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Read the vision
HENSOLDT Spearheads Innovations That Make the World a Safer and More Sustainable Place
All activities at HENSOLDT serve the company’s overarching vision and therefore respond to fundamental challenges of our time: safeguarding peace and life – for society, our environment, and our planet.
As a high-tech company in the defence sector, HENSOLDT develops powerful sensor systems and digital solutions that detect danger and protect people and the environment.
With around 6,300 highly qualified employees, the company develops these intelligent and integrated technologies for all fields of deployment: in the air, at sea, on land, in space, and in cyberspace. Building on the company’s leading market position in Europe, the strategic ambition of HENSOLDT is trained on the global defence industry.
Read the full foreword
It is time to take a look back at 2021, an exciting and successful year in which optics pioneer Moritz Carl Hensoldt would have celebrated his 200th birthday. To this day, his name stands for outstanding entrepreneurship, innovative strength, and inventive spirit – attributes that are still at the centre of HENSOLDT’s values and mission. These values are critical drivers of the continued growth of HENSOLDT against the backdrop of a turbulent environment. Due to the exceptional commitment delivered by every employee of the company last year, HENSOLDT is comfortably ahead of its strategic goals and continues to achieve strong top-line growth and high profitability. For this commitment and the outstanding results, I would like to thank all employees on behalf of the Supervisory Board.
With its IPO in 2020, the company laid the foundation for its next phase of growth. A lot has already been achieved since then; the company has a record order book, and has secured landmark contract wins, including the Pegasus order for airborne reconnaissance technology. Of particular strategic importance is the recent investment by Leonardo which joins the Federal Republic of Germany and KKR as an anchor shareholder. This investment will provide good opportunities for strategic and collaborative cooperation. These investments are a testament to the company’s accomplishments and reflect the importance of coordination and cooperation within the industry as well as with governments in both a national and European context. Together with its anchor investors, HENSOLDT will be better able to respond to the evolving defence and security market and the challenges that face its business.
HENSOLDT is a technological leader as evidenced by its portfolio and R&D focus; analytics, autonomy, and AI play an increasingly important role in both products and production processes. HENSOLDT is committed to continuing its path as a driver of innovation in the industry, which is reflected in the significant increase in R&D expenditure in 2021, which has nearly doubled since 2017. Furthermore, the company will continue to build on its track record of successful acquisitions as an additional means of expanding its capabilities and solution set.
One of the dominating topics for the defence industry and the broader economy is ESG, an area that is becoming ever more prevalent for HENSOLDT. Being a sustainable business is extremely important to HENSOLDT and its partners; safety, security, and defence of people as well as fundamental rights of democracy are basic requirements and the very foundation of sustainability. While the defence industry must take responsibility for its own share of greenhouse gas emissions, it can also provide critical technologies and solutions to reduce climate change. HENSOLDT takes this responsibility extremely seriously and has established a new ESG strategy with specific commitments and targets for the coming years. The persistent work is paying off. HENSOLDT was recently accredited the lowest ESG risk factor in an industry ranking by Sustainalytics.
HENSOLDT still upholds and represents today what Moritz Carl Hensoldt was known for: entrepreneurship, innovation, and excellence. Our strategic alignment over the last year, the significant continued investments in technology and R&D, as well as in people, plants, and equipment globally, including in our core market Germany have led to the largest order book in the history of HENSOLDT and led to the creation of more than 700 new jobs globally. It is proof that the company is on the right track, and it positions us very strongly for the years to come.
Read the full letter
Thomas Müller Chief Executive Officer, HENSOLDT AG
Dear Shareholders and Readers,
The dramatic geopolitical developments of the last few weeks and months have put a very clear focus on a fundamental human need: security.
Russia’s assault on Ukraine is a seismic shift on a scale that we in Europe have not seen since the Cold War. It represents the climax of a long-running shake-up of international order and will leave deep marks in many ways, from politics to business and, above all, for people in the regions concerned. While it is currently impossible to gauge the long-term fallout from Russia’s waging of war, it is clear that they have brought the NATO member states back together again very closely. New life has undeniably been breathed into the alliance’s mission. Now it is more important than ever that Europe is strong, stands together, and is able to exercise full sovereignty over its security policy. This demands a greater deepening of political and industrial cooperation in Europe. What’s more, the war in Ukraine clearly shows how large an influence that cyberspace manipulation and disinformation have in determining war and peace these days. Today’s security, peace, and liberty are almost always threatened in digital spheres as well and require defence in them.
In Germany, the lightning-fast end of Europe’s post-war order in just a few days has led to a new era in security policy. The government’s ambition to beef up the country’s army quickly and comprehensively and future-proof it for a new defence reality will demand an enormous joint effort. HENSOLDT is ready for this. We are aware of our exceptional role as a leading technology company in the defence industry. We make it possible to detect threats in analog and virtual spheres thanks to our sensor solutions, electronic-warfare technologies, and expertise in data analytics and cybersecurity. HENSOLDT is committed to key pan-European projects such as FCAS, MGCS, and the Eurodrone which now have a stronger focus than ever. With our international development and manufacturing network and a workforce that has grown significantly in recent years, we are also able to ramp up the production of existing technologies and systems to meet short-term and medium-term demand.
