Hensoldt AG (HAG) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the HENSOLDT AG H1 Results 2026 Analyst Conference Call. I'm Sergen, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Nicole Schillinger, Head of Investor Relations. Please go ahead.

Good afternoon, and welcome, everyone. Thank you for joining us for our H1 2026 earnings call. My name is Nicole Schillinger, and I took over as Head of Investor Relations on the 1st of July. I'm delighted to have joined such a strong IR team, and I'm very pleased to be hosting my first earnings call with you. Joining me on the call are our CEO, Oliver Dorre; and our CFO, Christian Ladurner. They will take you through today's presentation and provide an update on our business performance, strategic priorities and financial development. We will then move into the Q&A session at the end of the call. With that, I hand over to you, Oliver.

Thank you very much, Nicole, and a warm welcome to all of our investors and analysts. It's a real pleasure to have you with us today. There are moments when geopolitical decisions translate directly into industrial reality. The NATO Summit in Ankara was one of them. The 5 themes on this slide map on to our business. So let me take them in turn. First, the financial commitments. They confirm a multiyear investment cycle across all our core markets and give us a long-term demand visibility that supports the capacity investments we are already making. Second, the Drone Edge initiative formalizes counter-UAS as an alliance priority. That creates additional momentum for capabilities that already in our portfolio. Third, NATO's technological focus on sensors. Radar & Electromagnetic Warfare aligns closely with our core technologies as these become alliance priorities, procurement programs tend to follow. Fourth, digitalization, cloud and AI. The future battlefield is networked, data-centric and software enabled, whoever sees first and decides faster, prevails. That is sensors plus software, and it is exactly where HENSOLDT is positioned. And fifth, Ukraine support creates a durable service and upgrade pipeline for systems already in operation. Ukraine is today the largest operator of our TRML-4D radar worldwide. That is a strong validation of our positioning and the foundation for long-term support business. Ankara, to sum it up, did not change the direction of travel. It confirmed and accelerated. The previous slide shows the political trend. This one shows now how our portfolio maps on to the defense architecture that is now emerging. MDOcore is our software backbone for the digitization of defense. It connects sensors, platforms and detectors with an open software architecture, which is what multi-domain operations require. Platforms matter still, but increasingly, the network decides. In missile defense, our position becomes tangible with FREYJA. Together with Fire Point, we are combining combat-proven Ukrainian technologies with our radar expertise. The Ukraine connection is deliberate. We are integrating proven capabilities and with them operational expertise from a battlefield where innovation cycles are measured in weeks rather than years. Electronic Warfare & Airborne ISR are equally strategic. PEGASUS is a flagship European program, and we supply its core sensors and mission system, laying the foundation for the upcoming luWES program. That role strengthens European technological sovereignty in the domain where independence has become a strategic necessity. We are deliberately extending this position into space. The war in Ukraine has shown that space-based sensing has become an operational requirement. We are building sovereign MDOcore-based sensing capabilities that integrate space into the same real-time picture as the land, air and maritime domains. For a company positioned as leader in sensors and multi-domain integration, that is the next logical step. Together, these positions give us exposure to some of the strategically most relevant defense programs in Europe for the coming decade. Talking about HENSOLDT's strategic relevance, within 1 week, 2 federal ministers visited HENSOLDT, Boris Pistorius, Federal Minister of Defense in Oberkochen; Katherina Reiche, Federal Minister for Economic Affairs and Energy in Furstenfeldbruck. Two ministers, one message. HENSOLDT is central to Germany's defense and industrial strategy. In the words of Minister