Hensoldt backs 2026 targets as order intake doubles, backlog tops 10 billion euros

July 31 (Reuters) - German sensor and radar maker Hensoldt reaffirmed its 2026 targets on Friday after first-half order intake more than doubled and backlog topped 10 billion euros for the first time, helping ease investor concerns over the loss of major naval contracts.

The company, one of the main beneficiaries of Germany's military spending push, maintained its forecasts for revenue, profitability and cash generation.

"The political decisions to increase defence spending are now being reflected in our order book," Chief Executive Oliver Doerre said.

The outlook confirmation comes only a month after Hensoldt sought to reassure investors following Germany's decision to abandon the F126 frigate programme, for which Hensoldt was due to supply TRS-4D maritime surveillance radars. The company said at the time that the contract value exceeded 200 million euros but that it expected no impact on its short- or medium-term forecast.

Concerns intensified after Saab secured a contract to provide combat systems and radar equipment for Germany's replacement MEKO A-200 frigates.

The guidance reaffirmation and record backlog may help reassure investors worried that the loss of the naval contracts could weaken Hensoldt's future growth prospects.

A particular focus for investors was cash generation after Hensoldt raised its adjusted free cash flow target in June to around 50% of adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) from roughly 40%, citing accelerated procurement processes in Germany and higher customer advance payments.

Adjusted free cash flow improved to negative 136 million euros from negative 181 million euros a year earlier, although the company said the improvement was primarily driven by advance payments received from customers.

Adjusted EBITDA climbed 28.5% to 137 million euros, lifting the margin to 11.8% from 11.3% a year earlier.

(Reporting by Maria Rugamer; Editing by Matt Scuffham)