Elmos Semiconductor Aktie

Good morning, ladies and gentlemen, and welcome to the Elmos Semiconductor SE conference call regarding the Q1 2026 results. [Operator Instructions].

Let me now turn the floor over to your host, Dr. Arne Schneider, CEO.

Ladies and gentlemen, good morning, everyone, and welcome to the Elmos Conference Call for the First Quarter 2026. Thank you very much for your participation and your interest in our company.

Ladies and gentlemen, Elmos had an impressive start into the new year with strong sales, improved profitability and significantly higher free cash flow. In fact, as reflected in last night's ad hoc announcement, we have raised our full year 2026 guidance, driven by strong first quarter performance and sustained high demand for Elmos products. The impact that may come from the allocation are not yet fully reflected. We will incorporate that piece of good news as it materializes step by step.

Our strong operational execution since many quarters significantly improved cash generation and enhanced capital allocation. Combined with more transparency at our successful Capital Markets Day in February this year, has driven a sustained increase of the Elmos share price in recent months. Year-to-date, the share price is up around 90%, bringing the company's market capitalization to nearly EUR 3.3 billion.

Based on this strong momentum, Elmos could potentially even qualify for inclusion in the MDAX, Germany's mid-cap index, potentially even at the next review in early June. If we were to make it, this would be a great achievement given that only free float market cap counts for the index ranking. And as all of you know, free float is something we can always have more of. This is a great success story, and it is especially rewarding to know that many of you have been supporting us on this exciting journey for such a long time.

Let me come to the market update. I would like to briefly comment on the last threat by the U.S. government to impose 25% tariffs on all EU cars exported to the United States. So if a consumer -- a U.S. consumer chooses a U.S.-made car, for example, a GM or a Ford, instead of an imported car, say, from Europe, this decision would actually have no major impact on Elmos, as our ICs are included in almost all brands and models globally. And that, of course, includes U.S. models manufactured locally in the U.S. So as long as the Americans continue to buy new cars, we will be okay.

More generally, destocking effects have more or less subsided. Inventory levels have largely normalized and in certain areas are now even below optimal levels. Customers have returned to order patterns that closely reflect the underlying structural demand, signaling a healthy end market. While some customers continue to order with shorter lead times, and it is our distinct advice not to do that, the overall visibility has improved and the demand environment remains solid. So our business is gaining further traction with improving momentum.

Also important, the long-term growth trajectory for Elmos is firmly intact and highly attractive. We have highlighted these trends in detail at our Capital Markets Day end of February. The semiconductor content per vehicle continues to increase at a strong pace, underpinned by powerful megatrends, including electrification, increasing ADAS penetration up to autonomous driving and the transition to software-defined vehicles.

In this favorable environment, the analog mixed-signal semiconductor market offers attractive and sustained growth opportunities. With its strong positioning, innovation capabilities and agility as a leading fabless player, Elmos is very well positioned to capture this upside and deliver attractive long-term value.

We are progressing also very well with the adoption of our China organization towards a full function entity. We have transitioned to a buy and sell model starting this year with China revenues being invoiced and shipped through our China organization. Our new local footprint strengthens customer proximity, enhances resilience and creates strategic optionality in China.

The acquisition of new projects continues to develop very positively with promising new design wins in all regions and across all segments. Year-to-date, we already have captured around 40% of new businesses as targets for the full year.

While we see an ongoing strong demand for analog mixed-signal automotive semiconductors, we anticipate a potential shortage in 8-inch wafer capacity. Power chips for AI data centers are manufactured mainly on 8-inch wafers, so are all of the Elmos products. Due to the ongoing AI boom, foundries and also OSATs are prioritizing more and more these AI applications.

This may very likely constrain automotive capacities and would lead to higher wafer and higher OSAT costs. We will closely monitor this situation, and we will pass on allocation-related cost increases to our customers in a fair way, as we did in the past.

We think it is not unlikely that prices may go up in the second half of the year. You have seen the recent announcement by various semi players to raise prices in 2026, some as early as April. Based on our experience in the last allocation cycle 2021 to 2023, we see limited risk for Elmos and view this as a potential upside from selective pricing actions and maybe even further share gain.

Let me now continue with the financial highlights of the first quarter of 2026. Sales reached EUR 152.5 million in the first quarter, growing by 20% year-over-year. Compared to the first quarter of last year, the weaker U.S. dollar had a negative impact on our Q1 sales by around 7 percentage points. So FX adjusted Q1 sales in 2026 would have been 27% higher than last year. Gross margin was 46.4% in Q1 2026, improving by 3 percentage points year-over-year. The increase is mainly due to the higher volume and cost improvement.

Like in the previous quarters, gross profit was impacted by higher gold prices in assembly. However, despite the further price hike in 2026 compared to the average price of last year, we do not expect incremental cost impacts in 2026, as the higher price is compensated by our mitigation measures and selective hedging activities for both.

At 24.7% of sales, Q1 OpEx were on par with Q1 2025, but somewhat higher than the full year 2025 ratio, mainly due to higher personnel costs. Furthermore, in Q1 2026, we got no material R&D grants, while we ramped our new Brno and Shanghai R&D locations, which added some extra OpEx burden. EBIT improved to EUR 36.2 million in Q1 2026 compared to EUR 25.6 million in Q1 of last year, mainly due to the higher gross profits, net of higher OpEx. As a result, the EBIT margin reached 23.8% in Q1 2026, almost 4 percentage points higher than last year.

After 3 months, CapEx amounted to only EUR 2.7 million or 1.8% of sales. Despite the higher volume, we still have sufficient testing capacity available after our successful efficiency optimization and test time reduction programs. Due to low investments and the reduction in working capital, adjusted free cash flow climbed to a strong EUR 40.7 million in the first quarter or 26.7% of sales. Another significant improvement, reinforcing our confidence that we are well on track to deliver even stronger cash performance than originally planned for 2026.

Ladies and gentlemen, let me finish my presentation with the market outlook and our guidance for the fiscal year 2026. S&P projects in its April forecast, a global production volume of 91.4 million new vehicles, down around 2% versus 2025. However, as we have highlighted many times in the past, growth in the automotive semiconductor market is largely decoupled from the underlying vehicle products. Instead, it is driven by powerful structural megatrends that continue to increase semiconductor content per vehicle in new cars. And in addition to these secular tailwinds, Elmos is also benefiting from a strong track record of design wins in recent years, which is supporting our continued outperformance relative to peers and securing our ambitious growth targets.

As reported in the ad hoc announcement last night, we have raised our guidance for the 2026 fiscal year based on the very strong performance in the first 3 months and the continued high demand for Elmos products. With order momentum further improving, we now expect sales growth of 12%, plus or minus 2 percentage points. So we have narrowed our guidance range, as you see, and raised the midpoint of our sales expectations.

Based on the higher sales as well as further optimization measures, an improved operating EBIT margin of 23% to 26% of sales is now anticipated. In line with our updated sales guidance, we have tightened the range by raising the lower end and increasing the midpoint of our operating EBIT margin guidance.

Despite the growth, capital expenditures less capitalized development expenses remain at a low level and are expected to amount to around 5% of sales, just as we said before. In addition, an even stronger cash performance is now expected with an operating adjusted free cash flow of 19% of sales, plus or minus 2 percentage points.

Let me also briefly explain why we now base our EBIT and free cash flow guidance on operating performance indicators. We announced early April that we will cancel most of our treasury shares to have maximum flexibility regarding potential future share buybacks. As you may know, under German law, companies are limited to hold, this is the first thing, or to buy back only up to 10% of their share capital. So it's not having more than 10% and not buying back more than 10%. It's a double threshold concerning treasury shares. So following the cancellation of our existing treasury shares, 3% about, after the AGM end of May, we will regain full flexibility within this 10% limit.

As a result, the stock-based compensation must now be settled in cash until further notice. And the resulting accounting effects will not be recognized in operating results. We want to present a clear view of our underlying operating performance. Accordingly, our guidance for EBIT margin and adjusted free cash flow will be based on operational performance.

So let me summarize. As promised on our Capital Markets Day in February, the year 2026 marks a turning point for Elmos. The headwinds from destocking are fading, and we are returning to normal structural growth rates with improved profitability and higher cash flows. Elmos has delivered an outstanding start to the year with strong growth across sales and EBIT and a particularly impressive improvement of the free cash flow, significantly above prior year level. Based on this excellent first quarter performance and continued robust demand for our semiconductor solutions, we were able to further raise our already very positive outlook for this year.

Ladies and gentlemen, electrification, ADAS, zonal architectures and software-defined vehicles are, of course, not just short-term effect, this is a long-term structural growth phase with significant opportunities ahead based on a strong market position and innovative mixed-signal solutions. As we continue to execute, convert design wins into profitable revenue and deliver consistent strong cash, we are confident that our shareholders will also acknowledge the strength of our underlying fundamentals.

So thank you very much for listening and your interest. I would like to open now the floor for questions.

[Operator Instructions] The first question is from Malte Schaumann from Warburg Research.

First question is on the potential 8-inch wafer shortage. Could you provide a timing perspective? When do you expect the potential shortage to kick in? And what that means for potential price impacts that you might pass on to customers? Will that affect already this quarter or the second half of the year? And is such a move already baked into your new guidance? Or would that provide kind of additional upside?

Yes. So we see a gradually increasing tightness throughout the value chain at the wafer foundries and also at the OSATs. We have seen some competitors react to that tightness and also to raising prices. Some started as early as April. Some started at the end of April or beginning of May. I think, usually, the practice is adhered to that to give kind of a month notice before the prices really go up. So I think for Elmos, there won't be a lot of impact in Q2. But, of course, we now have to look at the second half.

As far as our guidance is concerned, we haven't baked too much into that guidance. Also, the guidance increase, we still think we should gain a little bit more clarity on the amount. You've seen kind of a little step. I mean, we don't want to hold back, but we will gain a lot more clarity and then kind of the other part of the good news. Once we are clear, we will also report on it.

Okay. Understood. Then on some P&L items. On the gross margin, R&D, there has been no reclassification, say, development expenses covered by customers so that have been reclassified from cost of goods sold to R&D. So will that could be that gross margin...

Well, it's still very insignificant. You see R&D actually jumping a little bit in Q1. I think this is what you are asking, why is R&D so high? Yes. Well, 2 major things where we actually invest in. We invest in the Brno site, which is a great team of very accomplished engineers that joined us from a direct competitor. And, of course, this is now coming in the Q1 into the first quarter of kind of full personnel and also other cost effects.

The other thing is that we are building our China R&D center. The effect is even a little bit larger than the Brno effect. And then the third thing is that we have no material contribution of any government or state money in R&D. And usually, we have with all these European programs, the IPCEI, for instance, we have significant contributions. So all that taken together, R&D is a little up. That is true. However, this will not be the run rate for the year.

Okay. Good. And then on G&A, maybe a comment that was also a bit of the -- could be a bit on the high side, EUR 11 million in G&A costs, in the first quarter of the year, anything extraordinarily included here?

No, there's nothing too much extraordinary. Also, the run rate, I think, if I look at kind of the Q1 versus our internal projection for the year, our year projection is below. Yes. So basically, when you combine SG&A and R&D for the full year run rate, it will be in line with our general, let's say, guidance of around 20% total OpEx below gross profit. So, yes, nothing spectacular going forward for the full year ratios.

Okay. Good. And back to the shortage in the supply chain, is there any part of the supply chain that cause -- could cause trouble for you because of limited production?

Could cause trouble is kind of a -- that's trouble good or trouble bad. So let's see what comes out of that. No, I mean, trouble, of course, but we think that usually automotive in the end has a high priority and other parts of the semiconductor and electronics world should be cut off first because autos, of course, are very high-value products and semiconductors are, of course, key. And in a lot of places, we are, of course, single source. So up to now, there are no major issues, but we will work ourselves through any shortages. And if the time '21 to '23 is any guide or any example, things can be very excellent for us.

Next question is from Abed Jarad, mwb research.

I have just one question regarding the gross margin in Q1. Can we take this as a run rate? And how much was of this 3 percentage point effect from the cost optimization and efficiency program?

Yes. It's an interesting question. I think it's a little bit above the run rate, as I would expect it. However, with allocation coming, it -- this would not be included in my run rate considerations. So kind of -- it's above the baseline run rate. But who knows what happens in a more and more allocation scenario where usually also gross margins not explode, but kind of edge up a little bit. So we had higher volume. That, of course, helps the gross margin. We also had cost improvements. We ran a cost program last year. We shed some staff. And this is, of course, reflected in that situation.

But also here, if I can add to that, for the full year, I think we will be also -- will be back to our general, let's say, operating model, 45%, give or take, gross profit.

But why is this? Can you quantify the moving parts here? Because you also reported like cost inflation, but still came in with like really impressive gross margins. So I -- just trying to understand the moving parts here.

Yes. I mean, we had our cost program. And, of course, that helps, and it helps particularly when you get into your full year effect and everything is kind of done. Over last year, we first -- I mean, once you decide for a cost program, it has quite a time lag to actually get people off your payroll. And that takes basically a year. And in Q4, we finally got people off our payroll such that you now see results that are not too bad.

[Operator Instructions] Next in line is Johannes Ries from Apus Capital GmbH.

Big surprise that I'm on the line. Maybe 3 short questions from my side. I had to dial in, therefore, maybe I have not everything with the discussion, which you might have; therefore, if I maybe ask a question which was already answered, I apologize. Maybe first on the cash flow, how -- what development we can expect for CapEx and working capital, especially going forward? Is there a further reduction in working capital possible? Or was it a big step in the first quarter?

Yes. I mean, the first quarter is in 2 respects, a little kind of off center in terms of what we expect for the year. I mean, we expect 19% free cash flow as a percent of revenue. Now, we are at 26% and a little bit, 2 effects. You see very low CapEx. We expect CapEx to be at around 5%. So we're kind of 3 points below that full year expectation. So of course, that helps a little bit in the cash flow.

The other thing is that we also see a working capital decrease versus the end of the year 2025. I think working capital is going to be interesting this year. We manage it down. We want to manage it down further. But I can't really tell you what happens, say, in Q4, which is, of course, also an interesting part of the year given this allocation potential constraints. So we may see a more drastic drop in working capital if some wafers are so constrained that we go below desired inventory. We may see a little bit more if we somehow get some wafers and decide to take them regardless whether we need them now or only in 2 months' time.

So I think in Q4, it's particularly hard to predict this year. I mean, cash will turn out brilliantly this year. That is clear already. But the working capital part could still go either way or it could be rational and positive for us either way. We have -- we cannot really say how the second half and particularly Q4 working capital will develop.

Very clear answer and explains the guidance you have done on cash flows. Very helpful.

Second question, only a clarification question. You said you have 40% of what you are targeting on design wins, if I got it right in. And if I remember right, you said you have -- the majority of the design wins had -- you had already in at the end of last year for your 2030 target. How much of the -- maybe the part which was left at the beginning of the year, it's now already came in, and how much you need on additional design wins to have maybe everything in your books with all maybe cautious regarding especially Chinese orders to achieve this 2030 target?

Yes, we have kind of 15% that's left for '27 following. We wanted to win 10% of what's left. So 25% is left in total, 15% will be left for the next years if we kind of follow our plans. 10%, we need to win this year. Of that 10%, we won 40%. So I think we are on a reasonable track to get that 10% in this year.

And this is also -- if maybe more comes in, especially in '27, which could partly get even revenues maybe in '29 or 2030, is that this is maybe icing on the cake?

That is, of course, upside. That is true, then maybe we will reach our target a little earlier. I don't think we'll reach it some years earlier, then it's just a little earlier. But that is, of course, true. There's potentially more to be had.

That's clear. On the pricing component, in other areas, the pricing is going like crazy. I saw semiconductors, the growth was 79% year-over-year for the whole. Definitely, the memory is the biggest driver on the pricing, but could be more pronounced upside? Or is it a little bit different in automotive players, as we are partners, and we don't -- maybe are unfair in both directions.

Well, I think that for this year, most people are still single digits, some may go into double digits, but mostly with all the incomplete information there is, I would read a single digit into the market, but potentially adding something next year, which would then be very, very likely. Things like the numbers you mentioned, kind of 80% or doubling or so, I don't think so. I mean, we've seen in the past allocation if that can be any guide to the future that companies behave differently. And some -- actually, Elmos chose a very partnership-informed approach that you pass on cost that you kind of made a lot of effort to make things possible for customers.

And yes, this does not lead to you taking a financial hit, but you were also not kind of taking real advantage of your customers. There were a few exceptions. And maybe this time, there will also be a few exceptions. I think, however, that the general market will maybe, again, follow that partnership approach where you don't take advantage, but you'd rather see that the world goes on in a positive manner for everyone.

That's clear. Finally, on new end markets and new products, how have the things developed maybe in the recent weeks on the topic of robotics? We hear from the one other also very positive maybe expectations from customers like you also told with your customer.

And the second is on the crypto chip. It's very small crypto -- quantum-based crypto chip. Any maybe update you have won an innovation price? How is the interest of customers on this product?

Yes. Well, this is -- so on the robotics, actually, there's nothing in terms of big news to report since the CMD. It's a dynamic field, but it's not that dynamic that we have news kind of every month that are worth reporting. But we like where this thing is going.

Yes, on the QRNG, so the quantum number generator, we won that innovation price. We actually won 3 innovation prices, I believe, in total over the last week. This is a beautiful little device. Of course, quantum computing is not big today, right? But it's kind of up and coming. So there's a lot of interest to discuss that device and to see where it could add layers of security that is actually quantum safe. However, there's no big serious ramp, so I think we are at the forefront of innovation. We are not in kind of these ramps this year. These things are, of course, quick because cryptography is a dynamic field. However, I cannot report any quick revenue or design win right now. It's a developing field.

But again, it's not in the 2030 target...

No, no, none of it. None of it. We won't know, of course, not because it's not running in series and it's no design win. So by definition, it can't be in, and we would always be conservative. If we win something that is on top, and I mean, we -- since doing something on top is kind of allowed we think, we are very much running to customers and explaining why this is the best chip ever. But we wouldn't include it in our targets yet.

And finally, you are at least showing this product not only to your traditional customers because it could be also very interesting and valuable for other sectors.

We are very open to -- with whom we speak.

[Operator Instructions] There are a few more questions incoming. The first one is from Robert Sanders, Deutsche Bank.

This is Rob. Can you hear me?

Rob, we can hear you well. We are looking forward to your questions.

Great. Yes, that was just on the foundry tightness. There have been some reports about lagging edge foundries raising prices by 10% starting in June. Is that what you see? And is the idea then that into next year, you could see corresponding price rises as you saw in 2022 and 2021? Or is this -- is the dynamic a little bit different to when we were in '21, '22?

No. We can debate the details now on different months or exact numbers, but this is the general direction that we see. We've already seen some competitors raising prices. April was, I believe, the first incident. And then, there were quite some others. So -- I believe it's not exactly the way it was in '21. I mean, in '21, we had this huge swing into consumer first, and then, we had this V-shaped recovery in the car industry. So I personally feel that '21 was a lot more brutal in the swing, and it was a lot more unexpected.

Now that AI demand just creeps up, and it's tight, and it's really tight, and everyone kind of already learned something, I believe, from the '21 to '23 period, we slide into allocation and tightness. But I think, overall, the industry will better manage, and at least, let's knock on wood, this is likely to happen.

Yes, I believe the price increases should somehow reflect the increased cost throughout the value chain. We already discussed whether some people go in a less or more partnership-like way on that, but I think it's a good rule of thumb.

And back in '22, you saw your competitors doing LTAs. I think you were a bit more reluctant to lock yourself into a certain price because then you would end up taking on some risk, whether it's foundry costs or other kinds of cost. What is your thought process this time around regarding LTAs?

Yes. We are always a little bit opportunistic, and there's no clear right or wrong on an LTA. In certain business situation, it does make sense. In others, it's actually not needed. I mean, if you win over a complete new business and you are the new sole source, and everything, yes, maybe you want to be that for some years such that all the efforts and all the prioritization makes sense. Today, at this stage, I can't tell you whether there will be a lot of LTAs. Given where we are now in this cycle, I would doubt it. But honestly, whether that is still true in 3 months or 6 months, I can't tell you.

Next question is from Alexander Lippert from GS&P KAG S.A.

I have a follow-up question on your share buyback potential. So during Capital Markets Day, you've stated that you do not want to intend -- or do not want to build up a large cash pile, and now, you are considering buying back 10% of the share capital. Would this mean that you would also like to relever the company?

Yes, this is one option that, that would go in with such a step. However, it would still be very moderate leverage, of course.

And in the past, you've been quite opportunistic and price sensitive when it comes to share buybacks. Do you still apply some kind of a valuation framework?

Yes, of course, we do. But I think one change -- one thing really changed versus the past. I mean, in the past, we had a very moderate cash flow generation. So we had to be a lot more kind of opportunistic in buying back shares. Yes, there was money, but mostly from transactions like selling SMI or selling the fab. And this situation is, of course, a little different from a capital allocation strategy that is a lot more structural.

If you're structurally generating quite interesting amounts of cash, you have to -- and you don't want to build a cash pile, and you have to think about buybacks a little bit in a different way if you don't want to shift 100% to dividends, but I think this is kind of also a little bit off center to shift 100% to dividends. So if you want to combine buybacks and dividends in a much more structural way, you are in a little different situation given the new ability to generate cash.

Okay. And given that you also mentioned that MDAX inclusion is a topic, and -- how do you think about the balance between free float and share buyback?

Yes. Of course, we would love more free float. This helps for MDAX. I believe it helps the stock itself. There is no structural reasons why 56% or 58% is a great number. I believe stability and long-term orientation is in line with much lower numbers of anchor shareholding. This is all debatable. For now, if we look at smaller buybacks, like the buybacks we've done at the beginning of this year, this does not change the structural kind of shareholder pie chart so much. So there's -- I mean, we can continue doing buybacks with 0.5% or so for quite some time until something really structurally changes. I mean, more free float is, in essence, a decision of the anchor shareholder family.

So they could also sell via share buyback, for example.

Well, I mean, if you own shares, you can sell whenever you like, I think. I mean, if you're in the Supervisory Board, potentially not in a closed period or so. But -- I mean, this is the benefit of ownership. You can essentially do what you want.

Dear ladies and gentlemen, as there are no more questions in the queue, with that, I'm closing the Q&A session and handing the floor back over to the host.

So this is then the end of our Q1 conference call. Thank you very much for your participation and all your great questions. I hope to meet many of you in our upcoming roadshows and investment conferences in London, Germany and the U.S. So for now, thank you very much for your support and your interest in Elmos. Goodbye. Take care and stay confident.

Good afternoon, ladies and gentlemen. Welcome to the Elmos Capital Markets Day 2026, and welcome back to all of you who followed our earnings call this morning. My name is Ralf Hoppe, and I'm responsible at Elmos for Corporate Investor Relations and Corporate Communications. Today is all about Elmos. Following the presentation of our financial results and our optimistic outlook for 2026 this morning, we have prepared an exciting program for this afternoon. Over the next couple of hours, we'll give you a clear view of the cornerstones of our strategy, our great market opportunities and growth potential, our chances in China, leadership in innovation, our operational excellence and, of course, our financial ambitions.

Let me briefly walk you through today's agenda. Our CEO, Dr. Arne Schneider, will kick off the Capital Markets Day with the big picture, outlining our strategic priorities and how we see Elmos evolving in a rapidly changing global environment. Dr. Jan Dienstuhl, our Chief Sales Officer, will then discuss market opportunities and our right to win new business, explaining why we are confident in our competitive positioning and in our ability to capture structural growth towards our 2030 sales target.

Dr. Burkhard von Spreckelsen, Chief Development Officer, will provide a detailed update on our China strategy. As you know, a key pillar of our growth plans and strategic agenda. After a short break, Jochen Vaihinger, CTO, will take you deep into innovation and technology, the core engine behind our long-term success.

