Yes, good morning. Welcome to OHB SE's earnings call for Q2 for the six-month results, 2025. I'm here in Bremen with Markus Moeller, with Sabine von der Recke, and Marcel, he's not on the screen, but he's there, and he's supervising everything. Kurt is also there, he's connected in from remote. So, I welcome you all on this call. I, like always, will walk you through the slides quickly, and then obviously we have time for Q&A. I hope you have been able to download the documents. Marcel is nodding. He said he put it all online and everything was okay, and that is very good.
Maybe just to start, I think the first half of 2025 has been a good six months. I think the numbers are well underway. We are quite happy about this and maybe Kurt will answer this a little bit later on, but I think we're on a good way to achieve our goals. If we look at the overview of the group, nothing has really changed this quarter. We had a few slight changes last in the beginning of the year with OHB Space UK, and we regrouped OHB Austria. So this is currently our business segment overview. Of course, we are looking at it.
We are seeing, of course, how to cope with the significant business that we have, mainly in the space systems area. Of course, there is, I think in Europe, but worldwide as well, but also in Germany, a lot of expectation for space work, satellite work. But for the time being, this segment is as it is, and will probably be the same by the end of this quarter, and maybe we will look at it in the forthcoming months in the fall, in the fall. Just a few highlights. The biggest highlight, actually, that we had was the prime contractor win that OHB System had for the LISA contract. This is really a very, very special and very important win that we had with the European Space Agency.
It's the first L-class mission that we are doing. It's a large. L stands for large. It's the first time OHB has been selected to lead an L-class but with an M-class. M is medium-sized mission, so for us, it's in terms of size and the contract is EUR 839 million. It's a long-running project. You see, the mission will be completed in 2035. But if you look at what this mission is doing, it's really unbelievable, and it's really fundamental meanings for actually for mankind. I better read it. It's the detection of low-frequency gravitational waves and conclusions about the properties of their sources. So yeah.
I'm not sure if Markus is ready to take questions on this later, but it's fundamental physics.
Yeah. Basically, we're trying to discover dark matter and do a new map of the universe. That's what we do in practice.
Yes. Couple of other highlights we had, of course, we are moving along very well with implementing programs. The biggest success, clearly, was the MTG-S1 launch. The sounder, first sounder, very important mission for us. We worked very long on it, and it has been successfully launched on July 1. And it's now also in the first couple of weeks, the operations go very well, commissioning goes very well. GARI-B is another satellite, built in Sweden, based on our InnoSat platform, will be launched later this year. So we are moving along quite well. First, for which we Czech space, a big success first.
The win of leading a spacecraft out of the Czech Republic for us, this is now a selection of four missions overall from the whole Czech space industry. We have been selected, but there will be a down selection following next year. So moving quite well. If we go to the aerospace segment, yeah, MT Aerospace is doing okay. We had a couple of deliveries. Work on ION is moving along. We're waiting for the next ION six launch, which is supposed to be later this month. I think it's still scheduled for late August, and then we will see if there are more launches coming, so moves quite well. And also in the digital segment, we're doing quite well.
The FlyEye telescope, which is an unbelievable project, also similar, I guess, in many ways to the scientific things we're doing—is we're watching from the ground—has been first images of new Earth observations. This is obviously now our pride, the development of order backlog. For the first time in the history of OHB, we have EUR 3 billion-plus order backlog. So you can see here, this chart goes back all the way to 2008. So it looks back for like 17 years, and you see how slowly the order backlog increased. But you can typically see these peaks and these valleys follow typically. There is a cycle of ministerial conferences.
And in a way, this valley between the last peak in 2020 and now is a little bit broader valley, but it basically... Yeah, it came now with the LISA and with other things, to the record high of EUR 3 billion. We will talk about this a little bit. Markus has a few slides on that one. So if I look to the numbers, to summarize, very good order backlog compared to last year, almost double. Total revenues for this first six months are good, 20% increase. The EBITDA is significantly higher. Adjusted EBITDA, also higher. You see here, we have less adjustments. There will be another slide following on this. EBIT is good.
Net profits after minority is more than double, so we are quite happy, EUR 0.59. Headcount, by the end of June, we had 3,552. I guess now, as we speak of today, it's 3,600-something. We are hiring-
Fifteen.
