Elringklinger Aktie

Ladies and gentlemen, welcome to the ElringKlinger AG Q1 2026 Earnings Conference Call. I'm Vicki, the Chorus Call operator. [Operator Instructions] At this time, it's my pleasure to hand over to Thomas Jessulat, CEO. Please go ahead.

Yes, ladies and gentlemen, I welcome you to our earnings call on the first quarter of 2026. Today, Isabelle and I will provide a detailed look into the results from the first quarter. With today's publication, we confirm the guidance for 2026 in the medium term, which we have published with the annual report end of March.

At the end of the presentation, as usual, you will have the opportunity to ask questions, and we're pleased to answer them. At the outset, I would like to present a brief overview of the key developments from the past three months. Let me start with a brief overview of the external environment, which remains challenging for the global automotive industry. Rising global tensions, including the military escalation in Iran are increasing regional spillover risks and posing threats to energy security and global stability. In parallel, sanctions, trade restrictions and regulatory fragmentation continue to weigh on cross-border business. These risk factors, combined with volatile energy prices and ongoing logistics disruptions are increasing uncertainty for investment and production planning.

At the same time, the industry remains in a profound transformation. In Q1 2026, global light vehicle production declined by 3.4%. Despite the cyclical pressure, electrification momentum remains intact. E-Mobility continues to be the dominant long-term trend even as regulatory requirements are being eased in Europe or partially rolled back in the U.S. China continues to act as the global pacesetter, driven by strong local ecosystems, technology leadership and customer proximity.

Against this backdrop, ElringKlinger is well positioned. Our global footprint enables localized production close to customers and supports further optimization of supply contract. At the same time, we continue to strengthen our profile supported by a solid position in established markets and growing order intake in new drive technologies.

The next slide summarizes the company's overarching strategic framework, outlining its purpose, vision and mission. Our purpose underscores our commitment to innovative technologies that contribute to a sustainable future. Our vision is to remain the preferred partner in advancing technological innovation. To translate this vision into reality, we have defined five key success factors that will enable the organization to fully realize its potential.

Let me briefly walk you through the progress of SHAPE30. Starting with growth. Our E-Mobility business shows strong momentum. Sales increased by 42% year-on-year from EUR 27 million in Q1 2025 to EUR 38 million in Q1 2026, underlining the commercial traction of our strategic focus area, E-Mobility.

At the same time, we have made visible progress on profitability, particularly in the OE segment. The adjusted EBIT margin, excluding E-Mobility, improved by 3.1 percentage points, reaching 5.5% in Q1 2026, driven by operational improvements and disciplined cost management. E-Mobility remains a ramp-up phase. Adjusted EBIT in this business stood at minus EUR 16 million compared with minus EUR 15 million in the prior year quarter. Importantly, this development is fully aligned with our road map, and we expect improvements will be realized in the course of the year. The classical business, excluding E-Mobility, continues to be profitable and serves as the financial backbone of the transformation.

At the same time, we are systematically reducing the cost base in E-Mobility step-by-step with a clear objective of bringing this business into a profitable range by 2028 on a full year basis. We expect EUR 50 million in cost savings and ramp-up contributions, improving efficiency and contribution to margin by ramping up the major orders are crucial levers for reaching our midterm profitability targets. Overall, these figures clearly demonstrate that SHAPE30 is progressing as planned.

Turning to the next slide. We illustrate how ElringKlinger is well positioned for changing market landscape. At group level, we're actively shaping our portfolio and sharpening our strategic profile. Through continuous and systematic market analysis, we are deliberately discontinuing low-margin activities and focusing our resources on value-creating businesses.

At the same time, our Powered by People approach underlines our strong corporate culture, creating the conditions for our employees to perform at their best. The key element in this context is our new organizational structure, SHAPE2EMPOWER. This structure is fully aligned with our strategy and is designed to strengthen accountability, accelerate decision-making and enhance customer proximity across the group. SHAPE2EMPOWER builds on clear and consistent principles for action. Roles and responsibilities are clearly defined, interfaces in the organization simplified and management structure standardized globally.

The organization is fully aligned with SHAPE30 with a stronger focus on speed, market and customer proximity and efficiency. As part of this transformation, existing business units will evolve into business areas, strengthening entrepreneurial accountability.

In addition, we are establishing a new business area, Sealing Solutions and Engineered Metal Components by merging two business units into one. And as a result, we create a new business area with focus on metal and pure metal applications in a market that largely consolidates. The objective is to further accelerate decision-making, enhance customer focus and improve efficiency across the group.

Overall, ElringKlinger is actively shaping the group and reorganizing its structure to sustainably strengthen competitiveness in a rapidly changing environment. With having said all this, I now hand over to my financial colleague on the Board, Isabelle.

Thank you, Thomas. Hello, and good afternoon from me as well.

Starting with sales and the organic revenue on Slide number 8. In a challenging market environment, ElringKlinger generated revenue of EUR 430 million in the first quarter of 2026, representing a year-on-year increase of 1.6% according to reported figures. But figures have been affected by M&A as well as FX effects this quarter.

In the prior year quarter, the U.K. subsidiary that has been divested effective November 30, 2025, had contributed EUR 3.1 million, with the corresponding reference value for the previous amounting to EUR 420 million. Additionally, revenue was diluted by currency effects equivalent to EUR 9.7 million. All in all, when excluding currency and M&A effects, revenue increased organically by 4.7% in the first quarter of 2026, and the company remains fully on track to meet its full year guidance as communicated in March.

Notably, this growth represents a clear outperformance of the underlying automotive market. While global automotive production declined by 3.4% year-on-year in the first quarter. Europe, ElringKlinger's core market recorded only a modest decrease of 1%, excluding Russia, and Germany declined by 1.6%. Against this backdrop, ElringKlinger achieved solid organic growth, clearly demonstrating its resilience and competitive positioning in a contracting market environment.

The sales mix presented on Slide 9 provides a more detailed breakdown. Within the segment breakdown, the Original Equipment segment remains the largest contributor, accounting for 65% of total group's revenue, which corresponds to EUR 280 million in sales.

Compared to the same quarter last year, revenue in this segment was only slightly below the prior year level. Within the OE segment, E-Mobility generated sales of EUR 38 million in the first quarter of 2026. The ramp-up phase of large-scale series orders for cell contacting systems is further progressing. Compared to the previous year's first quarter, revenues increased by 42%, highlighting the business unit strategic importance for the group's transformation.

The aftermarket segment continued its strong performance, increasing sales from EUR 102 million in Q1 2025 to EUR 110 million in the first quarter of 2026. In addition, the Engineered Plastics business was able to slightly increase revenue in the first quarter of 2026, rising from EUR 39 million to EUR 40 million, driven primarily by an improved Product Mix. Growth was achieved in the European region, North America and South America and the rest of the world, while revenues in Asia Pacific declined year-on-year.

Adjusted EBITDA of the group rose to EUR 59 million compared to EUR 42 million in the last year's first quarter. Including one-off items, reported EBITDA stood at EUR 58 million. The increase in adjusted EBITDA was driven by compensation received for an asset that was depreciated at the same time.

In Q1, adjusted EBIT reached EUR 29 million, corresponding to a margin of 6.8%, which is in line with our full year target guidance of 6% to 7% of sales. Adjustments totaling an amount of less than EUR 1 million were related to exceptional items from the STREAMLINE program. Reported EBIT amounted to EUR 28 million, corresponding to a margin of 6.6%. This is a noticeable increase to last year's figure, which stood at EUR 20 million. Both the STREAMLINE program and the SHAPE30 measures aimed at annual savings of EUR 50 million in total. Around EUR 10 million of these savings are realized in Q1. The full impact of these measures are expected for 2027.

The adjusted group EBIT of EUR 29 million already includes the adjusted EBIT of the E-Mobility business unit, which came in at minus EUR 60 million compared to minus EUR 50 million in prior year's quarter. The planned improvement here will be realized in the upcoming quarters according to the ramp-up.

Thanks to the strategic measures implemented under our transformation strategy, we are strongly positioned and operate from a more profitable base, enabling the group to sustain a solid adjusted EBIT margin at this level. These actions refer to an EBIT improvement of EUR 10.5 million compared to the prior year's first quarter and created a more resilient foundation for sustainable performance.

In addition, Product Mix effects contributed to a better earnings. These improvements have been partly compensated by tariffs totaling EUR 2 million and ramp-up costs for the large skills orders of almost EUR 2 million. In the first quarter, the R&D ratio decreased to 5%, while absolute R&D spending edged down year-on-year slightly from EUR 25 million to EUR 22 million.

ElringKlinger's net working capital stood at EUR 383 million in the first quarter of 2026. The ratio amounted to 23%, thereby achieving the group's short- and medium-term target of keeping the figure below 25%. The development illustrates the group's continuous focus and optimization of capital efficiency and expanding operational flexibility in line with ramp-up related sales activities. Following a CapEx-intense fourth quarter in 2025, capital expenditure declined significantly and returned to a markedly lower level in the first quarter.

As anticipated, this figure was quite stable in absolute numbers in Q3 with CapEx at EUR 21 million and a CapEx ratio of 5%. This figure is fully in line with the full year guidance, which calls for a ratio of 4% to 6% of sales.

In the first quarter of 2026, operating free cash flow was in a negative territory at minus EUR 109 million. This development was driven by a higher net working capital requirement due to the ramp-up of the large-scale orders and in addition, cash effective restructuring expenses of around EUR 20 million related to the STREAMLINE program. Overall, the cash flow development followed largely the same seasonal pattern as last year, but still showing a slightly year-on-year improvement. Net debt stood at EUR 430 million, corresponding to an adjusted net debt-to-EBITDA ratio of 2.1, which is stable compared to prior year's quarter.

And last but not least, group equity totaled EUR 686 million by the end of the first quarter, slightly above the EUR 666 million recorded at the close of Q4 2025 and on the same level of prior year's figure.

Coming to the segment performance on Slide 13. In the first quarter of 2026, the OE segment generated sales of EUR 280 million. When comparing this to the prior year's figure, we have to consider the sales contribution of EUR 3 million from the divested entity in the U.K. The adjusted segment EBIT margin stood at 0.9%, an improvement to prior year's figure.

The aftermarket segment continues to successfully execute its growth strategy, once again posting a quarter-on-quarter increase in revenue. In the first quarter of 2026, sales reached EUR 110 million, which implies a growth of roughly 8% compared to previous year's quarter. With an adjusted EBIT margin of 24.3%, the segment once again delivered a strong level of profitability.