Dr. Patrick Schmitt, COO, will present our supply chain strategy and operational excellence, ensuring scalability, resilience and performance as a fabless company. And finally, our CFO, Margarita Mamberger, will walk you through our financial performance and our targets, outlining how growth translates into profitability into cash and, of course, into shareholder value.

We will conclude with an open Q&A session. We encourage you to ask questions and interact with our Executive Committee.

Ladies and gentlemen, we are convinced that today's presentation will reinforce your understanding why Elmos is uniquely positioned in an evolving automotive semiconductor landscape and why we are so confident about our next phase of growth and value creation. Before we begin, of course, a short legal disclaimer. As usual, please note that today's presentation includes forward-looking statements. These statements reflect current expectations and, of course, are subject to risks and uncertainties that could cause actual results to differ from these expectations. Thank you very much for being with us today. I would say let's get started. Please join me in welcoming our CEO, Dr. Arne Schneider.

Ladies and gentlemen, good afternoon. It is a great pleasure to welcome you to our Capital Markets Day 2026. When we met at our last CMD in November 2024, we made clear commitments to all of you. Today, I can say with confidence we have delivered. We executed our strategy exactly as planned. We outperformed our peers. We gained market share and strengthened our competitive position. We started successfully on our new journey, and we created substantial shareholder value. And I think the best news to all of us to you, we are only just getting started. The best is yet to come. Let's see where we are. Amos is a real global high-tech leader, enabling intelligent mobility around the globe. On average, there are 10 Elmos ICs installed in every new car globally. Our innovative solutions are used by virtually every major OEM worldwide from Europe to the U.S. to China, Japan or Korea. From premium models with a lot of Elmos chips to entry-level vehicles with some fewer Elmos content. From combustion engine to fully electric platforms. Our chips are not just components. They are the intelligent layer of a modern vehicle. Our ICs measure, control and enable electronic intelligence at the edge of the vehicle architecture, where real-time data is generated, processed and translated into safe, reliable, high-performance functionality. If you drive a car or you plan to buy a new one, we are part of your daily life. You will most probably not see the Elmos logo anywhere in your car.

Of course, unless you grab a screw driver and take things apart, I can recommend that just for knowing what's in sight. We are working behind the scenes under the hood, in the dashboard in the airbag, in the HVAC system or at the edge of the vehicle. We are everywhere to make your journey safer, more efficient and more comfortable. Since 1984, so for more than 40 years, we have transformed from a visionary startup into a real global leader. When we look back at the early days of our company, we see the courage, vision and determination it took to turn a bold idea into a global leader in analog mixed signal semiconductors.

Our passion for innovation, our deep understanding of customer needs, our strong execution discipline and above all, our tilers commitment have shaped Elmos into what it is today. And these qualities are firmly embedded in the DNA of our people, and we continue to drive our success every single day. Today, we are stronger and better positioned than ever before to lead the structural growth of intelligent vehicle electronics.

Let me give you some examples. Our success is the direct result of the innovative and visionary spirit of our 500 engineers worldwide. Their passion, creativity and technical excellence form the foundation of our competitive strength. Based on our best-in-class IP performance, Elmos has been recognized as the most innovative German midsized tech company in 2025. Elmos is part of the tech docs, as you know, and 1 of Germany's largest listed technology companies. At the same time, we are among the fastest-growing members of the index with only 3 out of 30 TecDAX companies achieving a comparable sales CAGR between 2021 and '25. We are the global #1 or #2 in our key application segments.

You see leadership is not optional. It is a key element of our strategy and essential for our ongoing successful development. From our early beginnings to our position today, and the significant potential that lies ahead, our journey has always been driven by relentless innovation, disciplined execution and a highly committed team.

I've already mentioned our strong performance in the last years. Between 2021 and '25, Elmos delivered 16% sales CAGR, a very strong EBIT margin improvement improving free cash flow margins and solid EPS growth. We have clearly outperformed our direct peers, all global high-tech companies. Most of them really bigger, a lot bigger than Elmos.

In this 5-year period of chip allocation and destocking, we have grown faster, improve profitability more and generated substantial free cash flows. But at the same time, Elmos share still has a valuation upside. So despite our strong share price performance, our current valuation may not fully reflect the strength of our positioning we feel. So there may be potential. We believe the market still underestimates the structural opportunity ahead of us. We see upside potential. We see that the trends are going in the right way, and we will see them materialize as we continue to execute our strategic agenda, grow profitably and generate more cash.

So looking at what happened to the share price, since January '21, the Elmos share price has increased by 350%. Our performance actually crushed the average of our peers and the German tech dogs, where Elmos is a member since June 2024. And our performance was also significantly better than the SOX, comprising of the 30 largest U.S.-listed semi companies, including the very big ones, like NVIDIA, Intel, Qualcomm, GSMC or ASML and of course, many of our direct peers as well.

Including dividends, we have delivered 9x higher shareholder returns than the average of our peer group. We delivered structural outperformance based on disciplined execution, technological leadership and a clear strategic road map. So we think we are a great company and we don't deserve any sort of [indiscernible]

Ladies and gentlemen, we have delivered on our commitment -- now let us turn our focus to the opportunities ahead. The automotive semiconductor market is expected to grow at around 13% CAGR until 2030 with a moderate annual growth of the underlying car volumes by around 2%. Correspondingly, the semiconductor content per vehicle is expected to increase by around 11% per year until 2030. This is structural growth. It's based on an acceleration of EVs, higher ADAS and autonomous driving functions in all vehicle segments and the shift to new zonal architectures and software-defined vehicles.

These mega trends play directly to our strengths and Elmos is uniquely positioned to serve them with innovative high-value IC solutions. Our midterm growth target is market aligned, and we have chosen a conservative approach. The annual growth rate of around 12% is largely secured by existing serial business and design wins. And we still see upside potential in our key segments as well as in adjacencies.

Let me give you a few examples by exceeding our growth target is not unrealistic. More and more U.S. and European OEMs are going to follow the Chinese pace in rolling out Level 2++ ADAS across their full model range, e-Mobility penetration in Europe is accelerating again, supported by stronger government incentives and an ever-increasing charging infrastructure. An increasing number of car platforms will be shifted to zonal architectures, enabling true software-defined vehicles and structurally increasing semiconductor content per car. And importantly, our current plan does not include any meaningful contribution from robotics.

Already today, we supply sensor and motor control ICs to robotics manufacturers in China and the U.S. But honestly, given the early stage of this market, we have delivered not built an assumption into our forecast. However, even if we take conservative market expectations and we say they materialize, robotics could become an additional structural growth driver for Elmos. And if that happens, we may have to revise and of course, potentially upgrade our growth targets.

So maybe at the next Capital Markets Day when we can start counting robots. Today, we just love the robots. They are technically super exciting. We love them, but today, we do not count them. My colleague, Dienstuhl, will provide much more detail on how we plan to deliver our growth ambitions in our core business and where additional upsides from new technologies could emerge. All I can say, we feel very confident about our 2030 sales target of around EUR 1 billion.

A substantial part of it is already underpinned by the design wins we have secured in recent years. Let me briefly remind you of the 6 priorities we defined at our Capital Markets Day in November 2024. These strategic and operational pillars form the foundation of our successful development and underpin our ambitious 2030 financial targets. Today, I can say this very clearly. We have delivered on all 6 priorities. And we have proven that execution excellence across the entire Elmos organization is 1 of our most powerful competitive advantages. In the following presentations by my AC colleagues, you will hear much more about the progress we have made, the achievements to date and our future ambitions in all of these strategic pillars.

Over the past decade, we have doubled our annual patent filings, a truly outstanding achievement. Our disciplined IP portfolio management and proactive filing strategy exceeds industry-leading standards by a substantial multiple. A highly experienced and talented R&D team generate more than EUR 1.2 million revenue per engineer. I think a very impressive level even exceeding players with multitudes of our sites.

Our passion for innovation and our drive to create the next generation of intelligent microelectronics, translates direct to into new business and strengthens our market leadership in our core applications. Since 2021, we have acquired more than 1,200 design wins, representing more than EUR 3.3 billion in lifetime value. These design wins secure our future growth in all major regions and in all of our key applications. All major mega trends are working in our favor, and all of our key applications will benefit from structural IC content growth in modern cars.

A modern premium battery electric vehicle based on a zonal architecture can contain up to 200 Elmos ICs. But also in premium combustion engine or hybrid vehicles, the number of Elmos chips is growing significantly. Because safety, autonomous driving, efficiency and comfort are becoming more important in all engine types. Our EUR 1 billion sales target for 2030 is largely backed by already secured design wins. Our sales growth is not based on speculative forecasts, but on booked business already in hand. Between 2021 and '25, Elmos delivered a strong 16% sales CAGR, clearly outperforming our direct peers, which grew by only 2% on average in the same period. Our track record, I think, speaks for itself. We know how to grow, and we are fully committed to continuing this trajectory.

China is the largest automotive market in the world, setting new innovation standards in the industry constantly. It's also a very dynamic market, which requires a very flexible, very local team and organization. Because of these market dynamics and the geopolitical environment, China is often perceived as a risk. We do not agree -- we see big opportunities in China. And of course, nothing is guaranteed or secured forever. But based on our China strategy, we see a lot more opportunities than risks in this region. We've been very successful in China, dominating the market in some of our product segments. We are present at almost every car OEM in China with our products. Between 2021 and '25, we achieved more than 30% annual revenue growth in China.

However, of course, we are not leaning back or taking the success for granted. We're actively improving our position and executing our China strategy, which will be presented to you by our Chief Development Officer later today in more detail. We are deeply embedded in the local ecosystem in China. We doubled our head count in the last year and hired many highly talented people to manage our business in China.

Our local senior management team combines over 100 years of semiconductor experience. And let me highlight another interesting fact. Stock listed Chinese analog mixed signal peers trade at a 7x premium valuation compared to Elmos. Our priority is to build strategic optionality and ensure resilience under any future political or geopolitical scenario. Our carve-out and fully functioned Chinese entity provides the structural basis to achieve this strategic flexibility. Maybe engage in new partnerships and align business success with geopolitics. I think of future paths might be a very exciting one.

Innovation is not only about creativity. It is also about speed and efficiency. It is important to find the right balance between R&D funding and profitability. We made significant progress in our R&D efficiency program over the past 12 months, and we improved R&D run times between 15% to 30% year-over-year. Time to market is a critical success factor these days, and it will become even more important as innovation cycles continue to shorten, particularly driven by the rapid pace of development in China.

Our global R&D teams are a core competitive advantage of Elmos. We operate in 7 R&D centers with almost 500 highly skilled and experienced engineers. More than 40% of our total workforce is dedicated to research and development, mostly development, of course. And this is a clear reflection of how deeply innovation is embedded in our organization.

Innovation is in our DNA, and it is our passion. We file roughly 1 patent for every 3 engineers each year. This is a benchmark level that exceeds industry benchmarks and it's way above many peers. Even those several times our sites. Our research and development activities are fully aligned with our strategy to deliver the next generation of IC solutions that add value to our customers and strengthen our leadership in our key application areas. Over the last years, we have transformed Elmos into an agile and highly scalable fabless semiconductor company.

Our new operational focus and the benefits of being fabless are already starting to materialize. And the results, I think, speak for themselves. Our CapEx ratio is around 70% lower compared to our 5-year average. Our supply chain is resilient as we have entered into more than 10 strong partnerships with leading foundries and others across 6 countries. Our investment in the latest generation of testing machines combined with our efforts to optimize the uptime of our testing machines and our test program to reduce test times -- we're extremely successful.

Overall, we could more than triple the testing capacity per machine. This is, of course, a key achievement to permanently lowering the capital intensity going forward and to burn significantly less cash for our growth. All of our activities are geared at generating significantly more cash than in the past. Historically, cash generation was not 1 of Alma's key strength -- but we have fundamentally changed that. We have transitioned from cash consumption to substantial cash generation.

Last year, we improved the adjusted free cash flow by more than EUR 100 million versus the operating adjusted free cash flow in 2024. The adjusted free cash flow to sales ratio was 11.4% in 2025, and we expect another strong improvement in the free cash flow margin to more than 17% for the fiscal year 2026. Our new cash journey is a major milestone and gives us more room to allocate excess cash to our shareholders. Of course, you may have already read that we will double the total payout for the financial year 2025 compared to 2024 and returned EUR 36 million via the dividend and the share buyback program. And speaking of returns, since January 2021, we have delivered 9x the shareholder return of our average peer group.

I think a direct reflection of our outstanding performance. Ladies and gentlemen, our cash generation is accelerating, providing additional momentum for sustained and attractive shareholder returns. The targets we have published in our Capital Markets Day 2024 are fully in line and we can confirm today around EUR 1 billion sales in 2030 with an EBIT margin of around 25%.

In addition, we have upgraded our CapEx ratio target from below 10% to now around 6%. We have defined a clear and ambitious free cash flow margin target at around 17% of sales. To further enhance the attractiveness of our capital allocation, we have refined our dividend policy. We do not want to build large cash power. So we plan to distribute excess cash via a combination of dividends and share buybacks.

Going forward, share buybacks will become a structural element of our capital allocation work rather than the opportunistic element you've seen before. Of course, capital allocation decisions will continue to reflect our current and future business development as well as the prevailing market environment. The objective of the new Elmos dividend policy is clear. to ensure that our shareholders participate appropriately in the company's success.

Ladies and gentlemen, behind all of these achievements, stands a highly committed workforce and a very strong leadership team. Our senior leadership team represents a powerful combination of experience, diversity and execution strength. It brings together proven Elmo's expertise with fresh external leadership, creating a forward-looking, a performance-driven management culture. This combination enables us to think boldly, act decisively and drive continuous improvement across the whole organization.

With the new EEC structure, so the Elmos Executive Committee structure in place for 1 year now, we are strengthening accountability, accelerating decision-making and sharpening our strategic focus. I'm very confident that this leadership setup will play a pivotal role in shaping the next phase of Elmos growth and long-term success.

Ladies and gentlemen, this concludes my presentation. I hope I have sparked your interest here and there and excitement for what comes next. In the following presentations, we will outline our strategic agenda, our growth road map and our financial ambitions in much greater detail. For now, thank you very much for your attention. I now hand over to Jan, who will take a deeper dive into our market opportunities and our right to win.

So Jan, the stage is yours.

Ladies and gentlemen, thank you for joining us today.

It is a pleasure to speak to investors who truly understand technology, growth and long-term value creation. My name is Jan Dienstuhl. I am the Chief Sales Officer and member of the Management Board of Elmos Semiconductor SE.

Today, I would like to focus on 3 key topics: First, the strong market opportunity ahead of us, driven by the structural growth of the automotive semiconductor sector. Second, where Elmos plays in this market and why we win in these segments. And third, why everyone at Elmos is confident that we will achieve and potentially exceed our EUR 1 billion sales target by 2030.

Let me start with the top-down view of the market. Automotive is our core business, and it is entering a new phase of structural semiconductor growth. This growth is now largely decoupled from global vehicle production. It is driven by the steadily rising IC content in modern cars. Therefore, the long-term development of the automotive semiconductor market is not cyclical. It is a structural and a sustainable growth story. Global light vehicle production will grow only slightly in the coming years from about 90 million vehicles today to around 97 million by 2030. That equals roughly 1% CAGR. At the same time, semiconductor content per vehicle will almost double from around USD 720 per car in 2024 to nearly USD 1,400 by 2030. This represents roughly 11% CAGR per vehicle. This represents roughly 11% CAGR per vehicle. As a result, the total automotive semiconductor market is set to grow by around 12% to 13% annually through 2030. This gives us long-term visibility and strong confidence in our growth trajectory for the years ahead. The growth drivers behind higher IC content are clear. Five powerful megatrends are shaping the modern car, and they are fueling the Elmos growth engine. First, advanced driver assistance systems and autonomous driving, enabled by high-performance sensing at the edge.

Second, electric and hybrid vehicles. They significantly increased the need for control, power management and thermal management, boosting the range and reducing CO2 emissions. Third, comfort and premium features that enhance the well-being of drivers and passengers. Fourth, higher safety standards driven by consumer expectations and by stricter regulations. And fifth, software-defined vehicles and also new [ boardnet ] architectures with more intelligent and capable edge devices. This shift increases demand for intelligent edge components, system-based chips, communication interfaces and power management.

All these trends are firmly embedded in the production plans of every major OEM. They define modern mobility across all vehicle segments. Let me briefly walk you through them and show why Elmos is ideally positioned to benefit from these mega trends. First, advanced driver assistance systems and autonomous driving. In 2020, only about 20% of global vehicles had Level 2 or higher ADAS functions. By 2025, this number has increased to 46%, and it will reach nearly 65% by 2030 across almost all vehicle segments.

Level 2++ others is already being rolled out today, led by Chinese OEMs, which are equipping every vehicle from entry level to premium with intelligence, driver assistance features. Ultrasonic ranging sensors built with Elmos chips capture the 360-degree environment around the car precisely and reliably. They provide essential input for assisted and autonomous driving in city environments and also at low speed. Elmos Ultrasonic ICs enable blind spot detection, emergency braking, collision avoidance and of course, assisted our fully autonomous parking.

Our next-generation ultrasonic ICs set new benchmarks, much faster data rates, higher sensor performance, lower system costs and lower power consumption. With our latest solutions, the distance to obstacles can be measured as close as 3 centimeters, supported by smart AI algorithms, our sensors classify object height and they reliably separate real hazards from noncritical interference such as ACOs from [ Corbistones ], for example. The winning formula here is simple, rising autonomy levels drive rising sensing content at the edge. The higher the ADAS level, the more sensor ICs each vehicle requires.

The long-term trend is clear. By 2030, around 68% of all new cars worldwide will be electric or hybrid, with more than half of them produced in China. But electrification is far more than replacing just the combustion engine with a battery. Electrification multiplies control, power and thermal complexity across the entire vehicle. Modern electric and hybrid vehicles. They rely on intelligent thermal management, precise battery monitoring, advanced Boardnet and power management systems. All of these functions depend on sensors and compact electric motors to monitor, control and power key operations. At the same time, today's combustion engine vehicles also require increasingly sophisticated electronics to meet efficiency and emission standards.

In short, electrification increases semiconductor content across all drivetrain types: combustion engine, hybrid and battery electric platforms all alike in of new lighting applications, both inside and outside the car, efficiently and comfortably illuminated by LEDs. Elmos lighting control ICs enable illuminated front grills with multi-pixel LED surfaces as well as glass roofs with colored mood adaptive dynamic ambient lighting.

Airvents are another good example. In the past, they were purely mechanical and required manual adjustment. Today, our motor control ICs for air conditioning flaps, support narrow, almost hidden air outlets in the dashboard. AirFlow is no longer controlled mechanically. It is managed electronically and automatically. This ensures maximum comfort for occupants and also optimal energy use for heating or cooling the cabin.

Each of these upgrades in user experience and in premium comfort increases IC content per vehicle by a significant factor, multi-zone ambient and light sky systems require 5 to 10x more ICs than basic interior lighting.

I think [indiscernible] similar factor also [indiscernible] This enables automatic affordable climate zones inside the car. And last securing our position with a continuous pipeline of innovative IC solutions that deliver real value for our customers and for the end user. The board met architecture of modern vehicles is also undergoing a fundamental shift. We are moving from distributed ECUs to a domain-based and zonal architecture.

By 2030, nearly 70% of all vehicles will follow this approach. A few powerful central computers will replace more than 100 traditional ECUs. This makes the edge increasingly important, where Elmos ICs must deliver higher performance, safety and security. Whenever there is no compelling reason to shift a function to a centralized updatable high-performance controller, it will remain at the edge to keep system complexity and the integrity of the system under control. In these cases, Elmos HICs and dedicated application gateways are becoming more feature-rich, better connected and more intelligent, replacing today's ECU based components. Zonal designs also accelerate the transition from mechanical fuses to smart electronic fuses. These so-called eFuses operate faster, can be switched on and off, reduced wiring rate, minimize interference and allow advanced power monitoring. As vehicles further adopt Ethernet-based networking, we will introduce our first smart Ethernet-enabled application gateways. These gateways will support functions such as mastering the ultrasonic sensor network or enabling zone light controllers. They deliver intelligent, high-speed connectivity for the new vehicle architecture.

Elmos bridges the physical and the digital layers of the car. We engineer the intelligent nervous system at the edge. Exactly there, where semiconductor content is growing fastest. When we combine all of these mega trends, the outlook for Elmos becomes very positive. The modern car is autonomous and safe, it is electrified and highly efficient, affordable and it's intuitive. It is connected and increasingly software defined. Electrification of vehicle platforms remains a strong and a continuous growth driver for our products. Many of tomorrow's premium battery electric and hybrid vehicles, will integrate significantly more mixed signal ICs from Elmos.

At the same time, many of our applications are completely independent of the drivetrain itself, whether it is an internal combustion engine, a plug-in hybrid or a fully battery electric vehicle. In a premium ice vehicle today, we already see up to 70 Elmos ICs installed. In a premium electric vehicle or hybrid vehicle of tomorrow, this number could rise to as many as 200 Elmos ICs per car, nearly tripling potential content. And this is not theoretical. These applications are already designed into OEM platforms, and we are successfully winning the corresponding design wins to capture this growth across the short, the medium and the long term.

The automotive semiconductor market is expected to grow by around 12% to 13% annually through 2030. This is mainly fueled by high-performance SOC chips, high-power semiconductors, ADAS content and various intelligent IC solutions. Our own growth target of roughly 12% CAGR is deliberately conservative. It is fully aligned with structural growth drivers, but it still offers upside. Faster-than-expected EV penetration, broader adoption of ADAS Level 2++, more platforms moving to software-defined architectures or a stronger underlying [indiscernible] and each of them is supported by our innovative portfolio. Battery electric and hybrid vehicle penetration will rise from 42% to 68% by 2030. ADAS adoption increases from roughly 46% to 65% and zonal architecture adoption grows from around 35% to 68%. With all -- and make no -- take this adjacent area roughly 20% and Sensing & Safety together at about 25%.

In 2025, our ranging segment outperformed other applications, driven by the strong demand for our ultrasonic ICs, especially in China. By 2030, we target approximately EUR 1 billion in sales, and our portfolio will remain well balanced. You clearly see the rising importance of sensor ICs and the growing momentum of software-defined vehicle applications. Our portfolio and our design wins ensure a diversified profitable growth across all of our core product segments.

Let me please summarize the first part of my presentation. The automotive semiconductor market is on a structural, not a cyclical growth path. I see content per vehicle remains a dominant long-term driver of this expansion. Multiple megatrends such as electrification, safety, ADAS, autonomous driving, comfort and software, they reinforce each other. These developments are not isolated. They accumulate and each of them increases semiconductor content per car functionality, complexity and electronics content are rising across all vehicle segments. Automotive semiconductor growth is no longer driven by premium models only. We are positioned at the center of this IC content expansion. Elmos focuses exactly on those application areas where I see density is increasing fastest at the intelligent edge of the vehicle and our 12% annual growth target is based on conservative assumptions, leaving some room for upside potential.

Now let me explain why we have a clear right to win in our markets. And what truly differentiates Elmos from other IC suppliers. Elmos is not a generic semiconductor company. We are the leading specialist for analog and mixed signal ICs with more than 40 years of experience in that field. We understand our technologies and applications in depth and we combine this with outstanding product and system-level expertise. This holistic understanding of the full system context gives us strong and defensible market positions in our core segments.

Our decades-long relationship with Tier 1 suppliers and OEMs are built on trust and on consistent performance. As a global market and innovation leader in our core application fields, we engage with our customers at high level, helping them to make their electronic systems smarter, safer and more efficient. Innovation has always been a part of our DNA. Since our foundation in 1984. We have continuously driven performance and technology improvements across multiple generations of vehicle platforms. further strengthening our position as a true automotive IC specialist.