All over, so company is developing well. This is what I meant when I initially said that we're on a good path forward. Here you see, total revenues of the six-month results over the last five years. Actually, this year and the last four years. Profitability, these are not adjusted numbers. These are the reported numbers. So you see, obviously, that the adjusted numbers are increasing more than the reported numbers, especially on EBIT level, but that's normal. We had massive transactions. We have the significant one-off effects related to our transformational project we have since the change in our shareholding, and so we are quite happy with this chart, but we obviously also show the reported numbers as a backward-looking comparison.
Here you see the reconciliation of EBITDA to adjusted EBITDA, and I guess if you compare the two years, you see what I just said, that the adjusted EBITDA, first of all, is 13% up from EUR 40.7 million to EUR 45.9 million, and the adjustments are just smaller than they have been in the previous year. The transformation costs are down to EUR 2.5 million, and that's less than half of what it was in the year 2024. So we believe we are on a good path to reach our goals, and we are happy with the EUR 45.9 million as adjusted EBITDA in this year. Financial outlook has not changed. It's the same set of numbers we are communicating since our capital market day in mid-January this year.
We feel comfortable about this. Of course, the projection of EUR 1.2 billion, and of course, the projection of 9% EBITDA, adjusted EBITDA, and profitability, EBIT of 6%. That's quite what we feel, what we feel comfortable, and we believe that we're on a good path. Also, to the main message of this, is that we see now a revenue growth, and this is obviously substantiated by the backlog record, but we also feel that a margin increase is on a good way. So we'll see next year's. There will be, of course, a pressure to go to 10% and 12%, but we believe that this is something that is achievable. So this is the chart of... Markus, you want to explain this chart?
Yeah, real quickly, just to give you an outlook on where we think the orders will go. As you know, we always do a very detailed planning a year ahead of the current year. And so we'll confirm that we see a positive outlook of a growing order intake. We believe that this year we could surpass the EUR 2 billion mark. You know, as of half year at the EUR 1.5 billion out of the EUR 2.1 that we currently see in our scenario.
So the pipe has been significantly front-loaded this year, in comparison to the other years, and we believe there will be three larger deals that are under a good way, one in Italy, one in Sweden, and one here in Germany, that will bring us close to the EUR 2 billion mark, which would be then also a, you know, a growing order intake as we enjoyed that since 2023. Our particular attention is 2026, as we see that many of our large institutional customers have the intention to sign extensions of our program lines in 2026, specifically in ESA, the EU programs, but also the national customers that we have in the defense arena.
So we'll review that number now in September with the, you know, the decisions also that are being taken by our customers. And then baseline by end of this year, the numbers for 2027 and 2028. The reason why we rebaseline is specifically that ESA has the Ministerial Conference here in Bremen by end of November, where the budgets will be set for the coming three years. So we'll take that into account, and also, we'll see now the first budget proposal from the EU for the MFF, so the Multi-Year Financial Framework, where things like Galileo, Copernicus, and also IRIS² are being included. So we'll take that into account, too.
And we will have, by end of this year, also a better view on what the national customers are planning for the next year, so that we will be able to, communicate a new outlook, I would say, early January on the order intake. But, in general, it will stay positive, and our ambition is that, you know, 2026 will be around the EUR 3 billion mark in terms of order intake for one year.
Yes. Well, thank you very much. Thanks, Markus. Maybe two other things I'd like to mention. The first one, that two weeks ago, we have completed a refinancing, which is obviously not part of the first six months, but in mid to late July. So we were very happy that we have been able to do this. This has separately been communicated, that helps us to have a long-term stability in the financing. We have increased our facility to EUR 350 million, and we are now having five years, plus two years options on this. We have been able to improve our conditions there. We are very grateful to the banking consortium, and to the whole team, especially under Kurt's leadership.
Kurt's team has done a marvelous job in doing this, so thanks to everybody involved in that. Have also been supported by our advisors and attorneys on this. So this has been very successful, as something, let's say, after the six months period. That's adding stability to the overall development. Obviously, that together with what you see here as a chart, and what we all have seen in the past months, that Germany has changed its policies on spending, especially defense spending. And you all know very well that the in-between governments, after the election, even the Constitution has been changed to allow for much higher defense spending.
