deliver and, of course, charge for it. Third, service over the operating life. Sustainment, maintenance, security updates, and further capability upgrades.
This extends the revenue potential beyond the first delivery and across the whole system life cycle. The important point is software earns revenue in its own right through licenses, customer-specific development and integration, and services over the life of the system. LuWES is one example of this model. The same logic applies to other programs. For example, LUCHS 2, where CERETRON provides the core software. So, software creates value in two connected ways. It differentiates our products and increases their value, and it creates additional revenue through licenses, integration, and lifecycle services. That is the business we are building on our sensor base. Let me show you the concrete progress over the past 12 months. We launched MDOcore in November last year. This year, we demonstrated it in our Battle Lab and at ILA and Eurosatory and built our partner network.
With IBM Germany, one of our key strategic partners, we took the collaboration a step further and signed a commercial framework agreement. In September, the first prototype was tested in the NATO exercise REPMUS with real mission data. The next milestone is the first minimum viable product by the end of this year. We expect initial customer prototype orders from 2027 and plan to scale the architecture across key programs. We keep developing MDOcore continuously. Together with Helsing, we are working on a new functionality that will become part of this evolving software ecosystem. One example makes this tangible. This summer, our team connected our Airborne Missile Protection System, AMPS, to MDOcore in the lab. AMPS warns a helicopter crew of an approaching shoulder-launched missile. In this demonstration, MDOcore passed the warning into the common operational picture and the data fusion.
In an operation, that is where command and control centers across the battle space decide on the right countermeasures. I saw the setup myself a few weeks ago. Information that protects one crew can now become useful to other forces as well. That is a concrete step from a separate system to a connected capability, and it shows the value of making our existing sensors MDOcore -ready. We are also working on the commercial side through prototypes. We are negotiating initial prototype sales with three customers in Germany, Singapore, and India. These discussions are the next commercial step beyond demonstrations. The central point is, our sensor expertise gives the software a strong foundation. We understand where the data comes from and how it can support the mission. MDOcore is moving through concrete development steps from prototype-based demonstration and exercise towards a first product and initial customer orders.
Software earns money in three ways: licenses, customer adaptation and integration, as well as services. Software let us keep improving equipment after first delivery as requirements and threats evolve. The customer gains capabilities, we gain opportunities for further business. The AMPS integration shows that connection in the lab. LUCHS 2 shows the larger program role we have already won. We build on our sensors, take responsibility for integration, and support the capability over its life. That is how we intend to create lasting value with software. Thank you. You have managed the first part. We will now take you to a coffee break for 30 minutes, and then continue with Inka, who will show you how we built the team that delivers all of what Christian and I have shared with you. Thank you very much.
[Break]
We act as one HENSOLDT, focusing on people and business needs, setting clear priorities, and shaping tomorrow's workforce.
If the direction is clear for our leaders, then it will trickle down from the leadership to basically every employee, so that we ensure that our people, everyone, gets the right guidance, the right framework, the right processes, so that everyone can fulfill their role to its best. Welcome back from a hopefully tasteful coffee break, and filled with interesting discussions. It is now my pleasure to take you into the people part of the HENSOLDT strategy. You have heard a lot about products, outlook, order intake, MDOcore already. There are people behind who delivered it every day, and I would like to share with you how we ensure that we have those people, how we grow them. Our strategy is about what we want to achieve. It is just as much about how we enable our organization to deliver.
To turn strategic ambitions into execution and to focus on what matters most as our business grows in scale and complexity, we have adjusted the strategic axis, Lead our Team into the Future. We are sharpening our focus on three areas: people and leadership, sorry, leadership and collaboration, people and culture, and future work and intelligence. This means we enable our people to take ownership. We strengthen alignment around business priorities, and we use new technology and new ways of working. Under the heading, Leading the HENSOLDT Way, we are investing into the quality and effectiveness of our leadership. We are developing a systematic leadership framework, which means we define how we identify and select leaders, how we create targeted development paths, and how we have a clear understanding of what effective leadership means within HENSOLDT. We focus on ownership, decision-making, and empowerment.
Those three aspects are most critical under the headline, Leading the HENSOLDT Way. Leadership has to translate into clear direction, accountability, and effective execution throughout the organization. Succession planning is another part of that focus area. We are strengthening it to build continuity in critical positions and to have the right capabilities in place at the right time as the business grows. That's very, very critical. At the same time, we see digitalization, automation, and AI as an important enabler of our transformation. We want to build intelligent solutions into our processes and daily work, above all, to simplify routine tasks, improve decisions, and increase efficiency. As the organization grows, we will use AI solutions to support our talent attraction processes and our people processes so that we stay efficient and agile. The aim is to focus our time on things that really create additional value for our business.
Lead our Team into the Future is a prerequisite for sustainable growth. It's not just a separate HR agenda. That's also very, very important to understand. We concentrate on topics which have the greatest impact on the business so that this strategic axis adds value. In the next few minutes, I would like to highlight the aspects that are most relevant from a capital market perspective, with a special focus on hiring. Those are impressive numbers. Our business is growing, and we need to scale our workforce in line with strong market demand. On the left side, you can see that we grew to 10,600 people coming from 6,900. That's a 50% growth. As you can see, we continue to grow with a target of 14,000 employees in 2029. Important to understand is that this growth is concentrated on direct functions, which means on R&D, production, and services.
83% of our new hires join us in those areas, and from those, 50% in R&D. Only 17% are in support functions, so we try to keep those as lean as possible, and still, also that part needs to grow a little bit as the business grows. Hiring is only the first step. It is just as important to onboard our new colleagues well and to bring them up to speed quickly. We have introduced a standard onboarding process. It reduces complexity, automates routine steps, and provides curated content for the first 12 weeks. In addition to our global onboarding journey, we are offering tailored onboarding in production and engineering. It combines product and technology skills with knowledge of our processes and of defense requirements, so that new colleagues integrate quickly into their teams and projects.
To give you a concrete example, together with our internal experts, we have already taken more than 150 new production workers in Ulm and Oberkochen through a site-specific onboarding program. It focuses on mandatory requirements which are important for HENSOLDT, including machine training on the job. To sum up, our workforce growth is designed to expand delivery capacity with a clear focus on customer-facing and operational roles. We are very, very proud at HENSOLDT, if you look at those numbers, that we are an employer of choice. We receive very, very strong ratings on kununu and Glassdoor, 4.2 out of five, with a recommendation rate of 88% and 90%. That is very, very great for hiring people. In Germany, kununu recognizes us as a top company, and Die Zeit lists us as Most Wanted Employer. People who join us stay with us. So, our retention rate is 96%.
Oliver hinted to that already during his introduction. Here comes my most impressive number. When we look back in 2023, we received 15,000 applications, which is a nice number. Today, we got this year more than 100,000 applications, and that is something. In total, in the company, we have even more than 120,000, so the 100,000 is just in Germany. These numbers underline two things. First, we are seen in the market as an employer of choice. We are seen as an employer, as a company who provides attractive working conditions. Second, we are currently benefiting from the very, very challenging situation in the automotive industry. Because our industry is attractive, we can recruit experienced professionals across all functions. We are also strengthening our long-term pipeline, what you can see on the right side of the picture.
Since 2023, the number of apprentices and dual students starting with us each year has grown by 50%. New courses such as optical engineering and cybersecurity reflect our technology focus, and 59% of those apprentices are in technical profiles, which supports our production ramp-up. Our apprenticeship program is designed around what we need, so those people get the technical skills we need in the future and which are critical for the ramp-up. Just one example is IPC standards for soldering. It is part of our broader talent development approach. We foster lifelong learning to keep our workforce well-trained, and we build critical technical capabilities in-house. The last number, our own employees also help us to find the right talent, and we really appreciate that. In the first nine months of this year, our employee referral program brought already 2.5 x more successful referrals compared to 2023.
Our employees' network is another important lever for our growth. Our focus is on attracting the right talent in the right functions, how we manage that headcount growth, to deliver the workforce growth, diversified talent attraction strategy. First, we run targeted campaigns, for example, multi-channel HR marketing, application days, or events at technical colleges. These campaigns work. From our more than 20 campaigns, we could offer 65% of the attendees a concrete offer. Second, we build strong strategic partnerships with the automotive industry. I just mentioned that they are in a challenging situation, so for us, that's a unique opportunity to build those partnerships. Through these partnerships, we have already hired more than 300 well-trained professionals, and we expect another 300 joining us from Bosch at our new site in Leinfelden near Stuttgart.
We also collaborate with ZF, AUMOVIO, and other car manufacturers or car players in the automotive industry. Third, we strengthen our access to engineering talent. With the ARGUS Award, we recognize graduates for outstanding theses, so for instance, in high-frequency technology, AI, or IT. It is our channel to best young talent. ITCS is a tech conference, reaches young talent professionals in IT systems engineering, software development, and cybersecurity, very important aspects for our company. Our own career day at our site in Fürstenfeldbruck this year brought in more than 500 interested people. Fürstenfeldbruck is very close to Munich, especially from the car industry. Finally, university partnerships, including the University of the Bundeswehr Munich and the Technical University of Munich, the TUM. Both help us build lasting relationships with young talent and secure the long-term talent pipeline.