During the semiconductor crisis of 21 to 23 no direct customer or OEM had to stop production because of Elmos. To my knowledge, we were the only automotive IC supplier that achieved this. It significantly reinforced our reputation as an agile flexible and highly reliable partner. Finally, our global footprint with regional R&D, sales and application engineering teams ensures proximity to our customers. With R&D centers across Europe and Asia, we can provide fast response times, strong local support and cultural alignment, always close to where our customers innovate.

To be a successful and highly relevant supplier of automotive chips, we must be among the market leaders in all of our high-volume focused applications. Only then we can truly understand market trends early enough and invest in the innovations that will shape tomorrow's platforms. That is why it is our explicit ambition to achieve segment leadership in all of our focus applications.

Today, we are #1 in ultrasonic parking and 360-degree ranging. In motor control ICs for smart HVAC actuators in LED real lighting ICs and in pressure sensing ICs for brake systems. In other segments such as RGB interior lighting, and airbag ICs, we are run up or rapidly catching up to become the #1 or #2 player. These strong positions result from deep focus and from a long-standing track record of adding tangible value with every new generation of Elmos ICs.

We also invest in new product families, such as our eFuse ICs or the smart Ethernet gateways. But as a specialized niche player, we do not chase every opportunity. We focus on high-value mixed-signal domains where we can scale across multiple platforms. This is our core DNA. delivering outstanding products to customers worldwide and unlocking significant growth potential through highly differentiated automotive mixed-signal leadership.

We are a trusted partner for both our tier customers and for the OEMs. They value Elmos as a flexible, reliable and highly committed IC development partner, one that consistently supports their needs with a strong focus on innovation, on quality and on dependable execution. This trust is a major achievement, and it is only possible because of the outstanding commitment, the passion and the close collaboration of the entire Elmos team around the world.

Every single colleague contributes to the reputation we have built. As a partner, our customers can rely on today and also in the future. Our outstanding performance is not only recognized by our customers. Thanks to our great products and the exceptional work of our employees day after day, Elmos is regularly honored by leading industry organizations.

In 2025, we were recognized as the most innovative German midsized company in Electrical Engineering. And we were ranked #2 across 31 industries and 500 companies. In 2024, we received the prestigious TWAN Award for best lighting technology. And in the same year, the Innovation Enterprise Award in China. These awards, they really make us proud and they motivate us to raise the bar even higher as we continue our successful journey. Innovation and great products, they are essential. But without high quality and reliability, you cannot succeed in the automotive semiconductor industry. I am proud that that Elmos stands for excellence in free of crucial dimensions: quality, reliability and supply security. We maintain consistently low field return rates measured in parts per billion. These very low failure levels, they show how robust our products are across the entire automotive portfolio.

For our customers, this is more than just the KPI. It is a key trust factor. Our secure and adaptable edge solutions, they support both internal combustion engine vehicles and battery electric platforms. We design for long-term system stability so that our ICs perform reliably even under the toughest operating conditions. And finally, supply security has become even more important since the ship crisis from 2021 to '23. In today's environment, shaped by global disruptions and geopolitical uncertainty, dependable supply is a decisive competitive advantage. The local proximity of our engineering experts to our customers allows us to engage early in new projects.

In Europe, Japan, Korea and the United States we are already deeply embedded. In China, we have also been present now for many years, and now we are expanding our footprint and building a fully functional local entity, including our new China product center. And in India, we established a new application engineering site in Pune last year. As you can see, our global footprint helps us to engage with virtually every major automotive player in the world. With a well-known established grants and also with the many new players in Europe, the United States and especially in China. Our end customer footprint is, in many ways, a true reflection of the global automotive market.

Ladies and gentlemen, this slide captures the essence of our growth story. In 2025, we have achieved around EUR 583 million in sales. By 2030, our goal is EUR 1 billion. That is more than 70% growth or about 12% per year. This target is built on strength. We are not changing who we are. we are building on what already works. First, we have a strong system level understanding. We do not design ships in isolation. We understand the full application. And this is a major advantage.

Second, we provide dedicated engineering assistance. We work closely with our Tier 1 customers and with OEM engineering teams. This creates deep platform integration and also long-term visibility. Third, we are highly focused on analog mixed signal innovation. This is our core DNA. And in a digital world, the intelligent interface between the physical and digital domain, it becomes even more important. Fourth, we offer a compelling value proposition, performance, easy integration, reliability and cost efficiency, all in one. That is the reason why customers repeatedly award us new design wins. Fifth, we operate with a worldwide regional setup. We are close to our customers in Europe, Asia and the United States. This leads to faster development, more successful products and stronger relationships.

Together, these strengths form the foundation for our EUR 1 billion target. This target is driven by the execution of our automotive business pipeline. It is mainly based on design wins that we have already secured and on programs that are now ramping up. We also see additional upside from adjacent markets, such as robotics, these opportunities are not included in the EUR 1 billion target, which makes our plan even more robust. So when we speak about EUR 1 billion by 2030 we speak about disciplined execution of the business already in our hands, strengthened by structural market growth and rising semiconductor content per vehicle. This is why we are confident -- this is why the target is achievable, and this is why we are excited about the Design wins are the foundation of our growth ambition. Between '21 and '25. We have secured more than 1,200 design wins across all major automotive applications. This shows strong customer traction and broad relevance across our entire portfolio from others to electrification, comfort and safety systems. These wins represent more than EUR 3.3 billion in lifetime revenue. This number shows very clearly that our solutions meet real market needs and they generate long-term demand. And that is the key point. This business is already awarded and provides good revenue visibility.

Among these design wins, we achieved 7 major platform programs each worth more than EUR 100 million in lifetime revenue. These large wins prove that we can compete at the highest level and win global platforms. Our pipeline is also fully aligned with structural growth trends, 33% in others, 32% in electrification and 28% in comfort and premium. In other words, our awarded business matches the megatrends of the automotive industry. Our design win performance is exactly on track. What follows now is execution, supply ramps and product ramps that turn these wins into profitable cereal business. If you look at our annual development of design wins since 2020, you see consistently strong and improving performance.

We grew from around EUR 300 million in lifetime revenue in 2020 to a peak of nearly EUR 1 billion in '22, between '23 and '25, we continued to increase our annual new business acquisition every year. The peak in '22 was partly driven by short-term opportunities during the chip crisis. when some of our competitors could not deliver, but we could, and we were glad to support our customers. After '22, we increased our new design win volume every single year. As a result, we achieved a compound annual growth rate of 19% between 2020 and '25.

This development shows 3 things clearly. First, our technology and innovation road map is highly relevant to our customers. Second, our sales and engineering teams, they execute with great discipline and consistency. Third, we are aligned with the structural growth drivers of the automotive industry. Compared to 5 years ago, we have more than doubled our annual design win achievement. These more than EUR 3.3 billion in new lifetime revenue gives us strong visibility for our growth trajectory towards 2030.

Ladies and gentlemen, this slide delivers one of the most important messages of today. The majority of our top line growth towards 2030 is already awarded. If you look at the composition of our revenue bridge, around 50% comes from running business and follow-up wins that we have secured before and since '21. Another roughly 25% comes from design wins in new business and platforms we have achieved since 2021. These programs are now starting to ramp into serial production. Around 10% related to the remaining design in target for this year for 2 and we have already achieved more than 20% of the target year-to-date.

Only about 15% still need to be won through new business from 2027 onwards. Based on our strong design win performance in recent years, we are very confident that we can exceed this target. This breakdown is important. It shows that we are not building our future uncertainty. We are converting awarded business into revenue with disciplined execution, and we will continue our strong design win performance. Let me make our growth story a little bit more tangible by sharing a few recent design win highlights. These are strategic platform wins with leading global OEMs across regions, applications and also technologies. Example one, high-end front lighting. We have secured a next-generation front grill lighting win for top-selling premium SUV of a leading German OEM.

This program represents more than EUR 15 million in lifetime revenue with SOP in 2026. This platform integrates dozens of our ICs per vehicle, driving hundreds of LEDs for dynamic light animations. It enables synchronized software control lighting architectures that create a distinctive brand signature. Example 2, Avant motor control, Here, we won a next-generation Avant control solution for premium platforms of a leading German luxury OEM, more than EUR 25 million lifetime revenue, SOP in '27. This solution enables a fully electronic airflow control with seamless HVAC integration. It enhances user experience and interior differentiation through software-controlled climate features. What used to be a simple mechanical component becomes an intelligent electronically controlled comfort feature.

Example #3, ultrasonic ranging platform -- this is a particularly strong one, a global OEM platform in the United States, representing more than EUR 125 million in lifetime revenue with SOP in early '27. Our ultrasonic signal processing platform supports multiple vehicle tiers within the OEM's global architecture. It delivers robust, cost-efficient and very precise proximity sensing, enabling parking and safety functions across all vehicle segments. Example 4, an EV system basis chip in Asia. We were selected as a system-based chip so-called SBC supplier for next-generation luxury SUV platform of a leading Korean OEM group, more than EUR 15 million lifetime revenue.

SOP '26 this year. This SBC enables the transition toward software-defined vehicles with better integration, enhanced safety and optimize power management. It becomes a core building block for upcoming EV and extended range EV platforms. These examples illustrate what our product pipeline looks like. It is diversified. It is global and it is technology-driven India. India is not just another emerging market. India is becoming the world's next major automotive growth and we are very well positioned to participate in that growth.

If you look at vehicles per 1,000 inhabitants, the gap becomes clear. Europe and China already have a high penetration rate. India in contrast still has very low vehicle density. While mature markets grow only at low single digits, India's vehicle penetration and automotive demand are expected to rise sharply over the coming decades. This translates directly into the semiconductor growth. The Indian automotive semiconductor market is expected to grow from about USD 2.3 billion in '25 to roughly USD 4.8 billion in 2030, a compound annual growth rate of more than 15%.

Where does Elmos stand in India. First, we have direct access to top OEM decision makers. We are not only supplying for Tier 1 and Tier 2 customers. We are directly influencing architecture decisions on platform level. Second, we are recognized as a strategic semiconductor partner. Several of our flagship products are already in serial production. Third, we bring deep system integration capabilities across lighting, motor control and also others. OEMs engage with us directly because we understand not only the chip but the full application. And fourth, we have a local presence in Pune, one of India's major high-tech centers.

This proximity allows us to support customers effectively and to leverage the rapid growth of domestic OEMs. Let's now look beyond automotive. Robots are one of the hottest topics in the tech industry right now, very similar to the current AI wave. But the real question is, how can Amos benefit from this trend? And this slide shows why robotics is a logical extension of what we already do.

Cars and robots share fundamental architectural principles. Modern vehicles increasingly rely on 48-volt board nets. Humanoid and industrial robots operate in a very similar voltage range, typically 40 to 60 volts. Many semiconductor solutions can therefore be transferred almost directly. In vehicles, we are moving towards centralized high-performance computers with zonal -- in robots, we see central compute units that control distributed body zones. It is the same architectural logic, a central brain combined with distributed intelligence at the edge.

Vehicles are transitioning to automotive Ethernet backbones. Robots also rely on ethernet-based internal networks. They need reliable communication between many distributed notes. This is exactly the environment our mixed signal and interface ICs are designed for. Consider sensors and actuators. In a vehicle, we control motors, fans, wells, lighting systems and safety sensors at the edge. In robots, motor control and sensing are present at every joint and the extremities. This is exactly our home turf, and then there is autonomy and safety. Both autonomous vehicles and autonomous robots require functional safety, redundancy and fail safe concepts. The safety philosophy and robustness requirements are very similar.

The technological DNA of modern vehicles and of advanced robots is converging. Elmos has spent decades mastering automotive-grade mixed signal solutions at the intelligence edge. That is why we are naturally positioned to serve robotic applications as well. And importantly, this is not about entering a completely new industry with massive R&D investments. It is about leveraging our proven core strengths and products in a structurally adjacent market. And I want to repeat this clearly, robotics is a pure upside for us.

Our EUR 1 billion target is based entirely on automotive business. Robotics represents additional potential beyond that. If cars are becoming software-defined machines on wheels, humanoid robots are becoming intelligent machines on legs. This slide shows how Elmos ICs can enable what you might call the nervous system of humanoid robots. Robots like modern vehicles, they rely on centralized compute with a high-speed Ethernet backbone. Around the central brain, you have distributed edge gateways in the head, the hands, the legs. You need [indiscernible] and Ethernet connectivity across upzone.

Humanoid robots require a high number of BLDC motor drivers across joints, shoulders, elbows, hips, knees and fingers. Every movement depends on motor and sensor control including precise positioning and force sensing. Robots require high-density capacitive touch sensing across hands, fingers, body. They need proximity, optical passive infrared and ultrasonic sensing to interact safely with humans and their environment. Robots run on batteries and power distribution in the 48-volt range electronic protection. Wake up and sleep malls, thermal monitoring, safety critical control, everything very similar. When you add it all together, a single humanoid robot can easily integrate more than 120 potential Elmos ICs across power, motion, sensing and control. This is a significant semiconductor opportunity. and it is well connected to our core. It is a natural extension of our strengths in mixed signal edge intelligence, sensing, safety, motor control and power management.

While the shipment volumes of humanoid robots are still small today, all major research houses expect exponential growth beyond 2030. Depending on the scenario estimates for 2035, they range up from roughly 1 million up to 10 million units per year. Even the conservative scenarios show a massive step up from today's levels.

On average, the market is expected to grow from about 0.6 million units in 2030 to around 4.5 million units in 2035, a compound annual growth rate of almost 50%. We are not entering robotics as new companies. We are already engaged with multiple robot manufacturers. We are aligning the product requirements, and we are in active design in discussions. Four of our products are already designed into delivery robots and humanoid robot platforms. These include applications such as extremity motor control, for sensing and also ultrasonic sensor ICs that allow robotic hands to detect distances to objects. This is still the early stage of a potential new large market.

Our cereal revenue today is small, but it is real. And if even a fraction of the bullish scenario becomes reality, robotics could evolve into a meaningful additional growth driver in the next decade. Let me close with the key takeaways of my presentation. Our growth is built on true global market leadership in our focus applications. We have secured #1 or #2 positions in core automotive IC markets. Innovation is in our DNA. We are not simply following platforms. We are shaping future mobility.

Our technology leadership is recognized not only by industry awards, but even more importantly, through repeated design wins from our customers. Our global customer relationships are a major competitive advantage. Strong partnerships with automotive tier customers and close engagements with OEM engineering teams. They allow us to be involved early and to secure a long-term platform integration.

Our 2030 target of EUR 1 billion is well anchored, more than EUR 3.3 billion in lifetime revenue from design wins over the past 5 years already secured most of our future growth. This gives us visibility and it gives us confidence, and we are not stopping at 2030. Long-term growth fields such as robotics and emerging intelligent applications they build directly on our core strength. They offer additional potential beyond our current target.

Ladies and gentlemen, we have delivered in the past, we are executing today and we are clearly positioned to continue growing profitably in the years ahead. Thank you very much for your participation.

Let's continue with Burkhard, our CEO.

Thank you, Jan, for providing this overview of our market, our right to win and our plan to achieve further profitable growth. Hello, and welcome, ladies and gentlemen. As Chief Development Officer, my responsibilities include strategy, M&A, IT and AI, and China is very relevant for all those topics. I'm looking forward to providing you with an update on our China strategy and the status of its implementation.

I will split my presentation into 3 parts. At first, I will share with you our perspective on the Chinese automotive market. Secondly, I will review our China strategy as presented in 2024 and show selected highlights we could achieve since the last Capital Markets Day. Thirdly, and this will be the main part of my presentation, I will share with you our strategy moving forward.

In essence, we at Elmos see much more opportunities than risks in China. Let me walk you through our way of thinking about China. I would like to start with an update on our assessment of the attractiveness of the Chinese automotive market. Our assessment is very similar to what we showed 15 months ago. We are very positive about the potential of the Chinese automotive market. As is very well known, China is by far the largest automotive market globally, and that is true for both production as well as for sales. Around 1/3 of all cars being built globally are being built in China.

Since a few years, China is also the largest exporter of cars globally and the country exported around 8 million vehicles in 2025, an increase of around 30% as compared to 2024. This impressive figure highlights that export markets and hence, meeting standards of export markets are becoming increasingly important for the Chinese automotive industry. We continue to believe that domestic demand will remain very strong.

Since the number of cars per 1,000 habitants is still comparatively low in China at 250. If you compare that to the EU at around 600 or to the U.S. at around 800. As more and more people globally have an opportunity to experience Chinese cars -- it is becoming more and more visible that Chinese cars are highly innovative, as we have already spoken about 15 months ago. International experts acknowledge the technology of Chinese OEMs in areas like ADAS, EE architecture, software-defined vehicles new energy vehicles or user interface.

Furthermore, we experienced very fast innovation cycles. Last but not least, we see a strong price competitiveness of the Chinese automotive industry due to economies of scale, efficient manufacturing and other factors. This comparatively low cost basis to support further growth of the automotive industry in China. Based on this assessment of the Chinese automotive market, let me move on to the second chapter with a review of our China strategy from 2024, highlighting also selected achievements.

During the Capital Markets Day 2024, we shared with you our China strategy. When reviewing this from today's perspective, the development since 2024 confirm our expectations and our positioning. At first, we continue to experience significant geopolitical dynamics as well as intensifying and unpredictable trade tensions. Secondly, the trend evolving customer expectations towards more local Chinese products and more local Chinese integrated circuits is intact as well.

Statistics show that Chinese customers by more and more costs from China-based OEMs, which is adversely impacting non-Chinese OEMs. Due to our strong presence, innovative products and customer proximity. We were able to strengthen our position in China and achieve very strong growth. From 2021, until 2025, we were able to expand our revenues at a CAGR of more than 30%.

All in all, our China strategy from 2024 has been validated. Let me show you selected key achievements since the last Capital Markets Day. We told you that we had introduced the second brand, [indiscernible] in China. I'm happy to report that we have already shipped millions of ICs to customers in China, customers which are both China-based and western-based. Just a few weeks ago, we inaugurated our new office in Shanghai Pudong and we co-located all colleagues in Shanghai into 1 place.

This new office includes our R&D activity, which is being called China Product Center or in short, CPC. Our CTO, John will share more insights about this in a few moments. I'm very happy about the next highlight. Elmos received its first 12-inch wafer. The fab out took place at the Chinese foundry [indiscernible]. We also opened a new warehouse in Pudong to serve our customers with more local stock. And last but not least, we see Elmos chips as just explained by an being used in the evolving market of humor robots, a market segment, which promises high growth in the medium to long term. Based on our market assessment and our achievements, I would like to move on and present to you our strategy moving forward. It is an evolution of our existing China strategy, and we call it all weather set up.

The all-weather setup consists of 2 aspects: operational performance across all functions; and secondly, generating strategic optionalities -- let me start to walk you through the 9 elements of operational performance across all functions, across all functions, which you can see on the left side of the slide. For selected elements, there will be a backup slide with more details. In the top row, you see the 3 elements, 6 offices strategically located across China, scaling towards 100 employees with deep local expertise and senior local leaders with proven track record in the semiconductor industry.

In the middle row, there are the elements top OEMs use Elmos ICs, local and joint ventures, strong relationships with Tier 1s and key distributors and the dual brand strategy. as mentioned, Elmos and for [indiscernible] reach and optionality. At the bottom, you can see the remaining 3 elements: local-for-local approach across the value chain, localization of core functions and fully localized support functions. These 9 elements of operational performance across all functions are being complemented by the creation of strategic optionalities. And I will provide you with more details on this in a second. Before going there, let us look at our geographic positioning in China.

As you know, our China headquarters is located in Shanghai, and that's also the place where we have set up our China product center. In addition to our presence in Shanghai, we have offices in 5 regions, Changzhou, Chongqing, Shenzhen, Tianjin and Taiwan. Our offices cover the most important automotive hubs in China. Obviously, our locations serve a sales and application engineering hubs in order to serve our customers.

So how do we manage those locations? Our sales application engineering, R&D and support functions. We have established a strong Chinese senior leadership team with the functions, General Manager, sales, operations, CPC, quality, finance, HR and IT. Taken together, the senior leadership team has a background of around 100 years of semiconductor experience. Our head count in China is growing strongly, and we roughly tripled our team in 2025. We expand the team in all functions with a special focus on R&D sales, operations and support functions.

On the right side of the slide, you can see a few [indiscernible] from the recent office opening in Shanghai Pudong and at the bottom, a meeting with public officials. Moving on to the next element, strong customer access. On the right part of the slide, you can see examples of companies which use our products. As you will notice, the examples cover all market segments from China-based OEMs to joint venture OEMs, established companies and newcomers.

Besides OEMs, we have also very strong inroads into Tier 1s and Tier 2s and again, China-based as well as international companies. In order to strengthen our customer coverage, we collaborate with China-based and international distributors. For our market success, it is of crucial importance to be close to our customers, understand their needs and in particularly to notice emerging trends instantly. We are not resting on our laurels, but -- as mentioned before, we are expanding our sales and application engineering teams to continue the success with our customers. That brings me to the topic of stringent localization. In the past, Western companies could be very successful by exporting to China or by setting up subsidiaries to build products for the Chinese market, which were designed in the West. These days seem to come to an end, at least in the automotive industry. We are in the middle of converting our business from a German headquarter-centric approach to a fully localized setup in China.

On this slide, you can see the implications for the 5 functional areas: R&D, operations, supply chain, sales, logistics and delivery and support functions. Historically, Elmos has been very successful in designing integrated circuits and developing software at its main sites in Germany and Europe. As mentioned before, we have started to set up a dedicated R&D team in China to serve the Chinese customers. We were able to hire an industry veteran for this important role. Again, in the past, we built very successful operations by managing our supply chain from Germany.

However, due to more operational partners in China, and our COO, Patrick will tell you more about this in a few moments, customer expectations and other factors, we are in the process of starting to manage operations and the supply chain from China. This is a highly complex task since business processes, IT systems, legal contracts and many other things are affected by this transition, which is, by the way, well underway. Our sales and application engineering teams have been operating very successfully in the past, and we intend to increase the team size furthermore. Shipments to our customers have historically taken place from our warehouse in Germany.

Meanwhile, we have started operations at our new warehouse in Shanghai Pudong and ship to our customers, our Chinese customers directly from that local warehouse. Last but not least, and this is frequently not being talked about. We are also in the middle of the transition to localize our processes and IT systems for support functions. All of the above mentioned will support our objective of being closer to the customer and serving them even better. I'm confident I was able to provide you with an overview of our activities on strengthening our setup in China and creating an entity which is enabled and that is important to act independently from the headquarters.

However, there is an important aspect missing when talking about our all-weather setup, strategic optionalities. So what do we mean by this term? For us, it is of utmost importance that we are prepared for different external developments. Strategic optionalities shall help us in those situations. Let me share with you some data about Chinese semiconductor companies.

On this slide, on the left, you can see examples of stock listed, analog mixed signal and RF companies in China. Some of the company's names shown will be known to you. In total, we identified around 14 of these stock listed companies in China, each with a market cap of more than EUR 1 billion. A few things are noteworthy. At first, all of these companies had lower revenues than Elmos group in total in 2025. Secondly, their sales multiple defined as enterprise value over sales expected for 2026 is on average at '23. Comparing this figure to the ratio of Elmos semiconductor, so Elmos Group in total, which is at around 3.3%. This highlights the significantly higher multiples for stock-listed companies in China.