Of course, now also with the NATO commitments that were done at the NATO summit in Holland in June with the 3.5% + 1.5%, total of 5%. The defense industry system, the military plannings all over NATO, obviously, especially that accounts for European NATO members, is very different. So money is available, and this is also reflected here in the growth. Changes a lot the perspective of money. It used to be the mantra that there was no money, and time was not critical. Now it's the other way around. Now money is available, and time is very urgent.
So this has had a very positive impact on the outlook of business there. That's one thing. Maybe another information, looking back to what also happened in the first six months. In June, we had our annual meeting, our annual assembly, Hauptversammlung, where we had the dividends at the same level as before, with EUR 0.60, and this is obviously following our dividend tradition. We had reelected the three of the the sitting supervisory board members. And it's now we are now at a situation where the overall shareholding with the OHB, with the Fuchs family at 65.5%, KKR 28.6%, and the free float five point seven percent, is for the time being stable.
This is the good scenario that we work under. We are feeling very comfortable with this. We are, of course, also happy to have this type framework of communication that we have here now, with you, and this will remain in place for the future, for the next future. So we will see, coming to the financial calendar, we will clearly also see beyond this next Q3 earnings call. We will see also for next year, 2026, earnings calls as a listed company, so we will remain, for the time being, a listed company. And Marcel, you have to take up our agenda that we have to fix those dates.
I can also assure you that we will have another capital market day in January. It has not been fixed yet. But I can assure you that at the next Q3 date in November, at the latest, we will communicate the dates for next year. So we will go on as a public company, as a PE company, as a family company, and this is something that we are very comfortable with. So now I'm moving to the Q&A session, and I look to Marcel to see if he has any questions so far, if anybody is interested in asking some questions.
Yes, as always, just raise your hand if you want to ask a question. Henry Wendisch from NuWays already did that, so I hit you as a panelist, Henry.
Hello, Henry, can you hear us? I think you're still muted, Henry.
Oh, no. Yes, sorry, I took-
Ah, here you are.
Permission.
Thank you. Thanks for joining the call and asking us. Obviously, since we're only having 5.5, 5.7% free float, the public interest is not as big as it used to be, but I'm very grateful that you're still interested in space and OHB.
Yeah, well, the stock has done quite well over the years, I think also from the funding, from the defense and infrastructure spending boost. It's one of the beneficiaries, actually. I have a couple of questions. The first one, I think, is more to Markus, regarding, I think, ExoMars. It's back on track, and I was quite positively surprised because I was always of the impression that there are some parts stuck in Russia, and the collaboration obviously has stopped. So, looks like it's back on track, and it's going to Mars in 2028. So what happened there, cooperation-wise? Did Germany step in or USA step in to fill in the part of Russia, or what, what's driving this positive transformation here?
Yeah, so ExoMars itself, it's, you know, it's specifically ESA in, in France that, you know, stepped into, you know, into the mission to complete it, from that perspective. Yeah, we have portions of that mission, but it comes to... I think there's a continued interest on Mars, specifically, you know, from, you know, the French scientific community, and that helped to, you know, start to complete that program. Obviously, there are, you know, changes, you know, that have been, will be made, to accommodate for the new circumstance, but I think that is the, you know, the essential driver in that program. Yes. Mm-hmm.
It's now called Rosalind Franklin, the mission, right? I mean-
Franklin, yes. It has changed name too.
ExoMars name was not appreciated by everybody, and then they decided Rosalind Franklin, she was a British scientist, right?
Exactly, that's it. And there was a previous mission that was successful, with you know, with a, let's say, a similar challenge on how to land on, you know, a foreign object with lower gravity. And so, I think that's the reason why that name changed. Yes. Mm-hmm.
Don't get confused. ExoMars will not be launched. Rosalind Franklin will be launched.
Okay. Um-
You know, in terms of numbers, it's, you know, of course, it adds to contributions that we have in the for the scientific community, but in terms of the let's say, overall outlook that we have in the numbers, it's a rather small part, yes.
Yeah. Okay. And then,
On our side as a partner. Yeah. Mm-hmm.
Yeah, you're not, you're not prime contractor on this. You're like-
Yeah, exactly. Exactly. Mm-hmm.