Speaking on behalf of everyone here at HENSOLDT, I wish to express that the tragedy in Ukraine has demonstrated just how vital the mission of our company actually is. Our work creates the technological foundations for maintaining people’s peaceful coexistence. There is also a second aspect to what we do which remains fundamental for us in these extraordinary times: security is an indispensable precondition for environmental sustainability and, by extension, the preservation of our planet. This is another reason why our operations at HENSOLDT have such special relevance.
By publishing this Annual Report, we want to describe to you the path that our company will take into the future and, of course, look back on the fiscal year that recently ended. The year 2021 was a very successful one for HENSOLDT. We achieved all our targets and even exceeded some of them while continuing to develop strategically.
During the last fiscal year, HENSOLDT reached a further crucial milestone on its journey to being a solution provider and system integrator, with a contract from our German key client for the PEGASUS airborne reconnaissance system at a value of roughly €1.3 billion. PEGASUS is going to form the core of a sovereign reconnaissance network and the basis for the German military’s future capability development in the fields of self-protection and electronic warfare. In terms of our high-performance sensor technology, the Eurofighter will remain one of the most important platforms. In 2021, we successfully acquired more than €350 million worth of contracts for radars and self-protection systems for Germany’s Quadriga program. Other contracts of high strategic relevance include ones for long-range radars on F124 frigates and for Germany’s air defence system, with these radars having initial ballistic-missile defence capabilities. In our Optronics segment, we sold further reconnaissance sensors to the Netherlands and are equipping Germany’s and Norway’s jointly procured submarines with our groundbreaking, fully digital optronic mast systems.
With these developments and many other positive ones, we continued to pursue the path charted by our global growth strategy with determination during 2021, even in a market environment made extremely challenging by the COVID-19 pandemic. We further strengthened our brand that has become globally recognized. The company and its portfolio kept developing in all markets and we created a stable, future-proof shareholder structure with our anchor investors.
We are proud of the strategic equity interests held in HENSOLDT by the Federal Republic of Germany and LEONARDO. They emphasize our importance as a key technology partner and strategic player for Germany and as a core partner for the consolidation that is needed within the European defence industry. As a leading provider of electronic sensor solutions, we develop critical elements for next-generation security and defence applications. We are looking forward to furthering the expansion of our enduring and very trusting partnership with the Federal Republic of Germany, our most important client for the coming years. The same applies to LEONARDO, a partner with which we closely cooperate in a variety of pan-European programs.
The year 2021 became a shared success for all employees of HENSOLDT, wherever they were in the world. I would like to express to them my deepest thanks for their commitment during the persistently unfavorable conditions of the pandemic. Together, we again demonstrated last year the strength and extraordinary agility that HENSOLDT possesses. Our business model remains resilient and we have done an excellent job overcoming the fallout of the global supply-chain crisis. By applying the extensive measures coordinated by our dedicated COVID-19 task force, we were able to ensure the health of our staff, clients, and partners, while simultaneously maintaining full business operations. We are particularly proud of our in-house COVID-19 vaccination campaign, through which we administered over 2,500 vaccine doses in Germany alone. This further increased the protection of our workforce.
HENSOLDT very successfully combines outstanding innovation with a robust, crisis-proof business model, as corroborated by the figures for the 2021 fiscal year. Having received orders of a value of €3.2 billion, we now have a record €5.1 billion worth of orders on our books and a book-to-bill ratio of 2.2x. HENSOLDT was able to boost its revenue by 22 percent in 2021, bringing it to almost €1.5 billion, with EBITDA rising by 19 percent to €261 million. Something that is particularly pleasing in this context is the 28 percent rise in the adjusted free cash flow before taxes and interest to €252 million, through which we were able to reduce our debt-to-equity ratio to 1.6x.
Our excellent operational performance is the basis for HENSOLDT’s ongoing profitable growth and is the launching pad for the corporate strategy that we continued developing in 2021. We wish to begin the next chapter of HENSOLDT’s history, actively influence transformation, and push our business successfully over the coming years.
The global security situation is becoming more and more complex with almost every day that passes, with new threats, increasingly asymmetric conflicts, and numerous simmering conflicts. Alongside them are the growing challenges resulting from civil unrest and migration flows. Global cybersecurity threats are a danger for critical infrastructure, can bring entire supply chains to a standstill, and destabilize our societal coexistence in many different ways.
These are precisely the threats that are pushing military and security forces worldwide to develop new operational concepts. Their efforts are focused on platforms that are better connected and more intelligent, on greater autonomy, and on stronger collaboration — between nations and traditional players in the defense and security sector as well as within heavy industry. At HENSOLDT, we want to offer the right responses to our clients’ challenges, both now and in the future.