A simple calculation would show that our China business alone could be worth more than Elmos Group in its entire team. On the right side of the slide, you can see a few examples of Western companies which have or are in the process of reshaping their China operating model. I think you're all aware of in the semiconductor having agreed to sell their remaining share in its Chinese operations in the micro. And we have probably all heard of Starbucks being in the process of transferring 60% of their China business to a Chinese private equity company. The message is clear. There are Western companies who are looking for Chinese co-ownership of their China activities as part of their strategy. This can support the development of the local business as well as generate significant amounts of cash. I do not want to walk you through all the figures on the next slide, but I believe this data is back up in the presentation. The table consists of public information about financials of analog mixed signal and RF companies, which are stock listed in China.

Allow me to conclude my chapter, and let me reiterate the key takeaways of our China strategy and execution. At first, we strongly believe in the attractiveness of the Chinese automotive market. And due to its high level of innovativeness, we expect continued demand for integrated circuits for cars. Secondly, we have built a very strong local 8-person senior leadership team to lead our China activities. This team has around 100 years of combined semiconductor experience. Thirdly, we are serving the Chinese automotive industry across all segments. We have strong relationships to China-based and international OEMs, suppliers and distributors. We maintain a network of offices across China, in the most important hubs of the Chinese automotive industry. And then fourth, we execute a clear plan to enable our China business to be run independently from the headquarters and we are constantly tracking the market for emerging strategic opportunities.

In a sense, we almost see much more opportunities than risks in China. And that's how I started my presentation. I hope I was able to inspire you about our plans for this very interesting market. Thank you very much for your attention. And with that, let me hand over back to Ralph.

Yes. Thank you, Burkhard. And thanks to Ana and Jan for the fantastic presentations. Great stuff, super exciting. Yes, this concludes the first part of our CMD. We will now take a short 5-minute break and they'll come back with the second half of our program.

By the way, our Q&A system is already open. So if you want to ask a question, please enter your question and your text field on your screen. We will answer the questions in the Q&A session after the end of our presentations. Yes. So please stay with us. We have a lot more prepared for you. The second half holds many more exciting highlights.

Yes, thank you very much so far. See you in a couple of minutes. Bye-bye.

[Presentation]

Welcome back, everyone. Very short break. We don't want to waste your time. We have a lot of exciting stuff ahead of us. So let's continue with this Capital Markets Day and with Jochen Vaihinger, our CTO, Jochen the stage is yours.

Thank you, Ralf. Good afternoon, ladies and gentlemen, and a very warm welcome from my side as well. I am Jochen Vaihinger. I'm the Chief Technology Officer of Elmos. Today, I would like to give you an in-depth view on technology and R&D at Elmos. More specifically, I will explain how our technology strategy our innovation capability and our scalable R&D platform translate automotive mega trends into customer value, profitable growth and long-term differentiation.

At Elmos, R&D is not an isolated function. It's a core value driver. It connects market trends, customer requirements and manufacturing realities into robust and scalable system solutions that perform over the full automotive product life cycle. Let me start with a high-level view. Our R&D and technology organization is built around 1 clear objective to enable sustained and profitable growth through technology leadership and execution excellence.

On the value creation, we focus on compelling product value for our customers, enabled by a focused product road map, a proven innovation track record. Execution is supported by a great and extraordinary engineering team, a state-of-the-art technology road map, a robust global R&D setup and a strong emphasis on continuously improving R&D efficiency. We improved our R&D execution times by around 30% last year. And finally, on acceleration and differentiation, we leverage a strong partner ecosystem and increasingly AI-enabled development and product differentiation and an industry-leading patent portfolio with about 1 patent per working day.

Together, these elements from an excellent and scalable R&D platform that allows Elmos to grow faster than the market while maintaining quality, predictability and margin discipline. Now let us look at the value is shifting in the vehicle. This defines the technology leadership matters most. The automotive industry is undergoing a profound architectural transformation towards software-defined vehicles and solar architectures. This shift is driven by 3 structural changes. First, computing is being centralized into powerful central computers, Second, networks are being simplified and standardized moving towards high-speed Ethernet. And third, power distribution is becoming decentralized with a clear transition from a traditional 12-fold architecture to smart 48-volt board nets. Together, these changes move complexity and value creation to the edge of the vehicle. Distributed ECUs are replaced by solar controllers. Complexity, weight and cost of the wiring harness in a car are reduced. And at the same time, edge nodes become more intelligent, more connected and more soft federal. This has important consequences.

Edge Systems must be safe because they directly control actuators and power. They must be adaptable because functionality evolves over the eagle lifetime. And they must be secure because connectivity and OTA updates increase risk of attacks. This is exactly the sweet spot for Elmos. This is our home turf. We deliver safe, adaptable and secure edge system solutions, especially designed for sonar and software-defined vehicle architectures. We enable this architectural shift with eFuse protected for the 8 walk board nets, Ethernet Baget communication and system-level solutions that combine high-voltage signals associated software and seamless software integration. And at the same time, we increase our IC content per vehicle, as shown before [indiscernible] This strategic positioning is directly reflected in our R&D pipeline. Across all Elmos application segments, sensing, software fund vehicle, lightning and motor control, our pipeline is well filled for the years to come. In Sensing, we continuously expand our sensor and master IC families, firmware and system architectures.

In braking system and pressure sensing, we extend our portfolio with additional interfaces and integrated solutions. In Lightning, we move from discrete solutions towards scalable, multichannel and high-performance systems. In motor control, we address both low current activators and high power for the advert applications. And in SDV, smart EFuse controllers and edge gateway solutions are becoming central building blocks. This pipeline ensures that Elmos remains technologically relevant, cost competitive and highly attractive for OEMs and Tier 1s, not just today, but our multiple hit generations. Innovation at Elmos does not happen in isolation at circuit level. It happens holistically at system level, architecture level and circuit land.

Our edge focused innovation in SDVN solar architecture underpins our path towards 1 building revenue in sales by 2030. Let me illustrate this with 4 concrete examples. The first example is ultrasonic system innovation an area where Elmos holds a global leadership position. We are the #1 supplier of ultrasonicaworldwide, serving applications from entry-level parking assistance to near-field others. Our leadership requires continuous innovation. Our latest ultrasonic system solutions deliver a step change in efficiency with up to 75% lower power consumption. This directly supports EV range and sustainability targets. At the same time, advanced interfaces and scalable architectures allow a seamless migration from entry to premium vehicles protecting customer investments. We also extend ultrasonic relevance beyond classical parking functions.

With the e-enabled perception such as object disclassification and had detection, ultrasonic sensing becomes relevant for additional safety and automation use cases. And importantly, our spare system solution has been selected for the NVIDIA platform with a start of production in 2026. We also integrate our ranging solution into other platforms, for instance, from TI, Horizon Robotics and Qualcomm. This vol dates our STV readiness and system competence at the highest level. Security is fully embedded across our ranging systems from sensing authentication to encrypted communication and secure firm updates. We have already deployed more than 2 billion ultrasonic ICs in the field. The second example addresses a topic that is becoming increasingly critical. Security, with our Quantum random number generator, -- we established a hardware route of trust for future vehicles suited to withstand anti computer-based attacks. True randomness at silicon level is fundamentally different from side random or software-based approaches used today.

It strengthens cryptography, authentication secure communication and OTA updates. Why is this important now? Cybersecurity regulation is tightening globally and software-defined vehicles are permanently connected. Hardware trust anchors are not longer optional. They are becoming mandatory. Our RMG solution is compact and highly reusable across platforms and technologies. Our light measurements exceed our expectations already. For instance, with respect to power consumption, the total count rate of the entropy source of 2.5 megahertz and passing of list random tests. This enables capable value creation with low incremental cost and increasing relevance as vehicle connectivity and autonomy growth.p

The third example is our smart iFuse control innovation. Smart if users are a key enabler of solar architectures. They replace mechanical fuses with intelligent software-controlled protection. A modern STV architecture requires more than 20 eFuse controller per vehicle. Smart Ivus controller enables faster and more precise fall detection and isolation. This allows partially Boardnet operation instead of full system shutdown, what we call fill operational behavior. Electronic protection also allows smaller cable cross sections, reducing wiring harness weight and improving EV range. by integrating protection, sensing and communication into a scalable mixed signal platform, we create high value per node and strong content growth per vehicle.

Our fuse controller solutions support flexible designs from 300 to 500 MPI with external MOSFETs. The fourth example builds on our system-level expertise in ranging and goes 1 step further, our next-generation ultrasonic architecture. Here, we fundamentally rearchitecture the system. By repartitioning analog and digital functions between Master and tenders, we unlock a new cost performance curve. Proprietary ultrasonic data compression minimize data loss by enabling advanced signal processing at the highest effective resolution. A unified power and data concept simplifies wiring and interfaces, reducing system complexity and cost. At the same time, we enable multisensor setups with similar years measurements without crosstalk. This architecture also improves short-range performance smaller than 10 centimeters upto 3 centimeters even, simplified sensor handling and configuration and is fully cybersecurity-ready. We've already demonstrated stable operation in our web with 6 parallel sensors using a fully functional to wire interface for data over power. This is a system-level innovation, not an incremental improvement and it clearly differentiates Elmos in the market.

All these innovations are supported by a broad and competitive BCD technology portfolio. Elmos operates as a true fabless semiconductor company providing full strategic and operational flexibility across leading global silicon foundry technologies. By collaborating closely with best-in-class silicon foundry partners, Elmo secures access to highly competitive and automotive quality qualified BCV processes that combine performance excellence with cost efficiency. We actively manage our technology portfolio to ensure an optimal match between product requirements, technical performance, scalability and long-term economics. As part of this approach, we also enabled 12-inch wafer capabilities across wafer test and assembly, strengthening supply chain resilience and cost competitiveness.

Today, 130-nanometer BCD technology forms the proven backbone of Elmo's product development. It is optimized for analog and mixed-signal performance, offers a robust automotive reliability and delivers the right balance between performance, cost and scalability for high-volume application. This note supports a wide range of current product platform and remains a key enabler of profitable growth. Looking ahead, we are systematically extending our technology road map to next-generation BCD nodes. With 90-nanometer and 55-nanometer BCD identified as the next strategic step. These advanced nodes enable higher functional integration improve power efficiency and enhanced scalability, supporting evolving automotive architectures and software-defined vehicles.

Our clear technology requirements are driven by automotive use cases. such as high-voltage capability up to 150 volt, competitive RDS on, compact nonvolatile memory footprints and solid digital performance ensure Elmos is well positioned for future platforms and sustainable long-term growth. Let me now turn to our R&D setup. Elmos R&D has evolved into a global network, enabling innovation without borders. We move from regional expertise to global excellence.

Our German core remains the center of system expertise architecture leadership and quality culture. At the same time, we have significantly strengthened our global footprint. We have the full acquisition of our legal entity Demos GmbH in [indiscernible] we opened a new R&D site in Bruneau Czech, and we rent the China product center in Shanghai. This setup combines deep expertise with scalability, increasing efficiency, resilience and speed. Our global R&D excellence is a core competitive advantage of Elmos. With highly skilled experts across all disciplines, strong partnerships with key suppliers to scale capacity in close cooperation with leading universities, we continuously translate innovation into safe, secure, and competitive automotive products. And very importantly, we also invest in the next generation of engineering talent. R&D efficiency is a strategic priority.

Our R&D platform is built to scale, supporting up to 1.5x revenue growth every 2 years with a disciplined and flexible cost base. Speed is a competitive advantage. We must consistently move faster without compromising automotive quality. Predictable execution is nonnegotiable. Our R&D projects are delivered on time, within budget and with tightly controlled deviations. Over the past 12 months, we have made significant progress in our R&D efficiency program. The time from an idea to product start has been reduced by 30%. 25% improvement of the duration to deliver samples to our customers supports fast time to market. Industrialization cycles are shorter and more predictable. I'm extremely delighted about the performance our engineers bring to the table every day. We continuously improve and enhance the way we work. Methodology and process optimizations are key to cope with the increasing complexity of our products and fast innovation cycles in the industry. And we do not innovate alone.

Our partner-led R&D ecosystem spends the entire semiconductor value chain. Long-standing partnerships gives us access to best-in-class tools, methodologies and scalable capacity. Last but not least, close and early engagement with our customers for the definition of superior products and reduce risks. Very important, innovation must be protected. Intellectual properties at the core of Elmo strategy and it is key to ensure freedom to operate. We filed roughly 4 patents every week and almost doubled the number of annual filed patents over the last decade. Our industry-leading patent filing rate of 1 filing per 3 engineers underlines our strong relation of intellectual property. We adopt our focus for patent application based on Alma's strategy and towards the new application segments such as eFuse and security. Consequently, -- we file percentage wise more patents on system and application level compared to 10 years ago. This IP base protects differentiation ensures freedom to operate and support long-term value creation. Artificial intelligence in the meantime, is an integral part of how we work. We see AI as a strategic enabler deployed with full transparency traceability and control to earn lasting trust. By embedding AI copilots across our development domains like software and coding software coding and testing, verification in the bagging we are redefining speed shortening cycles by preserving uncommising quality and safety.

AI-powered design automation is transforming today how we innovate. For instance, enabling much faster analog migration or accelerating our path from idea to silicon. With AI-driven test optimization, we simultaneously unlock higher performance and structurally lower cost and integrating AI into our products, for instance, giving access to unfiltered ultrasonic data allows us to move beyond traditional limits and creates a new level of real-time perception. Our AI perception kit turns innovation into experience, lower barriers, accelerating customer evaluation and speeding time to decisions.

Let me conclude. Technology and R&D are not just a function at Elmos. They are the engine of our future. With our global innovation network, deep systems expertise, strong partnerships and AI-driven productivity, we are transforming complexity into competitive advantage. We innovate faster, execute with discipline and protect what makes us unique. This is how we create sustainable value for our customers, shape the future of mobility and build long-term growth for our shareholders. At Elmos, we are not just keeping pace with change, we are engineering what comes next.

Thank you very much for your attention. Let me now hand over to our CEO, Patrick.

Good afternoon, ladies and gentlemen, and a very warm welcome from my side. My name is Patrick Schmitt, and I'm the Chief Operating Officer, responsible for Elmos Global Operations and Supply Chain. Today, I will update you on how our fabless transformation is translating into measurable operational progress and how operations are positioned to support the next growth phase of Elmos.

Operations at Elmos are not just about execution. They are a structural enabler of value creation. They ensure that innovation becomes reliable delivery, that growth remains scalable and that quality is maintained even as volume increase materially. One year after completing the fabless transition, we are now seeing the operational and financial benefits clearly materialize.

The wafer fab transaction was successfully closed in December 2024 for a net purchase price of approximately EUR 93 million. This marked the completion of our structural transition. Importantly, we retained our testing and other critical facilities. At the same time, we redirected our focus toward managing the global supply chain and strengthening our partner ecosystem.

Operationally, we onboarded and ramped a new OSAT for final test in Taiwan and qualified a new OSAT in China covering assembly, final test and tape and reel. From a technology perspective, newer volume products are now mainly based on 130-nanometer technology, improving scalability and cost efficiency. In addition, our 12-inch wafer prober is under evaluation and is moving towards serial release, enabling further efficiency and technology readiness. This was a year of disciplined execution. The foundation is firmly in place.

The benefits of a fabless model are now clearly visible, both operationally and financially. Our setup enables approximately 15% annual volume growth until 2030. We have built more than 10 strategic partnerships with leading foundries and OSATs across the global semiconductor value chain.

Our CapEx ratio has structurally declined by roughly 70% compared to the IDM model. For 2026, we are targeting a CapEx intensity of below 5% of sales. Operational efficiencies are delivering measurable improvements across our organization. We have reduced test time by around 25%, increasing throughput while simultaneously expanding available capacity without the need for additional capital investment in equipment. At the same time, we have shortened time to market for new product developments by approximately 25%. This significantly enhances our competitiveness and strengthens our ability to capture growth opportunities in an increasing dynamic market environment.

We have also realized roughly 50% efficiency gains in tape and reel output, significantly increasing productivity in our back-end processes. At the same time, we reduced inventory intensity by around 20%, enhancing capital efficiency and supporting stronger cash generation. By driving these operational improvements, we remain fully focused on our core competencies, design excellence, innovation leadership and close customer intimacy. Taken together, this is a structurally stronger operating model.

Looking ahead, strong demand is expected to drive a material increase in volumes. From 2026 to 2030, we expect volume growth of approximately 15% CAGR. Delivering this requires 3 operational pillars: scalability, resilience and uncompromising quality. Scalability is ensured through our fabless capacity model, standardization, reuse and back-end-driven scaling. Resilience is embedded by design, multi-sourcing, built-in capacity buffers, regional execution capabilities in our newly set up regional operations hub in Singapore and our organization in China and end-to-end risk management. And quality remains nonnegotiable. Automotive grade standard, scalable quality systems and disciplined ramp-up processes ensure growth without compromise. This is how we support a step change in volume while maintaining operational stability.

Our fabless model is powered by partnerships across wafer processing, wafer test, assembly, final test and tape and reel. At the same time, Elmos retains strong in-house focus on chip design, innovation and customer focus, the core value-driving capabilities. We are in advanced discussions with additional external partners to further strengthen scalability, especially regarding our external tape and reel capabilities. This capital-light structure allows us to expand capacity without proportional CapEx while maintaining full control over quality, delivery performance and customer outcomes.

Our partner network is both global and diversified. We work with leading global foundries and OSATs complemented by strong local players, including long-standing relationships of more than 30 years and more than 15 years in some cases. This diversified setup enhances supply resilience and reduces geopolitical exposure. At the same time, it strengthens our position in China and worldwide, acting as a differentiator in customer discussions. Resilience is not only defensive, it is commercially relevant.

As we grow, the outsourced value-add share will continue to increase, but in a structured and controlled manner. Historically, a significant portion of value creation has been already driven by our external partners across Asia. Our [ Dortmund ] site has primarily focused on serial production while also playing a key role in engineering, ramp-up activities and tape and reel processes. Today, Singapore has been established as our new regional operations hub. The external manufacturing function has been relocated from Dortmund to Singapore. Additionally, short-term planning responsibilities from the supply chain team in Dortmund have also been transferred to Singapore. We have established a dedicated China operations function and further expanded our partner network across Asia.

For our customers in China, the supply chain will be managed entirely within the country, ensuring that all processes and operations are locally administered. Warehousing and logistics will be handled from our facility in the Shanghai free trade zone. We have implemented our first turnkey solution for the Chinese market under our [indiscernible] brand, integrating assembly, testing and tape and reel services.

Looking ahead, we are building full operational capabilities in Asia and expanding regional tape and reel capacity. This approach provides several distinct advantages for our organization. First, it allows us to scale our operational capacity efficiently without the need for significant capital expenditures on our own facilities. As a result, we can respond more quickly to shift in demand while maintaining financial flexibility.

Second, by leveraging external partners and a structured outsourcing model, we can reduce customer lead times. This means our clients receive their products faster, strengthening our competitiveness in the market.

Third, this model enables us to lower our working capital requirements. By minimizing the need to invest heavily in inventory and infrastructure, we can allocate resources more strategically and efficiently.

Finally, we will establish a robust end-to-end supply chain within China that is managed entirely in country. This China for China setup ensures that all processes from assembly to logistics are locally administered, further enhancing our responsiveness and resilience in one of the world's most important markets. This structure brings us closer to partners and customers operationally and geographically.

Execution excellence and capital discipline go hand-in-hand. We expanded test capacity ahead of demand to enable future growth. Importantly, capacity expansion has been largely upgrade led with limited new tester purchases. Efficiency gains are delivering around 25% test time reduction and stronger OEE performance. Our hybrid test footprint across Asia allows flexible scaling.

OSATs provide scale while internal operations focus on engineering, yield and ramp agility. Proximity to fabs and customers improves responsiveness and resilience, higher capacity, faster cycles, better outcomes. Our long-term test strategy combines internal efficiency with OSAT scale. In wafer test, the mix gradually shifts toward external partners from a balanced split in 2024 to approximately 80% OSAT share by 2030. In final test, we see a similar trend moving towards around 85% external share by 2030. This transition allows us to leverage scale effects externally while maintaining engineering and ramp-up competence internally. It is deliberate and economic sound allocation model.

2025 was deliberately used to accelerate inventory normalization. We consciously operated at demand levels that allowed us to reduce buffers and structurally lower working capital. Inventories as a percentage of revenue declined to approximately 32%, a clear step toward a leaner capital structure. This improvement is operationally driven and sustainable.

First, OSAT cycle and throughput have been optimized, supported by measurable improvements in overall equipment effectiveness. This increases velocity across the supply chain and reduces capital tied up in work in progress.

Second, we tightened our SIOP discipline. More rigorous demand planning and cross-functional alignment reduced inventory coverage and safety stock structurally. Third, SAP S/4HANA, combined with AI-supported forecasting now enables real-time inventory steering. This significantly enhances transparency and allows proactive adjustments instead of reactive corrections.

And finally, our regional Asia operations hub further streamlines material flows, shortens lead times and lower structural buffers. Looking ahead to 2030, we see additional optimization potential, particularly when benchmarked against peers. This is not a temporary correction. It is a structural shift towards stronger cash conversion and a sustainably higher free cash flow profile. Together, these measures make our supply chain faster, more disciplined and more resilient, and they directly support our financial ambition.

What you see here is not just a hardware upgrade story. It is fundamentally a test effort reduction story. If we look at the numbers, old systems delivered around 3.5 million units per system. Current systems already increased that to 11.5 million units. And the new generation will reach roughly 23 million units per system. That is more than a sixfold productivity improvement across generations. And the key driver behind the step change is reduced test time per device. Every second we remove from the test time directly increases throughput. And in high-volume automotive applications, even small reductions translate into massive structural capacity gains. Of course, next-generation platforms contribute with higher base performance. And we have delivered sustainable OEE improvements across internal and external sites. But the real structural lever is this. We test faster with the same or even better quality standards, and that changes the economics.

During the allocation phase, we invested heavily in expanding capacity. Now with significantly reduced test time and higher system productivity, we can grow output without proportionally increasing equipment. That is why future output growth is achievable with limited incremental CapEx. In practical terms, lower test effort per unit, higher throughput per asset, better asset utilization and structurally lower capital intensity. This is a key enabler for margin stability, stronger cash conversion and our disciplined CapEx ratio to around 6% on the path towards EUR 1 billion revenue.

Let me be very clear. Quality remains nonnegotiable. Quality delivers the 0 defect performance automotive customers demand. It builds long-term trust and repeat design wins. It protects premium positioning and creates pricing power. It reduces operational and supply chain risks. It accelerates time to market and is essential for fabless scalability. Most importantly, it is embedded in our DNA, built into processes, governance and daily discipline. The customer feedback shown on this slide speaks for itself. Quality is not only compliance, it is a competitive advantage.

Let me close with 5 key messages. First, the fabless transformation has unlocked agility, scalability and structural capital efficiency. Second, strategic partnerships provide technology access and scale while strengthening resilience. Third, significant efficiency gains, lower working capital, lower CapEx intensity and operational improvements, enhanced profitability and cash generation. Fourth, our testing strategy combines internal engineering excellence with OSAT scale and strong operating leverage. And finally, relentless focus on quality and operational excellence remains the foundation of long-term customer trust and sustainable growth.

Operations at Elmos are ready to support the next step change in volumes. Thank you very much for your attention. Let me now hand over to Rita, our CFO.

Good afternoon, everyone, and also a very warm welcome from my side. My name is Rita Mamberger. I have been with Elmos since 2015 and have been CFO since 2022. My clear focus as the CFO of the company is to secure financial stability, disciplined growth and sustainable cash generation. Today, I will walk you through our strong financial performance and outline how we will achieve our ambitious financial targets for 2030. The key message of my presentation is straightforward. Elmos delivers profitable growth and strong cash flows even in volatile market environments, creating very attractive shareholder returns.

