Defense budgets are climbing around the
world as geopolitical risks mount.
Bloomberg Intelligence sees a $300
billion revenue opportunity for
contractors driven by demand for radars,
launchers, and interceptors. One company
benefiting from that demand is
Australian defense firm Electrooptic
Systems. The company recently secured a
71 million euro drone defense contract
from a NATO member country. Its clients
include the US and Australian Defense
Forces, plus Gulf nations in the Middle
East. Joining us exclusively is Andreas
Vea, CEO and managing director of
Electrooptic Systems. Andreas really get
uh good to get you with us. Talk to us
about the overall outlook. Um there's a
lot of attention in this space. What do
you see as the demand trajectory? How
sustainable is it against this backdrop
of a more militarized world that we are
living in?
Yeah, thanks a so indeed electropic
systems uh is uh getting lots of
attention from the marketplace. We are
in the middle of a super cycle, a super
cycle which from our perspective will
last at least for another 7 to 10 years.
There's a surge demand in the terms of
replenishment of all the emptied stocks,
all the weapon systems which went into
Ukraine to to help Ukrainians defending
the position against the Russians. And
it's not only this replenishment need,
there's also additional need coming up.
needs which are arising from the new
type of air defense warfare. The warfare
against drones, small drones where today
almost no weapon system has been fielded
and where we as electrooptic systems
have the ideal range of ranging from
cannonbased air defense up to high
energy laser weapons where they are the
world first company offering that.
And what are some of the other
advantages including cost advantages
of your counter drone systems?
We offer layered counter drone defense
systems. So from ranging from a few
hundred meters up to 7 8 9 kilometers.
Our laser weapon systems are
characterized by kill a kill rate of up
to 20 drones per minute. Uh the cost per
shot is extremely low. It's about1 to
$10 maximum. And if you compare those
kind of engagement cost comp if you
compare that against the cost of a
missile rocket coming in for a price of
$500,000 to $1 million it's obviously
from an economic standpoint extremely
attractive and against again also from a
perspective of the efficiency it is
highly desirable by many clients. So we
believe that the high energy laser
weapon will make its way to the
battlefield in different domains on the
front line but predominantly to protect
critical infrastructure from being
attacked by drone swarms.
Who are your biggest customers at this
point and any contracts in the pipeline
that you're excited about when it comes
to brighter regional uh uh areas that
you're targeting at this point?
So we are a globally acting and
operating company. Obviously we have a
strong domestic market here in Australia
but we have also very large clients and
very very strong clients in the Middle
East but also across Europe across
Western Europe and obviously also the US
government is a client of electoptic
systems.
We have seen uh this trend of rearmament
across Asia as well. We just got the
headline today that South Korea is
planning to up its defense uh budget as
well. Um are you seeing any other
markets across Asia that might be of
interest to you?
Yes, we have received lots of inquiries
since we've announced this world first
100 kilowatt laser weapon export
program. So ranging from all the western
type of Asian countries NATO allies they
all are reaching out to us asking
whether we can localize our technology
and whether we could become an element
of the local domestic supply chain and
we ready to do that. US owns all the IPs
and we're ready to localize and to
transfer IPs to all of our customer and
client countries. That's one of our
biggest advantages.
How else are you positioning the company
to capture what your clients are asking
for some of these counter drone
requirements?
I
mean, we are very active in the counter
drone business, but obviously the
classical ground to ground business
remains important for the company. But
we are about to transform our space
business into what we call space control
and space warfare business enabling us
as the only company outside US to be
able to engage against satellites from
ground. So we can blind sensors from
ground, satellite sensors from ground
and over the next few years we will be
able to also engage against entire
satellites from ground which is a unique
and quite a war decisive capability.
Andreas, it's interesting that you talk
about transferring IP because when it
comes to really defense tech, how
crucial is it that when you're working
with these countries that you localize
your operations to have the buy in from
these uh partner countries,
it's becoming more and more demanding or
a requirement which is absolute mustd
do. So most of the countries want to
have a full access not only full access
to technology they want to have the full
autonomy and the self-sufficiency. So
they want to be independent no
dependency from any other country in
terms of export control is is acceptable
in the future. In particular, if we talk
about products in the domain of the high
energy laser weapons or space control,
it is an absolutely must have within the
local territory and all IPS needs to be
residing Yeah.