This is why we will:
This is a journey that we started long ago. Our ultramodern technology portfolio has been a cornerstone of our success and a key growth vector for HENSOLDT since the very beginning. We master next-generation technologies and turn them into long-term business.
Last year, for example, we put the new Quadome naval surveillance radar, developed by our colleagues in South Africa, on the market. This cyberattack-resistant, software-defined radar for air and surface surveillance is a trailblazing expansion of our product portfolio in the sensor segment. It offers outstanding performance characteristics at a very attractive price and we are very sure that it will appeal to many clients in the offshore patrol ship class.
We are also gaining new clients with our groundbreaking Twinvis® passive radar. This will pave the way for an entire array of applications of this revolutionary technology, from air defense in conventional and asymmetric conflicts to support for air traffic management.
When it comes to the increasing relocation or expansion of conflicts into cyberspace, we are seeking to make HENSOLDT one of the leading data analytics companies in Germany’s security and defence sector. While our current portfolio specializes in the classic electromagnetic spectrum with radar, electronic warfare, and optoelectronic sensor solutions, it will be crucial that we expand this spectrum into cyberspace further and further and continuously enhance our capabilities of transforming enormous volumes of data from digital contexts into usable information.
Consequently, data analytics and cybersecurity are crucial fields of growth for HENSOLDT.
We gained key capabilities for our tech stack through our acquisition of SAIL LABS in 2021, taking another step toward complementing our sensor portfolio with open-source intelligence. By combining our sensors from the electromagnetic spectrum with additional, digital sources of data, we can create reconnaissance systems with an unprecedented level of quality.
Sustainability is a core element of the HENSOLDT corporate culture. As a company guided by the motto of “Detect and Protect,” we practice a very special degree of responsibility and strong commitment to sustainability. HENSOLDT stands for protection and security, two crucial requirements for our society’s transformation into something more sustainable. On the other hand, we are seeing initiatives under the EU Taxonomy for Sustainable Activities that label businesses in the security and defence industry as neutral or even negative in relation to sustainability. In my opinion, this is an improper approach and may prove harmful to the development of a more sustainable society.
Our company’s response to ESG-related issues, that is sustainability in terms of the environment, society, and governance, is of critical importance to us as it ensures that we make a genuine difference to the world in which we operate. ESG has become an important distinguishing feature for our appeal as an employer, particularly for our new generation of talent. It is our direct responsibility to use resources in an environmentally friendly manner and to support the sustainable development of our societies in peace and freedom. A determined focus on sustainability delivers dividends in a commercial sense, too.
It is for these reasons that we launched our Group-wide ESG Strategy 2026 last year, an ambitious plan with which we wish to become the ESG benchmark for the defence industry within five years. We are on the right path and our first ESG rating from Sustainalytics is impressive evidence of this. We have become the number one for sustainability in the aviation and defence industry in the blink of an eye and are the only company in this industry to be listed as “low risk”.
HENSOLDT presently employs roughly 6,300 staff globally. We recruited more than 700 new colleagues in just the last year alone. Our motivated and high-performing workforce is the key to delivering the many major projects acquired in recent years on time, on budget, and at the high quality that is expected of us. It is our firm belief that our workforce needs to be diverse in order to maintain HENSOLDT’s successful track record. For me, it is clear that diverse teams are more creative and successful. For this reason, we wish to significantly increase the proportion of women in the global leadership team to 25 percent and the proportion on the Executive Committee to 35 percent. Our Management Board team has already gained a more diverse footing with the appointment of Celia Pelaz as Chief Strategy Officer. We have established numerous initiatives in order to achieve our goals. These initiatives include endeavors such as ELEVATE, our internal diversity and inclusion program with over 250 participants. HENSOLDT is also a member of the UN Global Compact and takes part in the UN’s Target Gender Equality program. Furthermore, we are an active member of Initiative CHEFSACHE, a network of 20 corporations in Germany. HENSOLDT promotes openness to diversity and integration.
Our workforce is highly motivated and works passionately on HENSOLDT’s future. It was therefore very important to us that we offer our employees an opportunity to acquire stock in our company. We began our ECHO employee stock option plan for this purpose last year, with resounding success. There are now 3,755 HENSOLDTIANS – more than 65 percent of our workforce globally – who hold shares in HENSOLDT AG and, in doing so, are demonstrating their trust in and commitment to the company.
In addition to ensuring security, HENSOLDT solutions are used to protect endangered species, often on the personal initiative of our HENSOLDTIANS. There is an exceptional example of our employees’ personal dedication and of the HENSOLDT culture that can be mentioned in this regard: We launched a joint pilot project with the Polar Bears International NGO in Manitoba, Canada in October 2021. The conflict between humans and polar bears is becoming more and more critical in this province as a result of climate change. The lives of humans as well as polar bears are in danger, as multiple fatal incidents have shown in recent years. Using our high-tech products as a basis, we developed an early-warning system consisting of a radar and thermal-imaging cameras to track down polar bears and keep them away from human communities in a peaceful way. We are currently training the artificial intelligence of our system in Canada before we bring it to Norway for a pilot project. As you can see, this is but one example of HENSOLDT products helping to protect nature.