This chart shows the financial development of Elmos from 2021 to 2025 and deliberately covers 2 very different cycles of the automotive semiconductor market. The first phase was characterized by the global semiconductor shortage, while the second phase was dominated by slower momentum due to customer inventory destocking. These conditions required very different management actions, especially with respect to capacities, working capital and cost control. The key is to be flexible and agile so we can react quickly to demand changes and use short-term opportunities.

Despite these very different market phases, Elmos increased sales from EUR 322 million in 2021 to around EUR 583 million in 2025. This corresponds to a compounded annual growth rate of 16% and clearly demonstrates the structural growth of our business based on our innovative [indiscernible] solutions. EBIT grew even faster than sales with a CAGR of 21%. This reflects strong operating leverage, stable gross margins and disciplined management of operating expenses. Importantly, this profitability improvement was not driven by aggressive pricing, but by volume growth, scale effects and efficiency gains in all of our processes.

Capital expenditures were elevated during the expansion phase, mainly due to investments in back-end and test capacity to support our strong growth, new product ramps and secure delivery capability. During the cheap allocation, we focused all of our activities purely on growth, and we wanted to be able to deliver as many ICs as possible. With the completion of our capacity expansion plan, capital expenditures declined again in 2024 and 2025. Free cash flow margin improved significantly in 2025. This improvement was mainly driven by lower CapEx the normalization of working capital and lower taxes. As you all know, cash generation is a core focus of our new strategy and Elmos will be much more cash attractive in the future. The key takeaway from this slide is straightforward, Elmos can grow profitably and improve cash generation across the cycle.

Our financial performance also compares favorably with a selected peer group of global automotive semiconductor companies, our core competitors in the different application fields. During the chip shortage, all automotive semiconductor companies were able to grow significantly. However, with an annual growth rate of 33.6%, Elmos grew twice as fast as its core competitors. Our great products and excellent delivery performance turned Elmos in the real growth engine. Between 2023 and 2025, despite 2 years of inventory destocking, we also achieved slight growth, while competitors declined by nearly 20% on average with some down by more than 30%.

At the same time, our EBIT margin is more resilient. Even in the stagnation phase of 2024 and 2025, we managed to maintain a higher EBIT margin than most of our core competitors. This underlines the stability of our operating model and strength of our execution capabilities.

Finally, we were able to improve our free cash flow performance despite economic headwinds and temporary working capital effects. Our focus on cash generation creates further upside as Elmos moves into a cash harvesting phase. This very clear outperformance reflects our excellent position, consistent financial discipline and the great commitment of the entire Elmos team.

Our strong financial performance resulted also in a superior share price development and total shareholder return. Our share price increased 350% since 2021, well above peers and the TecDAX Index, which Elmos is a member of since June 2024. The total shareholder return is 384%, also well above peers. And despite this outstanding performance, Elmos' relative valuation is still well below most peers, offering further upside potential.

Let me now turn to our midterm financial targets for 2030. As you can see, we confirm our ambitious growth and profitability targets published at the CMD in November 2024, and we even have upgraded our targets for CapEx and free cash flow margin. As explained by our CSO, Jan Dienstuhl, earlier, we target sales of around EUR 1 billion by 2030, supported by many design wins in our core application fields and an innovative product road map for automotive and non-automotive technologies. At the same time, we expect a solid gross margin of around 45%, reflecting our transition to a fabless business model and the continued shift in the product portfolio towards higher-value applications. It is essential to find the right balance between growth and profitability.

As we have demonstrated in the past, an OpEx level of around 20% below gross profit, covering R&D as well as SG&A provides us with sufficient resources to drive growth while still maintaining a high level of profitability. Our EBIT margin target of around 25% of sales is supported by broadly [indiscernible] gross margins and strict cost discipline. As a fabless company, we benefit from a flexible cost structure and good scalability. We now target a CapEx ratio of around 6% based on our average annual growth rate. This improvement by 4 percentage points compared to our former target of less than 10% is a result of better-than-anticipated improvements in operational efficiency in the back end, as highlighted by Patrick Schmitt.

Following our transition to a fabless model on the front-end side and the substantially improved utilization of our testing equipment, we anticipate lower investment requirements to support our future growth. Finally, we target a free cash flow ratio of around 17% of sales. This positive development will be driven by a combination of higher profitability, lower CapEx optimized working capital and a lower tax burden as we target a tax rate of around 21% in the coming years.

Ladies and gentlemen, while some of our peers have recently lowered their financial ambitions, we remain committed to our midterm targets, once again, a clear testament to the resilience of our business model, the attractiveness of our product portfolio and the dedication and commitment of the Elmos team.

As just mentioned, we plan to increase our EBIT margin to around 25% by 2030. The main driver is volume growth across all product segments, supported by higher margins from new product generations and scale effects as volumes ramp up. We expect typical annual price declines in the low to mid-single-digit range, which we plan to offset through ongoing compensation measures.

Cost inflation, particularly for materials and labor, is actively managed through cost discipline, supplier negotiations and efficiency programs. The higher gold price impacted costs in 2025, but mitigation measures such as copper via transitions and customer should largely offset this from 2027 onwards. In addition to the higher gold price, consulting costs for the SAP transition and the implementation of our China strategy, impacted profitability by around 3 percentage points in fiscal year 2025.

We are confident in achieving sustainable margin expansion through operational excellence, continuous process improvements and scalable structures, supported by SAP S/4HANA and AI-based tools. Historically, Elmos has a tax rate of 33% to 34%, a clear disadvantage to our competitors who had a tax rate below 20% in the past. However, we must be competitive across all cost positions. And in this context, the tax environment is a key building block. That's why we have defined a clear path to significantly lower our tax rate.

As you all know, we have realigned Elmos Semiconductor SE into a holding company and relocated the registered office from Dortmund to Leverkusen, which has allowed us to cut our local business tax, the so-called Gewerbesteuer, in half and lowered our combined tax rate by around 7 percentage points effective January 1, 2025.

Looking ahead, we expect the effective tax rate to normalize at an even lower level at around 21%. This is driven by a more balanced geographic profit distribution with the establishment of an Asia sales hub in Singapore and the full functional entity in China with optimized transfer pricing structures. In addition, the gradual reduction of the German corporate income tax rate as enacted by the German government in July last year will support this development in the next years. A lower and more stable tax rate directly supports net income growth and free cash flow generation. It is, therefore, an important pillar in achieving our 2030 free cash flow targets.

The increase in working capital in 2022 and 2023 was mainly driven by a deliberate inventory buildup during the global chip shortage. At that time, securing wafer supply and back-end capacity was critical to ensure delivery capability for our customers. This decision supported growth and customer trust, but it also led to temporarily higher cash absorption. With the normalization of supply and demand, inventory levels have started to come down gradually. It is important to be able to react quickly to customer demand, especially when you have limited visibility and most customers order well below the normal lead times. This is the reason why we have started optimizing our inventory levels at the end of 2025, not aggressively, but rather in a prudent and targeted manner.

Looking forward, we target a structurally lower working capital ratio by 2030. Our goal is a net working capital level of around 25% of sales. That means we are targeting a reduction in absolute net working capital even as the business grows by around 70% until 2030. This will be achieved through tighter inventory management, improved demand forecasting and real-time tracking of inventory across the supply chain, also with the help of SAP S/4HANA and AI support.

In addition, faster and more automated invoicing processes support quicker cash collection. And we also will be even stricter on monitoring the payment behavior of our customers, especially on the distribution side in China. Working capital discipline is a key lever for improving cash conversion and free cash flow generation at Elmos.

Our COO, Patrick Schmitt, has previously presented all of our important projects to lower CapEx needs. So I will be very brief here. After elevated CapEx levels during the peak growth phase to expand back-end and test capacities, CapEx has declined significantly since 2023. This reflects completed capacity expansions, higher test efficiency, the transition to fabless model and lower IT investments after the SAP S/4HANA rollout. Our new cutting-edge testing equipment, combined with the operational efficiency optimization as well as test time reduction programs resulted in a significant capacity expansion. This increases the output for each testing cell by a factor of more than 3x. And based on these great results, we expect CapEx to remain at around 6% of sales in the future, supporting growth while improving cash flow and capital efficiency.

A core element of our new strategy is to improve free cash flow. In 2025, we already achieved a significant step-up of the free cash flow to sales ratio of 11.4%. However, we see further upside potential and are targeting a free cash flow margin of around 17% in 2030. Let me first give you a high-level overview of the key elements of how we plan to achieve this target. The first step is our higher operating profitability, which will translate directly into stronger operating cash flows. One important lever is to further optimize our effective tax rate, resulting in structurally lower cash taxes. The tax savings due to the transfer to our registered office to Leverkusen were significant, but only the first step in our road map.

We also plan to further improve working capital efficiency. After the exceptional buildup during the global chip shortage and the subsequent destocking phase, we expect more normalized inventory levels. In addition, we will continue to work together with our customers and suppliers to further improve working capital. Last but not least, capital expenditures will structurally decline due to fabless operating model, higher operational efficiency and shorter test times. All these measures combined give us a confidence in reaching a free cash flow margin of around 17% of sales.

Ladies and gentlemen, Elmos has structurally closed the gap between profitability and cash generation, and we are going to harvest a lot of cash in the future. In light of our higher free cash flow generation, we have also updated our capital allocation framework to ensure attractive returns for our shareholders. Our first priority for capital allocation remains organic growth. We invest consistently in R&D, product development and operational capabilities to support our long-term growth strategy. These investments are fully embedded and well balanced in our financial targets and planning assumptions.

Beyond organic growth, we will place a stronger focus on returning capital to shareholders. We do not want to build large cash piles, so we plan to distribute excess cash via a combination of dividends and share buybacks. For fiscal year 2025, we propose a dividend increase by 50% to EUR 1.50 per share to be paid out after Annual General Meeting in May 2026 and return additional EUR 10 million to the capital markets via a safe harbor share buyback program. The total payout in 2026 will be around EUR 36 million, more than doubling the payout of the previous year. This total payout translates into EUR 2.08 per share. This is a payout ratio of 35% of consolidated net income or 54% of free cash flow in 2025.

Stable or increasing dividends remain a key priority for us. Our new capital return policy is sustainable and flexible across the cycle, balancing capital returns with investments in future growth. At the same time, it allows shareholders to participate appropriately in the company's success and provides for attractive returns.

This slide illustrates 2 important messages: strong cash generation and a clear commitment to increasing shareholder returns. Starting on the left-hand side, we expect to end 2026 with an estimated net cash position of around EUR 95 million, even after dividend payments and share buybacks. This reflects the strength of our free cash flow generation with a projected contribution of around EUR 110 million in 2026 at the midpoint of our guidance.

In the center chart, you see the development of our total payout from EUR 17 million in 2024 with a strong increase to EUR 36 million in 2025. For 2026, we are outlining an illustrative payout of EUR 95 million, which would represent a year-over-year increase of more than 160%. Based on this potential payout amount, we have different options to distribute the excess cash to our shareholders via a mix of dividends and share buybacks. On the right-hand side, we present different payout scenarios. The key message is clear. Based on our strong cash generation, shareholders can expect a significant step-up in shareholder returns.

Ladies and gentlemen, let me summarize. Elmos has demonstrated a strong track record of profitable growth and outperformance versus industry benchmarks, even in challenging market cycles. Our ambitious 2030 financial targets are confirmed and partially upgraded, supported by a resilient operating model, strong product positioning and disciplined cost management. We see further potential for margin upside driven by operating leverage, product mix improvements and continued operational excellence. Efficient capital management, lower recurring CapEx and optimized working capital will further strengthen free cash flow generation. Finally, bringing all these elements together, our capital allocation strategy is clearly focused on sustainable shareholder value creation through a progressive dividend and share buybacks.

Thank you for your attention, and back to Arne for his final remarks before the Q&A session.

So ladies and gentlemen, thank you for spending this day with us. Today, we have shared a comprehensive view of Elmos. We discussed our markets and our structural growth drivers; our innovative product and technology road map; our strategic initiatives in China and the operational optimization of our supply chain. And finally, we outlined our financial ambitions and introduced our refined capital allocation principles.

2026 marks a turning point for Elmos. The headwinds from destocking are fading. We expect to return to normal structural growth rates in 2026, growth that is driven by one powerful trend: the continuous increase of semiconductor content per vehicle. Electrification, ADAS, zonal architecture and software-defined vehicles are not short-term effects, they are very structural transformations and Elmos is positioned right at the core of these developments.

Our ambition of around EUR 1 billion in sales by 2030 is anchored in awarded design wins. These design wins provide long-term visibility and confidence that our growth path towards 2030 is firmly established. Of course, with some additional upside beyond what is already secured.

China remains a complex environment, but complexity for us creates opportunity. With our localized structure and expanding development capabilities, we are well positioned to capture structural growth in China while maintaining strategic flexibility and prudent risk management.

At the same time, growth alone, of course, is not enough. What differentiates Elmos today is the quality of that growth. We operate a scalable fabless model. We prioritize high-margin strategically attractive projects. We are targeting an EBIT margin of around 25% in the midterm with further optimization potential as volume, scale and efficiencies increase.

Most importantly, cash generation has fundamentally improved. Free cash flow is no longer a weak point. Today, cash flow is a management priority. Through disciplined capital expenditure, strict working capital management and ongoing tax optimization, we are building a business model that converts innovation into cash and cash into shareholder value.

Capital allocation has therefore entered also a new phase. The increase in 2026 will just be the start of an attractive journey. If you step back and look at the overall picture, you see a company that is market-leading in attractive niches, structurally exposed to rising semiconductor content per vehicle, increasingly cash generative and guided by disciplined and highly attractive capital allocation principles. And yet, we believe this powerful combination may not be fully reflected in our valuation. So as execution continues, as design wins convert into visible revenue, and as cash generation becomes consistently strong, we are confident that the valuation will, of course, follow the fundamentals.

Ladies and gentlemen, Elmos has transformed in the last years. We are stronger, more agile and financially more resilient than ever before. And we have a great executive leadership team that you have seen here today. We're entering a structural growth phase with significant opportunities ahead based on our strong position and based on an outstanding global Elmos team. We are totally convinced the best is still ahead of us. So thank you for your trust. Thank you for your continued support.

And now, Ralf, please open the Q&A session.

Yes. Thank you, Arne, and thanks to all [ ECC ] members for the excellent presentations. [Operator Instructions] Okay. Yes, all set? We're okay. Let's get started.

Good. So first question, let me see. It comes from Belgium, and not from our [ biller of ] friends, but from federal insurance. The first question is how do you see the competitive environment? Some European peers are underperforming in terms of top line growth, Elmos is strongly outperforming. Could that be seen as market share gains in some of your segments?

Yes, of course, it's partly market share gains, partly it's exposure to subsegments that grow quicker. But particularly if you look at the last 5 years, this is also share gains. That is correctly noted.

Okay. Thank you. Next question. A couple of questions. They come from [indiscernible] Good to have you with us. First question, compared to the last Capital Markets Day, the average semiconductor content per vehicle, so the total market by 2030 was downgraded roughly 9%. So when you look at the '24 numbers we've shown, I think it was USD 1,500 per vehicle. Now it's a little bit more than USD 1,300 yet our sales target has been confirmed. So also, does it mean we are -- yes, expect market share gains here?

So the numbers -- the content growth numbers from the last CMD, they also contain like also [ this indeed ], they contain HPC, so SoC. So this high-performance computers, they contain power [indiscernible] and they also contain memory chips. So -- and all these categories, they develop differently in this year's figures.

If we look on what we do, the edge ICs, the analog mix cycle ICs, interface management and so on, control ICs. So they still develop similarly like we have seen in the last CMD. So yes, it's true. The numbers are different, but our outlook, the forecast of our volume growth and value growth is very similar.

Okay. Thank you, Jan. Next question from [ Malte ]. Can you give us more details on what type of chips will drive the growth in our STV and safety business?

Yes, sure. So actually, these are the [ epic ICs ]. These are the issues controller ICs, where we see many of them in the new vehicles. We will see, first, gateway ICs starting on the Ethernet-based controllers that do lighting and ultrasonic applications. And we also see a lot of SSP, so-called sensor signal processors here for pressure, strain, force and torque measurement everywhere in the car.

Another question from [ Malte ]. I think this one is a question for our CTO, Jochen, how much Elmos design capabilities are moving to China as part of your China-for-China strategy?

So yes, we are not moving the signed capabilities but build up newly in China, and this will be approximately 10% of our total capacity. But very important, it's not a move, it's a buildup.

Excellent. Now we have some questions from Johannes Ries from Apus Capital. It's good to have you with us. We missed you today, we missed your input this morning in our earnings call. So let's start with your question.

The first question is about India. Two questions actually, how many revenue has been achieved in India in '25 to last year? And how many revenue are we expecting in 2030?

So actually, the revenue achieved in '25 was less than EUR 10 million. And in the growth plan for 2030, it's actually less than 3% that are planned for revenue in India.

Okay. Another question from Johannes Ries, is AI a challenge or a chance for Elmos, meaning a robot, but also physical AI agents?

Let me take this. And it's clearly a chance, not a challenge. I mean, as outlined in the way we work and how we work AI is part of our daily work already, and it's really supportive to be more efficient, to be faster, to handle [ that ] in a better way of complex tasks. Nevertheless, of course, the engineering brain is always very important in parallel to that.

The other topic, of course, is and this goes to robots as well to [ Stratas ], AI and AI features in our products getting more relevant as more data has to be calculated in these applications and using AI algorithms or hardware accelerators associated with is a very important topic.

Thank you, Jochen. Our hardware-based cybersecurity for SDV, so software-defined vehicle cybersecurity is included in our EUR 1 billion revenue target?

No, it is absolutely not. So we did not include any product revenues from this kind of categories.

So it's an upside similar to robotics?

Exactly, yes.

Okay. This is one from Mr. Ries. Our Smart Home or other IoT in a lot of things, areas are future opportunities for Elmos as well.

So we still have -- and I think you saw it in the presentation today, around 6% of our revenue is coming out of non-automotive application. This includes the two named here. So Smart Home is specifically one of our product areas here. And for the growth plan looking forward, they are still included. We will still have low single digit percentage revenue coming out of such kind of applications, but it will not overproportionately add to our growth. It will be on a similar level or a little bit less.

Okay. Next one also from Mr. Ries about our China competitors. How much are local Chinese competitors are a midterm risk for the Elmos China business?

Let me take this question. So number one, we are highly competitive in the Chinese market, and we already see the competitors. Some would say they imitate or they copy us. So we see this, the pressure is there. But based on our extreme specialization or niches, our system understanding our innovativeness and more and more our speed, I'm quite confident another aspect is, and you have seen it in our numbers. China is exporting more and more cars. And of course, these cars, which are being exported, they have to comply with global standards or the sense of the global markets. So I think quality and working according to standards and established standards is very important. So we're watching them, but I'm quite confident for us.

Okay. Thank you, Burkhard. Another question from Johannes Ries. How important is advanced packaging to improve efficiency of our products in the future?

Yes, there will be -- let's take this question. And there are two aspects. One of course is, yes, it's getting important in the terms that we have, of course, dual guy solutions where we have a wire by-wire interface in the advanced package. So for instance, a high-performance digital part, which will keep very stable because we have a certain standard architecture for computation. But on the other hand, of course, having an analog mixed-signal, high-voltage part, which is more flexible, which is more dedicated to the specific application here. But keep in mind, it's not the advantaged packaging. We are talking on high-performance computing, for instance. It's not 3D stack integration or chiplet. It's really, I would call it, it's more simple dual-die solutions where you either put the dice on top with a substrate ball or you have a wire by wire interface.

in the coming years.

So the -- if we look at the growth plan, our average growth rate is around 12%. So the growth that will be actually coming from revenue sourced in the U.S. will be lower than this 12%. It will be a few percentage lower. Also maybe as a side information, if we look at the business that is fulfilled today to the U.S. So partially, it's also being sent to Asia, but that is fulfilled through the -- as our exposure is only 2% in revenue. So it's quite a low exposure. Okay.

Is the sound quality, okay? Yes. Okay. Good. So let's continue. Another question by Johannes Ries. If we achieve at least the same volume in euros of design wins, what we did in the past, when we continue to do that in the 5 coming years, will you exceed -- or can we exceed our 2030 target?

So actually assuming that the design wins will come in a similar annually distribution because it's always business spread over some years. Then in the last 5 years, the clear answer is yes. This would give us the opportunity to grow beyond that.

Okay. Thank you. And of course, a margin question as well. If we achieve or beat our 2030 sales target, why is there no real margin leverage?

Well, so there may be margin leverage. But keep in mind, these Capital Markets Day, they come along every year. So what should we tell you next year. In 2024, we haven't told you the full set of KPIs on cash flow, and we are telling you today. So I wonder what we have to tell you next year.

Okay. Thank you. Next question comes from Peter from London. It's is a question, I guess, for our -- for Patrick, our COO, what is the value of keeping part of the testing in-house? And why don't we outsource it completely?

Yes. Our in-house testing gives us great flexibility. We have the chance to basically prepare our [ REMS ] flawlessly in-house first. We have short proximity to do engineering tests and as well to support us while developing new test programs. However, as said in my showed in my presentation as well, if there are capacity increases needed because of volume growth, these will be definitely happening at our partners in Asia and not in-house.

Okay. Thank you. Now we have some questions by Malte Schaumann. Good to have you with us. Let's start with the Chinese one. Will the Chinese organization also be responsible for business with Chinese robot customers?

Yes. That is the short answer, right?

Yes. Okay. And another robot one by Malte. What is approximately the Elmos revenue potential opportunity for each robot?

So if we look at the maximum equipment, we see a potential for around 120 ICs, similar like the analogy in the car. So that means you would have a revenue potential between $50 and $80, something like that. So -- but we think we can achieve per robot take rate like in the cars today is 10 ICs per car today, we think we can achieve a similar rate in the robot market. But again, it's not in our current growth plan until 2030. We see it more a little bit in the 20, 30-plus years as per today's knowledge.

Okay. Thank you, [ Ian ]. The question regarding capitalized development expenses [indiscernible]. What is the net effect of capitalized R&D, so meaning capitalization less the depreciation in '25, '26 and what is this figure to be expected by 2030? So what's the net impact in terms of EBIT margin?

So the net effect for 2025 was EUR 14 million or 2.5% of EBIT margin, and we expect for 2026 going forward more or less same level.

Okay. Thank you, Rita. Another financial question by multi. What are the expected growth rates for R&D and SG&A expenses in relative to top line growth?

Okay. We maintain OpEx level at 20% of revenue. It means 11% to 12% for R&D and 8% to 9% SG&A, and they expect the same level also going forward.

Okay. The next question, I think Arne already answered this question. What are your thoughts potentially exceeding the 25% EBIT margin? I guess we have already answered that there's definitely potential there. Let's wait and see.

Okay. Next one, also by Malte. Could you please provide some color on the emerging competitors as a potential local headwind? So who are our main competitors currently in China [indiscernible]

Yes, let me start and then [indiscernible], maybe you can chime in. So number one, when you look at the Chinese semiconductor industry, it's important to understand there's a long -- there was a very strong focus on senior conductors for the consumer and industrial markets, mostly consumer but also industrial markets. And step by step, we also see more and more companies expanding into automotive. So we see that. That's number one.

Number two, as you have seen on my chart, the companies we are observing, which are potential competitors for us are relatively small as we speak right now.

And number three, that's also what I mentioned before. It's very important meeting global standards, global quality standards because once you export the cost to the world, you need to have those [ trip in the cars ]. So we watch them. We look out for them. We're always happy when we see somebody is imitating us, but I'm not too concerned.

Next question or last question by Malte. Are there any nonautomotive technology, which could open up new applications, which might be realized by M&A. So non organic, non automotive opportunities.