For our Munich sites in particular, we benefit from TUM and its really excellent graduates. We are a founding partner of the TUM Security and Defense Alliance at the Ottobrunn-Taufkirchen campus, so very close to our headquarter. There, we work with students and founders long before they finally enter the job market, and they get to know HENSOLDT as a place where Software-Defined Defence is built in practice. We do everything possible that many of them will stay with us long term. These activities complement our broader recruitment efforts and allow us to address both immediate staffing and longer-term capability requirements. In parallel, as I said before, we are using digitalization and AI to make our recruitment processes more efficient, improve the candidate experience, and handle this growing recruiting volume.
Besides our efforts in HR and hiring, I would like to use the opportunity to highlight another part of our strategy, sustainability. Our sustainability strategy pays off in three ways. First, we reduce our energy costs. Efficiency measures lower our energy demand. At new sites such as Oberkochen, we generate renewable energy on-site with heat pumps and solar power. That reduces our dependence on fossil fuels and our exposure to price swings, and it cuts finally also emissions. Second, better data. If you use those consistently, it leads to better decisions. Metrics such as diversity or the Lost Time Injury Frequency Rate show us gaps we would otherwise miss. Third, our access to capital has improved. Our CSRD reporting gives investors more transparency, and better ratings from CDP, MSCI, EcoVadis, and others increase our visibility and hopefully also our standing with investors.
The share of renewable energy in our consumption has risen significantly in recent years, as you can see on the slide. We have switched our electricity contracts in the U.K., France, and Germany to green power, and we have expanded solar capacity at our German sites in Oberkochen, Kiel, and Wetzlar. We have also restructured the purchasing of energy in Germany. We now buy in several tranches, so long-term hedging for the base load, power purchase agreements directly with solar park and wind power parks, and shorter-term contracts and spot market purchases. This results in a low and stable blended price and a high share of renewable energy. To summarize, how do we lead our team into the future? First, pace. We need to scale at the speed of our business.
Our workforce planning is closely linked to our order book and expected demand, so we build capacity in line with the growth. Second, focus. Growth does not mean adding headcount everywhere. We direct resources where we need them most, in R&D, production, and services. This is where workforce growth becomes delivery capacity. Third, leadership. Scaling successfully also means retaining experience, developing internal talent, and ensuring continuity in critical positions. Strong leadership and transparent career paths help us keep engagement, expertise, stability as we grow. Fourth, future work. We are looking beyond today's capacity requirements. Digitalization, automation, and AI will help us increase productivity, simplify processes, and make our organization more scalable. We want technology to strengthen our people, not to replace expertise they bring. Fifth, sustainability. Investing in renewable energy makes us more resilient to energy market risks.
Our new energy procurement also saves us a single-digit million euro amount every year. This supports our way to carbon neutrality in 2035. Together, these five dimensions make sure that we grow at the right pace, in the right areas, and with the right capabilities, while our organization becomes more effective. This is how we turn workforce growth into lasting business performance. People will not be the bottleneck of our growth. Oliver will now show you how we Grow with Focus. Thank you very much.
At HENSOLDT, we will drive sustainable and profitable growth across Germany, Europe, and selected international markets.
I'm Ines Maiwald, and I lead HENSOLDT's operations across Asia from our Singapore headquarters.
I'm Lew Iadarola, President of HENSOLDT North America.
I'm Gary Shand, and I'm responsible for HENSOLDT's business across Middle East and North Africa.
I am Andleeb Shadman, leading HENSOLDT India.
I'm Thomas Schmid, Head of Global Sales Europe at HENSOLDT. We reinforce Europe's security with advanced sensor and defense solutions, focusing on air defense, land, and airborne electromagnetic warfare.
Detecting threats early is what HENSOLDT does. With active contracts in the UAE, together with our strategic local partners, we are building that security here in the Emirates.
We are transforming from a components provider into a connected solutions partner, ensuring our forces maintain the information advantage to anticipate, adapt, and act.
We are proud to be part of India's journey towards a stronger, more self-reliant defense industry.
It is really about bringing our advanced solutions closer to our customers and building long-term relationships across the region.
Grow with Focus is about where we grow. Germany is and remains our home market and our base. From this base, we grow internationally with partners and with the support of the German government. For this, we have set up a new global sales organization. I am very pleased that Viktoria Stürmer-Kuchelmeister will lead global sales, business development, and strategy from the 1st of January 2027. In a short video, she explains how her team will work.
Hello. I am Viktoria Stürmer-Kuchelmeister, and I am taking over as the Head of Global Sales, Business Development, and Strategy at HENSOLDT. North Star 2030 makes international growth a defined pillar of our strategy, along our axis, Grow with Focus. To deliver on it, we decide deliberately where we focus and how each focus country contributes to HENSOLDT as a whole. Four shifts will guide our work. First, from individual campaigns to integrated country strategies. Every focus country gets one HENSOLDT strategy. It covers market, portfolio, as well as partners, local industry, and talent. This way, our focus countries become a source of value for the whole company. When a customer asks for value creation, that becomes a strategic advantage for us. Second, we build a deliberate footprint. Our presence model has clear steps: market access, local entity, local value creation, and regional hub.
The strategic role of each country decides its target setup. Third, regional business development becomes international sales management. My team steers the regional pipeline and the sales targets hand-in-hand with our divisions. We also make government-to-government access a systematic lever. Fourth, we work as one HENSOLDT in every country. My team connects our local colleagues with the division and our central functions. We develop local leaders and offer career paths, including rotation between the headquarters and the focus countries. We measure success by order intake and pipeline in our focus regions against the business plan, and by how far each of these countries has come towards the target presence. For you, the most visible sign will be a growing share of our international business, in line with North Star 2030. Germany remains our home market. My job is to make sure our growth does not stop at its borders.
That is how we will organize our international business. Now let me show you what has become clearer since last year's Capital Markets Day. Our long-term ambition stands: 1/2 of our revenue from Germany, 30% from Europe, and 20% from other international markets. In 2025, Germany accounted for 63%. Our mid-term planning projects around 60%, and our long-term ambition is around half. It is clear that we will only reach that long-term ambition if we succeed in taking some of the larger German programs also to our international markets. Our German base is a strength. It gives us an established customer relationship, large reference programs, and political support. The aim is to use that base to build more business internationally. How do we serve these markets? Here, our answer has changed.
Until now, our international business has rested on two parts: exports from Germany and our subsidiaries in France, the U.K., and South Africa. The slide shows the difference in weight. International business served directly from Germany and supported by our sales network accounted for around 30% of the group revenue in 2025. In contrast, our subsidiaries in France, the U.K., and South Africa contributed only 7%. As you can see, the German-backed business has far greater relevance for international sales than the international subsidiaries. We have therefore decided to change our international go-to-market approach into a so-called hub-and-spoke structure. It rests on Germany as a central hub. Most of our international revenue is already served from here, and the German hub coordinates the technology and industrial contribution.
It is supported by regional hubs in the U.S.A., Canada, Abu Dhabi, India, and Singapore, you saw our colleagues there, and local partners, which provide market access and deep knowledge of local requirements. The level of presence follows the business, as Viktoria explained. It evolves over time. In one market, a sales office and an industrial partner may be enough. In another, the customer will require a local entity or local production. We make that choice based on the opportunity and the capability we need to deliver. What does this mean for France, the U.K., and South Africa? Let me start with South Africa, which will become a regional hub. I visited the country recently. After its reorganization, the business is back on track and doing well.
It already supplies customers in the Middle East and has potential to serve other regions, and it remains an important part of our manufacturing and sales footprint, also as an extended workbench for electromagnetic warfare and optronics. Second, France. Our French subsidiary, NEXEYA, has faced difficulties in the past. After a thorough review, we have concluded that it is no longer strategic for the group and decided to look for new owners for all or parts of the business. The process is underway, and I ask for your understanding that I cannot comment on it in detail. We will keep our other French business, though, HENSOLDT France SAS, which is active in IFF and crypto technology and is performing well. Last, U.K.
Based on our portfolio review, we have concluded that our activities in maritime radars and bridge systems in the U.K. are not strategic and too small to make a strong impact within the group. We have therefore decided to explore strategic options for this business, including a potential sale. France and the U.K. remain relevant markets for the group. They will be part of our European go-to-market, which we serve from Germany and through local sales offices. In summary, our route to market is becoming much more focused. We will leverage our German business even more than in the past, benefiting from our leading technology, large German reference programs, and increasing political support to drive international growth. Where exactly do we grow? We started North Star with six focus regions that I've also explained, and you saw the responsible persons.
After a year and a half of work, we see clearly where we make the fastest progress. Our priorities outside Germany are threefold: the rest of Europe, India, and Canada. The slide shows around EUR 27 billion unweighted potential in Europe, EUR 5 billion in India, EUR 4 billion in Canada for 2027 to 2032. Together, that is around EUR 36 billion. A further EUR 22 billion sits in markets we continue, of course, to develop. All these figures remain opportunities before allowing for our chances of winning. Europe offers a clear route. Armed forces can buy programs already used or being procured by Germany, including Eurofighter and IRIS-T SLM. Canada and India have significant requirements of their own. We are pursuing opportunities where our technology, German reference programs, and local partnerships can come together. In submarines, for example, the German-Norwegian U212 CD program gives potential new partners a common starting point.