Interesting. Again, then, I think next time we'll speak is November, and shortly after that is the ESA Ministerial Conference, and you touched upon this briefly. I was wondering, because I couldn't find anything yet publicly, there were like, in the months before, there were like discussions or like first budget proposals or anything like this. Is there anything like this that we can or like any tangible things you can talk about here that maybe could act as a positive surprise regarding the budget? I mean, we like to put this into perspective. I think over the last also one or two years, we've seen national budgets, for example, in Germany, they were about to decline for space spending, but they were about to increase at the European level.
I think now national budgets with the debt brake being gone are prone to rise again more, but maybe at the expense of the European budget. So how can we think of this development globally?
Well, obviously, we hope that that's not the case. I mean, our aim is to of course promote a significantly increased subscription for the ESA Ministerial Conference in November. We believe ESA is the right forum. We believe ESA is very successful. We believe ESA has very interesting programs. And of course, it's the time now that every country, every company, every directorate at ESA is working on let's say preparing the Ministerial Conference with content. I believe there's a lot of interesting content at least what I can see, the countries where we are active, especially Germany. In terms of the money, I don't know. It's still this poker face. Of course, the industry and ESA leadership is asking for significant increases.
Of course, in all the countries, they are not yet at committing level, because in all the countries, there are discussions about which program they want to subscribe. Because, as you know, we have the mandatory programs for science that will be the one thing, but obviously, optional programs, that's the question. I mean, so it's not clear. There are many proposals, and we support them. We like the idea, obviously, of a lunar program. We feel this is something where we should be in the lead. We feel this is something where Germany should be in the lead. We feel this is the right time for Europe to step to the moon, because if we don't go, others will, and we have to be part of that.
But that has not been decided, but that's something we're working on. There are other proposals in terms of Earth observation security satellites. We would welcome this as well. Obviously, we welcome the increases and the continuations. We have been very happy, very happy about our participation Rocket Factory Augsburg winning the European Launcher Challenge. So we hope that this program is also substantially funded. There have been five companies all over Europe, two out of Germany and one in France, Spain and UK selected. So we hope that this will also be funded.
So many things on that agenda, but the German process, doing the budget, and Sabine can help me there, is obviously in this year a little bit different than in the previous years. So we have we have a situation that currently in 2025, we do not have a budget approved, and the budget for 2025 is now under work. And what I understand is that in early September, there will be the so-called Bereinigungssitzung for 2025. And maybe, Sabine, you can outline what you believe is the process, how the budget of 2026 will come into power, because that is then the real budget for the ministerial, right?
Yes. So usually, in the year of the election, we have, so that, that's similar to the year of the election. We have two phases of debates about the budget in the German parliament. So usually, this is for the budget of the annual of the year is in the beginning, but since we have the election in the beginning of the year, we have now, actually, these days, the debate of the budget for 2025. The so-called Bereinigungssitzung will be held on September fourth in the week. Two weeks after, there will be the decision in the parliament. And so the... And after the parliament, Bundestag, has decided on the budget, they give it to the Bundesrat.
So I think that the final finalization of the budget 2025 will be by the end of October. But in parallel, directly after the decision in the Bundestag, the reason for the budget 2026 starts in the week, I think, of September 14th. No, September 14th, that's the week where we have the final date on the budget 2025, and two weeks later, we have the beginning of the debate on the budget for 2026. We have now seen the first draft of the government government draft for the budget 2026. If you had a look on it, so where we have already the overview of the numbers for the budget for defense.
The budget for space is still not put together in the new ministry, since the new ministry has not been finalized its organization. Therefore, we still have the numbers for space in the budget from the BMD, the Wirtschaftsministerium and the Verkehrsministerium, and the new ministry. I think that the consolidation will be done in the Bereinigungssitzung for the household for the budget 2026. So, of course, for the ministerial, the budget 2026 is essential, and I'm pretty sure that the members of parliament and the committee of the budget will decide on that prior to the ministerial.
I'm very convinced, since the coalition treaty gives us a very clear path, where the coalition will go with the space in the next four years, that we will see that the numbers will increase, and I'm sure that we will have very, very good and successful ministerial help by the new Minister of Space, Robert Habeck, here in Berlin in November.
Right. Got it. So maybe to sum it up from my side, the budgets might be put into different boxes than before, but the overall size will not drastically change or even go up, according to the, the-
We hope it goes up.
Coalition.
We hope it goes up.
We hope that it will change.