We are naturally aware of our company’s own responsibility in the battle against climate change and we accept this responsibility. Last year, we analyzed our Scope 1 and 2 emissions and are currently calculating our carbon-emission targets based on the 1.5-degree guidance issued by the Science Based Targets initiative. We are also going to take a second step of expanding this to incorporate our Scope 3 emissions. We have committed to being carbon-neutral by 2035 or even earlier, which at HENSOLDT means reducing emissions first and offsetting them last.
As part of our journey toward this goal, we have set up a pilot project that demonstrates the direct connection between ESG and our core business. It involves in-house hydrogen technology that enables us to operate the HENSOLDT site in Kiel independently of the local power grid. This showcase project uses the latest technology for sustainable purposes, and for us it is just the start. ESG is increasingly becoming a driver and pillar of entrepreneurial value creation at HENSOLDT.
On behalf of all the leadership team, I would like to assure all shareholders that we are very aware of our responsibility toward you every day. During the first full year since HENSOLDT’s IPO, we achieved all our targets, brought our projects to fruition, and thus reciprocated your trust. I wish to explicitly thank all shareholders who took a leap of faith and have been with us since our IPO. We will continue doing everything possible to justify your faith in us.
With the warmest regards,
Read the full interview
Dr. Christoph Heusgen in Conversation with Thomas Müller, Chief Executive Officer of HENSOLDT AG
Against the backdrop of a dramatically changing world order which is increasingly dominated by polarization between different centers of power, it is more important than ever that HENSOLDT identifies geopolitical developments at an early stage and makes decisions with foresight.
Key influencing factors include the recent confrontation between Russia and the West, along with the growing strategic rivalry between the United States and China as well as the European Union’s strategic position on foreign and security policies in a changed global environment. Russia’s attack on Ukraine as well as significant national elections and new governments in Italy, Germany, and France have resulted in fresh momentum for a European security architecture, with strong implications for industrial policy. The same applies to NATO, where there is now a considerably stronger focus on its role and importance for the alliance’s partners.
The strategic rivalry between competing political systems and global power blocs has many consequences, for both security policy and industrial policy, and they go far beyond the current conflict with Russia. The key elements include:
HENSOLDT is keenly aware of its global responsibility in this increasingly complex geopolitical situation. As a major player in the European security and defence industry, the company seeks to contribute to reducing stability risks and uncertainties by means of innovations in critical technological fields and to laying the technological foundation for the European ambition of stronger strategic autonomy.
With this in mind, HENSOLDT engages in continuous dialog with international experts from a wide variety of fields. Dr. Christoph Heusgen is one of the German-speaking countries’ most renowned and experienced experts on foreign and security policy. Thomas Müller, Chief Executive Officer of HENSOLDT AG, met him for a conversation in the aftermath of Germany’s federal election.
Dr. Christoph Heusgen
Since February 2022, Dr. Christoph Heusgen is chairman of the Munich Security Conference. Most recently, he served as the Permanent Representative of Germany to the United Nations in New York from July 2017 to June 2021. Prior to that, Dr. Heusgen was the chief foreign and security policy advisor to Chancellor Angela Merkel from 2005 to 2017. From 1999 to 2005, he headed the Policy Unit of Javier Solana, the European Union’s High Representative for Common Foreign and Security Policy.
“Who Else Is Going to Do It?”
Dr. Heusgen, where do you anticipate the major conflicts in the years ahead?
Dr. Heusgen: We are witnessing Russia’s invasion of Ukraine as well as China’s threats toward Taiwan. There are many other conflicts across the world and the instruments used for this warfare are changing. Armed drones may prove to be crucial, but cyber warfare is also becoming increasingly significant.
What do you expect from the new German federal government in respect of its foreign and defence policy?
Dr. Heusgen: I expect an active policy. Russia’s attack has prompted a new era in Germany’s foreign and security policies and made one thing clear: Given the withdrawal of the United States and the aggressive stance of China and Russia, Germany has to play a more active role. This is especially true when it comes to developments in our neighboring countries, including eastern Europe, the western Balkan countries, the Middle East, and North Africa. As the world’s fourth-largest economy, we have to shoulder more responsibility. Who else is going to do it?
Müller: In my view, “responsibility” is the absolute key term in this regard. Germany can only take on this responsibility, however, if German foreign policy is coordinated more effectively across the board than was previously the case. The commitment of the new German government to significantly increase the budgets for diplomacy, development, and defence represents an important step toward taking more responsibility and achieving the best equipment possible for our soldiers, bringing about the necessary modernization of the military, and meeting the legitimate expectations of our allies. Responsibility also means working toward multilateral and cooperative objectives. Therefore, Germany should make much more effort to achieve collective positions within the European Union, including in dealings with China and in the Indo-Pacific region. We should then consult closely on these positions with the United States and local partners and play a more prominent role in international alliances and institutions.
