Hanza CEO: We are growing in Europe for Europe

Hanza’s share price rose by around 25 percent after the company published its first-quarter report. 

- We have been transparent and have provided clear guidance on what we are doing and where we are heading. For those who have followed us, there is nothing new in the report, he told Defence Nordic's affiliate publication Metal Supply.

Despite the sharp rise, Stenfors said the market may have been surprised partly because of external analysis.

- My assessment is that some analyses have not fully understood Hanza and have had greater impact than our own communication. That leads to surprise, even though we are delivering according to plan.

Cash flow has always been a priority. For us, it is the fuel for growth

Erik Stenfors, CEO, Hanza

The report showed strong growth, improved profitability and unexpectedly strong cash flow.

- Cash flow has always been a priority. For us, it is the fuel for growth. It comes partly from strong results and partly from strict discipline in working capital, Stenfors said.

BMK acquisition

During the quarter, Hanza included German acquisition BMK in its figures for the first time. Stenfors said the integration was progressing as planned.

- The main work is done before the acquisition, particularly regarding corporate culture. If that work is done properly - that is, if the right company has been selected - then integration becomes easier, which is the case here.

BMK is significantly larger than Hanza’s other units.

- In Sweden, we have around 8,000 square metres, whereas BMK has approximately 80,000. It is a completely different scale.

The larger facility also brings broader production capacity.

- We often talk about our toolbox. In that analogy, BMK is a chainsaw capable of felling large trees.

We often talk about our toolbox. In that analogy, BMK is a chainsaw capable of felling large trees.

Erik Stenfors, CEO, Hanza

However, BMK has a lower margin than the wider group, which Hanza expects to improve over time.

- The time required to raise an acquisition’s margins to our level depends on the starting point, but also on the economic cycle. Historically, it has taken one to two years, says Stenfors.

Hanza is targeting an operating margin of 9 percent by 2028.

- It will not be a straight line. Margins are affected by the acquisitions we make, but we are clear about where we are heading.

Strengthening its position

As reported, the company is also strengthening its position in the defence industry, where it was recently named supplier of the year by Saab.

Defence currently accounts for just over 7 percent of Hanza’s revenue, but the company expects the segment to grow.

- It is an important segment, both commercially and from a European perspective. We see it as part of building capacity in Europe, Stenfors said.

He linked the shift to Europe’s changed security environment following Russia’s full-scale invasion of Ukraine.

- When Putin attacked Ukraine, we began to realise that every country has an army - either its own or someone else’s.

Stenfors said developments in the United States had further reinforced the need for independent European defence and industrial capability.

- When we realised that we cannot rely on the United States for the defence of Europe, it became serious. Europe needs to build both defence and industrial capacity.

In response, Hanza launched its Lynx initiative just over a year ago, focused on strengthening production for the defence industry.

- We were early in making a defence-oriented acquisition of Milectria, a group of companies focused on the defence sector.

New opportunities

The acquisition of Germany-based BMK is also opening new defence opportunities. 

BMK initially had no exposure to the segment, but Stenfors said the facility’s size and capacity made it relevant for future contracts.

- BMK has already secured customers in the defence industry. In the vicinity of Augsburg, where BMK operates, there is also a strong cluster of defence companies.

Germany has historically taken a more restrained approach to defence, but Stenfors said demand and investment were now increasing.

- Germany has historically placed less emphasis on defence, but there is now both significant demand and rising investment. We expect to grow substantially within the defence industry in the country, says Erik Stenfors.

We are growing in Europe for Europe

Erik Stenfors, CEO, Hanza

Hanza will continue its expansion under its Hanza 2028 strategy, with a focus on acquisitions and organic investment in Europe.

- We are growing in Europe for Europe. It is about strengthening our existing markets and broadening our technological base.