Another extraordinary and eventful year lies behind us. Russia’s war against Ukraine has been raging for more than two years now, and unfortunately there is still no end in sight. As if that were not enough, global instability is growing appreciably. To name just a few examples: In the past year, we have seen ethnic conflicts flare up in the Caucasus, but also in the Balkans. China is striving to become a superpower in an increasingly multi-polar world and is attempting to expand its influence worldwide beyond the Asian region. Events in the Middle East, sparked by Hamas’s aggression against Israel and the subsequent further destabilisation in the Horn of Africa, mean that the fledgling hopes for the success of peace efforts in this region have again receded far into the distance. These are all symptoms of a growing global security crisis with interlinked centres of conflict. The result is a polycrisis that will be very difficult to resolve and, if at all, only in the long term.

Long-term investment in defence and security has become a major priority for many nations and will remain so for a long time to come, as credible deterrence is the key to preventing conflicts. As a consequence, we continue to see strong growth in demand for sophisticated electronic defence and security solutions to counter the diverse and ever-changing threats.

An important insight I draw from all this is that investing in HENSOLDT not only holds out the promise of economic added value through stable and sustainable growth but is also a commitment to security and stability from a political and social perspective.

A busy and successful 2023 for HENSOLDT was accompanied by a raft of special events. Right at the beginning of the year, the German Chancellor Olaf Scholz visited our site in Ulm to gain his own impression of our company’s innovative products and key technologies. The Chancellor was able to see for himself how efficient HENSOLDT is and what contribution we make to the Bundeswehr, our partners and Ukraine. This visit by the Chancellor underscores how our industry’s importance has increased significantly and confirms my conviction that the Zeitenwende can only be tackled successfully with a trifecta of the right political framework, a well-equipped Bundeswehr and an efficient defence industry.

Shortly before Christmas, we were able to announce the acquisition of ESG Group. This acquisition – the ninth and largest in our company's history – is a perfect fit with our overall strategy and will accelerate HENSOLDT’s development as a solution provider for defence and security. The combination of the highly complementary capabilities of HENSOLDT and the ESG Group marks a decisive step towards becoming a leading European provider of seamlessly integrated all-round solutions. Integrating ESG Group’s design and systems integration capabilities will bolster HENSOLDT’s positioning as a comprehensive solutions provider. In particular, ESG Group will contribute its expertise in intelligent data networks to connect HENSOLDT’s sensor systems across domains and integrate them into holistic solutions that generate added value for our customers.

Our promotion to the second-highest German share index, the MDAX, in March 2023 is the result of the share’s strong performance in recent months, the record order backlog and the increase in our company’s sales. It means we are now one of the 90 largest listed companies in Germany in terms of free float market capitalisation.

And within barely nine months, we were able to celebrate the ground-breaking and topping-out ceremonies for the construction of our new plant in Oberkochen. With the new plant, we are also preparing to ramp up series production in Optronics.

Our business again developed excellently in 2023. We successfully completed the critical design review for the PEGASUS project in autumn, in which the customer not only attested to the compelling performance of our system design, but which also triggered important cash milestones.

We have been awarded an extension to the development contract for the Eurofighter Mk1 radar worth over 100 million euros, which will create a stable foundation for further development and the prerequisites for certification and installation in Germany’s Quadriga Eurofighter starting in 2027.

All business areas contributed to the renewed strong order intake of almost 2.1 billion euros last year. The positive effects of the Zeitenwende are also evident here, with a cumulative order volume exceeding 350 million euros for more than 20 of our TRML‑4D mid-range air defence radars and orders worth around 250 million euros for optronics and self-protection on the PUMA infantry combat vehicle and the LEOPARD 2 main battle tank. We are also successful internationally, for example with an order for an integrated sensor solution on mine-hunting vessels in Indonesia.

We have won a package of important national defence research and technology studies for the Future Combat Air System (FCAS). The eight projects, mainly under the direction of the HENSOLDT-led FCMS GbR with Diehl, ESG Group and Rohde & Schwarz, cover the areas of mission planning, multi-platform sensor data fusion, electronic warfare and networked armament. At the same time, an accompanying project is being launched to develop an overarching AI backbone for all these projects. This order will give HENSOLDT a significant boost in further positioning itself as a system house and mission system partner to our armed forces.

We very successfully combine our high innovative strength with a robust and crisis-proof business model and again achieved our ambitious targets in the 2023 fiscal year and even exceeded them: With our order intake of 2.087 billion euros, we now have a record order backlog of 5.5 billion euros and a book-to-bill ratio of 1.1x. Revenues increased to over 1.8 billion euros last year. A key driver here was a significant 16 percent increase in core business volume. Adjusted EBITDA increased by 37 million euros to 329 million euros. With a very pleasing adjusted free cash flow before interest and taxes of 249 million euros, we were able to further reduce our net leverage to 0.9x before the capital raise in December 2023. So you see, we keep our word and deliver what we promise!