Dr. Heusgen, you frequently talk about conflicts between nations that adhere to an international rules-based system and nations that do not. How can a weakening of multilateralism be combated?
Dr. Heusgen: Throwing in the towel is not an option. Our history and the history of Europe teach us just how important it is to enforce international law. We cannot allow the principle of “might is right” to gain the upper hand. We also need to demonstrate that our rules work, which is why we need a highly capable government in Germany and a well-functioning European Union.
You advocate a mix of dialog and robustness. What does that mean exactly?
Dr. Heusgen: We should never cut off communication with nations such as China. Global problems such as climate change and the pandemic can only be solved through global cooperation. At the same time, we can’t afford to sacrifice our principles and need to call out breaches of international law, including those involving human rights. Examples include the Russian invasion of Ukraine and the inhuman treatment of Uighur and Tibetan minorities by the Chinese government.
Mr. Müller, as the CEO of a major European industry player in the security and defence sector, what are your experiences of multilateralism reaching its limits increasingly frequently?
Müller: We were, of course, used to multilateralism being the key tenet of international relations over many decades. But areas of interest have been defined and claimed autonomously for several years now, and not only since Russia’s attack on Ukraine. Many times in the past, the West just stood by passively and watched this happen. At the same time, we are seeing a return to a bipolar world order, characterized by systemic rivalry between the United States and China as well as simultaneous confrontation and conditional cooperation between the two countries. In this context, many nations are realigning themselves and prioritizing their own interests. In my opinion, ad hoc coalitions — most recently the AUKUS format between Australia, the United Kingdom, and the United States, for example — constitute an effective response to this new situation. Germany and the European Union also need to find their place within such coalitions and, through cooperative formats, a new kind of multilateralism.
How should Europe specifically prepare itself for this new order? Are you in favor of a European army?
Dr. Heusgen: It is high time that we implement the decisions made. Twenty years ago, we decided to set up so-called battle groups, but they have proven to be paper tigers. We need a fast-acting European intervention force. It needs to be quickly deployable, for instance to save the lives of European citizens. The evacuation operation in Kabul was only possible thanks to the massive commitment made by the United States. When we talk about “European sovereignty,” we have to be able to act in a correspondingly sovereign manner.
Müller: And that can only work through profound industrial and political cooperation between all EU states. No EU member state is in a position to keep all its capabilities at the ready for a variety of scenarios — and certainly not to safeguard “sovereignty” on its own. In this regard, I am currently relatively optimistic for the first time: With the EU Strategic Compass, the bloc is developing a common vision for the first time; industrial cooperation is being strengthened through the European Defence Industrial Programme (EDIP) and the European Defence Fund (EDF) and, at a political level, there are now 60 PESCO projects that foster military cooperation. Gradually, many things are starting to come together.
How can the European defence and security industry contribute to this effort?
Müller: As an industry, we must, on the one hand, develop capabilities to meet the various scenarios and threats and, on the other hand, work even more closely with partner companies. Once again, cooperation is the key to success. We want to, and can, make our contribution to delivering the best possible kit for soldiers and achieving interoperability with our partner forces via Europe-wide industrial cooperation. However, this cannot succeed without political cooperation.
Dr. Heusgen: I regard limiting the number of different European weapons systems as eminently important. It would be a highly regrettable waste of resources if each country were to manufacture its own planes, own tanks, and own weapons. Genuine cooperation is needed here. And we have to do more in terms of developing cutting-edge armed drones, defending against the latest generation of rockets, repelling cyberattacks, and harnessing artificial intelligence.
With the digitalization of conflicts touched upon by Dr. Heusgen, we are also seeing changes in the battle to interpret events. What are the implications for the use of technology?
Müller: There can be no doubt that cyberspace and the information realm have opened up unprecedented potential for conflict in terms of both quantity and quality. The battle to interpret events and the conscious manipulation of people can take place in a much more targeted and effective manner, as well as on a global scale, in cyberspace. We have reached a new crescendo for this with Russia’s attack on Ukraine, though we have not seen the end of this development whatsoever. Many actors have only just begun developing these sorts of capabilities and are intent on using them to damage others. We Europeans also have to equip ourselves.
What might a European agenda against cyber warfare look like?
Dr. Heusgen: Two things are required: We need to keep pace in a technical sense in order to successfully repel attacks from cyberspace, for example those targeting our infrastructure. We also need to remain vigilant against content attacks on our communication systems. Russia and China are attempting to influence public opinion through false information and manipulation on a massive scale; in fact, they are seeking to undermine our democracies.
Finally, how should the defence industry contribute to the most important battle of our era — the one against climate change?
Dr. Heusgen: The same applies to the defence sector as to all other industries. We cannot afford to take climate change lightly and we all have to play our part. I am aware of the specific challenges facing the arms industry, but the increasing use of green energy holds the key.