The procurement stage is different in each country. Three levers support that focus. We put resources behind the portfolio with the strongest prospects. We use national reference programs and our sales network to build exports. We work with the German government, excuse me, where government-to-government cooperation supports a customer relationship. We expect our international growth to accelerate from 2028 onwards. Many of our products already reach customers outside Germany through established programs, and several newer solutions are well-placed to become export successes as well. These are the two paths of our export growth. First, new customers can buy equipment from established German and multinational programs. A reference program reduces the need to start from scratch and gives partners access to an existing industrial base. Eurofighter, IRIS-T SLM, Leopard 2, and the Knifefish electronic warfare program illustrate that route. We contribute radar, optronics, or electronic warfare.
Knifefish also shows that this works beyond German programs. The Netherlands started it, and other European customers are now following. Each additional customer can create further demand for our part of the system. Second, we take solutions in which we have a larger role into export markets, using Germany as a reference customer. PEGASUS and LUCHS 2 are examples. LuWES and MDOcore can add further opportunities as they develop. The route is similar. The maturity and timing are, of course, different. In the center is something that is easy to overlook, the direct sale and related service of products and components, for example, our smaller radars, directly or through international partners. That remains central to our export business. The German government now plays an active role. It uses government-to-government support deliberately to strengthen its partners. For HENSOLDT, this opens doors. Let me give you four examples.
First, U212 CD shows the logic. Germany and Norway are building a common submarine program with HENSOLDT's optronic masts. Canada has selected TKMS as its preferred supplier for negotiations on the U212 CD. This creates a concrete opportunity to extend the program, subject to the procurement and contract decisions. Other markets, including India, have their own requirements and decision processes. Second, PEGASUS. Germany is our reference customer, and the German government supports the export of the system. We have strong resonance from other countries who are also interested in the capability. Third, the statement of intent signed between Minister Pistorius and Secretary Hegseth in September provides now a wider basis for transatlantic industrial cooperation. We support Germany's F-35 program with logistics. In naval systems, our proposed role in bringing Canada's CMS 330 to F127 is another example of the integration opportunities we are pursuing.
Lastly, in Ukraine, we signed a memorandum of understanding with the Ministry of Defenc e during the chancellor's visit to Kyiv and have agreed to support the country in ballistic missile defense together with our local partner, Fire Point. Our joint project, FREYJA, has the backing of a coalition of 10 European nations, Germany and Norway among them. Focus also means making choices. In our recent portfolio review, we looked at a significant part of our portfolio with respect to market attractiveness and strategic fit, together with financial and competitive performance using a BCG matrix structure that you probably all know well. The results of the portfolio review are very compelling overall. Around 90% of the assessed portfolio sits in the stars and the cash cows, categories which are shown here.
Those businesses, together with some innovative question marks, form the backbone of our portfolio, and they will drive our future growth and cash generation. The long tail, though, remains visible because we are working on it. Some activities receive less emphasis. Others are being developed to unlock their value. The purpose is to release capacity and enhance focus to our most important programs where we can make the strongest contribution and build the most attractive business. The progress in Grow with Focus is a clearer choice of markets and a more practical way to serve them. Our long-term ambition is around 1/2 of the revenue outside of Germany. We expect international growth to accelerate from 2028 onwards. Europe, India, Canada are priorities because they combine customer requirements with a route to market for our technology. We build from Germany with regional hubs and partners providing local access and knowledge.
German programs and reference contracts open export markets backed by G2G support. Our portfolio review directs resources towards the businesses where we can contribute most. Focus is a choice about where to put our people and our capital. Let me now bring the four axes together and look beyond 2030. As I said at the beginning, our ambition for 2035 is EUR 10 billion of revenue. EUR 6 billion in 2030 is the milestone on the way. Beyond 2030, the demand is already taking shape. NATO allies have committed to at least 3.5% of GDP for core defense by 2035. Germany plans a substantial increase in its armed forces, and the procurement acceleration framework runs to the end of 2035. These commitments cover a whole decade, which marks a demand that is structural. The programs show where we can contribute.
On the left are the engine in our pipeline today, and on the right, what builds our tomorrow. They belong together in pairs. Air defense comes first, together with service. Every system we deliver adds to an installed base that we support for decades. Second, batches in established programs, such as PEGASUS, lead on to next-generation platforms, the fighter, the main battle tank, and frigate programs that enter production in the 2030s. New programs, such as luWES, go together with software. MDOcore and Software-Defined Defence add revenue on top of our sensors. Export growth goes together with partnering and M&A. National references and government support open markets, partners, and selective acquisitions add capabilities and access. Several of these engines already contribute today. Service above all. Their role is to strengthen and broaden the business over the next decade. The connection is important.
A new platform can bring a sensor order, software integration, and years of service. These are related sources of value. Our order backlog of more than EUR 10 billion shows the business we have already won. The eight engines explain where we are working to build the next stage. That is why I am confident in our ambition. We have a strong base and identifiable ways to build on it. Christian will now take you through the financial path, including the investment and performance needed to deliver that growth.
Ladies and gentlemen, Oliver just showed you eight growth engines for our business and our ambition of EUR 10 billion in group revenue for 2035. Now, let me put the financial perspective around them. I will take you through where we come from, where we stand after nine months, and how we are positioning ourselves financially in the fund, the next phase of growth. I would like to say, and I am quite famous for that, I would say, within HENSOLDT, the truth lies in the figures. Let us now look at them. Let me begin where we come from. You see here the figures from 2022. Since our IPO, we have built a strong record of financial discipline. We have met or beaten our guidance in all key metrics since day one. In a nutshell, we walk the talk.
As you can see, our group revenue has grown every year from EUR 1.7 billion to around EUR 2.8 billion this year. This translates into a CAGR of around 13%. At the same time, we have consistently strengthened profitability. Our adjusted EBITDA margin has expanded every year from around 17% to around 19% expected for this year. In other words, we grow and become more profitable with every step. We have achieved this while investing more than ever in capacity, in people, and technology. Growth and margin expansion year after year at the same time. This is the track record we will now bring into the next phase. In our industry, reliability and trust have become assets in their own right, and we intend to keep delivering on it. Now, let us turn to this year.
You saw our nine- months results already last week, so I will keep this rather short. Order intake reached EUR 3.6 billion, up 77%. The largest contributions came from Eurofighter radars, the Knifefish program prototypes, TRML-4D, and the optics for PUMA and for Schakal. Our backlog stands at record EUR 10.4 billion, with a book-to-bill ratio of 1.9 x. Revenue increased by 21% to EUR 1.9 billion. Adjusted EBITDA grew by 33% to EUR 281 million, lifting our margin by 1.4 percentage points to 15.1%. Orders grow faster than revenue. Earnings are growing faster than revenue. That is book-to-bill expansion and operating leverage at work. Just as in previous years, we expect the fourth quarter we are currently in to be the strongest one of the year. Let us now look at the individual segments, starting with Sensors.
Also here, order intake increased significantly, 54% to EUR 2.6 billion, driving segment backlog to a new record level of EUR 7.4 billion. Let me draw your attention to the order book at the bottom left. Eurofighter, TRML-4D radars, Knifefish prototypes account for the largest shares. These are long-term programs which provide us with strong visibility well into the next decade. Core revenue grew by 11% and supported by multi-domain, air defense, and a strong service business. There is only one caveat on this revenue split. You see that service ranks in our nine-month Sensors revenue, but please do not extrapolate it to this full year. The Sensors business has a very strong fourth quarter seasonality, and the product revenue typically rise significantly. Looking at profitability, adjusted EBITDA rose by 19% to EUR 236 million, and the margin improved by 40 basis points to 15.5%.
It is worth highlighting that our third quarter margin was also up, both year-on-year and sequentially, driven by high volumes and good cost control. Let's move on to Optronics, to our Optronics segment. We are pleased with our leverage in Sensors, but Optronics is the clearest example of this effect in the HENSOLDT Group. Order intake more than tripled, EUR 1.2 billion, driven by the large orders for the optronics for PUMA and Schakal, and revenue increased by 52%, with ground-based systems, of course, as the main driver of this business. Service, aerospace, and naval also contributed. As with Sensors, the service share is higher. Within nine months, this will be sorted out over the full year once the strong product business will deliver and kick in. Adjusted EBITDA almost quadrupled to EUR 45 million, with the margin expansion from 5.1% to 12.6%.
The key driver, of course, here is volume leverage. Revenues grow strongly while costs grow much less, especially in the ground-based systems where we deliver more periscopes and more gunner sights to our OEMs. Optronics is therefore making a growing contribution in terms of profitability to the group. What was historically a drag on our group margin is increasingly turning now into a margin driver. We see further upside ahead. With now nine months behind us, let's look at what underpins our order intake expectations for the full year and what we expect in the fourth quarter. In line with the usual seasonal pattern in our industry, the fourth quarter should be the strongest quarter also here in terms of order intake. We start from EUR 3.6 billion after nine months. In the fourth quarter, we expect another EUR 1.7 billion to come in.