The Engineered Plastics segment demonstrated a robust performance in the first quarter of 2026, reported by a wide and diversified industry footprint. The segment recorded sales of EUR 40 million compared to EUR 39 million in the first quarter of last year. With an adjusted EBIT margin of 10.6%, the segment demonstrates its resilience under challenging market conditions.

We remain firmly committed to our SHAPE30 group strategy, which continues to serve as the overarching strategic framework guiding our decision-making and positioning ElringKlinger for the long-term success. We are confident that SHAPE30 defines the right strategic priorities to effectively navigate market dynamics while further strengthening the group's long-term competitiveness.

We remain focused on driving profitable growth for further strengthening the group's competitiveness. Our priorities include realizing growth on the basis of large-scale contracts in E-Mobility, further improving the profitability, particularly in the OE segment, generating sustaining operating free cash flow and further reducing net debt to enhance the group's financial resilience and balance sheet strength.

I will now turn the floor over to Thomas to provide concluding remarks on the market environment and the outlook.

Yes. Thank you, Isabelle. I will now review the market expectations and come to the outlook for the full fiscal year. Let us now take a closer look at the market environment. As you can see on this slide, the global automotive market is expected to face a slowdown in 2026. Across all major regions, light vehicle production is projected to decline year-over-year, although to different degrees. In North America, volumes are expected to decrease by around 2%, reflecting a moderation in demand following the post-pandemic recovery phase.

In the Europe, production is also expected to decline by approximately 1.8% in 2026, driven by ongoing economic uncertainty and continued pressure on customer sentiment. Greater China is facing a somewhat more pronounced slowdown with volumes forecast to decline by about 2.3%, reflecting market situation and intensified competition. On a global level, this results in a modest contraction of light vehicle production in 2026. Importantly, however, the medium-term outlook remains constructive. By 2030, global volumes are expected to return to growth, underscoring that the current slowdown should be viewed as cyclical rather than structural.

Coming to the next slide, we confirm our outlook for the full year 2026 as published in March, reflecting our expectations regarding the challenging market environment and our operational performance for the year. Taken as a whole, our performance and our short and midterm ambitions demonstrate that we're on the right path with our SHAPE30 strategy. ElringKlinger's strong financial and strategic positioning provides a solid basis for further improving the group's profitability and delivering sustainable cash flow.

Finally, I would like to mention a few points from our corporate calendar. On Tuesday, May 12, we'll hold our Annual General Meeting in a virtual format. This will be followed by the publication of our Q2 results in August and our Q3 results in November.

But having said all this, we're now ready to answer your questions. Thank you.

[Operator Instructions] The first question is from Michael Punzet, DZ Bank.

I have two question. The first one is on your E-Mobility business. When we listen to BMW, they are very positive – they make very positive statements on the demand for the iX3, the first car of the Neue Klasse. My question is now, do you see any rise in call-offs compared with the originally planned? And the second one is on your Aftermarket business. We saw a very strong margin development in Q1 after, I would say, a slowdown in former quarters. So is that -- what are your expectations on margin levels for the Aftermarket? Is it fair to assume that this will stay above the 20% level also in coming quarters?

Yes. Thank you for your question. To your first question, you referred to one of our customers. We have different sizable contracts starting right now. And we can say that with all of the projects that we are working on, that is -- we see across the board pretty ambitious run-ups. So in that sense, without talking about one customer alone, we can confirm that there is a strong development for the first run-up phase here with different customers that we have, in particular, with E-Mobility. And we are really busy in order to manage those run-ups in a good way. So overall, we can say, yes, but it's not only one customer, but we see it with several customers, in particular E-Mobility.

Yes, Mr. Punzet, I'll take your second question on the Aftermarket. So yes, we expect growth to continue during the year, having said -- with also a strong margins. Having said that, we do see some impact from the war in Asia. So we have to see how this will develop over the coming months and coming period. But in principle, yes, strong growth still expected also maintaining profitability.

Okay. Maybe a follow-up to the first answer. Do you see any risk that you might be not able to fulfill all the demand from the E-Mobility side at this point in time with a strong ramp-up?

No. I mean we have our commitments in regard to the quantities. You know that from a from a risk perspective, but now very generally speaking there's always operational risks involved, in particular during the run-up phases. So there are risks. Are we seeing something specifically that hints at the point that we are not going to be able to fulfill those requirements? No.

No. I mean on the quantity side, so for example, when -- the customer decided to call off 100,000 pieces a year, and now they came up with 150,000, are you able to fulfill all the additional order? Would you be able to fulfill also the additional demand? That was the reason for my question.

Yes. And what I answered was that right now, we don't see anything where we cannot fulfill demand in those run-ups. And we agree that there is some flexibility involved in a lot of cases. And yes, we're going to be able to fulfill.

[Operator Instructions] The next question is from Tobias Willelms, LBBW.

First of all, congrats on the strong quarter. And I have three questions. My first question would be about ElringKlinger confirms the full year guidance despite the current difficult market situation consisting out of tariffs, war, and a general decline in the production rate of light vehicles. From my understanding, what are the core criteria for the strong performance at ElringKlinger when it comes to the resistance of the general market downturn?

And also a little follow-up here and there. And is Q1 more of a one-off effect? Or can the strong margin consist of 6.8% also be assumed for the rest of the year, because it's quite an impressive margin you achieved in Q1?

And my next question would be about the Q1 2026 tax rate was around 61% compared to 21% in Q1 2025. What are the reasons here for the sharp increase? And can a guidance be given for the full year ahead? Same question also applies to the financial income of around EUR 9 million compared to EUR 3 million from the previous quarter. Just for my understanding here, because I didn't find an explanation in your concerned presentations here.

And my last question would be about the CapEx guidance for 2026. It is given as 4% to 6% in the medium term, less is to be invested here at around about 2% to 4%. How is that strategic planning to be understood here, as the E-Mobility production rate should be increased in the future, right? Or is the production already unauthorized in the current stage of the production capacity at ElringKlinger?

Yes. Thank you for your questions, first of all. First question, in regard to the confirmation of the guidance, there is a lot of activity. We have the target to improve the cost base by EUR 50 million. Part of that is personnel costs, which we have done through STREAMLINE last year, and that has given us a lower cost base for this year in regard to personnel cost.

So what you see here in terms of the improvement from last year to this year, it's really mostly, it's around EUR 10 million. This is the expected run rate for this year. There is some, let's say, some items that spilled over into 2026 from a cost perspective. And this is what we mentioned earlier also that we do not expect to arrive at the EUR 50 million in 2026. But to a large extent, we should be able to. And with the EUR 10 million that we have here for Q1, the expectation is that we are going to be having this as a run rate basis for a lower cost base for this year.

How robust are we in this regard? For example, the Iran war or other global impact items, there is to some extent, and I mentioned in the last call, I mentioned a low to mid-single-digit amount in million euros that is accounted for. That means that we should be able to absorb if there is more to come. If the impact would be higher, then we would have to assess specifically. But part of the difficulties here in our global environment is already accounted for.

On the taxes. The Q1 tax rate here from a tax rate perspective, there is an expectation that step-by-step, we move to the nominal tax rate, which should be around 30% for the group. But since we divested loss-making entities in the group, and we implemented a new transfer pricing model, there is -- all the steps or almost all of the steps done that we should arrive at a nominal tax level. We are not there yet. Why is that? Because there are still some loss-making activities here in the group that we -- as part of the SHAPE30 activity we need to address, of course. But step-by-step, we should be able to arrive at the nominal 30% tax rate that we would expect. Approximately 30%, right?

Okay. And then thank you for your question on CapEx. So for this year, we started with a constraint on our CapEx. So we try, and we will respect our guidance on CapEx. We have a huge spend in the last two years to be able to ramp up in our E-Mobility business. That's now done, and we are confident that in the coming two years, we will be able to hold our CapEx targets as set in our guidance, and we don't need additional CapEx to fulfill our ambitions.

And if the -- when I'm allowed to ask a follow-up question. And is the E-Mobility production underutilized for now? Or what is still the kind of state when it comes to productions?

Yes. Right now, we are not at full utilization. This is going to be expected in 2027 and 2008. And therefore, for 2008, we expect a really breakeven situation here for the full year for E-Mobility. But right now, there's different projects in the run-up phase, and there's different phases that we have right now in the group. And typically, of course, there's a low utilization in both step-by-step, the run-up in terms of sales volume, and also in terms of contribution margin, of course helps to improve the EBIT situation that we want to step-by-step improve along with the run-up of those projects.

You still also had a question on the one-offs. What sort of one-offs -- we still expect some one-offs during the year related to some -- what we do with our strategy, not in the amount of the past two years, but there's still something we expected probably in the second half of the year.

The next question a follow-up from Mr. Michael Punzet, DZ Bank.

I have two follow-up questions. The first one is you mentioned a negative effect from tariffs. Maybe you can explain where this came from and how you will compensate for that? And the second one is on E-Mobility again. The EUR 60 million loss is it only coming from the operational performance? Or are there any kind of one-offs included in that figure?

Yes. Thanks for your question. No, this is -- from an operational perspective this is sort of the current run rate, approximately in terms of the loss-making here of E-Mobility. And then first question, I didn't get. You meant the negative effect -- sorry...

From tariffs, the U.S. tariffs. I think you mentioned something in the presentation that you have a negative effect from the U.S. tariffs. So I would like to have an indication which business unit is related to that negative effect, and how you will compensate for that?

Yes. Thank you. So this is mainly our Aftermarket business, which is impacted by that. And as a compensation measure, we did increase prices last year. So that's not shown in the break-even, but there is some compensation on the price side to compensate for tariffs, not for the full 100% though.

Okay. Maybe last question on E-Mobility. You mentioned that you expect break even on a full-year basis in 2028. Is it fair to assume that we also might see already a break-even level on a quarterly base in 2027? Or is that too optimistic?

No, that could be. But we want to be really clear when we talk about the overall business that 2028 for the full year should be what we will achieve. It could be from an earlier perspective, then we see the one other quarter where we may break even as well. But we want to be very clear on 2028 is the target for the full year.

[Operator Instructions] At the moment, there are no more questions. I would like to turn the conference back over to Mr. Jessulat for any closing remarks. Thank you.

Yes. Finally, I would like to thank you for your interest in ElringKlinger and your participation on our call on the figures of the first three month of 2026. Next Tuesday, we will hold our Annual General Meeting in a virtual format and would appreciate your attendance. The next quarterly figures will be released on August 5. We're looking forward to talk to you then again on a personal level. Thank you, and have a good rest of the week. Thank you very much.

Ladies and gentlemen, the conference call is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Analyst Conference Full year 2025. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Thomas Jessulat, CEO. Please go ahead, sir.