We're doing everything. We're working.
We propose that it should go up.
Yes.
Yeah, I mean, with the new ministry for space, I think, the tone is set.
Yes. Yes.
Yes.
Great. And then,
That's the assumption. I mean, that's the idea.
So part of the people have already been... So the organizational chart for the new ministry is not yet finalized, but and there are still discussions since, since it's not so easy to just, like in industry, to say, to put people somewhere else. To just say, "Okay, I take the box out of the Ministry of Economic, and I put it into the Ministry for Space." So this is obviously something that's-
Yeah.
Yeah, for public administration, it's a little bit more complicated. What we now read in the press is the debate about the new ministry for digitalization. And everything you read about this new ministry, you can copy and paste a little bit to the ministry for space. So, it takes some time, but I know that in the background, they are, they are already working, not only on the organizational chart, but also on increasing or on putting the numbers together for the ministerial, and therefore, we are really-
... confident that, the budget will go up. That's what we are working on.
Great. Then maybe to make the link between the budget and your operating performance. So from an outside view, it looks like, Mark, you said it before, there's less time for projects, but more money. And for me, this directly translate into bigger pricing power, maybe also margin increases coming from this. This is something, I mean, you're guiding obviously for even margin increases over the next years, but it's something you also feel when during when you bring your fund from, I don't know the English word right now, that-
Negotiations.
Negotiations. Exactly. Thank you. That, yeah, you have actually more pricing power in, in negotiations, or is that too far-fetched, or from my view?
Well, of course, more helps, and if there's more budget, it helps, and as you say, we are guiding for margin increases. I mean, pricing power, maybe, I mean, I think it's more scale, right? I don't know, Markus, how do you feel?
You know, I think, look, we're in an institutional market, so some of the markets have their rules, how you price and what are the profit margins. So, and that is negotiated long term, and we just had a recently concluded with our customer, ISAR, you know, a new agreement, that's certainly reflected in those numbers, but, we're not operating in fully, you know, free commercial markets, so, there are boundaries to that one.
80% of our businesses are with institutional customers, and 20% are really with, I would say, so-called commercial customers, in space and elsewhere, where we have open pricing negotiations. I think that's to be reminded. Nevertheless, we talked about the investments that we made, in the transformation program, standardization of platforms, you know, using the learning curves that we had in the recent years, the economies of scales that will come with the increase of the annual growth on revenue, and those three factors, on top, will make us believe that, you know, we will have the increase in margins. But it's hard work.
We believe it can be done, but it's not as easy as saying, you know, there's huge demands, we're just increasing the prices, and that's an immediately bottom line results just because of, you know, the markets we're operating in, which are guided in the market.
Got it.
Margins come from hard work, Henry, not just from pricing power. It's hard work to make the margins up.
So, delivering on time, and I think that's what we always see in the experience, in budget, as quirky as it sounds, is the key to success, and hence we're having invested a lot into the program management. Yes. Mm-hmm.
Great. And then-
Hard work and never give up. This is what we're doing, like, you followed also on our program, where it took a long time for us to make progress. So this is the story. I mean, space is hard. So it's not an easy, scalable industry. Everybody who's successful in the space industry is over decades, like OHB, has to work hard, and this is, unfortunately, something that also limits the margins. And so obviously, the margin expansion that you see here, we foresee, will keep us very busy over the years, but we're optimistic we will achieve it. And of course, a bigger market with more demand is a good thing.
Yeah. Agree. Thanks for this, yeah, gives us, gives us a bit more color on how this will play out. And then, I think one question for Kurt, to also give you, well, let you join the call with some, with some content. I've seen an aerospace segment that the EBIT margin has, has nearly doubled, and we've seen this trend also in Q1 already. How... what— Is there, like, a single pinpoint reason you can pin, pin it, pin this margin trend to in the aerospace segment?
My first guess would be that the cadence at the Ariane 6 production is going up, and therefore you have better utilization rates, but maybe you have something to add or give, give a little more color on why, why the EBIT margin in this segment is, is performing well on a year-on-year comparison.
Kurt, you want to take that? You are muted, Kurt.
Also, the picture is frozen. Maybe he's, he's offline.