Main drivers will be electromagnetic warfare, including Knifefish. This will be the serious production. Air defense, including TRML-4D, as well as ground-based systems and multi-domain. On top of this, we expect momentum in service, and there will be one or the other Eurofighter contract in terms of ECRS Mk1 and follow-on contracts, which are included in others. This brings us to an order intake of around EUR 5.3 billion for the full year and a book-to-bill ratio of around 1.9 x. The upper end of our guided range and in line with the guidance we find last week. Important again to mention, this figure does not include PEGASUS, the batch of at least EUR 1.1 billion. From today's perspective, we see it in Q1 2027. Including PEGASUS, this year's order intake would reach at least EUR 6.4 billion, a book-to-bill of 2.3 x.
Taking together, our strong order momentum and substantial order backlog provide excellent visibility for our business in the years ahead. Last year, with our nine- months results, we refined our guidance for the full year, and let me briefly summarize the key changes. We now expect the book-to-bill ratio towards the upper end of our range of 1.5x- 2 x, and you've seen the figure at the slide before. Revenue for 2026 should come in at at least EUR 2.8 billion. The adjusted EBITDA should come in around 19% on top of our previous range. We confirm expectations for cash conversion rate as percentage of revenue of EBITDA, and guidance for net leverage remains at 1.5 x. Finally, we confirm the dividend policy, 30%-40% of adjusted net income as payout for our shareholders. From 2026 targets to our midterm growth trajectory.
Based on the strong momentum and the sustained operating leverage we are seeing, we are also refining our midterm targets as outlined in this morning's press release. Let me now walk you through the key aspects for the midterm targets. First of all, we stick to our ambition that orders grow significantly faster than revenue. You've seen it in the growth story, why this is substantial. With 2026 book-to-bill of close to 2 x, we have proven that we can deliver on that, and all the prerequisites are set for that. We are also sharpening the expectations from our midterm revenue growth. The annual growth rate of 15%-20% is no longer back-end loaded. We now target for it in 2026 and 2028, and also here, when you look at our nine-months results, you've seen that we are growing at this pace.
On top of this, we reaffirm our target of improving the EBITDA margin by around 50 basis points every year. This now starts from the higher base of 19% in the refined guidance, and if you do the math, this takes you to an EBITDA margin of around 21% in 2030. I will give you also more color on our own margins in a few moments. Target for cash conversion remains at around 50%, and we continue every year further to deleverage. Dividend payout maintained 30%-40% of adjusted income. Please keep in mind, because of the higher baseline, any targets that appear unchanged are actually higher in absolute terms when you compare that to the midterm guidance a few weeks ago.
If you're now asking yourself why you should believe in this higher growth, let me remind you of the order pipeline Oliver has shown you earlier. Our growth visibility rests on the long lead character of our business. Order we receive today will turn into revenues over the next one to several years, and together with our growing backlog, this gives us a solid foundation for sustained growth and making our business much more predictable. By the end of this year, we expect this backlog of around EUR 11.2 billion. To break this down, about two-thirds of it is in Sensors, [and quarter in] Optronics and the aftermarket accounts for the rest.
On the right, you see our expected coverage for the next three years, and by end of this year, more than 90% of our planned 2027 revenues will already be covered by firm orders and recurring short business, short -cycled. Most of the work is already in our books, and you see the performance also of 2027 will much more depend of our ability to execute because of our strong market position. For 2028 and 2029, the share of new orders is higher, as you would expect. We expect this order volume to grow continuously as we win the opportunities in our pipeline. This keeps revenue coverage, I have to say, and I'm now very long in this company, at a record high.
Let me now turn to our revenue and margin path to 2030, from EUR 2.5 billion in 2025 to EUR 6 billion in 2030, while the margin rises around 2.5 percentage points over the same period. Both segments will contribute to that growth. Sensors by around 18% per year and Optronics by approximately 20% per year, while acquisitions should add around EUR 0.3 billion of revenue in 2030. Most of the revenue growth we see is and will be organic. How it's now the underlying prospects in the business? In Sensors, of course, air defense is our fastest-growing business unit by far. It will be followed by electromagnetic warfare and self-protection, mission systems, and services. In Optronics, ground-based systems and sights are already the largest business and keep growing steadily, while reconnaissance systems, LUCHS 2 , and service will accelerate strongly in the outer years.
This shows that the portfolio, and thus our growth, is broadly based. It comes from many areas at the same time, and that spreads our risk across products, programs, and customer segments. We expect revenue growth to accelerate over time from 14% today to 15%-20% in 2027 and 2028, and more than 20% towards the end of the decade as we execute existing and new programs and service revenue rise with a large installed base. I think what you have seen in terms of Deliver at Scale and the infrastructure programs we see, we will benefit every quarter from a much higher industrial base. Revenue growth feeds directly into margin expansion, driven by both segments. We think that the adjusted EBITDA margin to rise from 18.4% last year to around 21% in 2030. Where does, at the end of the day, margin improvement come?
First of all, it's volume. Fixed costs are spread over many more units, which gives us higher operating leverage. Second, productivity, as you've seen in the section Deliver at Scale with the example of the radar first-pass yield. Third, mix with a growing share of service and Software-Defined Defence. The next slide answers a specific request from you guys, from several of you, more transparency on our revenue, so we have expanded our disclosure. Next, the regional split, which Oliver touched in the Grow with Focus. The key addition is the breakdown by domain, mid-, and long-term. Our business is becoming more and more balanced. By domain, air should remain the largest contributor, with a revenue share in the high 40s%, driven by air defense and electromagnetic warfare. Please bear in mind that TRML-4D is included in this domain.
Service should rise from 16% to 25% in the long term and overtake land as number two. Land remains a large business while its share comes down to around 22%. This broader footprint across regions and domains gives us a more balanced revenue base that makes our long-term growth much more resilient as ever before. Growth needs a solid technological base, so our R&D roadmap follows a growth strategy and clear priorities. We keep investing around 6%-7% of group revenue in our own R&D. On top of that, our customers fund development work worth around 15% of our revenues. You see the main fields in R&D investments. In Sensors, we will invest in the next generation of air defense and active electro magnetic warfare. Our R&D also focuses on Software-Defined Defence, architectures for smart sensors, design for scale development, and on industrializing our product families.
In Optronics, the R&D currently focuses very strong on digital next-generation sights. We have to be ready to deliver to the OEMs, and of course, connected battlefield solutions will be the other path. Our money goes where we want to be first. Customer money funds what our customers have asked us to develop. Both together decide whether we still win programs in the upcoming years. Moving on to CapEx. We follow a clear plan for expanding our capacity and our infrastructure. For the current year, CapEx is expected to peak at around 5.5% of revenues. Next year, it will come down to around 5%, and in the midterm, we expect 4%-4.5% CapEx spending. As I mentioned, Deliver at Scale, the CapEx peak comes mainly from the new or enlarged production and service sites.
This figure sounds high, but it is temporary, and it creates capacities for orders we already hold. You may now ask how we keep our cash conversion rate stable at around 50% while this CapEx peaks, and the answer is simply advanced payments from customers. On average, we achieve advanced payments currently approximately 15% of order intake, providing this meaningful funding support for the capacity ramp-up. You see it in our cash flow statement also by nine months that we were better than last year despite much more investments in CapEx and working capital. Let us now move on to our balance sheet, where we maintain a stable and resilient debt profile with strong rate protection. We are fully funded until 2032, and our total debt is EUR 1.15 billion, a term loan of EUR 800 million, and promissory notes of EUR 300 million with different maturities.
Our RCF, revolving credit facility, EUR 400 million is undrawn, and more than three-quarters of our debt carries fixed rate. For the moment, higher interest rates have only a limited effect on our earnings. Net leverage, defined as net debt divided by adjusted EBITDA, was quite high when we were under private equity ownership. Since then, we have brought it down step by step, and a solid balance sheet will give us the freedom to decide and the freedom to invest when it matters. With solid funding in place, let me now show you how our capital allocation framework and our priorities for future growth look like. First, we fund organic growth, talent, innovation, new technology, infrastructure, supply chain, processes, and tools. Second, portfolio management, M&A, strategic expansion where it adds technology or capacity.
We close white spots or take minority stakes in startups, as Oliver has shown you, and we want to play an active role in the consolidation of our industry. Nedinsco is a very good example. It added capacity on the one hand in Optronics, and we funded it from our own cash flow. Our headroom for acquisitions, we have defined around EUR 1 billion, and we have set a cap of 2.5x in net leverage by year-end. Third, stable return for our shareholders, with a payout ratio of 30%-40% of adjusted net income. From the start of 2022 to the end of October this year, our total shareholder return was more than 600% at around 50% per year. We remain committed to disciplined capital allocation that maximizes shareholder value.
Now, to wrap up the financial section, let's bring all these elements together and look at our overall growth outlook. We expect EUR 2.8 billion in revenue this year and around EUR 6 billion in 2030. The ambition we clearly confirm today, and it got much more mature in the last year. On top of this comes our new ambition of around EUR 10 billion in 2035. How do we get there? Strong organic growth is the foundation, and we will reach more than 20% a year by the end of the decade. Demand is structural. It is driven by our customers' imperatives and anchored in NATO targets. On top of that comes our Neo-System House approach, which combines sensors, software, and integration, and open, platform-independent architecture. Add to this strong position in key programs and focus regions, a service business that grows with every system we deliver.