Yes. Thank you for that question. So as was pointed out, we have a very strong focused niche strategy and our M&A strategy is how can we get stronger in our niches or in very adjacent fields. We are also now venture capitalists. We are also no gambler let's say. So if there's a target which fits extremely well to our core capacities or our core markets, that's fine, but we don't intend to expand with M&A outside.

Okay. Next question now from Lukas Spang. In which markets or segments do we see potential upside until 2030 in terms of revenue, which are not included in the business, but if we see a real chance to realize this upside.

Where we are currently conservative in our growth plan is, as we have explained on robotics. So some competitors see the robotic market picking up earlier. So if that holds true, we are in position, and we can utilize today's products for that. That is one thing. The other thing is we are also a little bit careful on the home automation application and also on industrial sensors. So our sensor signal processors are also used in industrial applications. And if that market is developing a little bit better, that also gives us some upside potential.

Okay. Another one by Lukas Spang, where could potential upside on the EBIT margin side could come from? So what are specific potential effects?

Well, of course, you would expect, as you scale to EUR 1 billion, that there is more to come in terms of OpEx scale, and this may well be possible. If you look at the gross margin, we will get our hands around gold. We will get our hands around a number of operational improvements. So maybe [ 45 ] is not the right number for 2030. So we do have quite some ideas how to improve profitability and -- of course, we keep you posted how we would commit to a higher profitability number. For today, we leave it at the targets, but as I mentioned, we'll have a Capital Markets Day, I think, almost every year. So there are some more to come until 2030.

Thank you, Arne. Another question by Malte Schaumann. What is the share of U.S. competitors in our target applications at Chinese customer? And how do we judge the opportunity to gain shares from our U.S. friends due to geopolitical environment? Yes. So exactly in the last, let's say, 12 months, we had a lot of discussions with our customers in China in this geopolitically dynamic times about the supply chains. And indeed, especially in our strongest application segments in China, which are ultrasonic and lighting. There are direct U.S. competitors. What exactly the share is I could not tell now. There is quite some share, and it gives maybe additional opportunities because some of these Chinese customers may rethink utilizing this U.S.-based supply. That is true. We see it in the market every day. But at least until today, no major platform has been moved over. That remains an opportunity.

Our next question comes from [indiscernible] is there an expected effect for Elmos in case of consolidation of Chinese car brands? Do we have a concentrated exposure on special brands? Or do we have a broad exposure in terms of customer penetration in China?

No, we have a super broad exposure. So you can argue that if we had a super concentrated Chinese market, which may take some time in terms of OEMs, they may gain more buying power. On the other hand, you would take out a pretty kind of diversified supply chain. We would have a lot more direct customers, which would be a great benefit to us. So we do not fear consolidation of the Chinese OEMs. We would probably like it but there's nothing we can do about it. So on balance, it's a plus for us if that were to happen.

Okay. Thank you. Next question by Edwin. What would be the most likely driver of free margin or free cash flow margin above 17% working capital, EBIT expansion or something else? I think this question is valid for '26 and maybe also beyond that.

Yes. I mean, we plan to reduce our tax rate from 25% to 21%, that's [ 4 ] percentage points, which is quite material, material for our numbers. But operational results. So the increase of EBIT margin and also the efficient working capital management will help to increase free cash flow margin above 17%. So all the 3 effects will help [indiscernible].

Okay. So now we have a question or a couple of questions from Veysel from Metzler. Yes, you have a bunch of questions. I'll try to start with the first one. Design win conversion and timing. What is the typical time frame from securing a design win going into the first initial volume ramp?

So that very much depends. There are some design wins that are very short term, and they only live for one or two years, especially for some Chinese design wins that could be the case because we all know the platforms changed rapidly in China. Other big design platform wins, they go over many, many years. So we typically only count them over 7 years. If you look on the total distribution of all design wins in the year that we typically win it looks a little bit like a normal distribution that is a little bit front loaded. So that is how you can think about how typically they distribute over the years to come. But they also start quite early. So we do not have too many design wins that start only in many years. There are some but very few. That's typically the case for ASICs where you have a 3-year development or something like that. There, that is the case. For other things, it's winning business with existing products and then they are very short term, they generate business already in the ongoing year or in the year after.

Okay. Next question regarding design win. Historically, what has been your conversion ratio basically your success ratio from design win to realize sales?

So typically, it's significantly on top of 90%. So in some years, it's 92%. In some years, it's 96%. Some major platforms. Sometimes they change their volume. They push it out by one or two years, and then you need to adapt the revenues a little bit. We do a very detailed bookkeeping on that. So short answer significantly on top of 90%.

Okay. Another question regarding volume and revenue. So Patrick showed in his presentation, volume growth of 15% CAGR per year. Our sales CAGR is 12%. So the difference, 3 percentage points or 300 basis points, is this price erosion? So lower sales price.

Yes, that is the assumption between the volume and the revenue. Of course, in any given year, there can also be a mix effect. Chips being bigger, being smaller, being thus more expensive or less expensive. But in the most part, this projection, this 3 points is pricing.

So another question from Veysel regarding -- yes, risk and downside production. Looking at the 2015 targets, what are the main execution risks specifically in the rent of severe cyclical downturn in the automotive business before 2030? What would be your stress test scenario look like for revenue and margin, obviously?

What I think we've just been through a stress test scenario in the last 2 years, '24 and '25, we've just seen kind of market-wide minus 20% in revenue. And you've seen how we've fared. This would be pretty much two stress test years, which are current, and I think interesting to look at how we fared.

Thank you, Arne. Last question. strategic capital allocation question. So regarding our footprint in China is presented with a highly attractive exit multiple for our Chinese operation, would management consider divesting to unlock that immediate kind of opportunity?

Yes. We would look at all strategic options, and that continues to take on Chinese capital, which then, on the other side, would mean that we would reduce our equity participation. But let's see where we go. This is a little bit the cliff hanger question, right? Because we do not have a clear answer. A lot depends on where the market goes, where geopolitics go where valuations go. And since you framed it as, there's a super attractive or financially super attractive offer on the table would be considered, yes, we would.

Okay. A question from Martin again. How are your competitors in China, Taiwan, Korea and the U.S.? How would you assess their market position? So basically, our most important competitors in these regions.

Well, I mean, China are pretty young companies, and they are trying to break into the market to start with. Taiwan, there's not so many notable competitors, to be honest. Taiwan, for us is a country of fabs, it's a country of testing. So a little bit different position in the value chain. South Korea is a little bit emerging, but also no kind of big mixed signal competitors that we would face head on in our segments. The U.S., obviously, there are some big companies that have been competitors for years and years. I think we gained some share over the recent years, which encourages us to believe that we have a very strong product portfolio. and a strong attractiveness. However, there are very good U.S. companies and very formidable competitors.

Thanks, Arne. Next question from [ Edwin Young ], Are there any effects from the Nexperia situation for Elmos?

Well, what do we learn from Nexperia? I mean we see government intervention on all continents, but this is nothing new. What we learned, I believe, on the supply chain was that a lot of people have really little stock. When things are approaching a crash scenario after such a short amount of time, I think this is an unhealthily low stock level. So Nexperia kind of put that to a test, and this is what we, for sure, learned out of that.

But no -- let's say, no immediate chances for us to grab some experience?

No. This is -- these are different products. There's -- it's not that we could gobble up the Nexperia business because they may have certain challenges. This is not the case.

Okay. Another question from Veysel. How do we make sure that we have enough R&D and the right product that we can scale across platforms, meaning not missing out what customers expect in terms of innovation.

Yes. I mean the key topic here is, as Jan also showed in his presentation, the close interaction and customer intimacy we have with our Tier 1s and OEMs. We have continuously discussions and alignments with our customers. Is it Tier 1, is it OEMs to understand what they need? What can we benefit for a better system solution on their side that we've solved three little problems the customer have. For example, also looking on China by intention, we didn't call it an R&D center. We call it CPC, China product center. It means we also have to understand locally the market in China. We have to, on the local language, talk with our customers, with a understand what is their needs, what are their requirements and with that one, turning this into competitive products. So customer intimacy is key here.

Okay. Thanks, Jochen. Next question from [indiscernible]. Concerning cash payout, how do you weigh up the dividends versus share buybacks? Is there a minimum dividend versus share buybacks? Or are we flexible or want to be flexible?

Well, there's not a lot of rules there, right? First, we don't want to build cash parts, obviously. So then if we look at the dividend, we think that somehow organic behavior of the dividend is good. So stable or increasing. This holds still true. So we Don't think of it as a share of the one or the other, but we think of it as kind of a good development that is sustainable such that the dividends can be stable or increasing and that we do the rest, which may be a very substantial rest by share buybacks. But there's no rule like this must be 50-50 or it must be 70-30. It should be most of what we have in cash such that there is no [ pile burning ]. This is important.

Okay. Last question for the time being at least, again from Lukas Spang. In the presentation, it was mentioned that our revenue target, EUR 1 billion is largely covered by existing business or secured design wins. How do you see the chance to increase your market share further by 2030?

So part of the growth is coming actually from market share gains. So it's a smaller part, but there is a part. And it's especially for lighting, for motor control applications and for sensing applications. and also for the whole SDV part. Because, for example, the issues control [ seized ] today, they are already -- they have started already on low level, low volumes. But in 2027, they will ramp significantly. That is quite a high-volume application. So there's one part where we will gain a significant market share in that niche. So in our niches, our market share is growing.

Okay. Thank you, Jan. So ladies and gentlemen, currently, we have no more question pending. Here's one more question. Another one by Veysel, are distributors are still part of your sales strategy?

Yes, they are. So for distributors, there are two types of distribution business. One is fulfillment business. A lot of the business that we have today, especially in Asia, is going in fulfillment, we are distributors. But the other part of it is creation of the business demand creation. So that is the smaller part. And today, for us, that is still growth potential. So we are working closely with two of the biggest distributors in the world to make our products, especially even more visible in very fragmented markets. So our wholesale team is not set up to address very fragmented markets. But with strong distribution partners we think we can sell our products even in that part of the market more successfully. Yes, we are working on that. Today, the share is very low of that revenue, but we think we can improve it. We will update you on that.

And there's no big shift, big change in the future?

No, absolutely not. That is currently not planned.

Okay. Thank you, Jan. So again, no more questions are pending in our Q&A system. Okay. I think we had a lot of questions. We answered and covered a lot of [ turf ]. So thank you very much. First of all, of course, to you out there for sharing your questions interact with us, and being part of our Capital Markets Day. Thanks to, of course, all of our [ EEC ] members for presenting really a powerful message about our next phase of growth and value generation, of course, thanks to all personnel, all of my team members, corporate development teams, mark-on teams, IR teams and all persons behind the stage, making that capital market event possible. It's a team event as usual. Yes, thank you very much. We're looking forward to seeing many of you in the next, yes, investor meetings or investment conferences. And as our CEO, Arne Schneider, likes to say, "The best is yet to come." Thank you very much. Goodbye from [ Leverkusen ]. Take care. Bye-bye.

Good morning, ladies and gentlemen, and welcome to the Elmos Semiconductor SE Analyst Conference Call. [Operator Instructions] Let me now turn the floor over to your host, Dr. Arne Schneider, CEO.

Good morning, ladies and gentlemen. Welcome to our virtual Analyst Conference and Earnings Webcast for the fiscal year 2025. This earnings call marks the first part of an exciting day dedicated to you, our investors and analysts. This morning, I will walk you through the key highlights and our preliminary financial results for 2025 and share our positive outlook for 2026.

Together with my colleagues from the Elmos Executive Committee, we will then outline the next phase of our growth and strategic agenda at our virtual Capital Markets Day, starting at 2:30 p.m. CET today. We have prepared an exciting program for you this afternoon. So if you do not have yet registered for the CMD, please send a short e-mail to [email protected], so [email protected] and our IR team will provide you with the details.

Let us begin with the highlights of the fiscal year 2025. Of course, as always, we will open the line for your questions at the end of my presentation. Since our foundation in 1984 in Dortmund, Elmos has evolved from a small start-up into a global leader in automotive mixed-signal semiconductors. Our ICs measure, control and enable electronic intelligence at the edge of the vehicle. They power key automotive megatrends electrification, ADAS and autonomous driving, safety, comfort and software-defined vehicles.

In short, Elmos makes mobility safer, smarter, more comfortable and more sustainable. As a focused fabless analog mixed-signal specialist, we hold leading positions in all of our core application fields. And we continuously deliver next-generation ICs that create measurable value for our customers.

On average, around 10 Elmos ICs were installed in every new car produced worldwide in 2025 and a significantly higher content up to 200 ICs is possible in premium modern EV platforms. More than 90% of our revenues are generated in the automotive market. This is our core DNA. We have sourced numerous attractive design wins that will drive future demand for our innovative ICs solutions.

But at the same time, our technology goes beyond automotive. Many of our proven automotive applications are being redesigned and adapted for high-growth adjacent markets, such as smart home, smart factories and particularly robotics. In other words, automotive, is our core and proven growth platform. [indiscernible] semiconductor intelligence in new technologies is an additional growth opportunity.

With more than 1,100 employees across 20 locations worldwide, including almost 500 R&D engineers, we combine deep customer intimacy with global scale. We serve the world's leading Tier 1 suppliers. Around 60% of our sales are generated in Asia, reflecting the center of gravity of global automotive production. Our chips are designed into vehicles and platforms across all major OEMs in Europe, in America, in Japan, Korea and China and also, of course, in emerging markets like India.

In fact, our OEM footprint closely mirrors the global automotive market itself. Let me give you a snapshot of our innovative product portfolio, a preview of the technologies that are driving our growth and that we will present in much greater detail at our Capital Markets Day this afternoon.

Again, let me do a little advertisement, right to our IR staff or look on the website, and it will be a great thing this afternoon. So semiconductors are not just components. They are the intelligent layer of a modern vehicle, and this is exactly where Elmos operates. At the intelligent edge of the vehicle architecture, the point where real-time data is generated, processed and translated into safe, reliable and high-performance functionality.

Our ultrasonic ICs enable precise 360-degree environmental mapping around the vehicle, a fundamental building block of the sensor fusion for assisted and autonomous driving. Our next Ultrasonic IC generation has integrated AI capability and can detect objects as close as 7 centimeters, differentiate heights and significantly enhance the quality and performance for modern ADAS systems.

Lighting is another example of how semiconductors redefined vehicle experience. Ambient lighting has evolved from a premium feature into a brand-defining design element across all segments. Our LED driver ICs enable dynamic multipixel front grills, illuminated services and intelligent interior life concepts that transform cars into emotional spaces.

Electrification is accelerating this transition even further. Modern EV platforms rely on dozens of intelligence, actuators, pumps, valves and thermal management system, all powered by small electric motors, which are, of course, controlled by integrated mixed-signal ICs. Efficient battery conditioning, optimized range and advanced comfort features are impossible without semiconductor intelligence.

In many of these motor control and thermal applications, Elmos already holds leading market position. And at the same time, we are driving the next-generation botnet architectures with eFuses and gateway IC drivers. These applications are intelligent system solutions for software-defined vehicle.

Elmos sensor signal ICs are the bridge between the real world and the digital brain of the car. Fast, robust and safe sensor data from the edge is, of course, crucial for modern vehicles. Without the intelligence on the edge, there is no need for central compute. You can drive autonomously or have an efficient electrical drivetrain. With more than 4 decades of expertise, a powerful innovation road map and a global R&D organization, Elmos is ideally positioned to capture the structural trend for more semiconductor content per vehicle.

Let us also have a brief look at some economic market and strategic highlights of 2025. According to the latest IMF estimate, global economic output is expected to have grown by 3.3% in 2025. Growth remains uneven. Europe is forecasted at 1.4% with Germany at just 0.2%, the U.S. at 2.1%, while China continues to expand at a robust 5%. In automotive production, S&P projects global light vehicle output to increase by 4% to around 93 million vehicles in 2025. A significant improvement since early last year when SAP forecasted a decline at that time.

Growth will continue to be regionally different. China is expected to grow by a very strong 10%, reinforcing its leading position in the global automotive market. Due to the weaker automotive industry and the U.S. tariffs, Europe and North America are forecasted slightly below last year's level.

Just a short comment, by the way, on the U.S. tariffs. So there is currently no direct impact on Elmos from the U.S. tariff regime on semiconductors as our ICs are not subject to it. But even in a scenario, and I haven't looked now for 20 minutes on how the tariff might have changed in the last 20 minutes. So maybe I'm not up to date. So even in the scenario where we have tariffs on our analog mixed signal chips, the direct exposure would be very limited as we have only 2% of our products shipped directly to the U.S.

So returning to the automotive semis market. The destocking activities have almost completely ended. Inventory levels have normalized and are from our perspective, even too low in some parts. Customers are gradually returning to normal order levels that better reflect underlying structural demand.

Currently, we do not see and therefore, we do not forecast the noticeable restocking by our customers. However, the headwind of destocking estimates with around 6 negative percentage points in growth is gone. That said, some customers continue to order below the normal lead time which keeps short-term visibility somewhat limited. But also in terms of the short-term ordering behavior, I feel there is some improvement, gradual improvement but improvement to be seen.

The structural picture remains bright and very promising. Semiconductor content per vehicle continues to rise significantly, driven by electrification, higher ADAS levels, autonomous driving and the shift to software-defined vehicles.

So let me now highlight some key strategic milestones. 2025 was the first year of Elmos as a fabless company after the wafer fab transaction was closed end of 2024. This marked the completion of our structural transition and the benefits of the fabless model are now clearly visible. We successfully completed our SAP transformation to S/4HANA, including the hypercare phase. This major operational achievement and a critical foundation for scalability, transparency and efficiency.

We also achieved the second highest level of new design wins in our history with promising wins across all segments and regions. This is a strong indicator of future revenue growth and highlights the competitiveness and attractiveness of our innovative product portfolio. Our OEE optimization and test time reduction programs delivered very positive results, directly contributing to a substantial capacity increase and corresponding lower CapEx intensity going forward. And we have successfully executed our labor and material cost optimization initiatives introduced at the beginning of last year. The savings strengthen our cost base and improve operational leverage.

And as all of you know, already as of January 1, 2025, we have relocated the registered office of Elmos Semiconductor SE from Dortmund to Leverkusen in order to reduce our tax book. In China, we are building a full function entity with an increasingly localized value chain. This strengthens customer proximity enhances resilience and create strategic optionality in its changing geopolitical environment.

And finally, our ESG performance continues to gain recognition. We achieved ISS Prime status with a C+ rating and the management level B rating from CDP. For us, a clear confirmation that sustainability and governance are embedded in how we operate. So in summary, the macro environment remains mixed, and geopolitics are challenging. The destocking headwind from the last 2 years is gone, that's very good, and we are returning to structural growth in 2026. We made great progress in our strategic agenda, further strengthening our global position and competitiveness.

So let me now present the key financial highlights of 2025 shown on Pages 5 to 8 of the presentation. As expected, sales in Q4 reached EUR 169.3 million, an absolute record level, 20% higher sequentially and 16% higher year-on-year. Q4 sales were impacted by around EUR 10 million by the postponement from Q3. However, even if we adjust that Q4 sales we would have reached a new quarterly record with then around EUR 160 million or 10% year-on-year growth.

The Elmos Group generated revenue of EUR 582.6 million in fiscal year 2025, representing a new record level also and a slight increase compared to the previous year. While the market environment, especially in the first half was characterized by subdued orders from customers, order patterns increasingly normalized over the course of the year, reflecting underlying structural demand.

Sales were also impacted by currency effects. Actually, on a currency-adjusted basis, group revenue would have increased by 2.5% year-on-year. Our sales development outperformed our direct peers, who on average reported an 8% decline in 2025. Over the past 2 years combined, we have outgrown our direct peers by nearly 20 percentage points. For us, this is clear evidence of the strong and sustained demand for our products.

And if you look at the past 5 years, from 2021 to '25, Elmos has increased its top line by more than 80%, while our direct peers achieved average growth of only 11%. The gross margin in fiscal year 2025 reached 42.3%, more or less on the level expected. Gross profit throughout the year was impacted by fixed cost effects and higher material costs, including higher gold prices in assembly. We could compensate some of the cost increases with positive effects of our cost optimization program launched at the beginning of the year.

The full year impact is expected in the course of 2026. Full year EBIT reached EUR 127.1 million or 21.8% of sales, in line with our guidance. In addition to the lower gross profit, EBIT was impacted by special costs for the SAP transfer, consulting costs for the expanded China strategy and negative FX effects. Again, despite the somewhat lower profitability versus the operational EBIT of the fiscal year 2024, so operational meaning, excluding the special gain of the sales of the wafer fab, our EBIT margin reduction of 3.3 percentage points was much lower than the profitability decline of our peers who lost on average 6.6 points.

I think again a true statement of our resilient operating model. Also, no one wants to do another SAP transfer again, at least not anytime soon. The China setup is more or less done, and we are working on the gold issue. And with growth and less scale, comps margin expansion as we will see this year.

The structural CapEx reduction is a result of our successful program to boost operational efficiency and to lower test types. The lower investment intensity is clearly visible in 2025. CapEx in the fiscal year 2025 totaled EUR 33.6 million or only 5.8% of sales and came in at the lower end of our guidance. Excluding the acquisition of a building at our Dortmund campus investments would have been even lower at 4.7% sales. With EUR 62.3 million R&D expenses were slightly higher than previous year due to higher personnel costs, lower capitalized development costs and lower R&D grants, partially compensated by strong improvements in our R&D efficiency.

In 2025, we have further expanded our R&D network with the opening of a brand-new China product center in Shanghai and our new R&D site in Brno in the Czech Republic. As promised, we have started to build a track record of strong cash generation. Our focus on sustainable cash generation through consequent execution of efficiency and optimization measures to reduce capital expenditures and working capital and supported by a lower tax burden is delivering, I think, quite impressive results.

The adjusted free cash flow totaled EUR 66.3 million in 2025. This is an increase of almost EUR 120 million versus the operating adjusted free cash flow of the previous year. The free cash flow margin of 11.4% of sales is clearly exceeding our original expectations. Based on the positive business performance and the substantially improved free cash flow, Elmos has further refined its capital allocation strategy.

The management and the Supervisory Board will propose to the AGM a 50% increase in the dividend for the fiscal year 2025, from EUR 1 previously to EUR 1.50 per share. In addition, Elmos has launched a share buyback program by the stock exchange with a volume of EUR 10 million starting today until March 31.

Ladies and gentlemen, let me finish my presentation with the market outlook and our guidance for the fiscal year 2026. S&P increased its latest global production forecast to 92.9 million new vehicles in 2025, up 3.3 million vehicles or plus 4% versus 2024. Production volumes are expected to stay at this higher level of more than 92 million cars in '26. The outlook remains shaped by Three key topics. U.S. trade and tariff policies, pretty volatile element, I think, the domestic development and export ambitions of the Chinese automotive industry and evolving demand for battery electric vehicles, particularly in Europe and North America.

So, at the end of my presentation, we are on Page 11 now. I would like to present our outlook for 2026. We are optimistic for the new year and expect to return to our structural growth level after 2 years of destocking headwinds. In addition, we expect a higher profitability and a further increase of free cash flow. For the current fiscal year 2026, Elmos expects sales growth of 11% plus or minus 3 points. And based on this positive revenue outlook and further optimization measures, Elmos expects an EBIT margin above the previous year's level of 24%, plus or minus 2 points. Despite the anticipated growth, capital expenditures will remain at a comparatively lower level amounting to approximately 5% of sales.

And in addition, Elmos expect positive cash development to continue and forecast an adjusted free cash flow of more than 70% of sales. Ladies and gentlemen, in 2025, Elmos once again demonstrated its resilience and its operational strength, significantly outperforming its direct competitors. As an agile fabless company with innovative products, substantially improved cash generation and an attractive capital allocation framework, Elmos exceptionally well positioned to benefit from the structural growth trends in our markets and to continue driving sustainable value creation. So we've come to the end of my presentation, I would like to ask the host to open the line for questions now.