Müller: Here at HENSOLDT, we are fully committed to setting standards in this area and championing industry-wide efforts in order to improve our carbon footprint and develop sustainable energy concepts. We are working at high tempo on hydrogen capabilities, for both military and civilian use. Our site in Kiel already runs fully on electricity from renewable energy sources, with all other locations set to follow suit. It is also clear, however, that we as a society cannot even pursue this quest for ambitious climate and sustainability targets if we do not have security. This is why our industry also has a key role to play in this regard.
Read the full interview
Chief Strategy Officer HENSOLDT AG:
“We Are Expanding Our Operations in Four Strategic Vectors”
How would you describe HENSOLDT’s operations to your family and friends?
It’s quite simple: We help our customers satisfy a basic human need – security. At the product and technology level, I often compare our services with the five senses and the nervous system that we humans use to perceive and process the world and external impressions and convert them into responses. Ultimately, we supply these five senses and the nervous system for various defence and security platforms.
What is your role as Chief Strategy Officer?
Together with my team, I am responsible for the strategic vision and business development of HENSOLDT. Here, the focus is often on tomorrow and beyond. On the one hand, we need to develop technologies and solutions for threats and scenarios that are constantly evolving – and that will continue to do so over the next 10 or 20 years. On the other hand, we cannot afford to develop in a way that ignores the needs of our customers; in other words, we have to understand the geopolitical dimension. What challenges is a country facing? What capabilities does it need to tackle these challenges? What technologies can fundamentally change our business model? In this complex world, we need to steer the development of our portfolio and our industrial presence in the right direction and prepare the company for the future.
You have now rolled out a strategic update under the title “Episode II.” Why? And why now?
The short answer is that we had reached all milestones in our first chapter much more quickly than anticipated. Given the pace of our development, it is sometimes easy to forget that the HENSOLDT brand didn’t even exist five years ago. We have enhanced our operational excellence, invested in our portfolio, substantially expanded our team every year, and secured major contracts as a general contractor. You could say that everything is already geared toward growth at HENSOLDT. Nevertheless, we must – and indeed want to – get to grips with the question of how we want HENSOLDT to look in 10 years. Therefore, we have defined in greater detail how we plan to grow in our four strategic vectors and fleshed out how we intend to translate this into specific corporate initiatives – and then put these initiatives into practice.
How would you categorize HENSOLDT using the “start – stop – continue” method?
We should continue 90 percent of all activities completely unchanged. These include our spirit of invention, systematic customer focus, rapid decision-making ability, ambitious goals, and outstanding implementation. These are our success factors. In order to achieve our ambitions, however, we need to think and act in an even more integrated way. We are no longer just a supplier of individual parts, but a general contractor for complete solutions. We need this mindset across the company. To put it another way: “Stop thinking in your box.” In terms of our identity, we should place far more emphasis on the value added that we provide to our customers and society in general. We have previously been too cautious in this regard, but that is going to change.
What are the key pillars of the strategy?
We are expanding our operations in four strategic vectors: We develop integrated solutions, spearhead the technologies of tomorrow, expand our operations globally, and foster security. The first aspect can be summarized under the term “Sensor Solutions House.” Security and defence platforms are becoming increasingly intelligent; they need to collect and process huge quantities of data and make decisions based on this data – and this process has to be in near real time and automated, as a human brain would simply not be capable of processing these kinds of data quantities. This is why our customers need a partner who doesn’t just provide partial answers, but rather complete answers. We have the ability to connect the individual parts, thereby developing complete solutions. We therefore no longer merely develop and sell the five senses, but rather supply the entire nervous system. Moreover, we want to be a driving force for future markets; we want to serve our customers around the world even more effectively by expanding our international partnerships and our own footprint, as well as by growing within the security sector.
Digital technologies are becoming increasingly important in the security and defence industry. How do we need to improve in this area in Europe?
From a purely technological standpoint, we are in an excellent position in some areas in Europe. However, we still find ourselves having to deal with reservations that stifle development. In my view, we need to demystify these technologies. Many Europeans immediately think of killer robots or killer drones when they hear “defence plus AI.” But the reality is very different. The use of such technologies is governed by numerous laws before we even start developing the technologies in the first place. As a European, I have a clear moral compass. We should, however, have a debate on the basis of facts. Ultimately, the aim is to implement a sovereign digital defence infrastructure in Europe. This can only be made possible if we develop the corresponding technical capabilities here and keep them in Europe.
Is AI already used in your products?
Of course. AI is the logical next step for intelligent algorithms and already forms an integral part of many of our products. Our self-protection systems for fighter jets and helicopters, for instance, and our air defence systems have long been autonomously guided by intelligent algorithms. The human brain is much too slow to recognize and understand certain threats at an early stage and to respond accordingly. However, our signal detection and video analysis algorithms also need to be able to keep pace with the speed of new threats. AI algorithms are, for example, used in our KALAETRON radar warning system for signal detection, as well as in our counter-UAS systems. Here, the objective is to detect and track other drones and to perform high-precision image analysis. In the HENSOLDT Analytics division, we are working to generate sensible decision-making bases for missions from a large quantity of open-source data. Without AI, none of this would be possible.