Smart partnering and selective acquisitions will add to it. Profitability, cash conversion keep rising along the way. Now, let me do the math for you. To get from EUR 6 billion to around EUR 10 billion in 2035, we need to grow organically by around 9% a year. The rest comes from acquisitions. That is well below the pace we plan for the rest of this decade, and to us, it's credible, and it's achievable, and it's supported by clear visibility. Before I hand back to Oliver, one personal remark. This year, our order backlog passed EUR 10 billion. A few years ago, we celebrated every new record. Today, I see it, each record, as an obligation to our customers and to you, and we're working diligently every day to meet it. Thank you very much.
Thank you, Christian. Ladies and gentlemen, we have covered a lot of ground today, and let me try to bring this all together. On the left is where we come from. EUR 6 billion of revenue in 2030. We confirm that ambition today. In the middle are five reasons why we are confident about what comes next. First, demand. The structural growth of our markets extends to 2035 and beyond. NATO and national commitments run for a decade, and Germany, our home market, is growing fastest. Second, capacity. We have progressively scaled until today, and at the same time, secured a step change in capacity by mid-2027. Each new step comes faster than the last. Third, our portfolio. We have a strong winning portfolio in place, and we are developing the next sources of long-term value, above all, software, data, and service. Fourth, our position.
Our Neo-System House approach combines sensors, software, and integration in an open architecture. That gives us a very distinct place between the platform manufacturers and the pure software companies, and a role in programs, whichever platform is chosen. Fifth, the financial strength. Our adjusted EBITDA margin rises year by year to around 21% in 2030. And we keep our cash conversion rate at around 50%. That gives us the firepower to invest in research and development capacity and people. On the right is where this takes us, EUR 10 billion in 2035. Let me be very clear about what you can expect from us. We will deliver what our customers have ordered, on time and in the quality they need. And we will invest in the growth of the next decade with the same financial discipline you have seen from us so far.
Ladies and gentlemen, today you have heard three voices and one plan. Christian, Inka, and I lead HENSOLDT as one board. Behind us stands a team that has delivered a demanding year and is ready for the next. We rely on each other, and each of us will go the extra mile for the others. That is what you, our shareholders, can count on. One board, one team, one HENSOLDT, delivering today, sustaining growth beyond 2035. Christian, Inka, please join me. We look forward to your questions.
Thank you. Thank you, Oliver, Christian, Inka, for the insights and how you view our business. We are starting now the Q&A session. For the people in the room, please, when you ask a question, please state your name and the company you work for. We also have people online providing their questions via chat. First question comes from Ross. Sorry.
Ayme ric. I have got the mic. Sorry.
Flashlight.
Aymeric Poulain from Kepler. A question on services, please. You say your ambition to grow the percentage of services from 16% to 25%. Can you confirm this is a share of services excluding ESG revenue contribution? If so, what the contribution of ESG in 2026 might have been? If I am correct, last year you said 2% of revenue are coming from software-defined services effectively, with an ambition to grow it to 8% by 2030 and maybe 15% by 2033 or 2034. If you look at the trajectory of software-defined services, it implies potentially more than 25% of the service excluding ESG. Is it because of the NEXEYA disposal that you have already assumed in this target? That is for the revenue question. On the margin, I was curious to know if you see margin in services as a dilutive effect in the short term.
Last year you mentioned EUR 20 million-EUR 30 million adjusted EBITDA investment in Software-Defined Defence up to the end of the decade. Do you expect the margin in service to be high enough in the late part of the 2035 target to compensate any drawdown in high-margin hardware revenues? Thank you.
Yeah, many finance questions. First of all, the percentage we have shown you in service is with ESG. We acquired the ESG business 2023, and closed 2024, and there was a service business in. The figures we currently show you are already including ESG, so this is like for like. Of course, also the ESG [inaudible] service will contribute to the growth. Second was on margins. First of all, yes, service is by nature has enjoyable margins. It gives us a good contribution in times where I would say, yeah, revenues get more and more balanced between platform business, solution business, and service business. Yes, I expect enjoyable margins from there. It will help us, of course, in our margin guidance during the years. Software-Defined Defence, I can confirm more or less the figures you have mentioned, this 8% 2030.
Let me just briefly evaluate why we did not show this now. We have once shown this 8% 2030, and it was creating a little bit of confusion because people were thinking that the whole value creation in HENSOLDT with software is only 8%. No, it is far more. It is 30%-40% of our whole value creation we do at HENSOLDT is software-based. But out of the programs, Oliver have shown, out of the topics we see, out of MDOcore, these are the 8% we are talking about. I hope this helps a little bit in clarity.
Hi, Christian. Just one back here from Sam Burgess at Goldman Sachs. Just two questions, please. I think both for Christian. Firstly, just coming back to the point of margin. You are seeing phenomenal growth in volumes. SPEXER is 650% higher is your aim. I just wanted to get a feel for whether there is any reason that you do not see more operating leverage. Is there anything that would constrain your margin? Looking back, you have achieved very strong growth in your EBITDA margin since 2023. Is there a reason it only goes up 200 basis points, if I can be a bit provocative? The second question just on cash. You are on track for 50% cash conversion this year. Your CapEx is going to come down meaningfully. What are the other moving parts on cash there that is going to constrain you to 50% cash conversion?
Yeah, so the first question, margins. Yes, of course, operating leverage plays a significant role in our business, but when you look at Sensors, it is about 40%. So, it is air defense and self-protection, which is, from my point of view, a clear product business where you reach economies of scale. Then we have 40% mission topics, integration, ESG acquisition, which is, from my point of view, a very valuable business, which puts us access to platforms like F-35, other ones. We would never have achieved that. But this is limited in margin. That means it is people business, it is integration business, it is lifecycle business, logistics. It is enjoyable, but the ability to ramp up margins with delivery is limited. It is then much more created by the balance between revenue growth and keeping cost discipline. Last but least is service.
Okay, service will help us in the outer years, but this is in Sensors. In Optronics currently, you have seen the last two years margin doubling, but this was highly driven by ground-based systems. Ground-based systems by 2027, 2028 will be still growing, but it will be overtaken by reconnaissance systems. So, we have seen the LUCHS 2 topic, which is a mission system or mission program. Of course, it is lower in margin because integration is one big contributor. Last not least, we should not forget, so we are very keen on delivering more margins, but we are also very keen on the long sustainable business, and this requires us to reinvest parts of these economies of scale into R&D, yeah? R&D is for me the heart of this company where we decide about the future, and this is where we are willing to do that.
I think with this margin guidance, I have a very good feeling. We have shown that we can do that. Let us see over time, when we achieve more, happy to do that, but for the time being, I feel very comfortable with that guidance.
Hi. Ross from Morgan Stanley. Thanks very much for the presentations. The first is another one on margin. Obviously, you have outlined clear expansion plans to 2030, but following on from the previous questions, is further margin expansion beyond 2030 possible? Could you remind us of the delta between adjusted EBITDA and adjusted EBIT? The second question on M&A, you mentioned EUR 100 billion headroom. Which areas are you interested in investing in? It looks like from one of your slides that you are assuming EUR 100 billion of contributions from M&A in 2027. Are there any deals on the near-term horizon? Thanks.
Yeah, maybe you take the M&A topic. Just remind me, what was the first, Ross? Sorry.
EBITDA margin expansion beyond 2030.
Yeah, that is a tough question, I have to say. Let me now take it to the glass ball. Look, since I think it is, to be honest, now we see big, tremendous growth until 2030, with lower growth from 2030 to 2035, we should expect lower margin increase. But with the service and the software pack, it should give us tailwind. I think it is now not very serious to talk about exact margins by 2031 and 2032. It is still six years away, and we have to do many, many things to achieve that. But I think this is my takeaway for the moment. The next, EBIT to EBITDA, you should assume around 4.5%-5% delta between these both KPIs.
It is mainly D&A, which is, from my point of view, when you look at percentage, R&D of revenues is quite stable, and this implies that the D&A is also quite stable going forward. Approximately 4.5% - 5% you should assume for the delta between EBIT and EBITDA.
Maybe before I come to the M&A question, as you know us very well, of course we stay with a rather conservative approach going forward. But for sure, I would see more room after 2030 moving to 2035, because for the product business, we know very well. But in service, and we discussed it in the break, also with David, I think here the basic paradigms for doing service business are changing a lot these days. Yet we chose to go rather on the conservative side, as all these paradigms are maturing and shaping these days. We have recently had the logistics responsible of the German Air Force command with us for a full day to look how can we create more flying hours, how can we secure probably operations of the Eurofighter two weeks, 24/7, more or less two sorties a day.
That, of course, has a very strong impact on the paradigm, how we do service. In the past, it was just in time. Today, we are thinking about 30% to even 50% of stocks, spare parts to be distributed around the site, even storing them at the site. All of that is currently maturing, and I think we rather see the qualitative business, but on the quantitatives, of course, we will update as we go forward, as we did in the past. Until then, we stick to the plan that we will not overpromise and underdeliver, but do it in a slightly opposite way. The M&A question is, we stick to our profile. Again, verticalization like we did with Nedinsco is a topic. Technology, but here I would not see a takeover, like I explained for investments.