Thank you very much for your attention.

[Operator Instructions]

The first question from Malte Schaumann from Warburg Research.

The question is on the gross margin that appear to be a bit on the low side in the fourth quarter with just 41.4%. Is that relating to the surge in gold prices? Or did you encounter some other facts that impacted the margin?

Yes. I wouldn't look too much on the Q4, but rather on the whole year. And of course, the whole year is below what we had originally. On the other hand, if you look at the gold price development, which took away a point or 2. Then if you adjust for that, the structural level is not too bad and with optimizations coming, we don't have a bad feeling on structural profitability.

Okay. So nothing that worries you in the end. And then going into '26, can you confirm that the gold issue should not worsen in comparison to '25 and then -- but just a full relief from that then going into '27?

Yes. I mean, Gold, 3 main things will happen. And yes, Mr. Schaumann, you're right, the overall situation will not worsen this year. So first, we use less gold since our first gold-to-copper projects are coming into play then. So this is the first effect we use less gold. For the remaining goals we use, the prices have versus the average of 2025 are up. I believe the average was around [ EUR 3,500 ]. Now we're beyond [ EUR 5,000 ]. So the first is, of course, a positive fact. The second is a negative effect. And the third is that we charge gold adders now, which is, of course, also a positive effect. And on balance, we have this thing now under control.

Okay. How much of the portfolio is already -- has already transferred to copper?

All the new things are copper, anyway and as a standard. It's only old product that still run on gold. And when gold was at a more reasonable price level, we kind of shied away from transferring it because it does make effort and it also creates effort on our customer sites to requalify things and everything. But at this gold price level that we are seeing now the effort is more than justified. So that is why we kind of reacted to this gold price and now just have to take the effort on transferring even old products to copper that may only run for a few years. But still it's worthwhile at these gold prices.

Yes. Okay. And then finally, quickly on the design wins. Maybe a quick comment on how you would rate the year and maybe get some more insight on that this afternoon. So yes, I'll leave it up to you.

Yes. I mean last year was a very good year. And yes, this afternoon, we'll have -- I believe some of the charts -- that some of you in the call have been waiting for and pushing us for so long. We will share this afternoon. So I can't share now because if I share everything kind of it's a big spoiler and no one comes this afternoon. But please do join it. It was an excellent design win in 2025. I mean for 2026, what should I say? We had a good few weeks. So we are very happy, but of course, too early to be clear on what 2026 brings.

There are no further questions, back to Dr. Schneider.

Yes, don't worry. There's enough room to ask questions at our CMD, and I promise this is the last advertisement for this call. But I still would like to remind you that we host our virtual Capital Markets Day this afternoon at 2:30 CET. So many of you, of course, have already registered, but write an e-mail to [email protected], and the IR team will quickly send you all the registration details. It's going to be a great event, and we have an exciting program. So don't miss it. For now, thank you very much for your participation and your interest in Elmos. Goodbye from Leverkusen. Take care, stay confident and see you this afternoon at our CMD.

Good morning, ladies and gentlemen, and welcome to the Elmos Semiconductor SE Conference Call regarding the results of Q3 2025. [Operator Instructions]

Let me now turn the floor over to your host, Dr. Arne Schneider, CEO.

Ladies and gentlemen, good morning from Leverkusen, and welcome to the Elmos conference call for the third quarter 2025. Thank you very much for your participation and your interest in our company.

Ladies and gentlemen, Elmos showed a very robust performance in the third quarter of 2025 with improving profitability and strong cash flows, while the top line development was somewhat impacted by revenue shifts from Q3 into Q4 due to the SAP transition. In parallel, we are driving forward our operational and strategic agenda to even better position the company for future profitable growth and higher cash flows.

Let me start with an update about the current market environment. The destocking activities in the automotive semiconductor market are gradually decreasing, more and more customers return to normal order levels, and our Q3 book-to-bill ratio was well above 1. Nevertheless, visibility remains somehow low, and our customers still order at least some of them on a very short notice. Actually, especially in China, which is kind of the global headquarter of short-term ordering. This order pattern requires a high degree of flexibility and reaction speed from chip suppliers. But as an agile tables player, you have a clear advantage here.

Please allow a short comment on the Nexperia situation at this point. Nexperia primarily manufactures simple discrete components like diodes and MOSFETs. Elmos specializes in more complex analog mixed signal semiconductors. So actually, there's little overlap with Nexperia's product portfolio, and we cannot expect any significant volumes we could take over from Nexperia. However, this situation is, at least, I believe, another sign that the current inventory level by Tier 1s and OEMs are clearly too low to secure delivery and avoid line shutdowns when there is any kind of major disruption.

The geopolitical environment remains challenging. I can report today that we are progressing very well with the adoption of our China footprint towards a fully functional organization. As of today, we have hired more than 20 additional engineers and IT experts in our new entity in Shanghai. The goal is to establish all relevant business processes and to manage most of our China business locally during the course of next year. China is indeed very dynamic, and that's why we are executing our localization strategy at China speed.

I have already informed you that the successful go-live of the new SAP system took place at the beginning of July. We expect that the so-called hypercare phase of the new system will be completed in Q4. Due to the system freeze before the go-live, we had to postpone some orders from Q3 into Q4, which I will explain later. The acquisition of new projects continues to develop very positively, with promising new design wins in all regions and across all segments. The performance year-to-date indicates actually a significantly better result last year. So we are very happy about that.

Finally, I can report great news from our ESG team. Elmos has been awarded prime status for the first time in the ESG rating of the internationally renowned rating agency ISS. As part of the regular review, Elmos improved its ESG corporate rating to C+, and that's then the prime status. This wonderful recognition reinforces our strategy of achieving long-term profitable growth while making a positive contribution to environment and society.

Let me continue with the financial highlights of the third quarter 2025. Order intake in the third quarter developed very positively with a book-to-bill ratio well above 1. The transition to the new SAP system in July has led to some orders being postponed from the third to the fourth quarter. The approximately 2-week system shutdown at the end of June 2025 due to the conversion of the new SAP S/4HANA led to a production backlog that could actually not be completely cleared by the end of September.

This resulted in orders equivalent to approximately 1 week of production being postponed to the fourth quarter. For this reason, revenue in the third quarter was somewhat lower at EUR 140.8 million. However, despite this revenue shift, Q3 sales were above the quarterly average of the last 12 months. And I mean, kind of looking on a longer horizon, it's actually not a bad quarter at all. The order backlog will be caught up in Q4, which will then most likely result in a new quarterly sales record, and we confirm the midpoint of our full-year sales guidance of EUR 580 million.

In terms of regional dynamics, we once again saw very positive momentum in China and a more muted development in Europe and the U.S. The weaker U.S. dollar had a negative impact on our Q3 sales by around 3 percentage points. So if you do the granted theoretical FX-adjusted Q3 sales, it would have actually been about EUR 145 million. Gross margin was 43.6% in Q3, improving 2.5 percentage points versus Q2. Like in the previous quarters, gross profit was impacted by fixed cost effects and higher material costs, including higher gold prices in assembly. I mean those of you who regularly look at the gold price, it's really eye-watering. But you can also see the positive effects of our cost optimization program, which will lead to further reductions in personnel and material costs in the coming quarters.

EBIT improved to EUR 31.7 million in Q3 2025 compared to EUR 30.1 million in Q2. The EBIT continued to be impacted by special costs for the SAP transfer, consulting costs for the expanded China strategy, and, albeit somewhat less pronounced, by negative FX effect. As a result, the EBIT margin reached 22.5% in Q3 2025, which is around 2 percentage points above Q2. At EUR 5.9 million or 4.2% of sales, the Q3 CapEx was at a low level as it was planned. At EUR 24 million or 5.8% of sales after 9 months, we are at the lower end of our full-year CapEx expectation.

Adjusted free cash flow developed very positively in the third quarter. At EUR 32.5 million or 23.1% of revenue, it was significantly higher than in the second quarter. The activities to improve our cash performance show positive results, and we are confident to build a very solid track record going forward. After 9 months, we exceed our full-year expectation with a free cash flow ratio of 13.2% of sales. Due to the positive development, we have increased the full-year free cash flow guidance. So our initial comments that our free cash flow guidance for the full year 2025, if all works out, may prove to be conservative, this is actually true.

Ladies and gentlemen, let me finish my presentation with the market outlook and our guidance for fiscal year 2025. S&P increased its latest global production forecast to 91.1 million new vehicles, up 1.2 million from its July forecast. This new forecast corresponds to a year-over-year increase of almost 2%. The positive trend of recent months continues. Still in April, S&P was forecasting a decline of minus 2% in 2025. The momentum is clearly driven by China, where S&P now expects 6% growth to almost 32 million new vehicles. For Europe, minus 2% and North America also minus 2%, there's a somewhat lower production volume, mainly a result of the ongoing weaknesses of the European automotive industry and new tariffs in the U.S.

Speaking of tariffs, as usual, I have to remind you that our outlook for the year does not include potential impacts of any new tariffs or potential indirect effects of this tariff situation and trade war beyond the level we actually see today. So for the full year 2025, we expect sales of EUR 580 million, plus or minus EUR 20 million, despite negative FX effects. As highlighted in August, we continue to expect an EBIT margin somewhere in the lower half of the guidance range of 23% plus or minus 3 percentage points of sales.

Overall, our full-year guidance, both in terms of top-line development and profitability, would actually be a much better performance of Elmos than most of our closest peers. Investments in new machinery will be limited due to the lower growth, our successful OEE optimization, as well as the test time reductions we've been talking about for some time now. And we now expect CapEx in 2025 to be in the lower half of the guidance range of 7% plus or minus 2 percentage points of sales. Based on a solid cash performance in the first 9 months, we have increased our guidance for the adjusted free cash flow in the fiscal year 2025 from 7% to now 10%, plus or minus 2 percentage points of sales.

Let me summarize. Order intake continues to develop positively. There are clear signs that inventory reductions by our customers are coming to an end, and order volumes are returning to normal levels. Ladies and gentlemen, thanks to our innovative product portfolio and excellent positioning as a fabless company, we expect a strong final quarter and are also very confident about our growth opportunities in the coming year and beyond. We are continuing to work consistently on implementing our operational and strategic agenda for profitable growth and higher cash generation. We are convinced that this approach will continue to increase the valuation of our company and also create attractive opportunities for capital allocation.

Thank you very much. I'm now opening the floor for questions.

[Operator Instructions] And the first question comes from Johannes Ries, Apus Capital.

A couple of questions, like always. And in some regard, congratulations for a good job in difficult time. First one, the gold effect and the cost effect. Can you explain a little bit how important gold is in your total costs? And secondly, on the cost -- on the measures you have started, when they really -- we will see it in the figures? Will it already be in Q4? Will it start in Q1? And remind us, what was the impact of the cost reduction program you talked -- you expected or you are targeting?

Mr. Ries, thank you for your question. We have gold, and this is -- can be a low double-digit million euro effect. I mean, as we currently stand, we look at something around $4,000 per ounce. So this is really a high level. That's why there is quite a strong difference towards the levels we had seen before. I mean, at the beginning of the year, we were substantially lower, and same is true for last year. So gold has a significant effect. We are gradually shifting more and more products from gold to copper wiring. These are generally kind of legacy products that have been with us for quite a long time. That's why they still have gold.

All the modern IC developments, they are based on copper. Some customers also need to compensate for gold. But the gold price is a significant effect these days. And once we shifted these things to copper, which takes some time, but is underway, and we kind of plow our way through the portfolio, there's progress to be made.

On the general cost optimization program, this is also an effect, if I talk in terms of total EBIT to be gained, which is a low double-digit. million effect. We already see some of it in Q3. There's a little bit more to come also in the next quarters.

Maybe another question on the margins. You mentioned also a negative currency effect. How important was this effect? Maybe what is the impact of the weak dollar on your EBIT margin?

So generally, we make very good progress with our natural hedging strategy. However, when the currency changes, our dollar receivables, for instance, are valued differently. So you see one-time effect of currency changes. Kind of as a run rate, we make very good progress with natural hedging. I mean, basically, we buy a lot of wafers in U.S. dollar. We buy some machines in U.S. dollar, and then we have U.S. dollar revenue that stands against that. So you still have a receivables effect. We have an FX effect of minus EUR 8 million year-to-date.

However, if we would just stay at this level of dollar, this would -- this is a one-time. This would not reoccur. So I believe, generally, we have a good currency position, being pretty close to being naturally hedged. However, of course, every -- even if you're naturally hedged, every change in dollar has an impact on your balance sheet position. This is something you cannot hedge. And of course, it also has an impact on our revenue. We have -- we now show lower revenue than we would if the dollar would still be a little bit stronger. So keeping the EUR 580 million is a good achievement. It's about EUR 25 million that we just kind of breathe away, that's a negative currency effect, and we can still keep the EUR 580 million.

Another topic, working capital, you have this slight increase in the quarter, partly based on the SAP transformation. Should we expect that working capital will decline in Q4 and further on in the following quarters?

That is the trend that we also foresee. I mean it's always hard to comment on individual quarters. However, in Q4, I mean, you can imply that we plan significant revenues, which generally weighs a little bit on inventories. So I believe you're right in Q4. And then the general trend is, of course, that we think our inventory level is higher than exactly needed. So we will see that coming down in the next quarters and the next year, of course.

So if I look to this and that you achieved already in the first 9 months, free cash flow margin of 13%. The new guidance is even in some regard, not over aggressive.

No. Yes, Mr. Ries, you're right. It's not overaggressive. However, there's a next year that is also coming after 2025. And I believe we show that we make significant progress. Please, I mean, generally allow us some conservatism concerning free cash flow because after kind of 15 or 20 years, having an average below 1% of cash flow, you need to find your new -- and get comfortable in your new home. And the sheet tells you one thing, and we tend to believe that. However, building a track record is not only good for your expectations and your confidence. It's also good for management expectation and confidence that you see that you actually make it work. And I believe we, again, this quarter made very good progress, and we are very happy that the year 2025 is the first really good cash year. That is quite an achievement.

I'm 100% sure of your opinion because it was always a huge or maybe the most important negative point, especially for foreign investors that have no real free cash flow point [indiscernible], maybe finally, what are the real drivers of your business from your activities? What products are maybe showing the strongest growth? And my general question every quarter is, how was the development at the design win side?

Yes, design wins year-to-date are actually substantially above the year-to-date figure of last year. So it looks like it's going to be a very good design win year. If we don't screw it up in the last kind of what -- is it weeks or so. If we exclude Christmas, maybe only less weeks. So it looks very good. We are very confident. We have a new ultrasonic generation that's currently ramping. We have an airbag that's ramping mostly next year. We have motor products that are ramping nicely this year and continue into next year. China is developing really well on a kind of broad portfolio basis. Rail Light has great -- so this is not only one thing, but there are good developments in a lot of segments that kind of carry us in terms of growth for next year.

So you feel very well looking for next year, especially for your midterm ambitions?

Yes, we do not feel bad at all. We actually feel pretty well.

And the next question is from Malte Schaumann, Warburg Research.

First question is on the Q4 sales level. Did you already catch up with the delayed delivery? So what's the risk that eventually, at the end of the year, revenues might spill over into next year? Or do you have pretty solid visibility that you will be fully catching up with the delayed shipments due to the SAP transition?

Yes. I believe 50%, yes, 50% no. I mean it's -- operations happens day-to-day. So you can never be completely sure what happens the next day. But I think we are making good progress in getting rid of backlogs and delivering to everyone's expectations. Our plan is clearly to be around the EUR 580 million. And currently, there's no indication that that's impossible.

And in terms of gross margin, I mean, Q3 gross margin hasn't been too bad with the almost 44% after the weak -- rather weak margin we have seen in the second quarter. Typically, the year-end margins are even stronger or often the strongest margin in the year. So is that a trend you would also expect for this year? So would be very high volume in the fourth quarter? The gross margin should expand a little bit further in comparison to Q3?

Yes. I mean there's not kind of a real 200-page analysis I can now rely on. But generally, there are, of course, some scale effects. So a very good quarterly revenue typically always, if you do not have some other huge one-offs, this typically leads to a nice gross margin. So that would be the case of the coming Q4.

And then on the gold impact and mitigation effects, you indicated the magnitude of the potential impact for this year and what you are doing to mitigate that. Looking into next year, what do you expect? Can you share a number how much of the effect we are seeing this year might disappear because customer compensates for the use of gold or transferred to copper wire bonding? Is it 50-50 that you would expect maybe 50% to stay with you next year? Is it more? Is it less?

Well, I think on the pricing, it's hard to answer because negotiations are underway. The transitioning of products from gold to copper is easier to answer. There it's a few million that we will actually get in savings. But then this builds because more products are added. So next year, I would expect kind of a few million in savings already.

And then the year further out, maybe '27, probably you should have solved that issue.

You probably have right, then you're getting into solving it more. I mean there are actually 2 effects. One is that older products tend to decline while newer products ramp up. So we focus on the older products that have the longest life and the biggest volume in the switching from gold to copper. So we get out of these problems more and more, but it's not going to be all finished in 2026. If the gold price stays at the current level, of course, I mean, we've seen the gold price wildly fluctuating. I believe losing 10% or so from the peak. So let's see where we are next year. Honestly, I don't know.

Another question on pricing. Any comments you might already make regarding pricing environment going into '26, more or less the same we have seen in '25, or more material change what to expect?

I mean it's a little bit early to comment, but the general environment is not much different from what we've seen in the past. I mean, in the normal past, the non-allocation past.

And the next question is from Robert Sanders, Deutsche Bank.

Maybe a first question on China. I was just wondering when you thought that part of the world would be out of the worst of its kind of inventory correction that seems to be happening, particularly in electric cars. Also interested in just what you're seeing in terms of anti-American sentiment in China and how that might benefit you as well? And I have a follow-up.

Yes. For us, we see more kind of the value chain up to the car, which is kind of critical for us. As long as the car is produced, it's kind of pushing revenue. For us, we see that generally, inventories are really reduced. Some people are getting to inventory levels that are unhealthily low, so that any disruption whatsoever leads to a crisis mode, and then this mostly can be resolved. But still, it's unnecessarily low at some customers. So I believe going into 2026, there will not be anything, or if so, only very, very little of inventory topic be left, and maybe we even see a little restocking if some people learn from the past.

On the sentiment towards North America, I believe this is somehow mixed. There are some companies that are very much associated with the administration, and they may fare a little bit not so great. And there are some companies that got a huge China footprint and are kind of positive within the set of American companies. I mean, overall, I believe it's no surprise that as an American in China, you have certain -- you kind of have a carryover effect from your administration back home to your company. And while there may be kind of a ceasefire of a year or so, I believe everyone is aware that this is a dynamic situation and stays a dynamic situation. And I believe Europe is a lot more friendly towards China, a lot more reliable and some of our customers actually cherish that and kind of are positive on changing to a European supplier.

And on the Nexperia thing, one of the things I think surprised some investors was how much of their chips were packaged in China, I think 70%. I personally wasn't that surprised because a lot of the OSATs are in China. But are you feeling pressure from your Western customers to move your packaging out of China because of what Nexperia has illustrated, which is a very heavy dependency on China for packaging?

Yes. Well, we always have no package. I mean, there's very, very little, but you would need to find magnifying glasses to really get a good look of what we do in terms of OSAT use in China. We will rather for the China for China strategy, build OSAT use in China. So this is then on business that goes to our Chinese customers. And I believe they would love to see more China for China, and we are developing in that situation. Currently, we have too little China OSAT exposure to make our China for China work. So we will build for the Chinese business a little bit more Chinese OSAT exposure. I mean we have really next to nothing. So this is currently the situation we are in.

So in terms of the problem that there may be pacing in China, this is not a problem that we face.

And last question would just be on the Dortmund fab. Obviously, you've sold it now. You're probably on some kind of cost-plus wafer supply agreement or something with [indiscernible]. How quickly can you wiggle your way out of that and then move over to market pricing? I would assume market pricing today is lower than cost plus, but interested if there's when you can see that margin and capture that margin.

Well, we will use the fab. I mean, this is looking like a triangle, right? It goes down every year over 4 or 5 years, I believe, up to '29. Then we may produce a long tail. So certain small volume products, we may produce even longer, which is good for the customers. It's not that important in the overall scheme of things, but it's important for some customers. We have a very fair pricing arrangement with Littelfuse. So there is actually not that much potential in shifting things elsewhere. There may be a little effect, but our cost-plus arrangement is a very fair one for both sides. And some margin also the foundries want to make on their costs. So this is quite comparable.

At the moment, there are no further questions. [Operator Instructions] And we have one more question coming from [indiscernible].

Just one on the working capital. Obviously, the year is not over, so we don't really know how much of an improvement we will see in Q4. But I remember you put out this guidance that you want to be at around 25% net working capital to sales in 2027. So if we assume that '26 and '27 will be growth years, and we will obviously have sales probably more towards EUR 700 million than EUR 600 million. That would imply a number of maybe EUR 170 million, EUR 180 million of net working capital, which would actually be a decline to what I would expect for 2025. I mean is this really realistic that you can, in absolute terms, improve working capital in the next 2 years, even if the top line grows by, I don't know, what you were saying, 9%, 10%?

Yes, we do think so. I mean in Germany, you would say [Foreign Language]. So I mean, if you look at our peers, you can do better in working capital than we have been doing. There have been reasons why we have not been focusing on working capital so much. And these were good reasons. But now that we shift a little bit more towards cash and leaner operations, there's a lot of potential to reduce working capital more to the level of our peers.

There's nothing structurally different with Elmos than with our broader set of peers, and they achieve a 25% or even lower number.

This is Ralf Hoppe speaking, [ Mr. Muller ]. We're currently running around EUR 200 million of net working capital currently. And when you look at around 25% at EUR 700 million, the number you gave us is exactly right. That's around EUR 175 million of net working capital. So there is potential for reduction in absolute terms as well, but we have to do our homework, and we're doing it. And it's a bunch of activities we already started, and we will see the benefits in the coming quarters.

No, very happy to hear. And on the CapEx in the following years, I mean, given the investments you did in the last 3, 4 years, and you're now guiding for kind of a CapEx ratio closer to 5% in percentage of sales. Is this a number we should also use in the years to come? Or do you expect an upcoming CapEx cycle again?

Well, I believe for 2026 and most likely part of 2027, this is a very reasonable run rate. If we then -- also with growth, because we can use the CapEx we have for now. Then probably at some point in '27, we will switch to having to invest a little bit more. However, it should not return to the levels that we've seen in the past, but rather be well below 10%. We may give a more concrete guidance actually, at our next Capital Markets Day, I believe. Let's see. We are in the preparation. Let's put it that way.

And there are no further questions from the audience. So I hand back for closing remarks.

So ladies and gentlemen, this is the end of our Q3 conference call.

Thank you very much for your participation and your questions. I hope to meet many of you in the upcoming investment conferences in Germany and also quite some abroad. A detailed overview of our IR activities can actually be found in the financial calendar on our website. So thank you very much for your support and your interest in Elmos. Goodbye from Leverkusen. Take care and stay confident.

Good morning, ladies and gentlemen, and a warm welcome to the Elmos Semiconductor SE conference call regarding the results of Q2 2025. [Operator Instructions]

Let me now turn the floor over to your host, Dr. Arne Schneider, CEO.

Ladies and gentlemen, good morning from Leverkusen, and welcome to the Elmos conference call for the second quarter 2025. Thank you very much for your participation and your interest in our company. Today, I would like to welcome our new analyst, Veysel Taze from Metzler, who has started to cover Elmos since June. We already know the name, but the company is new, and we very much appreciate the uptake of coverage.