Ladies and gentlemen, good afternoon, and welcome. We appreciate your participation in today's analyst conference, which we are hosting virtually. It is my pleasure to open our conference call on the final and audited results for the fiscal year 2025. I'm joined today by our CFO, Isabelle Damen. Let me begin by outlining the key developments of the 2025 fiscal year before Isabelle will walk you through the full financial results. Afterwards, I will provide you with a look on the market development and give you an outlook of the current year as well as for the medium term.

Finally, as always, we look forward to your questions. Let me start with some highlights on 2025 fiscal year and their strategic background. The company concluded the fiscal year against the backdrop of ongoing uncertainty and elevated market volatility. At the same time, the group continued to lay the groundwork for the next stage of this transformation supported by substantial investments to advance new series projects in the area of cell contacting systems in particular. Despite these significant upfront expenditures, the year-end results were robust. Operating free cash flow amounted to 2.0% of sales.

The ramp-up of every related projects continued to gain momentum, contributing to strong revenue growth within the e-mobility business unit. In parallel, the group drove forward its streamlined program, achieving a lasting reduction in personnel expenses. All in all, the company delivered on its major full year targets and in several areas even slightly outperformed its initial guidance. Let us now take a look on our group strategy. This slide outlines the organization's overarching strategic framework presenting its purpose, vision and mission.

The purpose highlights our commitment to pioneering innovative technologies that contribute to a sustainable future. Our vision emphasizes becoming the preferred partner in driving technological innovation. For realizing this vision, we have identified 5 success factors that will enable us to reach our full potential. On the next Slide #6, we highlight the 2 complementary pillars of our SHAPE30 strategy, growth and efficiency.

Both are essential parts of the same strategic story. On the growth side, we are continuing to expand our e-mobility activities across all major automotive regions. At the same time, we are leveraging our strong position in the traditional business, especially in phases for the pace of transformation temporarily slows. Another key driver is the consistent optimization of working capital, which allows us to secure a sustained and healthy cash flow. On the efficiency side, we are returning to a disciplined level of capital expenditure now that the investment cycle for recent order ramp-ups is largely completed.

We're also focusing on optimizing personnel and structural costs and counteracting external pressures such as tariffs or raw material price development. In addition, we are streamlining our portfolio by phasing out underperforming product groups and locations, both dimensions, growth and efficiency directly support our strategic targets, enhancing profitability, particularly in the OE segment, and generating a sustainably strong cash flow.

Together, they form the financial core of our SHAPE30 road map in order to sustainably strengthen the group competitiveness. Let's now take a closer look at the growth dimension of our SHAPE30 strategy and how they contribute to improving our margin and key performance indicators. On the left, you can see the strong development of our e-mobility sales. After completing the first major ramp-up that started in 2024, we are continuing this momentum with further ramp-ups in 2025 and beyond.

And this creates a solid basis for scaling our e-mobility business profitably over the coming years. We expect 2025 sales of this business unit to be doubled by the end of 2028. In the center, we highlight the profitability of our OE business. This classical business of this segment remains the financial backbone for the group during the transformation. If you exclude the business with start-up characteristics, the e-mobility business unit, we see that the classical business within that segment delivers quite a robust margin of 5.6% in the 2025 fiscal year, and we expect a continued improvement in the profitability of the reported segment figure once the difference between the dotted line and the solid line is eliminated by the further ramp-up of e-mobility orders.

On the right, we emphasize the importance of optimizing working capital as a key driver of sustained cash flow. After improving our working capital performance in 2025, we aim to maintain a disciplined optimization going forward ensuring that cash generation remains strong and predictable. Together, these elements show how growth across e-mobility or core OE business and working capital discipline supports both our margin development and our financial strength. Alongside growth, the second dimension of our SHAPE30 strategy is efficiency. We are structurally reducing our cost base to strengthen our long-term positioning. On the left, you can see our development in capital expenditure after completing the investment cycle for major order ramp-ups.

We are now returning to a disciplined CapEx approach targeting around 4% to 6% of sales from 2026 onwards. This enables us to maintain the necessary investment discipline without compromising future growth. And at the same time, we're optimizing our overall cost level. Over the midterm, we expect EUR 50 million in cost savings and ramp-up contributions on the basis of the adjusted EBIT margin of 5.4% that we have achieved in 2025. Improving efficiency and contributing to margin by ramping up the major orders are crucial levers for reaching our medium-term profitability targets.

On the right, we show another key element of our efficiency approach, systematically addressing underperforming activities, by phasing out nonprofitable product groups and locations and concentrating on areas with a sustainable contribution, we sharpen our portfolio and enhance overall performance. Together, these efficiency measures form a crucial part of our SHAPE30 framework, driving a leaner cost base supporting our profitability targets and helping us position the group for long-term resilience. Let us now come to Slide #9. This slide provides an overview of the major milestones along our SHAPE30 road map and shows how our strategic initiatives unfold over time.

In 2024, we have started to shape the profile of the group, strengthening our foundation through targeted measures in cost structures and portfolio alignment. These steps were essential to prepare the organization for the next stages of SHAPE30. By 2026, we aim to realize growth. This includes scaling our e-mobility activities, leveraging our strong position in the classical business and driving improvements across our operational and financial caveats. Along with doubling e-mobility sales by 2028, we expect the e-mobility business unit to show a full clean breakeven year in 2028, marking a key milestone on our transformation journey with doubled e-mobility sales, growth, profitability and cash flow will increasingly reinforce each other. And finally, by 2030, we expect to have reached our midterm targets. This includes sustainable improvements in profitability, a robust cash flow profile and a strong strategic position for the decade ahead.

Overall, the road map illustrates how SHAPE30 combines near-term measures with a long-term ambition guiding ElringKlinger step-by-step toward a more resilient and robust group. Let us now have a quick look on the markets on Slide #10.

All in all, we noticed global growth in light vehicle production, mainly driven by China. Looking further ahead, industry projections indicate a profound realignment. By 2030, all major automotive regions are anticipated to significantly intensify their transition towards fully electric drive trends. Forecast suggests especially rapid growth in battery electric vehicles in Europe and China, while North America is also expected to see a notable rise as the decade concludes. In essence, while regional powertrain profile still vary widely today, the global trend is unmistakable. By 2030, all electric mobility is set to become one of the dominant trajectory across all major market regions in a global market of growth.

Let us now take a closer look at the segment of all electric mobility as this will be the core market for our solutions, including cell contacting systems, rotor stator components and other products from our comprehensive e-mobility portfolio. Across all major automotive regions, China, Europe and North America, the transition to electric mobility is gaining strong momentum with dynamic growth expected through 2030.

When you consider our large-scale customer programs, it becomes clear that we have represented a substantial portion of future electric vehicles particularly in Europe and North America. China remains at the forefront of the global shift towards electric vehicles and is developing differently from Western markets driven by the increasing strength and influence of purely domestic manufacturers. Nonetheless, the market for all electric vehicles is expanding across all major regions and significant growth is anticipated over the coming years.

The move toward electric mobility is well advanced and continues to accelerate. With all of that, I will now hand over to Isabelle.

Thanks for handing over Thomas. Let us now take a closer look at our financial figures. Our group strategy, SHAPE30 is built on a clear and powerful foundation. It centers on 4 essential performance indicators: sales, earnings, cash and net debt. These metrics guide our decisions, drive our ambitions and ensure that we stay on a sustainable path towards long-term growth. With SHAPE30, we are shaping our future with focus, discipline and a strong commitment to financial excellence. Let us take a quick look on our last year's guidance. In the fiscal year 2025, we achieved, and in some areas even exceeded our targets across all 4 categories, sales, earnings, cash and net debt, each developed strong as expected, reflecting both our operational discipline and the successful execution of our strategic priorities.

These results confirm that SHAPE30 is not only the right strategy, but one that's already delivering first measurable impact. Let me first come to Slide #15. We have generated sales revenue of EUR 1.6 billion, which is a decrease compared to the previous year figure on a reported level. However, there have been M&A effects from the divestments of our entities in Sevelen, Buford, and in the U.K., amounting in total to EUR 160 million. In addition, we've been faced with headwinds from exchange rates of EUR 40 million. Excluding these effects, we achieved an organic sales growth of 2.3% which exceeded our guidance given in March 2025.

Coming to the sales mix on Slide #16. ElringKlinger has a balanced distribution of sales amongst the business units. While our original equipment segment makes up 68% of the group's total or EUR 1.1 billion of external sales. In the financial year, segmental revenue declined compared to previous year, reflecting the challenging market conditions mentioned earlier. Additionally, the decrease was influenced by the divestment of 3 entities and a discontinuation of several locations.

Within the OE segment, e-mobility revenue increased from around EUR 103 million to EUR 144 million due to a ramp-up of large-scale series order of cell-contacting system. Additionally, the aftermarket segment once again performed strongly and increased sales by 12% to EUR 378 million. This makes up 23% of the group's total external sales. In regional terms, Asia Pacific, Rest of Europe as well as South America and Rest of World recorded growth, while revenues in Germany and North America contracted year-on-year.

Beyond the impact of currency fluctuations, the main factor behind this trend was the divestment of entities, the discontinuation of locations and a weak market environment. Coming now to the broadly diversified customer base on Slide #17. ElringKlinger operates on a broad and well-diversified customer base, ensuring that the company is not reliant on any single client, the largest customer accounts for only 6% of total revenue. In addition, the steadily rising contribution from the aftermarket business highlights its growing importance for the ElringKlinger business model.

Coming to the earnings on Slide 18. Adjusted EBITDA stood at EUR 178 million in 2025, which corresponded to a robust adjusted EBITDA margin of 10.9%, including one-off items. ElringKlinger recorded a reported EBITDA of EUR 140 million. The group recorded adjusted EBIT of EUR 89 million in the financial year under review, slightly above the prior year level, but with lower sales. Therefore, the adjusted EBIT margin increased by 50 basis points to 5.4%, which was above the target level of approximately 5%. These adjustments are made to enable a comparison of the company's operating profitability across different periods. In 2025, they totaled EUR 69 million. Thereof, EUR 32 million for impairment of noncurrent assets, including the discontinuation of locations and termination of unprofitable groups of projects. EUR 26 million for restructuring measures, including the streamlined program and EUR 11 million for other nonoperating items, including the divestment of the British entity and the insolvency of a customer.

On the right side, you see the factors with influenced earnings on EBIT adjusted basis compared to last year. There are positive impacts by our structural measures and the higher contribution of our Aftermarket and Engineered Plastics business. They were offset by the ramp-up of the e-mobility orders and tariffs. All in all, we've noticed an increase of the adjusted EBIT margin.

