Leonardo is not rushing to dispose of its stake in the German sensor and radar maker Hensoldt, with the possibility of closer cooperation on Eurofighter and the sixth-generation fighter programme among the reasons for holding on, according to the Italian group’s chief executive.
Asked on the company’s first-half results call whether the plan was still to sell the holding, Lorenzo Mariani said the business had improved considerably since Leonardo bought in. “I think Hensoldt is now going well. Good results. The value is at the moment much higher than the one we had when we bought the shares,” he said.
He acknowledged that the original rationale for the investment no longer applied. “At that time we had a different plan, that was about having the majority of that company. Today it’s clearly not possible,” Mariani said.
Two considerations were keeping the stake in place, the first was market conditions. “I’m not in a hurry to dispose for two main reasons. One, because I am confident that that market is going very well, it’s a very dynamic one in terms of defence. So, in any case, we can really think about it without risking to lose some value,” he said.
The second, which he described as the more important, concerned combat air. “The number of opportunities for Eurofighter and the movements around the sixth-generation fighter suggest that it’s prudent to wait a little bit and to seek further opportunities for collaboration between Hensoldt and the electronics, both the Italian and the UK component,” Mariani said.
He argued that a healthy Eurofighter order book would itself create openings. “Should the Eurofighter continue to be very healthy, this is an opportunity,” he said, adding that the Global Combat Air Programme “offers potential opportunities that today we cannot evaluate.” Given his confidence that the holding would not lose value, he said, the effect was that Leonardo was “still having our foot on the German market.”
Leonardo acquired a 25.1% holding in Hensoldt from the German state in early 2021, in a deal then valued at around €606 million, having positioned the investment as a step towards deeper European consolidation in defence electronics. The German government retains a controlling interest in the company, which it designated a national security asset. Hensoldt’s share price has risen sharply since 2022 as European defence budgets have expanded, and the company supplies radars and sensors used across a range of European platforms, including the Eurofighter Typhoon.
Leonardo reported first-half orders up around 40% year on year to roughly €16 billion, revenues up 10% and net income up 74%, and raised its full-year guidance. Chief financial officer Giuseppe Aurelio told analysts that the group’s strategic joint ventures and investments, naming MBDA and Hensoldt, had contributed a 20% increase within the defence electronics segment, describing very strong results at MBDA and good results at Hensoldt.
“…and the movements around the sixth-generation fighter suggest that it’s prudent to wait a little bit and to seek further opportunities for collaboration between Hensoldt and the electronics, both the Italian and the UK component,” I wonder if that is purely a sensible speculative general comment on such future possibilities, or there is a more specific knowledgable interest in where that potential lies for a German company.