Pistorius, I quote, " I'm very glad to have such a reliable partner in HENSOLDT." These visits confirm that our technologies are recognized at the highest political level and that we are ready to deliver at the scale and in the quality Germany needs. That recognition shapes where Germany is placing its bets for the future. CFSM is one of the most significant examples. The Combat Fighter System Nucleus sits at the heart of next-generation air combat, one of Europe's highest strategic priorities. Let me be clear on one point upfront. Our position in the air combat does not depend on the pace of any single program. FCAS, even without the next-generation fighters continues to represent the long-term European vision and while its future shape is evolving. Germany is advancing sovereign technologies through CFSM in parallel. We play a central role in both because our technology sit at the core of the architecture either way. Within CFSM, we have been selected to provide the mission sensor system and the initial contract was booked in the first half. CFSM is also the first program where our partnership with Helsing moves from strategic agreement to operational implementation. We are combining software-defined capabilities with advanced mission sensors in future air combat information superiority designs. The strategic value, therefore, goes well beyond the initial contract. It reinforces our leadership in sensors, electromagnetic warfare and system of systems integration, and it positions us in the programs that will shape European air combat capability for years to come. The F126 termination has drawn some attention, so let me address it directly. The financial impact is not material. The contract value was just over EUR 200 million and more than 1/3 has already been recognized as revenue. The remaining share, around EUR 130 million comes out of our order backlog. There is no impact on our short-term or medium guidance. The fundamentals of our naval business are unchanged. Demand for naval sensors and mission systems continues to grow as European navies modernize their fleets over the coming decades. That structural trend remains intact. Our naval business is built around technology families rather than individual programs. The TRS-3D/4D radar family is deployed across multiple vessel classes, including F125 and K130 in Germany, and it has been selected by international customers like Brazil for the Tamandare frigates. Continuous capacity upgrades benefit the entire family and create value well beyond any single platform or single customer. The recently approved MEKO A-200 frigates for the German Navy illustrates the point. They open new opportunities in a market where our technology is already established and competitive. F126 is a data point, not a signal about our naval business, our strategy, our technology road map and our market opportunities remain unchanged. The previous slide showed our strategic position. This one shows how it translates into execution across all our 4 North Star axes. Deliver at scale. Our electronics production is ramping up significantly. Printed circuit board output has almost tripled since January from around 600 to roughly 1,500 populated boards per week. What matters is what the number represents. Our capacity investments are converting directly into industrial output. We are no longer building capacity for future demand. We are delivering into today's demand. Pioneer software-defined defense. We have expanded the MDOcore ecosystem through 4 technology partnerships, each contributing a distinct capability. We are building an open ecosystem in which integration is a differentiator. That is the neo-system house in practice. Grow with focus. Our partnership with Bharat Electronics gives us a sovereign route into India's defense ecosystem and turns local content requirements into a competitive advantage. In one of the world's most important long-term defense markets, that is a strong foundation for future growth. Lead our team into the future is about ensuring that our organization scales alongside our business. Our leadership team meeting aligned senior leaders around the next phase of execution across the group. As we grow across markets, technologies and geographies, consistent leadership becomes an operational capability in its own right. Now I hand over to Christian, who will give you an update on our financials.

