Current Trading Overview:
- • Revenue: €2.813bn in 1H25 versus €1.579bn in 1H24, up €1.234bn YoY, driven by defence programs and price/mix; Ammo+ underperformed on softer demand and higher input costs. Operating EBITDA: €777mm in 1H25 versus €425mm in 1H24; margin broadly stable at c.28%. EBIT: €726mm in 1H25 versus €400mm in 1H24. Gross margin not disclosed; company focuses on EBITDA margins.
- • Out/underperformance drivers: Defence & Aerospace strength offset Ammo+ headwinds; management implemented price increases in August in Ammo+ to restore profitability. No market-consensus vs guidance disclosed.
Segmental Performance:
- • Defence & Aerospace: Revenue €2,006mm; Operating EBITDA €632mm; margin 31%. Main driver of YoY uplift via M/L caliber ammo, land systems, radars and ATC.
- • Ammo+: Revenue €713mm; Operating EBITDA €127mm; margin 18%. Impacted by raw material inflation and demand softness.
- • Other: Revenue €94mm; Operating EBITDA €18mm; margin 19%. Small contributor.
Leverage (TNL) Trends:
- • Net debt €2.975bn at 30 Jun 2025; cash €968mm. LTM Adjusted Operating EBITDA €1.553bn implies reported net leverage 1.9x; gross leverage 2.5x (2.8x pro forma post-June bond issuance). Up from 1.3x at Dec-24, driven by strategic inventory build and refinancing.
Cash Flow and FCF:
- • CFO: (€572mm) in 1H25 versus (€174mm) in 1H24, reflecting a €1.179bn NWC outflow tied to backlog execution and lower customer advances.
- • Capex: (€87mm) in 1H25 versus (€41mm) in 1H24.
- • FCF (CFO − Capex, ex-M&A): (€659mm) in 1H25 versus (€215mm) in 1H24. Net cash decreased by €261mm in 1H25. Quarterly split not disclosed.
Liquidity:
- • Total liquidity constrained by limited disclosure on undrawn lines; cash €968mm at 30 Jun 2025. Pro forma debt stack rebalanced via new bonds; RCF headroom not clearly stated.
Corporate Actions and News:
- • Issued €1bn 5.25% 2031 and $1bn 6.5% 2031 senior secured bonds; CZK10bn 5.75% 2030 bonds. Minority buyout of Fiocchi; integration of The Kinetic; JV with Greek HDS for TNT; acquisition of nitrocellulose plant in Bomlitz. Exploring strategic alternatives including a potential IPO.
Guidance:
- • No numeric guidance; visibility anchored by €14bn backlog and €14bn pipeline; defence backlog coverage 3.2x. Risks: execution on WC unwind, Ammo+ demand/pricing, raw material volatility, export controls/geopolitics, and potential delays in customer funding.
Clean EBITDA and Rating View:
- • Clean EBITDA definition: Reported LTM Operating EBITDA (€1,457mm) adjusted only for non-cash PPA inventory step-up (€47.3mm) that depresses EBITDA but does not affect cash, yielding Clean EBITDA LTM of €1,504mm. On 1H25, Clean EBITDA = €777mm + €47.3mm = €824.3mm.
- • TNL/Clean EBITDA: €2,975mm ÷ €1,504mm = 2.0x. Using company Adjusted EBITDA (€1,553mm) gives 1.9x.
- • Indicative rating from Clean EBITDA leverage and business risk: Moody’s Baa2 / S&P BBB, leaning lower if FCF remains negative and WC release lags. Half-year EBIT/interest ~6.1x (726/119), consistent with BBB territory.
Conclusion:
- • Strong topline and EBITDA growth from defence offset by severe cash burn from NWC. Leverage remains moderate on EBITDA but trending worse; liquidity clarity is limited. Execution on WC normalization and Ammo+ margin recovery are critical near-term catalysts.