At minus EUR 0.10 reported earnings per share are in a negative territory due to the impairment losses associated with the package of measures outlined above. However, excluding these exceptional factors, adjusted earnings per share amounts to EUR 0.88. In view of this positive development and expected improvement of profitability in the coming years, we, the management board, in consultation with the supervisory board were proposed to the Annual General Meeting that the dividend of EUR 0.15 per share, unchanged year-on-year be paid out to our shareholders. Another key performance indicator for the group is return on capital employed on an adjusted basis, dividing EBIT adjusted by capital employed.

Here, we see a positive development. ROCE adjusted stood at 7.7% at the end of 2025 financial year after 6.7% in the previous year. ElringKlinger Group expanded its research and development expenses to a ratio of 5.5%, which is within the 2025 target quarter of around 4% to 6% of group revenue. In absolute terms, R&D expenses decreased from EUR 95 million to EUR 90 million.

Net working capital stood at EUR 289 million at the end of 2025 compared to EUR 347 million a year earlier. Also, the share of net working capital in the group revenue was significantly lower at 17.6%. The guidance of net working capital ratio of below 25% of group revenue was therefore clearly met. CapEx in the 2025 financial year mainly related to property, plant and equipment amounted to EUR 143 million. The increase reflects the preparation for the ramp-up of several large-scale orders. After the investment cycle now to be ended, CapEx will be reduced to a lower range of sales again. In the financial year 2025, operating free cash flow stood at EUR 33 million and met the guidance of around 1% to 3% of group revenue.

The net debt-to-EBIT ratio was 2.0 at the end of the financial year, which is slightly above the figure 1 year earlier. If EBITDA adjusted for nonrecurring items used for the calculation, the adjusted net debt-to-EBITDA ratio stands at 1.6%. Additionally, the equity ratio decreased to 35% moderately below our guidance due to structural measures. Coming to the segment performance on Slide 22. Overall, the OE segment generated sales of around EUR 1.1 billion in the financial year 2025. The decrease in sales 2025 is mainly attributable to the 2 entities invested in '24. Within this segment, we continue to see solid ICE business as well as the ongoing ramp-up in the Mobility business unit are still strongly increased.

The Aftermarket segment successfully continued its growth strategy and saw a further increase in revenue. Sales amounted to EUR 378 million in the financial year 2025. Adjusted EBIT margin amounted to slightly above 20%. In the 2025 financial year, the Engineered Plastics segment performed strongly supported, in particular, by diversified industry exposure, with revenue totaling EUR 144 million, this segment performed better than in the previous year. We remain fully committed to our SHAPE30 group strategy. It continues to provide a strategic framework that guides our decisions and ensures that ElringKlinger is well positioned for the future. We are confident that SHAPE30 equips with the right priorities to navigate market dynamics while strengthening our long-term competitiveness. We will grow in sales, enhance our profitability, generate sustained cash flow and maintain a low debt level for being always able to act. With SHAPE30, we are confident that we are on the right path today and for the years ahead. Having said this, I will now hand back to Thomas.

Isabelle, thank you. Let us now take a look at market expectations and our next steps at ElringKlinger. The market environment is expected to be sluggish in 2026, as it will decrease in all major regions with a different degree. As a result, the global automotive market is projected to slightly decline in 2026. Let me now conclude with the outlook on the current fiscal year. The geopolitical and freight policy landscape remains challenging. The wall shifts away from a multipolar rules-based order compounded by the proliferation of conflicts and wars in trouble hotspots. Moreover, tariffs are widely used as political instruments, uncertainty and volatility are intensifying further. Most recently, the situation has culminated in the escalation of the Iranian conflict.

The implications for energy prices and the security of supply chains are as difficult to predict as the impact on the global economic situation, particularly in a cross-border sectors such as the automotive industry. ElringKlinger is affected by the lack of market dynamics but sees compensating effects from the large-scale orders and the good aftermarket business. Overall, the group expects sales slightly above previous year's level in organic terms.

In view of a complex framework of multiple factors, we expect an adjusted EBIT margin of around 6% to 7% overall. As a result of our measures, and revenue contributions, we expect a range of around 8% in the medium term. Operating free cash flow will be slightly positive in 2026. In the medium term, we expect to increase the time range to around 2% to 4% of sales, also in the light of revenue growth. Taken together, resulted in our short-term and midterm ambitions underscore that we're moving in the right direction with our SHAPE30 strategy. ElringKlinger is in a robust financial and strategic position and a solid foundation that enables us to further enhance the group profitability and generate sustainable cash flow. Yes. Finally, I would like to mention a few points from our corporate calendar. In May, we'll present our Q1 results and hold our Annual General Meeting in a virtual format. This will be followed by the publication of our Q2 results in August and our Q3 results in November. So having said all this, we're now ready to answer your questions.

[Operator Instructions] The first question comes from the line of Michael Punzet from DZ Bank.

Michael Punzet. I have two questions. First one is mainly related to the e-mobility business. you mentioned a loss of roughly EUR 61 million in the last fiscal year. Can you give us a split what is related to ongoing business and what is, let's say, sometime onetime effects? And the second one is, when I look to your margin guidance, of 6% to 7% in the running fiscal year. What will be the main driver for that? Will that be the increase or the better profitability in e-mobility or some other factors where we have to focus on? And what is the main risk to that guidance that you may miss this guidance?

Yes, Mr. Punzet. Thank you for your questions. I will answer your first question on e-mobility. So of the EUR 61 million losses in e-mobility around EUR 21 million are related to one-off effects and the remainder is recurring related to the ramp-up of our new business, new projects.

Yes. Mr. Punzet, thank you for your question. Your second question here on the margin guidance. I will answer as following. In our SHAPE30 framework, we have already adjusted footprint. We sold the U.S. and the Swiss plant. We closed plants, other plants in the U.S. and Germany. We last year, executed streamlined and reduced the number of employees from 2024 to 2025 so far by 473. And we have, of course, a particular focus here on overhead costs. We have ended -- to full extent, we have to say unsuccessful product groups and reduced overall number of product groups that are not successful, and they would represent a burden in the future. And of course, the EUR 50 million that we want to achieve in terms of cost reduction, that's going to be fully effective in 2027, streamline is part of that, but also some other activities here on other costs.

And in addition to that, and I think this is a very important partner. We are in the beginning of our growth cycle here on e-mobility. And we expect the doubling of sales, as we mentioned, from the current EUR 144 million to around EUR 300 million in 2028. And there's, of course, also associated contribution margins that we would expect in the run-up. So if I take everything into account, we can say we have done already a lot to improve structure and also to reduce cost, but not all of that was effective in 2025, but some will be effective in 2026.

Now our program is designed so that we should have some robustness here in meeting our guidance. And if you ask me for the main risks, we have factored in an amount based on current developments here on the Iran conflict to a large extent of a single-digit -- mid-single-digit figure. Now this is all factored in here when we give this guidance. If things intensify and conflicts escalate. Then, of course, that would pose the risk to the run-up. But when I look at, for example, the status of the programs, the dates for the start-up phase and those things, then we are pretty firm here in the run up. There's no further delays that we would expect. So really tariff, conflict, that would be the main risk factors here for us in meeting the guidance from today's perspective.

[Operator Instructions] The next question comes from the line of Miro Zuzak from JMS Invest.

I have a couple of smaller questions regarding the model, if I may. The first one is the FX impact due to weak currencies, mainly the U.S. dollar, but also other currencies, there was a significant move in the last couple of months. Maybe you can or tell me what is the impact that you expect on your revenues and also the EBIT line? And is your sales guidance already including this impact or not.

Yes, thank you for your question. So the sales guidance includes our budgeted expectations and the plan rates we make on the other hand, it's very difficult to predict how the exchanges will develop in a very uncertain environment range. So we guess we planned with -- and we also do some hedging to offset the risk.

Okay. So you -- basically you already -- there is some contingency for if the FX rate would stay as it is today or is it based on the year-end FX rates? Do you understand my question. I can't predict FX, but I know where they are today, right? So I can look at the euro versus the dollar, that can then calculate the impact on every quarter and the year, given basically assuming that the FX rate is on the current level.

Yes. Thank you. So there's not a huge risk at this moment in time with the current status of the exchange rates.

Okay. Then I have a question on the individual cost line, the OpEx cost line, if I may. So we've seen that the selling cost was down in Q4 versus the other quarters. This is not really typical so in the past, they can really go back many years back, it was always the case that Q4 had the highest sell cost. Now what -- and you mentioned the efficiency measures that you have taken. Is this an underlying improvement? Can we assume that because for selling will be lower going forward on a quarterly basis? And if yes, by how much roughly?

So they are somewhat lower, and we expect them to maintain a bit lower due to the streamlined effect mid-single digits.

To mid-single digit lower, like 5% or EUR 1 million lower, for example, per quarter roughly.

Mid-single digit.

Euros million or percentage point?

Euros.

Euros. Mid-single digit. So EUR 5 million lower. Oh, that's a lot. Well done. And also in G&A, basically the seasonal pattern persisted in Q4 was lower again. Have you also improved there a couple of million?

Well, let me step in here. We have communicated last year that the streamline effect now that we are aiming to achieve EUR 30 million in overall personnel cost reduction, yes, EUR 30 million in a good way. Not all of it, as I said before, not all of it, as I said, is accounted for in 2025 not because there is if you release it's a voluntary program, but if employees enter into this, there's a liability or there is a provision for that. And then at a later point, the provision is dissolved. And then employee is exiting and cash payment is done, right?

So what you see here, and this is the reason why I have to say, it's not that easy to go from a 2025 Q4 to a run rate because you see the provision effects throughout the year from streamlined on the one side, you'll see some items here in terms of dissolving effects because employees leave ElringKlinger in Q4 and what you have to take into consideration when you look at the model, then it's the ambition that we have communicated with a really full impact in 2027 and a partial impact in 2026 of the EUR 30 million in terms of personnel costs. And that is distributed between different functional layers of the P&L, okay?

There you find part of it in the gross margin. You find part of it in SG&A, and you find also part of it in R&D, but the full amount, distribution, we cannot really say at this point, but the full amount that you would have to take into account is EUR 30 million, part of it in 2026. All of it in 2027 forward, okay?