It is rather strategic partnerships with some startups, also considering that evaluations are going through the ceiling. You just recently saw the radar acquisitions on the market, all of that. I think it is really, for us, important to really foster those partnerships that we strive for in the Neo-System House with some selected investments, and then let us see how things evolve over time where we see further potential. To reserve, keep a foot in the door would rather be the strategy on technology. Then as we definitely go into sales, business development, strategy internationally, of course, let us see and consider what we can do there. That remains the profile as we go forward. Again, we stick to the point with the strong organic growth we see, we will never just purely buy for growing the company.
Of course, every acquisition that we bear in mind will be value-creative as far as we look forward.
This EUR 100 million, Ross, because you asked this question, it was just a kind of a modeling for 2027. So, there is no concrete target now. It was just how to reach this EUR 300 million per payment date. It is just a financial modeling topic and not a concrete case behind.
Hi, guys. Thanks for the time today. It is David Holmes from Bank of America. I have a few questions on the pipeline, please. So, you talked about the EUR 110 billion pipeline today. I think that was EUR 70 billion a year ago. So can you just help us understand where the EUR 40 billion of incremental opportunities have come from? On the PEGASUS, I think the presentation in the results last week talked to an order of more than EUR 1.1 billion, and the number in the slides today was EUR 5 billion. So, can you just help us understand specifically what the difference in those two numbers are? On the TRL-4D LR long- range, is there any commentary you can give us around volume expectations for that radar, please?
Yeah, I take the first, the pipeline. Why has it increased so strong? I think in the pipeline we see a similar aspect as we see in revenues. So, from the political decision, spending 3.5% on GDP until it really materializes into the pipeline with campaigns and ideas from the customer, you have a kind of a time lag of one year. I would really now relate this increase on this topic that from last year we know that 3.5% will be spent until end of this decade, and until it materializes into the pipeline, you have approximately this time lag. This is mainly the main reason for that.
So, PEGASUS, the opportunity that Christian was referring to with at least EUR 1.1 billion is the additional, the second lot of PEGASUS aircraft. That is additional three for Germany. Today, we have three under contract. The progress is really doing well. I just recently visited Hamburg, where I saw two aircraft, and the third aircraft will come to Germany this year. Next year, we still plan for the very early operational capability in the second half of the year. So, things are running well. That is why the customer, based on the contract amendment we signed end of last year, decided to buy additional aircraft. I think the case was clear from the beginning with a 24/7 operations of this aircraft. We would need then just more than just three.
The critical point that led to some of the delays was that some of the aircraft, the customer was not clear, do we buy them on the market or take them out of the VIP fleet of the German Armed Forces? Finally, they chose to take the ones, which would be a kind of customer-furnished equipment, out of the VIP fleet. And we are very well aware what these aircraft are like because Lufthansa Technik is our partner, and they are actually servicing those aircraft today. So, they will be integrated. We are in the final, very final negotiations with the customer on the contract, and we just see it as part of the end-year rally, especially looking at parliamentary approvals and so on, that this might slip to early next year. But we are very confident that we will get that order. It is just a question of timing. So, that is EUR 1.1 billion.
And the EUR 5 billion includes this EUR 1.1 billion plus a number of export opportunities, which, based on the fact that the program, the performance in the program as well, we as the board always took a little bit of a break with regards to export campaigns because we said, "Let us get the German program right to really mitigate all the risk, and then we go international." At the moment, we are in negotiations and first discussions with two European customers and one international. All of them fall on what I said, the G2G agreement. So, Germany is really supporting the idea of bringing things forward, and that is why we see that potential as we go forward. And we will take it step by step.
I mean, once we have sold it internationally, General Gräfe outlined yesterday how important those mission aircraft are, and that is where I definitely see a potential that is at least the EUR 5 billion, maybe even beyond. And the last one was long- range. So, long- range is actually a project in Germany. Actually, we sold together with a partner a long-range radar to the German customer, one in a naval version for the F124, and additional ones, so four, to the German Air Force. Definitely, it is confirmed that the German Armed Forces have a significant need for such a long-range capability, especially being confronted with tactical ballistic missile threats that we do see. It is a fully digital radar. It is software-defined. In that regards, it can be adapted.
The pure, what we see with recent discussions, not only with Germany, also in the NATO context, the pure availability of data to better understand the TBM and hypersonic threats is key. That is why we are currently discussing, can we use that radar in a broader base? I cannot disclose the details, as there is some sensitivity around it. But of course, also the FREYJA program, as we announced, would need a kind of data feeding for cueing, as the tactical weapons control radar TRML-4D in-country would not be sufficient for a full GBM defense cycle. As a matter of fact, we are thinking with our partner, including the R&D that Christian mentioned, more and more we see that we need a radar family across, starting from SPEXER to medium range to long range. So, that is definitely also on our R&D agenda as we move forward.
It is Sash Tusa from Agency Partners. I have got a question about Software-Defined Defence, and particularly MDOcore. You make the quite bold statement on page 38 of the presentation that MDOcore will link all legacy and future military sensors and solutions. The chart itself does not include probably two of the most important air procurements that Germany is making, which is F-35 and Apache. If we made the assumption that it is going to be very difficult for you to integrate at the software level with U.S.-supplied systems, what does that mean in terms of the percentage of the German installed base, or indeed the future installed base that is genuinely accessible to you rather than something you would like to do? Because clearly, those are big portions of Germany's future air capabilities.
As a matter of fact, we have some initial discussions talking about MDOcore to provide an interface to IBCS from Northrop Grumman, so that at least on a data level would secure access to that domain. I think that is what we see with MDOcore. What is unique about MDOcore is that we do not do a full integration on a software level. We rather go on the data level, and that is where definitely based on the initial discussions we are having, we see a potential to integrate the F-35 data domain, at least to a level of extents that we would need for the purpose of MDOcore with such interfaces.
Thank you. Then just one follow-on, slightly broader question, but based on some of the comments that General Gräfe made last night. Germany seems to have made a change in its strategy with regard to Collaborative Combat Aircraft, and rather than buying effectively off-the-shelf designs, is now sort of taking slightly longer to decide on domestic designs. What has driven that, and how do you think that changes the opportunity for you to either supply systems for CCAs or to be involved at an even more fundamental level in those procurements and operations?
Well, what has fundamentally changed it? Of course, the rather political or top-level industrial background of stopping FCAS was, of course, a key topic. What we see on the battlefield these days is, again, the second thing. I would say that Germany is just coping with the dynamics on rather geopolitical cooperation as well as the realities that they face on the battlefield. The HENSOLDT view at this stage is, like I presented, we kind of disconnect from the individual program. To secure our future growth, we are, of course, open as a strong national sovereign player to be part of a discussion whatever program Germany might join. You can read it in the media, it is either Sweden with Saab, and then, of course, opening up with Spain as today's partner, or it would be GCAP with Italy, Japan, and U.K.
This at the moment is a very political decision, and the German politicians have clearly also announced in the media that this decision will be taken by the end of the year. Let us see. It is also very clear that those decisions are at the moment very much driven by geopolitical arguments. However, it is also clear, Germany stated in the aerospace strategy that we want to take a substantial, if not leading role, in any future multinational program going forward. That is, of course, backing up the industry, and we stand ready also based on a kind of interim study that we are working on with a German customer to really support with technology, be it sensors, be it self-protection systems, EW, but also sensor data fusion.
At the same time, I do not put all my eggs in one basket, and the second basket we are looking at is the Combat Fighter System Nucleus, where we are a strategic partner of Helsing, who has received the first contract this year. We have a smaller share in this program. The bigger HENSOLDT share is expected for very early 2027. It is drafted. We are working on it, so I am very confident that we will get that share where we are providing sensors. Probably you have read it in the media very recently, Helsing has provided the software to the German customer. It is a very open architecture where, in a strong cooperation with Helsing, we are not only providing sensors to this network, but also supporting them in getting the sensor data fusion and the rather collaborative combat aspects, which are part of the CFSN in there as well.
The good news from a HENSOLDT growth perspective, we even have a third basket, and that is the MoUs we have signed, including Boeing, and we are open to other partners that will provide CCAs to this CFSN network in Germany. The German customer so far at least gave a couple of statements that this is not a monopoly for one CCA, but it would be a full fleet of CCAs. Here, of course, HENSOLDT is ready wherever the CCAs come from to provide our sensors. Especially if we look at luWES, if we look at PEGASUS, there are strong demands of capitalizing on the payload that is there on the manned mission aircraft to bring them also in the unmanned domain.
Christophe Ménard from Deutsche Bank. I had three questions, two financials and one product. The first one, to continue on the cash conversion question, beyond 2030, in theory, your cash conversion rate should improve. Are you willing to give any ranges at this point in time? The second financial question is more maintenance -type of question, but are you capitalized in the coming years? You outlined a number of developments. Will they be capitalized or expensed, or will the ratio change over the next few years? The product question was more on, thanks for all the presentation about radar systems and all this. Two of your competitors presented updated C2 systems recently with AI. Is it an area where you want to invest as well, or are you more into the sensors rather than the C2 systems?
You have C2 systems, but I am thinking about one French competitor and one American competitor.
I take the first one. I am absolutely with you. The cash conversion should go up because then the investments are taken and we can benefit from this industrial scale. We have not mentioned it in the presentation, but the 4.5%-5% have currently a reserve of 1%-1.5% CapEx in. Because since the dynamics of the business is currently that high, we have foreseen a certain percentage of CapEx for topics we do currently not see, but they should come. But in general, I am with you that normally, due to the structure of the business, what we have now outlined, the cash conversion should go up. Which range? Let us see. Second was, sorry? R&D capitalized, it will be again a mixture. I think that approximately 60% will be capitalized, 40% will be expensed. So, there is other ratios you should consider.