Yes. Thank you very much, Oliver, and good afternoon, everyone. Let me now walk you through our financial performance of the first half of 2026. The key message is pretty straightforward. HENSOLDT delivered a record first half with strong growth across all major KPIs. Most importantly, we continue to translate our strong market position and robust customer demand into tangible financial results. Starting with order intake, the first 6 months of the year were outstanding. Order intake doubled year-over-year to more than EUR 2.8 billion, lifting the book-to-bill ratio to 2.4x. This strong performance was driven by several major contracts, particularly the armored vehicle programs and the Eurofighter Mk1, with initial contributions from Knifefish program and additional TRML-4D orders. This underscores what we have consistently highlighted over the past several quarters. Strong defense procurement dynamics continue to translate into robust order intake and long-term program commitments. Revenue increased by 24% in the first 6 months to more than EUR 1.1 billion. Growth was driven primarily by the continued ramp-up in electronics and sustained strong execution in defense. As expected, successful milestone achievements in our key programs, Mk1 and PEGASUS resulted in higher pass-through revenues, which will gradually phase out over the second half. Core revenue, that is without pass-through gained further traction and increased by 18%, underlining the moment of our core business. Order backlog increased by 46% to a new record high of over EUR 10 billion, providing excellent visibility for future growth. Importantly, a significant share of secured contracts extends well into the next decade, reflecting our strong positioning in major European defense programs. To sum it up, increasing defense spending by our German international customers continues to translate into strong order intake, accelerating revenue growth and long-term revenue visibility. Let me now turn to our earnings and cash flow performance. Alongside our strong business growth, profitability increased at an even faster pace, underscoring the quality of our growth and execution effectiveness. Adjusted EBITDA increased by 29% to EUR 137 million, corresponding to a margin of 11.8%, that is up plus of 0.5 percentage points. This strong performance was primarily driven by higher volumes, particularly in our Electronics segment. In Sensors, our profitability benefited from revenue growth, too, but it was temporarily compensated by higher pass-through revenues as well as increased R&D spending. Our adjusted EBIT increased EUR 70 million, driven by the same operational factors. With depreciation and amortization growing at a significantly lower level than revenue and adjusted EBITDA, the adjusted EBIT margin expanded by even 0.9 percentage points to 6.0%. Turning to cash flow. Performance was in line with the usual seasonal pattern, reflecting our investing in working capital and infrastructure to support future growth. Higher advance payments levels provided the financial flexibility for these investments, leading to an adjusted free cash flow improvement of 25% year-on-year to minus EUR 136 million. In summary, profitability is well on track and set to gain further momentum as the year progresses. Turning now to our segments, starting with Sensors. The Sensors segment delivered a record first half performance with strong momentum across both order and signal value. Orders accelerated significantly in the second quarter, resulting in almost EUR 2 billion of new orders in the first half of 2026. Consequently, the backlog increased to more than EUR 7 billion, providing long-term visibility. The strong order momentum was primarily driven by major contracts for Eurofighter, initial contributions from program Knifefish program as well as TRML-4D radars. Revenue increased by 17% year-on-year to EUR 955 million, supported by accelerating dynamics in air defense solutions, particularly TRML-4D radars. Our integration business resulting from the former ESG acquisition as well as our service activities each contributed double-digit million euro growth. As highlighted earlier, milestone achievements in the Mk1 program drove pass-through revenues in the first half. We continue to expect a full year contribution of approximately EUR 150 million from this. Excluding pass-through revenues, core revenue increased by 10% to EUR 844 million, demonstrating the underlying strength and momentum of the business. This growth translated into healthy profitability. Adjusted EBITDA increased by 8% to EUR 113 million, corresponding to a margin of 11.9%. Segmental profit benefited in particular from higher volumes in TRML-4D and our integration business. At the same time, the margin was temporarily diluted by a higher share of pass-through revenues and continued R&D investments. Overall, Sensors continues to benefit from strong demand across the portfolio, combined sustained profitability with a record order backlog and a strong foundation for long-term growth. Moving on to our Optronics segment. Optronics continued its strong momentum and delivered another strong set of results in the first half of this year. Order intake increased significantly to more than EUR 900 million in the first half of the year, representing an almost sixfold increase compared to the prior year period. This exceptional performance was driven by major armored vehicle programs, including Schakal and second batch of Puma. These orders further strengthen our key position on European platforms and enhance long-term revenue visibility. Sales increased substantially by 63% year-on-year, supported by strong growth across all businesses. In particular, ground-based systems sustained their momentum, while also additional revenues from the Luchs 2 program further contributed to segment growth. The strong top line performance also translated into significant profitability improvement. Adjusted EBITDA increased to EUR 24 million, resulting in a margin of almost 11%. The significant uplift was driven by continued revenue momentum across the business and increasing economies of scale. Overall, Optronics demonstrated its ability to convert a substantial order backlog of more than EUR 3 billion into strong operational performance. With continued demand across key European land platforms, the business is well positioned to sustain its growth trajectory in the coming years. Let me now turn on to our guidance and outlook for the remainder of the year. Building on a very strong first half, we remain firmly on track and therefore, reaffirm our guidance across all key KPIs. As you are aware, business activity is typically weighted towards the second half of the year, particularly in the fourth quarter. While our strong H1 performance provides a solid foundation, we remain focused on delivering our targets for the second half. Starting with order intake, we continue to expect a book-to-bill ratio between 1.5x and 2x, supported by sustained defense procurement dynamics across our key markets. For revenue, we continue to expect a growth to approximately EUR 2.7 billion. We forecast an adjusted EBITDA margin in the range of 18.5% to 19%, reflecting our continued focus on profitable growth. As updated on June 1, we expect cash conversion of approximately 50%. This reflects continued positive impact of customer advance payments, which support our investments in capacity expansion, including our new radar production facility in the neighborhood. Finally, we continue to target a leverage of around 1.5x while maintaining our dividend policy of distributing between 30% and 40% of adjusted net income. For the midterm, we expect order intake to continue to outpace revenue growth, translating into average annual organic revenue growth to around 15% to 20%. Again, growth is likely to be more back-end loaded as large programs ramp up. Margins are expected to expand by approximately 50 basis points per year, supported by scale effects and productivity gains, while cash conversion normalizes towards 50% to 60%. In summary, our outlook combines strong top line momentum with sustained profitability and disciplined financial management. And with that, I will hand over back to you, Oliver, for an update on key orders for 2026 and beyond.