Okay. That makes sense. The next question, if I may. And then I step back in the queue. I don't want to take too much time from other analysts wanting to ask question. But there's a lot of talk about the advances in AI. You've certainly -- also, you said already internally for various tasks and experimenting with it. Typically, the predictions are that there is a huge improvement in productivity, especially for white label -- white collar, sorry, the white collar workforce. And looking at your almost EUR 80 million in F&D -- R&D, sorry, and also looking at almost EUR 100 million G&A, EUR 150 million selling that has predominantly personnel costs. In addition to the EUR 30 million and loan maybe a bit post the 2026 year, what additional efficiency gain are you assuming? Have you tried to quantify the effect? And have you tried to plan for these improvements. Maybe you can give some anecdotal evidence, but also some numbers there?

Yes. This is a great question. It is, in fact, the case that AI application is step-by-step entering the different areas of activities of ElringKlinger. And we talk on the one side analysis work if production equipment, and this is the case for the new lines that we have installed that they are part of a digital network here with our ERP system, and we're using AI to find trends within large amounts of data.

Okay. If we look at R&D, then AI in the first place is supporting us in reaching shorter cycles for customer responses, and then, of course, when we look at other functions here, there is some potential going forward, but there is an important principle for us here now. We think that, along with the use of ERP system and a centralized system that efficiency gains are going to be reached going forward, but we are also experimenting. But we do not do individual steps with isolated AI systems and expect huge gains in the short term.

So what I'm saying is, this is a longer term and is too uncertain that I say to the EUR 30 million that we wanted to achieve that there is in the foreseeable future, a significant amount there. It's too early to do that, but I can confirm that we here at ElringKlinger, we are looking in the different areas into this. We are, as part of our digitization we prepare for this cycle so that we are ready to make use of the applications, but it's really too early to give you a figure.

The next question comes from the line of Tobias Willems from LBBW.

First, congrats on the figures. I have three questions. Question one would be about whether a statement can be made on the current situation in Iran and the possibility of impact on the ElringKlinger International business with the focus on the oil-heavy automotive industry? And my second question would be whether our guidance can also be given when it comes to the tax rate for 2026 and maybe for 2027. And my last question would be regarding the ramp-up of high-volume series orders and e-mobility. What exactly can be expected for the further years because on order intake of around EUR 1.6 billion, was reported for 2025 versus EUR 1.65 billion in 2024 so a little bit less. And the question would be here, are there further major creation with the OEMs? Or what exactly can you expect when it comes to the year 2026 or even the years ahead?

On your first, we have analyzed the Iran situation for us here and we have identified as risk factors here. Number one is energy cost in terms of oil and gas. And I think we see that. And I can say that we have long-term contracts, we have for production and heating. We have usage of gas here at ElringKlinger, but we are using long-term contracts.

So there is nothing -- not much short term to be expected. Freight and logistics was adjusted fairly soon in terms of routes that we use. So from there, there is really maybe a little but not much. And then most maybe is on the direct materials. There is some materials that we use where it is not so easy to conclude long-term contracts. And there is some oil elements in there in terms of costing that may have an impact. For now, I mentioned that earlier, we have identified a sort of mid-single digits, EUR 1 million in terms of risk that we see now, yes, and this is factored in already, but now we have to see because sometimes there's shortages of secondary or tertiary effects in the supply chains, but it's not something that we see as of today. but it may be the case, and that is a risk factor that I mentioned before, okay?

So on the second question here on the tax rate, it is such that the expectation is that tax rate is going to be normalizing along with the reduction of losses in e-mobility. But as long as we have some entities here with start-up losses, then we'll see some effects here that have a negative effect on the tax rate. It's going to be normalizing that I can guide but I cannot say really from an exact perspective, we will be able to do that going forward. But now there is some uncertainty in regard to that. And then your last question here, your third question, on the ramp-up and order intake for more projects, we have to say.

There were over the years 2024 and '25, significant investments made into new technologies here for e-mobility, cell contacting systems mostly but not all of it, also other products here for e-mobility. And for now, our line is that we'll reduce CapEx to a lower amount as our guidance shows here. And that we will focus on the execution side because there's a lot of built-in growth by the investments that we have done. So for the foreseeable future, we are not so much focusing on very large contracts that we have here industrialized in the last 2 years. So we'll focus on execution of those new orders, of course, we'll do more business, but on a normalized level of CapEx. And like we say, we'll focus very much on the bottom line quality on the one side and also on free cash flow quality on the other side. So right now, nothing to be very huge, what we would take in because it's not the right time to do that, okay?

We have a follow-up question from the line of Michael Punzet.

Yes, Michael Punzet for a follow-up question. Can you give us any kind of guidance what we should expect for adjustment in the running fiscal year from today's point of view?

Yes, we have had adjustments, significant adjustments through all of those measures that I have explained throughout 2024 and 2025, we are not finished with a program, but I can say that most of the amounts from restructuring, impairments of immaterial and material assets, most of it is accounted for, yes, but we're not fully finished here with the global network of ours on the one side and with some adjustments we'll make to the group.

Expectation is not that it's going to be very significant amounts. I would right now estimate maybe low double digits as impairment amount is an estimation, but that really depends, but this is as much as I can say, based on that.

We have a follow-up question from the line of Miro Zuzak.

I have a question regarding the new parts business and the corresponding EBIT. We have seen a continuous downtrend in both the top line and the bottom line there. Is this -- I mean, given your guidance, which implies an uptick in the margin, is this business going to be positive again in 2026 EBIT-wise? What is the current projection? Or what shall we model in for this business in 2026?

What we have said, we have said that the e-mobility business unit, the 2025 had EUR 61 million in losses right in this hydrogen and battery business. And we said also that based on the EUR 144 million on e-mobility sales in '25, it's going to be doubling to around EUR 300 million in 2028. And we're going to be having a full breakeven year in 2028, yes? Until then, we realized some of the savings that we have mentioned in the year 2026. We expect a full impact here in 2027, talking personnel costs, structure or cost reductions, structural elements there and the EUR 50 million cost reductions effectively. And along the way from 2026 to 2028, if it's going to be a gradual improvement there from this loss-making situation.

This is what I can tell you. And of course, it depends on quantities and how fast we can reduce cost on the one or other side, but this is overall the line that we have communicated.

Okay. So I'm not sure if I got it correctly, but must be further loss-making by quite a large amount, in this case, in 2026 just looking into the current year basically. Okay.

There is some loss making in 2026, I can confirm that.

And the EUR 60 million losses to EUR 61 million in e-mobility, was there any one-off elements involved there? Or is it just due to the ramp-up. This is just the ramp-up situation, but not -- you believe you didn't book any adjustment for this in terms of onetime losses?

Yes, Mr. Zuzak, we booked about EUR 20 million one-off items of the EUR 61 million.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Thomas Jessulat for any closing remarks.

Yes, ladies and gentlemen, this brings us to the end of the conference call on the full year figures of the 2025 financial year. Thank you very much for attending. If you have further questions, please feel free to contact our IR department. And as mentioned earlier, the upcoming events are the release of our Q1 results on May 7 and our Annual General Meeting in a virtual format on the 12th of May. And yes, we would appreciate if you would attend. Until then, I wish you all the best. Thank you very much, and you have a good day. Thank you.

Good bye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your line. Goodbye.

Ladies and gentlemen, welcome to the conference call on the preliminary figures for full year 2025. I'm [ Sargen,] the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions]

At this time, it's my pleasure to hand over to Mr. Thomas Jessulat, CEO.

Please go ahead.

Ladies and gentlemen, hello and good afternoon, and thanks for being available today. I welcome you to our conference call on the preliminary and unaudited figures of the fiscal year 2025.

I'll start with some remarks on today's release. Afterwards, I will hand over to our CFO, Isabelle Damen, who will walk you through the financials down to the EBIT level. As usual, you will then have the opportunity to ask questions. Please note that the outlook as well as the financial details will be published together with the final and audited figures on March 26.

The company closed the year in an environment still marked by considerable uncertainty and volatility. At the same time, the group continued to prepare for the next phase of its transformation reflected in high levels of investments to launch additional series projects in the field of cell contacting systems. Despite these upfront costs, the year-end performance was strong with operating free cash flow reaching 2% of sales.

The ramp-up of battery component projects progressed further, driving significant sales growth in the E-Mobility business unit. In addition, the group successfully implemented its STREAMLINE program, achieving a sustainable reduction in personnel costs. Overall, the company mainly met or in some areas, even slightly exceeded its full year guidance targets.

Let us have a quick look on the markets. Across major automotive regions, the powertrain mix shows clear structural differences. In North America, internal combustion engine vehicles continue to hold a dominant share supported by market preferences and comparatively slower electrification dynamics. Europe, by contrast, sees a higher share of all electric vehicles as well as hybrid vehicles. Within the second half of the decade, there will be a significant shift towards all electric.

A lot of new programs of the established players are going to ramp up; however, long-term forecasts point to a decisive shift. By 2030, all major auto regions are expected to accelerate strongly towards fully electric vehicles. Projections indicate that Europe and China will experience some of the fastest growth in battery electric vehicles, while North America is also set for a substantial increase by the end of the decade. In summary, although today's powertrain landscape varies widely between regions, the trajectory towards fully electric mobility by 2030 is clear and consistent around the globe. Let us have a closer look at the pure electric mobility because this will be our core growth market with regard to cell contacting systems, or other components from our broad range of e-mobility solutions.

Across all major automotive regions, including China, Europe and North America, the shift toward electric mobility is firmly underway with strong growth projected through 2030. When considering our large-scale projects, you will see that we are covering quite a good share of those vehicles, especially in Europe and also North America. China continues to lead the global transition to electric vehicles and shows a different market development with regard to the rising importance of pure local players. Overall, the market of all electric mobility is expanding across all major regions and significant growth is expected throughout the coming years. The shift towards e-mobility is well underway and continues to accelerate.

Let me now hand over to our Group CFO, Ms. Isabelle Damen.

Thank you for handing over, Thomas. Let me first come to the preliminary and audited figures on Slide #5. Summing up, we have successfully concluded the 2025 financial year and laid the foundation for our future transformation. We have generated sales revenue of EUR 1.6 billion, which is a decrease to previous year's figure on a reported level. But there have been M&A effects from the divestment of our entities in Sevelen and [ Buford ] amounted to EUR 159 million. In addition, we have been faced with headwinds from the exchange rate of EUR 40.4 million. Excluding these effects, we achieved an organic sales of 2.1%, which slightly exceeded our guidance given in March '25.

The group reported adjusted EBIT of EUR 88.6 million in the financial year under review, which corresponds to an adjusted EBIT margin of 5.4%. Therefore, the group achieved a level at the upper end of the guidance range, which was around 5%. If you take into account that the earnings of the E-Mobility business unit currently remain in negative territory with an adjusted EBIT of minus EUR 62 million, it shows that ElringKlinger's classical business generates reliable cash flows and creates sufficient financial room for strategic investments.

