Overview
Theon, a Greek manufacturer of defense optics, saw its stock rise by over 3% on Tuesday following preliminary results for 2025 that outpaced analyst expectations on several fronts. Management detailed a larger-than-expected order backlog, healthy top-line growth, and improved profitability metrics, while setting a 2026 revenue range that implies continued organic expansion.
Order book and 2026 pipeline
The company reported a soft order backlog of €1.4 billion, exceeding analyst estimates by €100 million. Management signaled that additional sizeable contracts are expected to close in 2026, with the platforms segment specifically cited as an area where further large deals are anticipated.
Revenue and outlook
Sales for 2025 rose 26% year-over-year to €444 million, coming in roughly 2-3% ahead of forecasts. For 2026, Theon provided guidance for revenue in the range of €570-600 million. That range aligns with analyst consensus near €600 million and implies organic growth in excess of 15% versus the 2025 revenue figure.
Profitability and product mix
Adjusted EBIT margin for 2025 reached 26.2%, outperforming the 25% analysts had expected by about 120 basis points. Management noted the product mix as a contributor to margin strength, observing that thermal imaging products generally deliver higher margins than night vision systems - a dynamic that supports expectations for healthy 2026 margins.
Cash position, acquisitions and cash flow
Year-end net cash stood at €126.9 million. That amount includes proceeds from a December €150 million rights issue but does not account for the subsequent €69 million acquisition of Kappa. The results imply that free cash flow beat expectations by approximately €19 million.
Working capital and efficiency targets
Theon reported improved working capital efficiency, with net working capital as a percentage of sales falling to 41% from 44.2%. Management has set a mid-term objective of reducing that ratio to 35%.
Key points
- Order backlog of €1.4 billion surpasses estimates by €100 million, with more large platform deals expected in 2026 - sectors impacted: defense contracting and military platforms.
- 2025 sales grew 26% to €444 million and 2026 revenue guidance of €570-600 million implies organic growth above 15% - sectors impacted: defense manufacturing and capital markets.
- Adjusted EBIT margin of 26.2% benefits from a favorable shift toward higher-margin thermal imaging products - sectors impacted: defense optics and technology manufacturing.
Risks and uncertainties
- Future revenue depends in part on additional large deals anticipated in 2026; there is uncertainty over the timing and completion of those contracts - this affects the defense procurement and contractor sectors.
- Net cash reported at year-end excludes the €69 million Kappa acquisition, which will change the companys post-deal liquidity position; that alters balance-sheet resilience and could influence financing flexibility in capital markets.
- The firm aims to reduce net working capital to 35% of sales in the mid-term; failure to hit that target would affect working capital efficiency and free cash flow generation, with implications for corporate finance and investor returns.