Well, thank you very much, Christian. Since our last analyst call, we have seen tangible progress across all our sensor pipeline with several key opportunities converting into book business. Eurofighter is one example. Orders for the Mk1 rebaseline, the Spanish Halcon program and from Turkey have materialized, contributing around EUR 580 million of booked orders. TRML-4D and Knifefish are following a similar path with initial tranches already secured and substantial opportunities ahead. PEGASUS remains one of the largest opportunities in front of us with a potential order volume of around EUR 900 million for the second German batch. One program deserves a particular mention, luWES. Building on the technology and the operational experience we have gained through PEGASUS, we believe we are very well positioned to play a leading role in this program. The overall opportunity ranges from several hundred million euros up to billion euro levels. All in all, the message is clear, our Sensors pipeline remains broad and continues to convert into high-quality order intake across multiple programs. Turning to Optronics. We continue to see a very strong momentum with a significant share of the expected order intake already secured. The largest contributions come from Puma and Schakal. Together, these programs amount for around EUR 800 million of booked orders and are now firmly in execution. This underlines the strength of our position on 2 of the Bundeswehr most important land platforms. Following the large German order last year, Leopard 2 now provides further upside into international markets with the first EUR 20 million already secured and reflected in order intake. U212 CD highlights the breadth of our portfolio in Optronics. TKMS has been selected in Canada as preferred bidder and our optronics smart systems will be part of the offering. Taken together, these programs provide a strong foundation for continued growth in our Optronics business across the full range of platforms that define European conventional capabilities. Before we come to the key takeaways, let me share one broader observation. We are often asked whether defense spending is shifting from conventional capabilities towards the next-generation systems. That question is built on a false premise. A tank cannot be replaced by a drone, but the drone changes how a tank is deployed, protected and supplied. The 2 are not substitutes. They are part of the same system. Modern armed forces need both at scale connected through an architecture that processes information and adapts faster than the adversary. Three conclusions follow for HENSOLDT. First, conventional and next-generation capabilities are complement. Our sensors provide the situation awareness on which drone operations, air defense and software-defined command all depend. Without the sensor layer, the software layer has nothing to work on. Second, our positioning across technologies, platforms and domains structurally reduces program risk. We have seen that from several angles today in the parallel development of FCAS and CFSM, and in the F126 termination. Our investment case does not rest on the trajectory of any single program or customer. Third, defense spending is expanding across conventional platforms and next-generation capabilities at the same time. A company positioned in only one of the parts of that spectrum captures only part of the opportunity. We are positioned across both. Today, the constraint is no longer defense budget. It is industrial capacity and technology innovation. That is precisely where we have invested, and it is where we continue to execute. Let me conclude with a few takeaways. The first is that our operational execution is progressively translating into measurable results. Record order backlog of more than EUR 10 billion provides excellent visibility, revenue growth is accelerating and higher production volumes are driving improved profitability. At the same time, the investments we have made to deliver at scale are increasingly visible in our industrial performance. Second, our strategic positioning continues to strengthen. We are expanding the software-defined defense ecosystem through new technology partnerships, while our platform-agnostic approach is proving its value across programs, technologies and domains. That gives us resilience as well as access to a broader set of opportunities. Third and finally, the long-term demand environment remains highly supportive. We continue to expect major contract awards. Our industrial footprint expansion is progressing as planned, and the NATO Summit has further reinforced the multiyear investment cycle across our portfolio in core markets. Taken together, these developments demonstrate our ability to convert structural demand into operational performance while continuing to strengthen our strategic foundations. And with that, we are happy to take your questions.