What direction is AI development taking?
We will continue to invest extremely heavily in machine learning and our prediction capabilities. We currently collect and analyse data, thus facilitating faster and more effective decision-making. In the future, we want to be able to make accurate predictions about what happens next.
Besides, we finally also need to make our digital infrastructure in Europe more secure, which is why we will be putting cyberprotection at the core of our products. Across industries, we work much too frequently on patches in order to cover technological gaps and vulnerabilities, even though it is much more important to secure the foundation. Here, we are setting standards, for instance with the secure operating system that we have developed at HENSOLDT.
Are there not far too many competitors in the field of AI?
Sure. But it’s a good thing, as competition drives development. But what good are intelligent AI algorithms without expertise about how to apply them and how to access relevant data? Here at HENSOLDT, we not only have data from the electromagnetic spectrum of traditional sensors at our fingertips, but we also boast the ability to collect data from cyberspace. What’s more, we also possess experience of collecting big data in order to develop applications for dealing with security and defence threats. In other words, we are familiar with the challenges and concepts of operations of our customers and are able to transform technologies into solutions. Not many other companies can do this.
Why is HENSOLDT seeking to expand its footprint in the United Kingdom, United States, and Australia?
First and foremost, I firmly believe that our technologies can add value to potential customers in these countries. The markets are attractive to HENSOLDT on account of their sheer size alone. At the same time, it is virtually impossible to export to these Five Eyes countries, which is why we plan to operate as a local player, enter partnerships, and build up our presence. The first steps have already been taken; we already have branches in all three countries. In the United States, in particular, we are also considering the option of acquisitions.
How important are security operations for HENSOLDT and how important will they continue to be?
Security operations at the interface to the military sector represent one of our four strategic vectors; we see numerous growth opportunities within this vector, as – thanks in large part to digital technologies – there are more and more areas in which defence and security issues overlap or become very similar. One example is the Xpeller counter-UAV system, which can be used to guard military camps, but also airports. Hydrogen solutions and airborne solutions (such as mission management systems and flight data recorders) can be deployed in both sectors. We certainly aim to grow in this area.
Is the security and defence sector on the whole a “late follower” when it comes to sustainability?
Not at all. Security is the basis for sustainability. It would be absurd to label the industry as non-sustainable by definition. I would therefore advocate that our industry be taken on a case-by-case basis. At HENSOLDT, for example, we have always taken all three ESG dimensions extremely seriously. We are working to manufacture our products in a more carbon-saving way. We source an ever-increasing share of the energy for our in-house sites from green electricity. In addition, we make a significant contribution to environmental protection through various nature and wildlife conservation initiatives. In fact, many of these initiatives are instigated by employees. We attach great importance to the “S.” We help our employees harness their full potential. As you can see, we want to be the industry benchmark in this area, too. According to the Sustainalytics rankings, we are already the best in the sector. And we are going to continue working on ourselves.
Where will HENSOLDT be at the end of the decade?
By then, at the latest, we will be an integrated solution supplier for sensor systems and data analytics, with technologies that are deployed around the globe. The three Pegasus aircraft will have been taking to the skies for a few years, the Eurofighter Common Radar System (“ECRS”) Mk1 will be operational, and cyber/AI/data analytics technologies will be an integral component of all security and defence platforms in Europe. We will also be a technological trailblazer of future markets (e.g., unmanned aerial vehicles) and will have contributed to ensuring that hydrogen is the main energy source for missions and relevant civilian applications. From what I know about our company, however, we will achieve all this much more quickly.
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At HENSOLDT, all the signs are pointing to growth. This is down to every employee at HENSOLDT. That’s because HENSOLDT innovations are born of the pioneering spirit of the company’s employees and their passion for continuously pushing back the boundaries of what is technically possible. HENSOLDT solutions are born of a willingness to find the best response to diverse and evolving customer needs and requirements in the context of complex projects. HENSOLDT markets are born of the ambition to continuously explore new ground and champion international cooperation. The commitments to nature and wildlife protection, which are rooted in the workforce, offer further proof that the company’s employees embrace the HENSOLDT mission and make the world a safer and more secure place through passion and high tech.
Around 6,300 people from 54 countries work for HENSOLDT across 43 sites. In the 2021 fiscal year alone, more than 700 new members joined the HENSOLDT team. Diversity and equal opportunities – regardless of gender, nationality, sexual orientation, and culture – form part of the corporate strategy mission at HENSOLDT. The HENSOLDT workforce should be just as diverse and rich in different perspectives as the company’s customers around the world. It is also exceptionally important to the company to support all employees in maximizing their full potential. With this in mind, HENSOLDT is committed not only to training and professional development programs, but also aspects of physical and mental health. The company also has a strong focus on increasing the percentage of women in leadership positions.