Yeah. My expectation in general is that in the... due to the cadence of pre-cadence of Ariane 6, and due to the U.S. market, where we are, have substantial revenues in the meantime, I expect for the upcoming years, a stable margin, EBIT margin of 10% in aerospace is what we had in the before, out of five times, we had to spend during the five was running well, we had around 10%, and the target is clear coming business, in addition, with the increasing military business, coming back to a stable margin of 10%. This is all we are already on the way to it, and I think this is really feasible, and the business is now stable and increasing.
... and we have really good outlook in the segment for the next upcoming years.
Great. That's a great explanation. And then maybe last question, I think it's more on a global level. We've seen this big order intakes at the defense companies. Now you have your record order intake, I think EUR 1 billion in this quarter, or more. Then the question obviously arises, that also with the guide for this order intake, going forward, that the book-to-bill ratio will probably be above 2 in the next two years. So how do you plan to stem this growth at the end? I mean, this order intake is one thing, but execution is the other thing. So, yeah, is there like big CapEx plans, big hiring plans? Or do you have enough capacity to stem this growth with your current plans that you have?
That's a big challenge, obviously, because scalability in our industry is not so easy. You need the people, you need experienced people, excellent people. You need the facilities. So yes, we are hiring massively in many sites in Germany, but also in Italy, Sweden, U.K. Yes, we are hiring, so that's a big challenge, by the way, but we are. With regard to CapEx planning, Kurt, I don't know. I don't think we have any significant change in that, but Kurt, you maybe know better on the CapEx scenario. No, Kurt doesn't know better. Listen me, do you hear us, Kurt? No.
His picture is frozen. Sorry.
He's frozen again.
Yeah, it's a bad connection there.
Kurt? Oh, yeah. We can see you, but we cannot hear you, so I'll take the answer. No, I don't, I don't think there is a significant change in-
Yeah.
-CapEx.
Yeah, I don't...
It was just a question, if you foresee a massive CapEx increase, Kurt?
How, I will see what you-
It's hard to understand, Kurt, but I guess the bottom line is hiring is the biggest pain.
I don't-
I guess. Henry, I mean-
Yeah.
To really, really just how we approach it, you know, in terms of capacity. So hiring, you've seen the numbers, you know, since two years. I think we increased by over 650 people. So there's a process. We also hire a new HR director, Juliana, who specifically focuses on that one. On the MT side, as Kurt said, you know, we diversified quite a bit, the business, which is good, away from Ariane, and we still have capacity historically in Augsburg. And also for our U.S. customers, you know, we can use that capacity for two reasons.
We do have a pricing advantage over US competitors, number one, and we're currently still exempt of, you know, the tariffs discussion because space is strategic to the United States, so that can be continue to be used. And then in the ongoing projects that we have, on the space side, we either optimize space that we have here, in Germany specifically, or if we have to extend, that's actually part of the program pricing that we suggest, so that, the CapEx investments that we have to do, for example, for IRIS², have been always part of our, you know, program price, to the customer. Yeah.
Great. Thanks a lot. That's been it from my side. I think I got quite a good picture now of what's going on and what's going to come. Thanks, everybody.
Thank you, Henry.
Thank you.
All right.
I can't see any further questions, so...
Yeah, I don't know. If there are no further questions, then, but obviously, it's, it has been a pleasure again. Thanks for being interested in OHB. Thanks for following space. I can tell you, space industry is exciting. It will remain like this, and if now, it is really a booming industry, and we are very happy to be in the middle of it. We believe that our positioning is very good. There are new companies growing fast. There are traditional companies reshaping. But, I guess our segment is the, the, let's say, the, the one purest play space company in Europe that does satellites, that does rockets, that does the ground infrastructure, operations, services, downstream. We are very well-positioned, and we feel very comfortable with this setting.
We're very happy that you support us and you're interested in us. Should you have any further questions, please don't hesitate to call any of us, maybe channel through Marcel. Obviously, we're looking forward to see you again on our next call, on November 13th, for Q3. Of course, also then around those days at the Space Tech Fair, which is just a few days before the Ministerial Conference at Bremen in November 20-ish, 2022.
Eighteen.
18-ish. 18 or so. Anyway, there's a good reasons to visit Bremen, to get in touch with the space industry, and so I conclude this call. Thank you very much, and have a good day, and hopefully a good holiday season that I guess some of you still remains. Thanks. Bye-bye.