[Operator Instructions] And the first question coming from Marco Vitale from Mediobanca.

A couple of questions from my side. The first one is you could provide us an update on the naval pipeline after the F126 cancellation. Also, if you could quantify the magnitude opportunity you see for the, say, U212 CD campaign, successful campaign of ThyssenKrupp with Canada. Second one is on space that you mentioned during the presentation. Could you provide us with additional comments whether you want to pursue this opportunity with a maker buy strategy? And what would you be interesting in adding this domain?

Marco, can you please repeat the question? So for the first one, I understood it's a little bit on the consequences of FY '26 and the naval market in general? Or I'm very sorry, there was an audio problem here.

No problem. Yes, it was just a broad question on the pipeline that you see on maritime after the frigate cancellation. What could be the opportunities you are looking at also and if you could provide or try to quantify the magnitude of opportunity that you see from the export orders from Canada for the submarine recently won by ThyssenKrupp Marine. And then the second one, if you could add comments on space that you mentioned, you are very interested in expanding this domain. What could be the strategy? And also how do you want to pursue these opportunities from an organic standpoint or M&A?

Okay. I mean I'll start, Marco, with the naval opportunity. So I mean, I won't repeat what I said during my presentation. So again, F126, yes, there is a decision, which is still evaluated. I think also on the customer side, a lot of, let's say, administrative formal legal work has to be done. You read the media that the prime went into it. In a more conservative approach, I think we digested the financial impact. And as we outlined very clearly, no material impact on our financial performance or guidance. The strategy, and I just want to stress that point again. The strategy for the naval market is still on. First of all, I think we have a very competitive product with TRS-4D, which, by the way, was a mandated product in the F126 campaign. And definitely, we see that the concept of having a harmonized radar family within the German Navy is on and also international campaigns in Asia Pacific. I mentioned the Tamandare case, where, by the way, Tamandare is a MEKO A-200 kind of derivative where we have put our radar as well. So I think that also opens opportunity for additional batches of MEKO A-200 in Germany. The second topic, which I think underlines that our naval strategy, future opportunities is strong is that we have a strategic cooperation with Lockheed Martin Canada. We are the strategic partner of bringing this system, CMS 330 to Germany. And also what has been confirmed to us is that the F126 decision, which actually had a Thales combat management system, that this has no impact on the confirmed strategy of the German customer to harmonize their combat management systems across the fleet and the CMS 330 from Lockheed Martin has been preselected. And I think that again confirms a broad range of opportunity in the German market. But also being well aware that Germany, and that probably leads to the U212 CD that this cooperation with Canada, where I would see U212 CD only as a first step opens a broader corridor for cooperation. And I think, first of all, U212 CD is the roughly EUR 200 million. But of course, we have to accept that TKMS so far has only been selected as a preferred bidder. So the negotiations will start. So that is the rough magnitude of the opportunity, EUR 200 million, as I outlined. But again, there are ideas of opening bidirectional streets, bringing Canadian technologies to Germany, bringing German technologies to Canada, where, of course, with a footprint that we do within Canada, we see also a lot of opportunities coming up. And for the second one, is it luWES that actually you want a bit more of color?