Ladies and gentlemen, we can report an encouraging revenue growth for the second quarter, although we continue to face ongoing geopolitical challenges and quite dynamic markets. So let me start with an update about the current market environment. The destocking activities in the automotive semiconductor market are slowly but steadily decreasing. Our customers are now increasingly returning to normal order levels as they continue to reach their desired inventory. Nevertheless, visibility remains low and some of our customers still order on a very short notice. We also do see an increasing amount of rush orders where people exceed the level that they actually planned for this year.

The economic and geopolitical environment remains challenging. In particular, the Chinese automotive market has recently shown an even more dynamic growth momentum than in the past, but there is also increasing competition among Chinese OEMs, especially in the field of electric vehicles, so the new energy vehicles. This fierce competition leads to faster innovation cycles, increasing price pressure and ultimately will result in consolidation among the automotive OEMs in China. And of course, everyone desires local chips.

We have adapted to these latest developments very quickly and are going to realign our Chinese footprint even faster and more consequently than originally planned. We will further expand our organization in China and establish a fully functional local company with all relevant business processes, including the development of ICs for the local market. The entire Elmos China business will then be handled fully locally. The new structure offers the flexibility needed to deal with future market developments and geopolitical scenarios. We want to continue our great success in the Chinese market and secure our strong position. To do this, we build a local and agile organization in China, and we do that at China speed.

Before we talk about the second quarter results, I would like to comment on the latest tariff deal between the EU and the United States. According to the EU, there will be a basic tariff of 15% for the majority of EU exports going into the U.S. This rate applies across most sectors, including cars and semiconductors. This is all we know so far because all relevant details will be finalized only in the coming months. So it is still not possible for us to quantify the potential direct and indirect effects of the new tariff on cars, automotive components or semiconductors. We also do not yet know whether analog mixed signal semiconductors will actually be included and what will be the basis for the tariff as the majority actually of the value added of Elmos chips is generated outside the EU.

However, let's assume the worst if Elmos Semiconductors were included in the new tariffs, the direct impact on Elmos would be very limited as we only ship 2% of our products directly to customers located in the United States. And I have serious doubts that they wouldn't need to pay the tariffs that we pay and reimburse us.

Lastly, I would like to inform that we have successfully transferred our SAP R/3 system to S/4HANA. After more than 30 months of intense project work, the go-live of the new system took place in the early morning hours of July 7. So far, the new system is running a great success for the entire project team, which includes more than 200 internal and external experts. However, we, of course, have to monitor the performance of the new system very carefully, at least until the end of September. This is called Hypercare phase, where the system is stabilized and any defects will be fixed. We budgeted some money for it. So let's see whether we budgeted enough. So the SAP transfer has and will continue to impact our financial results, and we hope that everything will run as smoothly as possible.

We saw some impact on Q2, and I'll actually comment on that a little later. So let me now continue with the financial highlights of the second quarter 2025. Our Q2 sales developed better than expected driven by a strong demand for our innovative ICs. Compared to the previous year, sales increased by almost 3% to EUR 145.7 million and almost by 15% sequentially. The strong sales performance is mostly driven by our Asian customers, whereas Europe and the U.S. are still lacking in terms of growth. The weaker U.S. dollar had a negative impact on our Q2 sales almost 3 percentage points. So FX adjusted, Q2 sales growth would have been even higher with around 5% year-on-year and almost 20% versus Q1 2025.

The gross margin was 41.2% in Q2, slightly lower than Q1, impacted by fixed cost effects and higher material costs, including higher gold prices in assembly. EBIT was EUR 30.1 million in Q2 compared to EUR 35.9 million 1 year ago. In addition to the effects of the cost of goods sold, EBIT was impacted by special costs for the SAP transfer, consulting costs for the expanded China strategy as well as negative FX effects. As a result, the EBIT margin reached 20.6% in Q2 2025. Just as a side note, without the negative FX effect, the EBIT margin would have been around 24% in Q2.

So we are responding to these developments with consistent cost-cutting measures and selective price increases to pass on higher material costs to our customers. I mentioned the gold issue, for instance. Our cost optimization program will lead to noticeable reductions in personnel and material costs in the coming quarters. At EUR 4.6 million or 3.2% of sales, the Q2 CapEx decreased significantly. At 6.6% of sales after 6 months, we are in line with our full year CapEx expectation. And please keep in mind, we bought the building in Q1, which was quite an expense. The transfer of our SAP system has not only impacted our P&L, but also a noticeable effect on cash flow at the end of Q2. In preparation for the go-live, we had to freeze the system before the cutoff, resulting in higher working capital at the reporting date. So while we had pretty good cash flow in April and May, we estimate the special impact in June at around EUR 15 million.

Despite the lower free cash flow of EUR 0.5 million in Q2 then overall, we are still on a very good track for a sustainable improvement this year with a free cash flow of EUR 22 million or 8.1% of sales after 6 months, and that includes, of course, the negative effects of the SAP changeover, which are only temporary, of course.

Ladies and gentlemen, let me finish my presentation with the market outlook and our guidance for the fiscal year 2025. According to S&P Global, the latest global light vehicle production forecast shows a total number of 89.9 million new cars, a slight increase versus the last forecast, still virtually unchanged versus 2024. S&P expects plus 4% increase in China and minus 3% in Europe as well as minus 4% in the U.S., which is mainly a result of potential new tariffs on cars and automotive components. The good news is that S&P has upgraded its forecast in the right direction. Still, we think markets are volatile and visibility is, of course, more limited than it was before.

Regarding our outlook for the year 2025, please note that the potential impact of the new tariffs and increasing trade conflicts with U.S. or a global recession, of course, cannot be estimated and therefore, are not included in our outlook. Currently, I believe a lot of people are in a positive mood concerning U.S. trade policy, but you never know, right? We will, of course, give you an update should this become necessary in the future.

Our full year guidance from February 2025 has been adjusted regarding the U.S. dollar exchange rate. Previously, it was based on a ForEx rate of EUR 1.05 to the U.S. dollar. And now we base it on EUR 1.15. However, Elmos continues to expect sales of EUR 580 million, plus or minus EUR 30 million for the fiscal year 2025, and that despite the new exchange rate assumption, which would imply a negative impact on sales of around EUR 25 million. So for the mathematically inclined, you could say that we just increased our sales guidance by EUR 25 million. We also continue to expect an EBIT margin of 23%, plus or minus 3 percentage points of revenue. However, based on the EBIT performance since the beginning of the year and in particular due to onetime effects mentioned above, we think it's currently more likely that we may achieve the lower half of the forecast range for the full year.

Overall, our full year guidance would be a better performance than most of our closest peers, of course, you know, which expect a high single-digit sales decline on average in 2025 and a much more significant drop in profitability versus last year. Investments in new machinery will be limited as we continue our successful OEE optimization as well as test time reductions, and we expect CapEx in 2025 to be around 7%, plus or minus 2 points of sales. Based on a solid cash performance in H1, we are forecasting a positive adjusted free cash flow for 2025 of 7%, plus or minus 2 percentage points of sales and the CapEx and cash guidance is, of course, unchanged.

So let me summarize. In an ongoing challenging environment, we have achieved a strong top line performance in Q2. We are confident that the inventory adjustments will continue to subside and order levels will continue to improve. However, we have to manage significant market and geopolitical dynamics, leaving some traces on profitability in the short term and forcing us to react. Ladies and gentlemen, we are convinced of our operating model and strategic positioning, and we are confident that we will be able to achieve our ambitious targets in 2025 and beyond. Our approach focusing on profitable growth, cost discipline and operational efficiency, combined with a clear focus on a better cash generation will continue to increase the valuation of our company and create attractive opportunities for capital allocation.

So for now, thank you very much. I would like to open the floor for questions.

[Operator Instructions] And we have the first question already in coming. It is from Johannes Ries of Apus Capital.

Congratulations to good top line development. A couple of short questions. I will try to be fast to let open the call for the other participants. First, maybe on this onetime effect on the margin, do I got it right that the strongest onetime effect is the FX effect? Like you mentioned, the margin effect in Q3 was that you would have achieved 24% without the FX effect. And what are the other onetime effects? Is it also the SAP transformation or anything else?

Yes, you're right. FX is big. SAP is also very noticeable. We also spent more on gold than we did in the past. And we are still working on some compensatory measures. We spent some consulting costs on our new China setup, which we also want to kind of get forward at China speed. So this is one item and the rest, I believe, is smaller.

And also maybe a clarification. There is some speculation that maybe there's more price pressure or margin pressure in China because of the competition between the players and overcapacity and so on. How is your -- what is your situation and what you are facing in China on the margin and pricing side to make this clarification.

I mean China has always been a very tough environment, but they also value innovation and the best product. China, I believe, is the market that can be described in their buying behavior as making a list of who's #1, #2 and #3 in the market and then just talking to these. And then, of course, it's also a question of price once you settled on the engineering issues. So yes, China is a tough environment. But you can see that we are excessively successful in China because this is really a big source of growth. If now and then we have to make a little compromise, we do. But generally, we steer our course.

Okay. To make it very clear that not the speculation in the market, your lower margin guidance has nothing to do with margin pressure or price pressure from China. There are the other reasons you mentioned before as the main reason for this?

Well, if -- I mean, having -- we fight in all regions to kind of extend our share and to be successful. So it would be completely wrong to say our lower margin guidance is mostly linked to China. China has an influence. The rest of the world has an influence. The onetime effects I mentioned have the most influence of all. So it would be a little short to say the pricing environment in China because then you want to explain 100% and then you only -- I mean, this is what you can explain not a lot with. So no, it's -- this would be the wrong connotation.

Great, super. And on cash flow, you mentioned this special effect in receivables also this -- that you bought a building, which was although in the free cash flow. Therefore, as this was onetime effects in Q2, and I think the receivables now may be coming to a lower level in the second half as the system is up and running. There maybe the free cash flow in Q2 will be an exception and will be definitely the lowest maybe free cash flow in the quarters in this year.

This is very likely. I mean the thing is we bought the building, by the way, in Q1 already. But due to the SAP changeover, we paid some guys that we wouldn't usually have paid. But the thing is if you -- yes, but it's quite complicated to migrate all that data. And then for a week, you can do manual payments, but nothing system-based. So there is a strong rationale to pay a lot of people before you change over, even if it's a little early, even if that hurts cash flow in Q2 because you need a smooth cutover. And you do that with the minimum amount of data that is critical payment data. So if you kind of pay some people even before it's due, it's a clever strategy. And of course, this is not structural. This only affects one quarter then you have little problems with incoming payments in this cutover phase. So the assumption that the Q2 is the worst cash performance is very justified.

Super. Two very quick final questions. First, design wins in the first half and the second quarter, you have nothing said to this, maybe an update on this point because it's a longer-term future and very helpful regarding your 2030 targets you have commented to the market.

Well, if -- let me put it that way. If the second half develops exactly as the first half, everyone on the call is invited to join for a little bottle in Leverkusen or Dortmund. But it's too early to say, right, because I don't know about the second half. But we are in -- there are a lot of things you should be cautious about, but this is something we may open a bottle on.

Super. Finally, Melexis yesterday has a special chart on the topic of robotics that could be also a very interesting opportunity maybe in the mid- to longer term to their business, okay, they are more in the sensor business, but partly I could maybe imagine that's going to be also an interesting opportunity outside the automobile space. So is it maybe different because they are in a -- have a different angle in their product range.

No, no, no, not at all. We only wanted to tell people about robotics later. Well, I can do it now. We think robotics is a super interesting field because what currently happens in China with human robots is great. And we saw a lot of these robots on the Shanghai Auto Show already. And if you go more towards the robot people, you will see more and more of them. They will be at an attractive price point. I think they will have huge market success. I mean, not next quarter, but I mean, China speed is quick. So expect a lot to come. So we are talking with various potential customers. But today, of course, there is no volume because today, everyone is developing. And so the robotic sales of Elmos in Q3 2025 will be very limited, if anything at all. But let's see where that goes. We are -- we just don't want to hype the topic so much because it's not short term. But in the mid and long term, this is a super interesting topic. And we are actually working -- we were putting quite a lot of effort into that topic.

Super. Is robotics in any kind included in your 2030 ambition?

Not formally. But currently, it looks like that it may well contribute something.

Okay. It could be another words ice on the cake.

Yes. I mean it was not kind of part -- we -- it was not so big when we first told you about our 2030 ambition. But I think it's a super interesting field. And by 2030, it should contribute.

So moving on to the next question. The next question comes from Malte Schaumann of Warburg Research.

First question is also on the gross margin. I mean you mentioned rising input costs and then referred to gold. Is gold the only factor that is leading to rising input costs? Are you seeing other cost inflation, wafer pricing, other stuff? And then a follow-on question would be, how are you able to mitigate these effects to potentially pass it on to the customers, replace gold with copper and products, et cetera, which might take a longer time. So what are your thoughts around that?

Yes. Gold is actually about half of the issue. So the other things are small things that add up. So gold is a major issue for us. We still have a lot of old gold products and we're in the process -- we already started in Q3 last year to transfer some of these. It takes some time. Gradually, they are moving to copper, which is, of course, a lot less expensive. While the gold price keeps rising and rising, I mean we look at $3,300 today. Wow, this is a lot. We've been as high as $3,450 recently. So this is really something where we suffer a little bit. The discussion -- I mean, we are currently in the discussions to pass on some of that burden because we really dislike it. And it's not our fault. So -- let's see. These discussions now start.

Okay. And what should be the expectation then for the second half? So probably you will benefit from rising volumes. So do you expect gross margins to go back to the Q1 level, potentially even higher mid-40s? Should we expect something rather in the lower 40s. So what's then the expectation seeing all that moving parts for the second half of the year?

It is so hard to predict because there are a lot of moving parts these days. I think if we take the first half, this is not a bad indication per se because actually a good part of the first half was impacted by higher gold and higher material costs. Some of our measures concerning cost cutting only get online or get visible in Q3 or even Q4. So I think kind of -- there are so many moving parts that it's really hard to predict, especially if you want kind of in the 1% range, and we are talking very low percentages here, right, that we want to predict.

So we currently think that the first half may be the best indication we have. Rising volume will help. Some cost measures will help. But still, we also may face additional headwinds out of volatile markets. So since so much is happening short term these days, also in terms of sales development, it's particularly hard to predict. Our portfolio changes. We even now, for the Q3, do not have a complete view on the portfolio. You see that our book-to-bill is a little bit below 1, okay, you could round that to 1. But still, there are a lot of short-term orders. And it depends on what products are ordered, whether there's a margin impact on one or the other side. So I would love to know it, but it was a long answer for a very concrete question, but it's really hard to predict. I'm sorry.

Okay. Would you say that you have seen the trough in terms of gross margin in the second quarter?

Again, this would mean that we would kind of guess the gross margins. I mean, we certainly see some upside with the measures that are currently running. So we shouldn't kind of put our -- I don't know whether English say that, put our heads in the sand. So within all the volatility that we have, there is also a fair chance that there's some upside.

Okay. Then with respect to the rush orders you mentioned, are these mainly coming from Chinese customers?

Yes.

Okay. And then on visibility generally, I mean, are customers -- is confidence among customers growing in talks you have with customers going then into the second half and potentially into the next year? Do you feel a sense of rising confidence that provides stronger visibility that inventory correction eventually is behind us, customers grow confident regarding required volumes, content growth, et cetera, to become mechanics for the upcoming quarters and into next year?

I think that generally, people feel that with the latest trade deals that things are kind of calming down, right? And that the that the range of potential outcomes we have of this big disruption is a lot smaller than some people thought. So that we are settling on things that are more manageable. Generally, I believe the Europeans, the Japanese are very much on track on what they thought. So of course, there are structural challenges, but they have nothing to do with chip supply or chip needs. So that is all good. I believe that Chinese, by and large, are seeing a little bit more upside than they thought and are now struggling in their value chains to make it happen.

We just had a little test with the SAP cutover because we actually were not -- and we announced it really long before and reiterated it 100 times that we wouldn't be able to ship for 1.5 weeks or so and that everyone should kind of be aware. But still, we saw that even within a very short period of time, some people were on the verge of running dry. So inventory levels were structurally too low. Yes. So on the way up with very low inventory levels now and then you struggle. And I mean, then you're confident about the market, yes, but you struggle operationally. And does it feel good? We make it work. So I believe, overall, the market is pretty positive in China. It's very positive also in India. And Europe and the U.S. are kind of more muted also in terms of sales development. I mean IHS is seeing slight declines in Europe and the U.S. and a reasonable upside in Asia. So this is also reflected, I believe, in customer sentiment.

[Operator Instructions] At the moment, there are no more questions in the queue. There is another one coming from Veysel Taze of Metzler.

Thank you for the warm welcoming words at the beginning. A few questions, just follow-ups. On the rush orders, we have in this earnings season from the analog mixed signal companies, particularly from the large ones, a little bit mixed signal regarding are we seeing demand pull forward due to the tariffs topic or not. And now you mentioned also the rush orders, although you said mainly China. Do you see the risk of any demand pull in at this stage, particularly considering that we are still close to the cyclical bottom or we just passed the cyclical bottom in the auto industry?

Well, I think that some of our dear customers have optimized their logistics and their inventories maybe beyond the level that is ideal for an upswing. And since the assumption, which was true in the last half year and what was always chips will be available at very short notice because inventories are there. And this will, of course, gradually need an update because on the very short notice, not every chip is in stock. And so this is, I believe, where there may be some short-term shortages that we currently can manage. But I believe in the coming upturn, some people will have to be a little bit more careful in their logistics and plan a little bit more ahead. Otherwise, they might face more severe challenges because chips are just not ordered a week, 2 or 3 or 4 in advance.

On another note, we saw -- and this is just market related. Tariff related has nothing to do with automotive chips, but a little bit of side impact. We see that assembly is pretty full. And that was because a lot of people from the non-auto space, consumer, for instance, tried to get product into the U.S. while still in a more favorable tariff environment. And of course, if you're doing, say, electronic toys or so, you can have a product ready pretty quick and get it beyond the border, even in 90 days or a little bit more. We think this shortage in assembly will subside now that it's more clear what the midterm tariff conditions will be. But we had indeed that little assembly shortage. No impact really for us. We had our capacities, and this was all good. But it created for sure, some little friction in the value chain.

Got it. And then on second half, the underlying growth in first half was really quite strong, particularly when you see now the FX adjustments on your side and still confirming the sales guidance. Can you give a little bit color around Q3 versus Q4? Do you think that we will see a much stronger seasonality into the Q4? Or is it rather a solid confidence into Q3 already? And then on the profitability discussion, it looks like the one-offs in first half and you mentioned in your guidance, also some one-offs in second half. Can you quantify the impact in the second half related to the one-off? And would you agree that the phase of or this period of several one-offs is behind the company, and we should enjoy a little bit of cost-cutting benefits from the first quarter going into Q4 and second half?

So let me comment. I mean, we see the sales development to be a little bit more continuously phasing up. Last year, we had actually a weaker Q4 than the Q3, and this was not normal in a way, right? So if you ask me today, I would guess that Q3 is a little bit below Q4, but not too much. So we see a pretty constant development with no huge surprises as at least as we can see it today. Yes, there is, for sure, some upside, but I already commented. It's a lot of moving parts that we have here. I believe what is clear is that we will fare a lot better than most or all of our key competitors.

And on the profitability second half on the one-offs, if you can quantify that.

Well, we will continue to spend a little money on China. Let's see where the gold goes. We don't know, of course. But currently, gold is still a burden. We will discuss on some pass-ons, but this is starting now. Let's assume no major FX impact, right? Because it would be kind of an outlying assumption to assume that the same FX occurs again. So that, for sure, is helping us, right? So overall, we are kind of cautiously optimistic.

The next question comes from Lukas Spang of Tigris Capital.

Just 2 questions from my side. The first one is related to the CapEx ratio. So that was very low in Q2. What should we expect for Q3, Q4? I know you have this guidance of around 7%, but after 10% or nearly 11% in Q1, it was very low now in Q2. So Q2 more the range or the indication for the second half? Or is there maybe some room for the low -- let's say, the lower end of your CapEx ratio?

And the second question is related to your revenue guidance. So if we exclude the FX effects for a moment, you would probably have lifted your revenue guidance to the upper end. So from an underlying perspective, there is, from my perspective, a positive development. And I would be interested if you could explain, please, a little bit more in detail where this, let's call it, underlying positive development is coming from.

Yes. So first on the CapEx, we are at 6.6%, I believe, in the first half. That includes the building we bought. So this was a little bit more than a percentage point. So we think that the 7% is not kind of wrong, but it's -- we may use the guidance range also in the lower half of the CapEx a little bit. That is most -- this is noted and -- but we didn't want to change because it's kind of these small adjustments of the midpoints, we generally don't do if we are still within the range.

Then you asked about the revenue development. Yes, it's true. In the end, we -- like-for-like, we increased our sales guidance by EUR 25 million. We think that the Q2, we -- this shows that we're a little earlier than expected in the up cycle. We thought actually at the beginning of the year more that the second half will be the up cycle and the Q2 will be part of the so-so part of the year. Now the Q2 already is very strong. So we made significantly more progress in revenue than was part of the EUR 580 million plan. We, of course, have the dollar development, which does not help. But given that we made this underlying very, very strong progress, we think that we will be able to keep the EUR 580 million. So no, we are -- in terms of revenue, we are in really good mood.

And from your order intake or your order book, you can also exclude that this Q2 had no pull-forward effect.

Well, a key growth driver is China. And they tend to order as they need. I'm trying to find the most polite words I can. This is a very much demand-driven order behavior. Yes.

At the moment, there are no more questions. [Operator Instructions] A question incoming from Robert Sanders of Deutsche Bank.

Sorry, I joined late on the call. I just was interested if this is -- if this hasn't been answered, which is just regarding the China business. I was just hearing from another player that was talking about their business in China being down sequentially in Q2 just because of slower production and excess inventory. Have you seen any evidence of any kind of slowing in the mass market in China?

We actually cannot kind of confirm that because we are very much up sequentially and kind of broadly in the portfolio. So we actually see that our China customers have very much optimized their inventories now and then and that they now have patches where they are a little short and that the overall China market development actually is not bad, maybe also confirmed by the S&P numbers. I believe it was 3% or 4% up in China in terms of vehicles. So we can today only report very good things from China.

And have you seen some evidence of preference for European vendors over American competitors? I know you don't compete with that many. But for example, ultrasonic [indiscernible]

Ultrasonic, well, I guess. We do see that. We do see that the -- while all foreigners are foreign, of course, we see that the U.S. are even more foreign than the rest of the world in China.

So how quickly could that affect your business? Obviously, it takes time to get designed in and all of that.

China is very fast in getting things done. And I mean, recently, actually yesterday, I heard a rumor that a certain U.S. company -- I don't want to spread the rumor, but it was a rumor that a certain U.S. company is now basically banned. And this is meant to be the first example of really excluding a U.S. company basically from the automotive chip market. I don't know whether it's true or false. I only heard it from one person. So -- but I believe the general sentiment in China is that particularly after the EDA tool crisis, where the U.S. for some time was about to restrict the EDA tools used in chip development for all Chinese, all nodes, by the way, leading edge, lagging edge, everything that certainly did not help to induce confidence in U.S. suppliers.

At the moment, there are no further questions. So let's wait a couple more moments. [Operator Instructions] All right. Since there are no more questions incoming, with that, I'm closing the Q&A session and handing the floor back over to the host.

So at the end, I would like to wish all of you a great summer. Perhaps we will meet at one of the many investment conferences in September and throughout the rest of the year. Actually, a detailed overview of our IR activities can be found in the financial calendar on our website. The next regular quarterly reporting is scheduled for November 4 with the publication of Q3. So for today, thank you very much for your participation and your interest in Elmos. Goodbye from Leverkusen. Take care and stay confident.