All in all, adjusted EBIT margin is fully on track to continuously improve profitability of the group in the medium term. Regarding the other metrics, we've seen strong efforts in the fourth quarter. Due to an active working capital management, we achieved a level of EUR 285 million in the financial year 2025. At 17.4% of the group revenues, net working capital ratio was even lower than prior year's figure. The target set in March '25 to maintain a net working capital ratio of under 25% of group revenue was therefore clearly fulfilled. In line with the lower level of working capital and despite the high level of investments for the ramp-up of the large-scale e-mobility projects, we have generated an operating free cash flow of EUR 32.6 million in the financial year 2025.

With the ratio representing 2% of sales, we have achieved our target range of 1% to 3% of group revenue. As a result, net financial debt was kept at a low level. It amounts to EUR 288 million. As a result, the net debt-to-EBITDA ratio stood at [ 2.0 ] and fulfilled the guidance given in March '25 when we had appointed to a figure of around 2. When adjusted EBITDA for the one-off effects from SHAPE30 and STREAMLINE measures, the adjusted net EBITDA ratio would even amount to 1.5 compared to 1.2 in the previous year. Let me briefly reconnect these results to our transformation strategy, SHAPE30. SHAPE30 outlines our road map for transforming the group in response to the profound changes shaping our industry.

The strategy is focused on enhancing our profitability and strengthening cash flow performance. To ensure long-term success, we continuously monitor global market developments and align our product portfolio accordingly. This enables us to remain well positioned for the future and to act with maximum flexibility as market dynamics evolve. This includes terminating nonperforming products, divesting CapEx-intense business areas and consolidating our global footprint. In an effort to position the group effectively for the future, ElringKlinger implemented STREAMLINE, a global program to scale back staff costs in 2025. The measures on a STREAMLINE and SHAPE30 will translate into a significant reduction of the group's cost level.

As planned, the initial benefits of these measures will be seen as early as the current financial year. The measures will take full effect from 2027 onwards. In parallel, we entered the next steps of transformation by ramping up several large-scale e-mobility orders. With the ramp-ups, we returned to a normalized CapEx spending after an intense investment cycle as main investments have been done. The full and audited figures for fiscal 2025 will be released on March 26 in the morning. A press conference is scheduled for the morning, followed by an analyst conference call in the afternoon. The then released figures will include the full set of financial statements and therefore, more details on the financial KPIs. Moreover, we will provide you with an outlook on the fiscal year 2026. The invitation for the calls will be sent out in due time.

Ladies and gentlemen, thank you for your attention. And now Thomas and I are happy to answer your questions.

[Operator Instructions] And we have the first question from Michael Punzet from DZ Bank.

I have -- I will start with some questions with regard to the development in Europe with regard to the transformation to e-mobility. I think we have seen a lot of changes in the strategy of the big German and other OEMs as well as we have seen that the European Commission decided to soften the rule for 2035. And when I look to the presentation, I look at the slide on Page 3, your data you've shown there are based on the S&P Global Mobility outlook based on October 2025.

Do you think this will have an impact on the strategy changes as well as the decision by the European Commission on your ongoing forecast for the e-mobility? And the second question is, will this have any impact on your planned breakeven for the business unit E-Mobility in 2027?

Yes. Thank you for your initial questions, Mr. Punzet. I think when we look at the likely shift now after the change of the EU legislation, there is, I think, some change to be expected. It's not necessarily an adverse change to our strategy. That means that the strategy that ElringKlinger has is sound. The growth market within the auto business here, in particular, in Europe will be e-mobility with battery electric vehicles. I think that's not going to change.

The quantities may change. And therefore, it may have an impact on our initial assumption that we will see a 50%, 50% share of non-ICE versus ICE in our portfolio in 2030. That may be impacted. But it's not meaning on the other side that we need to change our strategy because then it would be merely a change in quantities to the ElringKlinger product portfolio.

Yes. And towards your second question on the breakeven point. So we don't expect a huge impact because of the measures you mentioned on '26 and '27. And I think we discussed before, we expect in '27 to realize a breakeven point on e-mobility.

There are no more questions at this time. I would now like to turn the conference back over to Thomas Jessulat for any closing remarks.

We have a last minute question from Klaus Ringel from ODDO BHF.

I just want to -- really to ask for the special items in Q4 were a bit higher than I had expected. So can you give a bit insight what was the driver here? And let's say, if you have pulled forward some of the measures that you might have planned for '26 for later, which now gives you a clean sheet to start in 2026.

So thanks for your question. On your first question, the adjustments we've booked in the fourth quarter are partially related to STREAMLINE, our personnel cost reduction program. So there's about EUR 6 million we booked in the fourth quarter versus EUR 21.5 million for the full year. Furthermore, we booked some adjustments on the consolidation of our global footprint of EUR 9.2 million in the fourth quarter, about EUR 12 million in the year.

And on nonperforming assets, there we booked about EUR 35 million for the year, of which EUR 19.4 million in Q4. So that's for the adjustments we booked in this quarter and for the year, and we did not really pull ahead anything of '26. So we still expect some effect in '26. The intention is in '27, we will no longer have any impact in adjustments for -- related to STREAMLINE or SHAPE30.

Also in regard to the measures, we indicated that we were -- we wanted to have a EUR 50 million cost improvement in the group. When we head into 2026 now, I would say we're half through of it. There is -- as part of the STREAMLINE program, there is still, in particular, in Germany here, contracts that will run out at the end of Q1 so that the full impact, in particular in Germany on the STREAMLINE program will be measurable starting in Q2 2026, like Isabelle is saying. Most of the accounting items in terms of impairments and also changes to the footprint, most of the items were already carried out.

We're not fully complete yet in that regard. But the expectation is that there is, from an accounting perspective, a little left that would be a difference between reported items and adjusted items. So that we expect more improvements to be seen in the course of 2026. And like Isabelle said, that we shoot for a clean 2027 with our activities.

And we have a follow-up question from Michael Punzet from DZ Bank.

Michael, again, I have several questions on the business unit E-Mobility. First, I would like to thank you very much for publishing the earnings figures for that business division. And I hope this was not a onetime effect, so that we will see that figure on a quarterly basis going forward. I have two questions with regard to the business unit. The first one is, can you give us any kind of guidance for the revenues you expect in 2027 to reach breakeven in that division?

Yes. Let me ask -- or let me give you some information here on your first remark. I mean the transformation here is a key activity for us within our strategy SHAPE30. And we are dedicating significant resources, including CapEx into this process as we have done throughout the last couple of years. And we approach, as you say rightly, the revenue cycle now. And I think -- and we think that it's the right point here to share this information with shareholders of ElringKlinger to show the financial progress in this transformation here for ElringKlinger. This is a background for that. And yes, we'll continue to report on that because, again, it shows the progress that we make in regard to this transformation process.

When we look at your second question here in terms of the top line, it's expected that through 2028, you would say roughly that we will double revenues here. And you have also to take into account that the loss situation here, part of it is one-off as part of this and part is part of start-up. So it's not a full amount that we have shown here in regard to recurring loss-making, but there's also part of it that is one-off amounts. And I think that's important to understand. So with the contribution margin that will come in through the doubling of sales, we think that we'll generate sufficient contribution margin in order to reach breakeven in the area of 2027, okay?

Okay. That means doubling revenues compared to the figure for 2025?

Yes.

Okay. And second question on that business unit. Is it right to assume that the fuel cell technology business is fully included in that figure on a 100% basis in EKPO...

Yes, that is included in there. But it's included here.

So it's not adjusted for the minority stake. So that is included on a 100% basis?

Yes, exactly because EKPO here is fully consolidated within our figures and therefore, is 100% considered.

Ladies and gentlemen, that was the last question. I would now finally hand over the conference back to Thomas Jessulat for any closing remarks.

Yes, ladies and gentlemen, together, my colleague, Isabelle Damen and I thank you for your attendance here during this call. On March 26, we will release our full and audited figures on the 2025 fiscal year and host a press conference as well as an investor conference call. We're looking forward to welcome you again and wish you a good rest of the week. Thank you very much. All the best.

Ladies and gentlemen, welcome to the ElringKlinger AG Q3 2025 Earnings Conference Call. I am Maira, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Thomas Jessulat, CEO. Please go ahead.

Ladies and gentlemen, welcome to our earnings call for the third quarter of 2025. Also on behalf of my colleague on the Board here, our CFO, Ms. Isabelle Damen.

Today, I will start with some highlights also from a strategic perspective, and my colleague, Isabelle, will walk you through the key results for Q3. With this publication, we reaffirm our guidance for 2025 as well as our medium-term outlook originally communicated in the annual report in March. As always, we will conclude the presentation under the Q&A session, and we look forward to addressing your questions.

We advanced the implementation of our SHAPE30 transformation strategy as a top priority. Since its launch last year, we have made significant process in reshaping the ElringKlinger Group and further measures are in process. Another measure is the STREAMLINE program, which aims to reduce personnel costs. Initial savings are expected to take effect in 2026 with full savings realized by 2027.

In addition, our organic sales performance during the first 9 months of 2025 grew by 2.2% compared to the previous year, outperforming the European market, which recorded a decline of 1.7% over the same period. We're making significant process in the field of e-mobility. Operations have started at our e-mobility hub Americas in Easley, South Carolina, which is in preparation for production ramp-up. At the same time, we are gearing up for production chart also in China.

After a phase of substantial investments, our CapEx level is expected to normalize to a more moderate level going forward. SHAPE30 represents our road map for transforming the group given the profound changes in our industry. Our transformation strategy is designed to improve profitability and cash flow. We have already taken significant steps along this path, including the sale of 2 companies in the U.S. and Switzerland, the discontinuation of the electric drive systems and with a reinforced focus on profitable components.

In this context, measures to strengthen the balance sheet have also been implemented. These actions are now complemented by a strict cost reduction plan. One of its elements is the STREAMLINE program, which targets at least EUR 30 million in global staff cost savings. Shaping the profile of the group summarizes one dimension of the SHAPE30 activities. The other dimension encompasses the preparation for future growth based on the received nominations of the past quarters.

And in this context, we have successfully initiated the ramp-up of major e-mobility projects. Currently, we're completing the final steps for the start of production, focusing on cell contacting systems and battery components. As part of the product transformation at ElringKlinger, we have made initial investments in production and space and equipment. At present, we're getting closer to the end of the investment cycle. Along this, we'll return to a more disciplined CapEx level according to our mid-term target of 2% to 4% of group sales.

With having said this, now I hand over to my CFO colleague on the Board, Ms. Isabelle Damen.