I was actually interested in hearing your thoughts on space domain on Page 4 of your presentation. Yes, exactly.

Yes. Okay. So basically, and I think it was public, I joined our Chancellor and also Minister Pistorius when they visited Andoya as part of G2G discussions, how could Germany and Norway combine their strength in actually building an ISR space constellation. So these discussions are ongoing. At the same time, you've heard of a German program called SPOCK, where the first batch has been awarded to Rheinmetall with ICEYE. But again, it's fully open how SPOCK-2, the broader ISR constellation would be awarded. So this could be a competitive tendering, and that could even move into a broader kind of also time-sensitive targeting capability. And we have joined forces. We have teamed up as we also made public with OHB, with Helsing and Kongsberg. We have agreed that HENSOLDT would provide the sensor capability, and that ranges from radar -- synthetic aperture radar capability. Actually, we have a clear technological product roadmap to bring our PrecISR radar, which has a lot of interest in the market and advanced synthetic aperture radar into space. So that is part of the sensor package. Also, we are very strong in bringing electro-optical infrared capabilities into that market. And what we also see is talking about PEGASUS that some of the sensors, the signal intelligence sensors would also not only be employed across the naval, land and air domains. I think talking to our customers, there's a significant need to bring signal intelligence, electromagnetic warfare also to space, and that will be part of our value proposition.

The next question comes from Ben Brown from Jefferies.

I have 2, if I may. The first is, if I look at the revenue guide, it implies a slowdown in H2 versus H1. I assume a proportion of this is on the lower pass-throughs. But if you could give us some help on some of the other moving parts here, that would be great. And the second question is on the Sensors margin. The decline year-on-year, I know there's a lot of pass-throughs in there. But if I also look at excluding pass-throughs, there's a small decline as well. I know you tend to have an acceleration in the second half and pass-through should be lower. But again, how should we think about the moving parts for achieving the 19% margin target you've previously pointed to?

Ben, thanks for your question. So the first question, 2 comments on that. Of course, pass-through will slow down in the rest of the year, we approximately think that we will be around EUR 170 million in pass-through revenues. That means we will only make another EUR 50 million to EUR 60 million instead of having the same amount also in the half year. So this is one effect. The second is, let me clearly point it out, the first half year gave us excellent tailwind for the second half year. Nevertheless, we have 60% ahead of us and maybe we are a little bit cautious in this moment, but I see a very good baseline to deliver on our full year guidance and maybe a little bit beyond. Regarding the Sensors margin, yes, we have a little bit of a slowdown, but this is due to the fact that costs always run in a linear mode, whilst revenues, especially in the Sensors segment run exponentially into the Q4. And we have some investments. The one is for the RDS44, for the second production line CLM40 Inspector. Most of CapEx is CapEx, but there are also costs for hiring people, training people without having any coverage for projects before they can work them next year on it. And the next thing is that we've clearly committed to spend for R&D. So Oliver has mentioned MDOcore will be significantly invested. And these investments weigh on H1 sensors, but I'm absolutely sure that it will phase out until year-end and the revenues kick in, in this segment, we will be well on track to deliver on our margin guidance.

The next question comes from Sebastian Growe from BNP Paribas.

Two questions. One said more on the order pipeline and the other on the guidance, maybe we can separate the 2. So if I may start on the orders, I've noticed that there has been an upgrade by around EUR 80 million for the Eurofighter part in the order pipeline as opposed to what you had disclosed in quarter 1. So what's been the driver here? And I was also wondering whether there's a similar potential for other programs that you might see? And then I have a couple of questions related to PEGASUS in particular. Can you remind us of the potential there for export contracts and more specifically, which milestones would have to be passed here? Or are you already actively offering the solution to potential export customers? And lastly, how might the margin profile differ between domestic and export, at least indicatively? Yes, if we could start there, please.