High tech, relevance to society, and a modern corporate culture make HENSOLDT a highly attractive employer within the defence and security industry. This is not least demonstrated by the company’s employer ratings on independent sites such as www.kununu.de: With a rating of 4.2 and a recommendation rate of 93 percent as an employer (as of December 2021), HENSOLDT is well above the industry average.
Echo – employee stock purchase plan
In the fourth quarter of 2021, HENSOLDT launched its first-ever employee stock purchase plan under the name of “Echo,” allowing employees to share even more closely in the future growth of the company. Employees in Germany, France, the United Kingdom, and South Africa were given the opportunity to purchase shares in HENSOLDT at a discounted price, thereby investing in shared future success.
“Echo” was met with an impressive response: Across all four countries, more than 65 percent of employees signed up – clear proof of the workforce’s strong identification with the company and their trust in its strategic direction.
The HENSOLDT Award — the Employee Prize for Team Players
HENSOLDT honors the high degree of identification and the dedication of its employees with the annual HENSOLDT Award. Presented for the first time in 2019, it recognizes exceptional contributions to the success of the company. Nominations and the choice of winner for the HENSOLDT Award follow an integrative process that involves all employees worldwide. Candidates can be nominated by their colleagues. A judging panel — which in 2021 comprised HENSOLDT Head of Communication Joachim Schranzhofer, the Head of Optoelectronics Development Michael Spieweck, Chairman of the Works Council at the Immenstaad site Thomas Höpfner, the Head of the International Setup department Celia Malahlela, and the Senior HR Business Partner Michael Huber, who sadly died in a tragic accident last year — selects the finalists from among the nominations submitted. The winners are then determined in a vote of all HENSOLDT employees.
The winners of the 2021 HENSOLDT Award all demonstrate particularly impressive entrepreneurship, team spirit, and passion. They were voted the best of the best from more than 200 nominations.
1st place: Frank Kehrer
Frank Kehrer, a developer of digital hardware at HENSOLDT, has been a regular visitor to Spitsbergen for many years and is fascinated by the Arctic.
Here, he became aware of a problem that has since grown into a genuine threat to the region’s inhabitants: polar bears, facing the risk of starvation due to climate change, that have lost their natural fear of humans, causing them to scavenge for food in human settlements. To protect themselves, local residents attempt to violently disperse the polar bears or shoot at them, both of which often have fatal consequences for the bears.
Problem detected, problem solved — with a HENSOLDT radar system that picks up the polar bears at an early stage and warns residents, allowing non-lethal countermeasures to be taken in time. The company has already carried out a pilot project in Canada’s Hudson Bay in tandem with the NGO Polar Bears International (see also “Giants of Silent Terrain”).
With his commitment to the protection of wildlife, Frank Kehrer was the winner of the HENSOLDT Awards 2021. The comments in the congratulatory speech at the 2021 HENSOLDT Awards were particularly apt: “Frank shows us that we can achieve amazing things when we consider the bigger picture and champion our ideas and beliefs with passion.”
2nd place: Claudia Wenke
“I look at the whole picture and solve problems as they arise.” Claudia Wenke, a project manager in the development of various HENSOLDT radar projects, describes her approach in an astonishingly matter-of-fact way.
However, she makes the impossible happen, time and again — just as she did in the middle of the pandemic, when the challenge was to ensure the punctual acceptance of the TRS-4D multifunctional radar for the second batch of K130 corvettes for the German navy. With tireless dedication and creative solutions, she managed to overcome all obstacles and safeguard a crucial project milestone for HENSOLDT. There were no delays whatsoever in the delivery of these corvettes, which are crucial for global surveillance and intelligence missions of the German navy.
A colleague used an analogy from the premier category of motorsports to describe her dedication. The following words at the 2021 HENSOLDT Award ceremony sum her up best: “Claudia Wenke is like a Formula 1 race car. But what matters to her is not her personal victory – in fact, she doesn’t enjoy standing on the podium – but rather the success of the team.”
3rd place: Markus Burdack
Markus Burdack’s motto is “I’m satisfied when the customer is satisfied.” As a commissioning and service engineer for periscope and optoelectronic mast systems, his job takes him around the world. But there is no distance too far, no journey too arduous when it comes to solving challenges with outstanding flexibility and creativity. The coronavirus pandemic made his job especially tough when several important service assignments needed to be carried out for a customer in Pakistan. Despite the challenging travel conditions and the 14-day quarantine requirement upon his return to Germany, Burdack made the journey multiple times.
As his wife and three small children are used to him often being away from home, even in normal circumstances, he found a particularly creative solution for his quarantine back in Germany, which he spent in an old borrowed trailer in the garden, at least allowing him to be close to his family. As the summer ended, the trailer was swapped for a heated camper (also borrowed).
Markus Burdack’s passion for customer care was recognized by the company with third place in the HENSOLDT Awards 2021.
To quote directly from the speech in his honor: “Markus Burdack is an outstanding example of the HENSOLDT values. Markus actively shares these values with younger colleagues, making him a mentor and a role model.”