We continued the process of generational change in our company’s top management last year. Tanya Altmann has managed our Optronics Division since the second quarter of 2023 and, at the turn of the year, not only did my designated successor Oliver Dörre start work at HENSOLDT, but also Dietmar Thelen, who now heads our Spectrum Dominance and Airborne Solutions Division.

Oliver Dörre, Tanya Altmann and Dietmar Thelen will contribute a great deal of commitment and inject fresh impetus to enable us to leverage the opportunities that lie ahead and overcome the dynamic challenges we face.

One of those challenges is to ensure a reliable supply of primary products and components, particularly against the backdrop of cross-industry disruptions in supply chains. The fact that roughly 90 percent of our suppliers are based in Germany and Europe mitigates this problem significantly for us. In addition, persistently high energy prices and inflation are influencing the development of our cost base and our products’ pricing. We are keeping a close eye on all of these issues and are constantly working to find solutions and measures to further strengthen our company’s efficiency.

The global polycrisis I mentioned at the outset has rekindled awareness in many countries – not only in the West – that our freedom and our basic democratic order must be defended. At the same time, there has been a recognition that the abilities needed for that have been neglected in recent decades and must now be restored as quickly and comprehensively as possible. Both have a direct impact on our work. Our customers expect us to deliver larger quantities in a shorter time than we have been used to in recent decades. Finally, there is also a realisation that global partnerships are required in addition to masterful skills. A strong defence industry requires an export policy that is also understood as an effective means of foreign and security policy.

As a result, we are industrialising our development and production processes wherever possible and modularising our products and solutions even more in order to expand capacities and reduce delivery times. In order to further increase our performance, we are increasingly focusing on our core competences, while delegating work packages to partners to ensure that our highly qualified developers can unleash their technical skills to ideal effect. That also includes driving forward our development into a system provider even more intensively and expanding our presence on different platforms.

Our customers not only value our technologies, but also our commitment, reliability and innovative strength. They rely on us to do our part to keep us all safe. Our transformation programmes, in which we are tackling the industrialisation of our production, further improving our engineering excellence and also future-proofing our SAP environment across the Group, contribute to this.

Despite all the challenges and uncertainties, the new situation also offers enormous opportunities: The reassessment of national and alliance defence and the related key technologies are moving in our direction, and international demand for our products and solutions is steadily increasing. Information superiority requires interconnected sensors enhanced by artificial intelligence, control over the electromagnetic spectrum and the protection of one’s own forces; we are ideally positioned with our portfolio for all of these tasks which have never been in more demand.

Dealing with sustainability in the areas of environment, society and governance remains a key strategic issue for us. After all, as a technology company in the defence industry, our goal is to enable the sustainable development of societies in peace and freedom – and that also includes our original responsibility for the environmentally friendly use of resources. For young talents, in particular, sustainability has become a key criterion for the attractiveness of an employer. However, a consistent focus on sustainability also pays off economically. That is why we are systematically pursuing our Group-wide ESG strategy in order to further strengthen our already leading position as an ESG benchmark in the defence sector.

Dear Shareholders and Readers, with this letter to you, I wish to bid farewell. I would therefore like to share with you a few thoughts on HENSOLDT’s outstanding growth story and the factors behind its success.

What was once a little-noticed business unit at Airbus is now a strongly growing company that is listed on the MDAX and has more than doubled in size since the spin-off. A company that has become lean, efficient and high-performing under the leadership of KKR, a company that reliably and continuously delivers on what it promises.

Many people have asked me in recent weeks about the secret of our success. Success always has many reasons, but if there is one ingredient that makes HENSOLDT very special, it is our employees and our unique and unshakeable team spirit. We are passionate about what we do. We know that we bear a great responsibility when we develop and produce the high-end sensor systems our customers need to accomplish their dangerous missions and protect all of us. And we are fully aware of our responsibility to the capital market, to our shareholders, to you.

When I see where HENSOLDT is today, I am filled with a sense of joy and pride. As a pure-play defence electronics solutions provider, we operate in a very attractive market segment that will undoubtedly continue to grow in the future. Our product portfolio is at the cutting edge of technology and will be even more digitised and AI-enabled in the future. Our business areas complement and support each other and are therefore very resilient to market cycles. With a huge order backlog, excellent visibility and this great team, HENSOLDT is in excellent shape to keep on growing.

On 1 April 2024, I hand over the baton as CEO of HENSOLDT AG to my successor Oliver Dörre, who joined us in January. We have thus achieved a very important milestone for the generational change both in the Management Board and in our Executive Committee, which will enable HENSOLDT to continue its ascent in the future. I am firmly convinced that Oliver Dörre and the team on the Management Board and Executive Committee will lead our company to new heights on its impressive growth trajectory of recent years.

Thank you for your trust in HENSOLDT’s management team, thank you for your commitment to our company and thank you for your support over the past years. It fills me with great gratitude and pride when I say that the best is yet to come for HENSOLDT!

Thank you!