Yes, Sebastian, thanks for your question. So first of all, what will the order pipeline look like in the second half year? So we have now collected EUR 2.8 billion, whilst EUR 1.9 billion amounts to Sensors and approximately EUR 1 billion to Optronics. We see especially some more orders in the Eurofighter program. It will be an order due to the fact that we have still some legacy topics in the MK1 radar. So the SDC, the power unit, which is in and Germany and Spain have both decided that they will be replaced and it will be a significant one in the second half year, so approximately EUR 200 million, EUR 300 million amount, which we will see. The second thing is, of course, the nicest program. It's an EW program for land sources, a combined multinational program where we equip the PIRANIA platform with our [ EW ] capabilities, and we also expect this program in the second half of the year, which also will be a triple-digit million amount coming to our order book. Then we see some more demand for air defense CLM 30, especially from Ukraine, where we see another batch coming up in autumn, which will give us some more orders. I think we have elaborated in the Optronics segment that there will be some network international programs, which is another part. And then, of course, the last big one is the PEGASUS. Maybe I'll start with the current situation around the second batch and Oliver continues with export. So we have now -- we have the request for proposal done. We will give our bid in the beginning of next week to the customer and then the negotiation phase starts so that we are very confident that we can do this in this year, but time is running. I have to say that it will be a December race. Let me say it like that. But currently, all the forces work like hell, but it works for the second lot. And these are the big bulks we see in the order pipeline for this year. And maybe with that, I hand over to Oliver for the export campaign for PEGASUS.

Yes, absolutely. Sebastian, so talking PEGASUS, I make a preliminary remark. So what is worth to note is that the program is really on a very good track as far as the remaining milestones for this year are concerned. And it's not that we have no doubts. We are absolutely confident that we will hand over the first capability to the customer mid-2027, which is a bit earlier than initially anticipated, and that's based on the contract changes we have agreed with our customer end of last year. And of course, that good news spreads to our customers. So our export campaigns, and please understand that I cannot name the countries. But what I can say that we initially started our export campaigns with 3 global customers, partially also with the support of the German Air Force at the exhibitions and special venues, looking at Asia Pacific and so on. But at the moment, and that is since quarter 4 last year, the focus shifts on 3 European customers, 2 of them with a very strong G2G agenda between the respective air forces. So in that regard, still having a full priority on execution in our ongoing program and on the amendment, the extra batch that Christian talked about, I definitely see that the export campaigns are maturing and that we would see next, but most probably the year after the first of those campaigns coming into our books. Margin-wise, it is worth to note that also the team that we have set up for PEGASUS, HENSOLDT, Lufthansa Technik, Bombardier is really strengthening the ties also with the perspective of luWES. And looking at all the experience, the maturity we get into our industrial capacity relating to the antennas that are part of PEGASUS, considering that part of the mission system is software that would need to be multiplied then with our customers, I'm pretty confident, and I have to go from Christian that the margins will go up.

Encouraging. If I can just clarify that I've got this right. So export contracts might be received by '27 for the first time. That's the message, right?

That case, late '27, but I mean, we definitely need to consider it's a complex program. But I mean, looking at the speed, to be honest with you, that we picked up since quarter 4 last year, especially related to these new European customers, I'm confident realistically, and you know we are taking more conservative approach, I would see it in 2028.

Okay. That's helpful. And then talking about conservatism. And let me then move to the guidance. What I've noticed is apparently that your guidance now implies quite meaningful deceleration in top line growth in the second half of the year compared to what you printed in the first half. So I was just curious to hear if this is mainly project or phasing related? Or do you feel more confident with regard to that very sales target now after how the first half has played out?