Thank you, Thomas. I will now provide you with some more details on our financial performance in the third quarter of '25. At the first glance, the order intake appears to have declined by around 3%. However, we reported slight growth in organic terms compared to the prior year period. This is primarily due to the fact that last year's figures still included contributions amounting to EUR 21.1 million from the divested entities, which have not been part of the group since December 31, 2024.

Despite the challenging market environment, we see a positive development in the underlying business. Organically, which means adjusted for the M&A effects and exchange rate development, order intake increased by EUR 16.6 million or 3.6% to EUR 477 million. The order backlog representing customers' cumulative short-term call-offs not yet realized, stood at EUR 1.1 billion at the end of the third quarter of '25. For comparison, the previous year's reporting period showed EUR 1.3 billion, a figure that still included the backdrop on the 2 group entities divested, which amounts to EUR 136 million.

Starting with the sales and an organic change on Slide #5. In a challenging market environment, ElringKlinger generated revenue of EUR 396 million in the third quarter of 2025, representing a year-on-year decline of 10% according to reported figures. But figures have been affected by M&A as well as FX for this quarter. The 2 entities in Switzerland and the United States had contributed revenue of EUR 34.1 million in the third quarter of '24. This means the relevant basis for a year-on-year comparison will be EUR 407 million. Additionally, revenue was diluted by currency effects equivalent to EUR 8.1 million.

All in all, when excluding currency and M&A effects, revenue declined organically by 0.6% in the third quarter of 2025, remaining at a relative stable level compared to the previous year. While global automotive production in the third quarter was 4.4% higher than the prior year level, Europe, ElringKlinger's core market, posted only a modest increase of 1.2% in the third quarter and Germany declined by 3.6%.

When considering year-to-date sales figures, prior year's numbers included EUR 123 million from the divested entities. With this in mind, sales in the first 3 quarters of '24 amounted to EUR 1.228 billion, in line with the first 9 months of this year. When taking into account FX effects, organic sales even increased by 2.2% year-to-date.

The global production market grew by 3.8% over the first 9 months, mainly driven by China. ElringKlinger's core market, Europe even contracted by 1.7% in the first 9 months. This disparity underscores the challenging conditions in ElringKlinger's primary market where limited momentum contrasts with stronger global trends.

The sales mix presented on Slide 7 provides a more detailed breakdown of the factors behind organic sales. Within the segment breakdown, the Original Equipment segment remains the largest contributor, accounting for 66% of total group revenue, which corresponds to EUR 262 million in sales. Compared to the same quarter last year, revenue in this segment declined, mainly due to the divestment of the 2 entities in the U.S.A. and Switzerland as well as ongoing challenging market conditions.

Within the OE segment, E-Mobility generated sales of EUR 26.3 million in the third quarter of '25. This business unit is currently in a ramp-up phase for upcoming large-scale serial orders, underlying its strategic importance for the group's transformation. The divestment of the 2 entities has also been reflected in the decline in the Metal Forming & Assembly Technology business unit.

The Aftermarket segment continues its strong performance, increasing sales from EUR 32.8 million in Q3 '24 to EUR 37.4 million in the third quarter of '25. Growth was achieved in the Asia-Pacific region, South America and the rest of the world, while revenues in Europe and North America declined year-on-year. In addition to currency headwinds and a general weak market environment, the primary factor behind this trend was the divestment of the 2 entities in the U.S. and Switzerland.

Adjusted EBITDA of the group declined to EUR 41.1 million compared to EUR 51.4 million in the last year's third quarter. In Q3, adjusted EBIT reached EUR 21.2 million, corresponding to a margin of 5.4%, which is even above the full year target of around 5%. Adjustments totaling EUR 16.7 million almost exclusively relate to exceptional items from the STREAMLINE program to structurally reduce personnel costs in the context of SHAPE30 transformation strategy.

Reported EBIT amounted to EUR 4.5 million, corresponding to a margin of 1.1%. This is a noticeable improvement to the same quarter last year when EBIT reported stood at minus EUR 35.2 million. Thanks to the strategic measures implemented as part of the company's transformation strategy, the group is well positioned to maintain a solid adjusted EBIT margin at a comparable high level.

These actions refer to an EBIT improvement of EUR 4 million and created a more resilient foundation for sustainable performance, although have been more than compensated in the third quarter by effects like tariffs totaling EUR 2 million or others amounting to EUR 2.7 million, such as ramp-up costs for the large-scale orders in South Carolina and China. In addition, the release of provisions of EUR 1.1 million in Q3 '24 has to be considered.

In the third quarter, the R&D ratio rose to 5.9%, while absolute R&D spending edged down year-on-year slightly from EUR 24 million to EUR 23.5 million. This keeps the company comfortable within its target range of 5% to 6% of group revenue. In the third quarter of '25, ElringKlinger reported net working capital of EUR 389 million. The corresponding ratio stood 23.2%, bringing the group to its short- and medium-term goal of maintaining the figure below 25%. This development highlights ongoing initiatives to improve capital efficiency and enhance operational flexibility in parallel to sales activities relating to the ramp-up.

Following elevated expenditures around the turn of the year in Q4 '24 and Q1 '25, CapEx has been lowered in the second quarter. As anticipated, this figure was quite stable in absolute numbers in Q3 with CapEx at EUR 27.8 million and a CapEx ratio of 7%. It is expected to lower this level starting next year and realize a CapEx ratio level of around 2% to 4% in the mid-term as well. Regarding the cash flow in the third quarter in '25, the group maintained a positive level of performance as in Q2 and achieved an operating free cash flow of EUR 18 million.

This underscores the continued benefit of disciplined financial management and the sustained impact of working capital measures even in a challenging market environment. And it is the basis for reaching our target range of 1% to 2% of sales with a strong fourth quarter as we had last year. This is what we are currently working hard on. Net financial debt slightly increased to EUR 389 million, corresponding to a net debt EBITDA ratio of 2.2. And last but not least, group equity totaled EUR 653 million by the end of the third quarter of '25, slightly below the EUR 659 million recorded at the close of Q2 '25.

Coming to the segment performance on Slide 11. In the third quarter of 2025, the OE segment generated sales of EUR 262 million. When comparing this to the prior year figure, it's important to account for a sales contribution of EUR 34.1 million from divested entities. The adjusted segment EBIT margin stood at minus 0.8%. The aftermarket segment is successfully advancing its growth strategy, delivering yet again a quarterly increase in revenue. In the third quarter of 2025, sales reached EUR 96.1 million, which implies a growth of 13.2% compared to a previous year's quarter. With an adjusted EBIT margin of 18%, the segment once again delivered a strong level of profitability.

The Engineered Plastics segment delivered a strong performance in the third quarter of '25, supported by its broad and diversified industry mix. The segment recorded sales of EUR 37.4 million, marking an increase of EUR 4.6 million compared to the same quarter last year. With an improved adjusted EBIT margin of 13.4%, the segment demonstrated its resilience in a challenging market environment.

Now I'll hand back to Thomas Jessulat for concluding words on the market and the outlook.

Thank you, Isabelle. Let us now turn our attention to the market expectations and the group's outlook. Let me quickly show you our agenda for Q4 in the upcoming quarters. We anticipate a weaker fourth quarter with regard to the market, while the outlook for fiscal year 2026 suggests largely sideways movement on a global scale. Against this backdrop, we'll continue to prepare for entering the sales cycle, strengthen profitable business areas and continue to refine the group's profile to ensure sustainable performance.

Our focus remains on our SHAPE30 targets, which is increasing the group's profitability, particularly, of course, in the OE segment and sustainably generating cash flow. This is crucial to enhance the group's resilience and competitiveness. We are continuing the ramp-up of additional large-scale e-mobility projects, building on the progress achieved in previous quarters. Following a CapEx-intensive phase, capital expenditure will normalize from next year onwards and reach a disciplined level of 2% to 4% in the medium-term.

And at the same time, we maintain an elevated level of e-mobility sales supported by strong demand. Cash flow is projected to improve significantly in the fourth quarter, recovering from the weaker start in Q1. Market dynamics remain uneven and are expected to persist into 2025. While global light vehicle production shows a positive trajectory overall, the regional picture is mixed.

China continues to gain momentum with strong growth for the full year, whereas Europe and especially North America, ElringKlinger's main markets are still struggling to recover. This contrast reflects the year-on-year development from 2024 to the forecast for 2025. Robust expansion in China is helping to cushion the impact of weaker demand in Europe and North America and therefore, ensuring that global production maintains a stable growth path.

We now turn our attention to the forecast for the fourth quarter of 2025. Current projections indicate a decline in light vehicle production across all regions during Q4, including Asia-Pacific, which has been the strongest region so far with China as the main growth driver. This anticipated slowdown highlights the high volatility that characterizes the automotive industry. Overall, the automotive market is showing a growth of 2% in 2025, while Europe is expected to face a decline of 1.8% over the same period.

I will close my comments with a remark on the outlook. Despite this short-term moderation of markets, we remain committed to our strategic targets and are preparing for the next growth cycle driven by serious production orders, particularly in the E-Mobility segment. Against the volatile backdrop, we confirm the outlook published in the fiscal year 2024 annual report, including organic sales at prior year levels and adjusted EBIT margin of around 5% and operating free cash flow between approximately 1% and 3% of revenue. Based on our strategic measures, we aim for a mid-term adjusted EBIT margin range of approximately 7% to 8%.

With having said this, Isabelle Damen and I are now ready to answer your questions.

[Operator Instructions] The first question comes from the line of Marc-Rene Tonn from Warburg Research.

Basically 3, if I may. The first one would be on the e-mobility sales outlook for the fourth quarter as you are now ramping up for the new orders, which are, let's say, coming into production at your customer. Can you give us some indication when we should expect the top line contribution to be more pronounced on your side? Will it already be Q4? Is it more beginning of next year? That would be the first question.

The second one would be on special items, whether we should expect any additional restructuring expenses for the fourth quarter between adjusted EBIT and the EBIT line? And lastly, on EKPO. When I look at your -- let's say, on the minorities line, I think it's minus EUR 2.5 million, if I'm not mistaken, for the third quarter, minus EUR 5.5 million for the first 9 months, basically representing about, let's say, 40% of the net profit or net loss in this case of that business. So obviously, a large drain on your operating performance when we're looking at EBIT. Do you expect any improvement on that side going forward? Or what could be potential measures to, let's say, stabilize or improve the situation on that side?

Thank you for your questions, Marc. Sorry, I lost my voice a bit. I'll answer the second question for you. If we expect some special items in Q4, as we are still in transition, we might still expect some -- and we're not [ completely true ] with our plan. So we might still expect some impact in the fourth quarter of our restructuring measures.