On the C2 question, actually, I see that here we have a massive dynamics in the market. I think the closed borders of systems, and especially the monolithic system architectures are disappearing more and more. That is why the answer is yes, we see investment in C2, but we do not invest in a new monolithic C2 system or whatever. Actually, it will be a lot about federated systems where each of them has dedicated points. When it comes to the pure display of situational awareness, as I explained with MDOcore, we will use SitaWare from Systematic, and we are in very close discussions with Systematic as this becomes, at the moment, the de facto standard in Europe and maybe even beyond. So, it is in the field, so it makes absolute sense not to invest in reinventing a wheel and using the software.
What we need is, however, the glue that puts it all together. That is actually together with integration work, with the knowledge on data, that is where HENSOLDT investing in the teams, in the knowledge. Also, we want to help part of that Neo-System House idea, the startups that come in with agentic AI and small algorithms that can be plugged into a C2 system where we see a very strong dynamics of things evolving. That is what we do. The broader C2 approach these days, as we see it with a couple of programs as examples, I mentioned CFSN, we are also working very closely with Helsing. I mentioned also IBM, where we see new models. One question could be, if we promise a sovereign approach with MDOcore, why would we choose a U.S. hyperscaler as our partner?
We managed with IBM Germany that we get full access to the code and the IPRs, and that saves us, I would say, two to two and a half years of development time because we build on that foundation to bring things forward. That is, again, in summary, we do invest in C2, but we will not invest into a C2 product, a monolithic product, but MDOcore as a stack which has a kind of glue to integrate various systems into a very effective C2 stack for the future.
Thanks. David Perry at JPMorgan. Just one question. I am just a bit confused whether or not you have got any assumptions in the guidance through to 2030 for whatever Germany chooses on the next- generation fighter jets. Have you made some estimates of what you are going to win, or is that a potential upside, or have you got nothing in? Thank you.
Actually, it is what I have explained before. It is the full continuum of possibilities. For us, it is rather the airborne, and the airborne includes the next- generation fighter, and at that stage, it rather includes, and you correct me and probably get some additional details in, the interim phase to sustain based on what we so far did in FCAS. Because that is a very clear commitment that also protecting the investment of the German customer, that is what goes forward. Then we have CFSN, where we have a lot of visibility, and we have the CCA corporations. Any program that would come up, like GCAP or German-Swedish development, is an—
Upside.
—upside.
The base work, as Oliver said, is in what we currently see. Any other solutions are an upside.
Can you put that coming before 2030?
Let's see. I mean, I was recently with the German Handelsblatt in a panel discussion with State Secretary Plötner, where he said, "The decision will be taken by the end of the year." There was really a deer in the headlight views in the audience, given recent decision speed. But let's see. I mean, but I would count that. That depends very much, be it a cooperation with Sweden, where I would say we're more or less on a greenfield approach, but also we see that with the Gripen E and everything, Sweden, I don't really see they are in a rush, in an urgency, so there it could take some time of negotiations. GCAP is a different story because we are very, very brownfield.
We have different companies already in the game, strong players like BAE, Leonardo, which we, of course, know very well from the Eurofighter. In that regards, we have a good starting point to discuss. But given a strong financial German contribution, which I think is attractive for each and every partner, we would have to resettle what is the part. This negotiation will take some time, and that's why it's so important to have that interim study, which at least to what we read and hear, is in the first term, one year, to be extended a second year. In the very beginning, there were even ideas of extending those sovereign national technology studies to also build a very strong position of Germany to approach any partner in the future on eye level. This could take a couple of years.
So, that is why, could it be part of a 2030? I would say yes, but rather in the upper end of the frame than in 2027.
Hello. Good afternoon. It is Afonso Osório from Barclays. Thanks for the presentation and for the extra disclosure on your numbers. Slide 67 on your revenue coverage for next year, 91%. Can I be too greedy to ask the 2028 and 2029 figures equivalent for that? And it is more like a big question for you, Oliver. Like, in terms of last week, 12 months ago, I think the 15%-20% guidance in the medium term was more back-end loaded. Now it is, I think it is for 2027 and 2028. So what has changed in the last 12 months for you to change your mind on those figures? Thank you.
Yeah. First, on coverage, I think when you look at the columns, you see that the coverage from fixed- order backlog is around 40%-50%, even 2028. And then it comes the after-sales, which pushes up to approximately, I would say, 60%, 65%. And the values for 2028 are around 25%-30%, which is covered by fixed backlog, and then the rest is short-cycle business.
And just one follow-up on that. On the backlog, it is only fixed orders? There is no frame backlog?
It is fixed. The column you see, it is a fixed- order backlog, which is part of our backlog. There are no intermediate definitions or other topics. A backlog is a backlog. It is a fixed order, which is part of our backlog. We have signed a contract, and we have booked.
Thank you. Oliver, on the-
I do not know if I got the question 100% right, but I will answer it more generally in what raised our confidence that we build and also extend our growth projection into 2035. I think the turning point was quarter four 2025, when actually, especially in the Optronics part, we received all the framework contracts and the big orders on Schakal, PUMA, Leopard. The visibility on Optronics, which up to that point had been a bit of a question mark. We were positive, but we were lacking the details of the models. I think that has become clear with the very clear decisions the customer took. The planning security we had asked for was there. The second topic is that I have visited the plant together with Christian in Oberkochen, last Tuesday, or the week before Tuesday.
On Monday, I have been to Ulm to see SPEXER to go to the Hall 31, which holds the TRML-4Ds. We also see that the additional plant in Ulm, that now the capacity is tangible. I mean, based on what happened in 2025 with our logistics ramp-up in Laichingen, we were still cautious, given also the complexity of scaling across what Christian laid out, supply chain, first-pass yield, having the right people, doing the shifts. I mean, now visiting a factory, the capacity is there. Even we have a plan for a step change in 2027, and based on all this experience, we are confident that by 2027, looking at the split of production and service for optronics, and the high-runner factory for SPEXER and TRML-4D in Ulm, that really we can also deliver on the demand in the quantities and the qualities that is needed.
The third element is the big programs, and I have shared it with you since last week. We have the RFP for luWES. We have now PEGASUS in a very stable performance. We get the additional ones, so we are ready for export. Export is probably the fifth part with all the investments, and probably some of you who are also my friends on LinkedIn, you see that I have traveled the world for HENSOLDT to really understand the countries. I think the G2G change, Germany is building in the German MOD a branch of 30 people, and I had recently two travels with the Minister of Defense, where they take it serious to promote German technology to the outside. With those reference programs, we can go big scale and we can go into export.
Those are, I would say, the imperatives, the changing things that really raised our confidence going forward. Still, 2030 to 2035, we need more details now as these things mature. You can count on us as you counted in the past. As soon as we have understood the details, we will increase the ambition. As long as we do not have these details, we are confident, and that is the ambition that we have laid out so far.
Any further questions? Yeah, Finn and Marco.
Thank you. Marco Vitale from Mediobanca. Just coming back on the pipeline, if you could provide us additional information what you see in the naval business that is quite substantial. I think you indicated around EUR 4 billion pipeline. What does include besides submarines and the export campaign? Thank you.
Submarine and naval. Naval business.
Okay, naval is indeed the big submarine campaign. We have Canada and we have India, and hopefully there is more to come because what we see, I was part of the Canada travel of Boris Pistorius, which at least in this very final phase, I would assume was decisive. We are working closely with TKMS on this one and see some potential. The other part is the CMS 330, where we have the strategic partnership. Very clearly some of you might worry or wonder with the decision on the MEKO A-200, the F128, which is a sub mission system including Sea Giraffe and 9LV.
But this is about delivering speed after the F126 decision. Also the Navy stopped the F124 long-range program and diverted, not diluted, diverted the radars to the Air Force because they need, they desperately need deep flagpoles, especially in the Baltics, in order to cope with the Russians. That is why we understand and respect that once the four MEKOs were ordered, in the sense of economies of scale, but also economies of speed, that they would go for eight of these ships, which are dedicated also for anti-submarine missions. But the paradigm of commonality also speaks for the rest of the fleet.
Here, recent discussions with politicians as well as with the naval leaders confirm that they stick to the approach of a harmonized C2 system for the Navy. That is CMS 330, probably extended also based on the partnership we have with Lockheed Martin on Aegis, but also leveraging on MDOcore, as we have a big concept in the Navy of the future naval system of systems, or naval collaborative combat. That was the REPMUS exercise I referred to, where we are in very close discussions to deliver that capability to the German Navy. We have very concrete ideas, which at that stage I cannot disclose, to do some mid-life upgrades for rather German ships where the CMS 330 will involved. Those frigates, and then you can do the rest of the deduction, those ships have our radar.
Germany had deliberately decided with F126 to have a family of radars on their corvettes, on the F125, and on the F126. With the decision on the MEKO, this is not off the table. We are planning, of course, to service support, also change software of those radars, because the hardware of a TRS-4D is a similar hardware than the TRML-4D. Germany is looking for a missile capability. You saw that Diehl Defence has done first missile shots, IRIS-T, from ships. There is a bigger plan, despite the current political debate on would there be a F127 or not. If there is a F127, we are part of the game with the strong relationships we have built with the U.S. players, but also with German shipyards.
If there will be a call for an alternative, like a European or German next generation of the F124, we are also part of those discussions. That is why I am very confident that the long term, and that is our reference customer perspective for the naval business in Germany, is there for CMS, for sensors, including optronics. We have the MEOR system on the new signals intelligence ship. There is a broader alley for products, but again, it is also about collaborative combat, about data, where we are the natural partner of the Navy. With ESG, we have also gathered a couple of other things, which is called the system house of the Navy, where we would also integrate third-party systems.
Even with Saab, there is an opportunity, as we are working with them on the F123, to support them on the MEKO, as they are looking for industrial capacities, and we are ready to go this way. That is putting a little bit of glimpse on the naval part. Again, we are very concrete in the discussions. But yes, I also admit very clearly that the F126 decision, MEKO, was like somebody putting the clutch on a big gearbox, but now the wheels in the gearbox are resynchronizing, and there is a big wheel of HENSOLDT turning as well.
Next question is from Finn.
Yes, thank you. Finn Kemper from Cantor Fitzgerald. I would be interested in the bridge from the EUR 6 billion in 2030 to the EUR 10 billion in 2035, and how it comes from programs you have not yet won compared to follow-on and service on platforms already in the backlog. Maybe you can give us some flavor on that.
Yeah. Maybe I can elaborate a little bit on that. Of course, you have seen in the presentations, these are ideas which we have in mind. First, when you look at Schakal, PUMA, Leopard 2, LUCHS 2, these are contracts which go until 2034, 2035. These are hard contracts we have already booked. Then we have talked about luWES, other topics. If luWES reaches our order books, it will be 2028, something like that, and last for more than two or three years. It will be a multi-year program. It is another one. Follow-on PEGASUS, what we have elaborated. There is a big portion of, I would say, firm order backlog and upcoming programs which will be signed next year, or the years to come. Service, we have now 16%. I remember quite well when we did the IPO, it was more than 30%.
It was a small growing business and service really contributing. Now we are at 16%, so the 25% is for me also valid figure. Since installed platform will come, they have to have service concepts in place, and we are preparing for that. This will also feed in. The other topics, I think we elaborated. I think it is fair to say that now talking about concrete amounts, which percentage comes from what, is too early. But I think the fundamentals we have laid out are very clear that there will also be growth beyond 2030, and there will be no abrupt change or shrinkage again.
Understood. Thank you. Maybe one more follow-on. The EUR 10 billion in 2035, this implies entirely organic growth, or is there any M&A?
We have included EUR 1 billion of M&A, so that means from EUR 300 million in 2030 to EUR 1 billion in 2035.
Okay.
Yeah, hi. I will try. I am not promising. My name is Anthony Sawtell from LionRock Capital. We have been shareholders for a few years. Thank you for your presentation today and for all the hard work over the last few years. I wanted to ask another question on your 2035 ambition. Do not shoot me. You are guiding for organic revenue growth to slow from above 20% in 2029 and 2030 down to below 10% over the next five years. That seems to contradict other data points and comments you have made today and in the recent past. I have two questions. I will try to keep them quick. The first one is, could you just help us understand the building blocks and assumptions that underpin these organic growth step-down?
Also, the second question is, could you help us understand which parts of your business are slowing so much that organic growth is constrained to below 10% when we know that some very large programs are only starting to get in the swing post-2030 and will make significant contribution? Thank you.
Maybe I start. I think, look, now in 2030, Germany will spend EUR 180 billion. What is then the way forward? When they keep this percentage constant as 3.5%, I think it will have an impact on the growth of defense players, yeah? Because otherwise, they have to go for 5% or even higher, yeah? So, this is one answer why we have assumed that there will be growth, but the dynamics we see in the next years is supposed to be lower than before. One element we took in is, of course, that with now filling up stocks, with now having then stocks with traditional platforms again recovered in terms of tanks, mechanical vehicles, other topics, there we will have a kind of a saturation for sure, because this is the main aim to have all these platforms ready by 2029.
You see, of course, ground-based systems and optronics, you see currently it is adding much revenue and much margin contribution, but I do not expect 50% growth across 10 or 15 years. This is, for me, not realistic, yeah? Since these dynamics will come down, yeah, we will see then from 2030 onwards a lower growth. There will be still growth, but from my point of view, a lower one. There will be service, there will solutions, there will be more platform business, but these big dynamics now we currently see of filling up stocks will, from my point of view, currently be a little bit lower than we see in the next years.
Let's share a little bit the discussion that Christian and I and the team had as we built this ambition, because very clearly, we understood your request that we have to look beyond 2030. Also, our people want to look beyond 2030. I think, and I fully support what Christian just said, we want to stick, and I think that is what I have to say upfront, and I said it before, to stick to our conservative approach, because we see in the market that partially the hype, people are over-promising and so on. It would be easy for us to tell you we do EUR 20 billion in 2035. That's not our nature. That's not how we do it.
That's why I think the small discriminator- based on what Christian said, that we have a very good visibility on the programs that we have with the vehicles, which are very long- term. We see the commitments that we have on a TRML-4D. At the moment, we see a massive dynamic, as I described, to the ends in air defense, be it the short range, the counter-UAS, and we didn't discuss a lot in Germany at the moment after what happened in Leipzig. I mean, we're in top discussions, including with Deutsche Telekom, the German air navigation provider, could we be the architect of a full counter-drone networks across Germany? That are a couple of topics which are evolving at the moment with the dynamics, but according to this rather conservative approach forward, we did not put in. This is upside.
Same as David asked, the aircraft, the future combat fighter program is upside. We had a figure on export. We account for two opportunities in export. At the moment, we are approached for PEGASUS. At the moment, we are approached from six countries. But we say, okay, we keep it focused. We control the risks as we go forward. And I think there's also big risks these times, which we always share with our team. You can burn yourself with a full backlog going forward if you don't control the growth in a certain sense. And I think that are the things that are driving us, and indeed, I struggled with the same topic that you said. We see 15%-20% already 2027 onwards, and that's based on all the visibility we have, and then it goes down to only 10%.
Yeah, because that's what we can guarantee from today. And having said that, what we always have to bear in mind, I mean, we have peace talks again. We have seen, I don't believe it. I see structural growth for the next decade, given the deteriorating security situation. But on the other hand, we see our politicians. We saw how quickly things can change in the world, and that is also something which we have to bear in mind if we go at a euphoric end of a future ambition. And that is just a couple of thoughts from my side I can share, but you can count on the EUR 10 billion, and you can also count on what I closed, that this team will work very diligently to increase that number as we go forward to reach the EUR 6 billion.
Compared to last year, I think we showed very clearly today that these EUR 6 billion are very confident to be managed in 2030, including now that we increased profitability and all of that. As we go forward, we will year by year revisit the EUR 10 billion, and I can tell you it will grow over time.
Thank you for the questions in the room. Let us now turn to the questions online. Tim, do we have questions online? If so, please limit to one per person.
Most of the questions from our online audience have already been addressed, so I will only come to the last remaining one, which is on SPEXER and Skyranger. In today's presentation, the export potential for SPEXER in connection with the Skyranger has been outlined for four nations. Do you see further export opportunities for SPEXER beyond these four nations also via Skyranger?
Well, as I said before, definitely we see Skyranger, but of course here we are as HENSOLDT not in the lead. We have signed a framework contract with Rheinmetall offering to a certain level our SPEXER radar, which would support opportunities that go beyond what is currently in the books and acquired by Rheinmetall as the lead company on the Skyranger. Also, as I answered before on one of the question, I see that these dedicated platforms, they will remain in service and there will be a market share for those platforms. But we see at the moment that Germany is also looking at alternatives, so the GARMR of Diehl Defence would be one where we have just recently been selected. Also here, this raises confidence in the quality, the performance, and also the cost competitiveness of our SPEXER radar.
But a massive momentum that is coming up at the moment in Ukraine with the bridges that I've shared with you, we had a team in Ukraine last Friday working with Ukrainian companies, how can we build a new system where we more loosely integrate a tactical radar into a multi-effector network, which could be counter- drones, small rockets, or guns, machine guns, as General Gräfe outlined yesterday. And if we isolate SPEXER, and I will be very loyal and supportive to Rheinmetall or Diehl Defence on the bigger vehicles, but as we saw it with TRML-4D, which was initially sold as part of IRIS-T weapon system, we see now more and more that this radar and its capacity gets disconnected from the weapon system.
And I see the same way forward for SPEXER, so that there will be a lot of opportunities of selling SPEXER as a medium-range radar out of a purer weapon system context.
Right. We've approached the end of our event. Thank you, everyone, for your questions, for such an engaging discussion. If you have any further questions following today's event, please get in touch with our investor relations team. Of course, we'll be happy to continue the conversation. Before we close, I'd like to extend a special thank you to the entire HENSOLDT team for the tremendous commitment that went into preparing today's event. You guys rock. Ladies and gentlemen, our growth story remains strong and continues far into the next decade. We wish you a safe journey home and look forward to staying in touch. Take care.