Okay. On the e-mobility sales for the fourth quarter will step-by-step will be ramping up. On the same time, it's not so sure if it is showing significantly. It will show, I'm sure, but it will not -- in Q4, it will not be showing significantly as a contribution. And certainly, starting from next year on, expectation is that we'll see top line growing in regard to e-mobility sales.

Okay. Third question from your side on EKPO, there is a lot of activity that we have right now in regard to cost reduction as part of our global, of course, cost reduction measures. And we would expect that we have some good progress here between Q4 and Q1 next year. So in fact, it is still in a start-up loss-making situation here, EKPO, but also here, we are working on reductions in order to minimize the impact here to the EK Group. Is that answering your question?

It does. Just one quick follow-up, if I may. Could you remind -- and not related to that, could you remind us on the incremental increase of net indebtedness from the IFRS 16 accounting for the -- what we have to expect for the fourth quarter from the U.S. facility?

Yes. When we look at IFRS 16 specifically, then we are at roughly EUR 90 million right now, which compares to EUR 47 million to previous year's quarter and expectation for Q4 this year will be roughly EUR 30 million addition. Yes, this is an estimation. So it's a mid-double-digit million euro figure, maybe a little bit less than EUR 40 million. This is the expectation that we have right now.

The next question is from Michael Punzet from DZ Bank.

I have only one left with regard to your OE business. You're still in the red figures for Q3 on an adjusted basis. Can you have any kind of time when we could expect a positive run rate on a quarterly base? Is that a thing we could expect for 2026? Or is it -- or [ happily ] wait until 2027 when all the positive impacts from your cost reduction program came in?

Yes. When we look at the year, right now, we are in an expected frame in regard to the current results. We are on the way with the STREAMLINE program. We are making progress here. So that is having already some positive impact here, but not yet a full impact in terms of our activities here in 2025. Expectation is that we'll see if there's no negative impact from the market of some significant sort that we'll see some impact here first half of next year also on the OE segment.

[Operator Instructions] The next question comes from Tobias Willems from LBBW.

Tobias Willems, LBBW. I have one question left regarding on your company strategy and your reshaping programs. Will we see further divestments in the years ahead, let's say, in 2026 and 2027, especially in the automotive segment?

Yes. Thank you for your question. What to expect going forward? One, it is a continuation of the transformation path into 2026. We'll have also like Isabelle has said, we'll have the expectation of some more adjustments, but adjustments are going to be getting smaller going forward compared to what we have seen in the past. We'll see -- in 2026, we'll see the following. We'll see a reduction of the balance sheet size because we have quite a figure. It's a high double-digit figure right now on our balance sheet of items, tooling equipment that will be sold off to customers.

So we'll see a reduction of balance sheet size in 2026, going into 2026. And we'll also see an improvement of financial KPIs based on the impact of all the activities done in 2025. So that I would say is a very general comment that we have laid a lot of groundwork here for improvements that we expect to kick in, in 2026. And we also have to say that some items are still in process where it is, to some extent, uncertain if they have an impact in 2025 or beginning of 2026.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Thomas Jessulat for any closing remarks.

Thank you very much for joining our Q3 conference call today. We truly appreciate your continued interest and support, and we look forward to meeting you either next week at our Capital Markets Day or during our next update when we present the full year figures. Until then, we wish you all the best for the weeks ahead.

Yes. Ladies and gentlemen, I welcome you to our earnings call here on the second quarter of 2025. Today, I will walk you through the detailed results of the second quarter. With the publication of today's figures, we reaffirm our guidance for 2025 as well as our medium-term outlook as outlined in the annual report published in March.

As always, we'll conclude the presentation with a Q&A session, and I look forward to addressing your questions. And before we begin, I am pleased to welcome Isabelle Damen as our new Chief Financial Officer. She joined us on August 1 and brings a wealth of experience and fresh perspectives to our leadership team.

With that, I would now like to hand over to Isabelle Damen for a brief introduction.

Thank you for the warm welcome. It's a real pleasure to speak to you today in my new role as Chief Financial Officer of ElringKlinger. I officially joined the company last Friday, August 1, and I'm truly excited to be part of this journey. ElringKlinger is a company with a strong foundation, a clear strategic direction and a deep commitment to innovation and sustainability.

I'm proud to now contribute to shaping its future, especially at such a dynamic time for the industry. In my role, I will be responsible for the areas of finance, IT and legal and compliance. These areas are critical to ensuring transparency, financial strength and a long-term value creation. And I look forward to working closely with the team to further develop the Group.

Before joining ElringKlinger, I held CFO positions in several international industrial companies, where I gained broad experience in financial leadership, transformation processes and capital market communication. I'm confident that this background will help me to support ElringKlinger's continued development and strategic goals. I'm very much looking forward to engaging with all of you, our investors, analysts and further stakeholders and to building a strong open dialogue in the quarters ahead.

Thank you, and I'll now hand back for the continuation of today's presentation.

Yes, Isabelle, thank you very much. Driving forward, the implementation of our SHAPE30 transformation strategy remains a key priority. Since its launch last year, we have made substantial progress in reshaping the ElringKlinger Group and further steps are already underway. One such milestone was the divestment of 2 group entities aimed at sharpening our strategic focus and streamlining the product portfolio.

Another measure is a streamlined program, which aims to reduce personnel costs. The program is progressing with good acceptance at this point. Coming now to the financial highlights. With an adjusted EBIT margin of 5.9% in the second quarter of 2025, we are well on track to deliver on the margin guidance for 2025. In addition, our organic sales performance during this period has been relatively strong, exceeding both the underlying market trends in our core region Europe and the prior year second quarter figures on an organic basis.

At this year's Annual General Meeting in May, the dividend of EUR 0.15 per share was confirmed by the AGM as proposed by the Management Board. In addition, Dr. Sabine Lutz was newly elected to the Supervisory Board of ElringKlinger.

Let us now turn to the detailed financial figures for the second quarter of 2025. The order situation is mainly influenced by 3 factors. First, it reflects the challenging market situation. Production figures are expected to fall this year in the core regions of North America and Europe with manufacturers producing fewer vehicles. This trend is visible in the order book. However, there are 2 additional factors when comparing the quarter under review with the previous year's second quarter with the previous year.

On the other hand, prior year's figures include orders from the 2 group entities that were divested with effect from December 31, 2024. And on the other hand, currency effects had a reducing impact on this year's figure. As a consequence, assuming stable exchange rates and adjusting the previous year's figure for the 2 divested entities, order intake fell by 3.3% from EUR 339 million in the second quarter of the previous year to EUR 328 million in the quarter under review. If both effects were taken into account, the decline from EUR 365 million in Q2 2024, which means including the 2 group entities to EUR 296 million in Q2 2025, which means including the headwind from exchange rate movements would be more significant.

The same logic applies to the half year figures. Adjusted for both effects, this metric decreased slightly by EUR 5 million or 0.6% from EUR 770 million to EUR 765 million. Order backlog, which comprises customers aggregated, and yet unrealized short-term call-offs amounted to EUR 1.40 billion at the end of the first half. The figure of EUR 1.249 billion posted at the end of the previous year's reporting period included the backlog of the 2 divested group entities. Currency effects were also a factor in the quarter under review. Excluding M&A effects and assuming stable exchange rates, order backlog fell by 1.8% from EUR 1.101 billion to EUR 1.81 billion.

Starting with sales and its organic change on Slide #5. Operating within a challenging environment, ElringKlinger recorded revenue of EUR 408.3 million in the second quarter of 2025. This corresponds to a year-on-year decline of 8.2%. We have faced challenges from currency and M&A effects this quarter. The 2 entities in Switzerland and the United States whose sale was finalized at the end of 2024 had contributed revenue of EUR 44.1 million in the second quarter of 2024. This means the relevant basis for a year-on-year comparison would be EUR 400.9 million.

Additionally, revenue was diluted by currency effects equivalent to EUR 14.1 million or 3.2%. Excluding currency and M&A effects, revenue grew organically by EUR 21.5 million or 4.8% in the second quarter of 2025. This represents a stronger performance than the overall market, which according to S&P Global Mobility data grew by 2.6% globally and declined by 1.7% in Europe during the same period. The sales mix on Slide #6 will explain the organic growth in more detail.

Among the segmental revenues, the Original Equipment segment is the largest one, making up 67% of Group total or EUR 276.9 million of sales. In the second quarter of the year, segmental revenue declined compared to prior year's quarter, reflecting the divestment of the 2 entities in the U.S. and Switzerland and the challenging market conditions.

Within the OE segment, e-mobility revenue more than doubled due to the ramp-up of a large-scale serious order of cell contacting systems. E-Mobility sales increased from around EUR 17.7 million to EUR 40 million in the second quarter of 2025 and now represents 10% of Group sales, which underlines the ongoing transformation of ElringKlinger.

The Aftermarket segment once again performed strongly and increased sales by 12.7% to EUR 95.5 million. Regionally, growth was recorded in Asia Pacific, South America and the rest of the world, while revenues in Europe and North America declined year-on-year. In addition to currency effects and the sluggish market environment, the main driver of this development was the divestment of the 2 entities in the U.S. and Switzerland.

Adjusted EBITDA of the Group rose slightly to EUR 50.2 million compared to EUR 49.8 million in last year's second quarter. Adjusted EBIT was able to recover over the last quarters and exceeded the prior year level. As a result, adjusted EBIT reached EUR 24.2 million, which corresponds to an adjusted EBIT margin of 5.9% and is in the quarterly review even above target level for the full year of approximately 5%. The adjustments include exceptional items of EUR 17.9 million in total due as a first point to the streamlined program to structurally reduce personnel costs with an amount of EUR 5 million due to the insolvency of one of the Group's customers of EUR 9 million and due to the measures taken as part of the SHAPE30 transformation strategy of EUR 4 million.

So all in all, the Group recorded a reported EBIT of EUR 6.3 million, corresponding to a reported EBIT margin of 1.6%. One of the key drivers of the improved adjusted EBIT was a positive effect of strategic measures taken in 2024, including the divestment of the 2 plants in the United States and Switzerland. However, in Q2 2025, adjusted EBIT was affected by higher tariffs, which had a dampening impact on earnings.

And let me say that at this point, the tariffs may also the influence business in the future, not only directly but also indirectly. Overall, neither the introduction nor the level of further burdens can be reliably estimated today due to the high degree of volatility. In Q2, the company was able to reduce the R&D ratio to 5.4%. And in absolute terms, R&D expenses slightly declined from EUR 24.9 million to EUR 22 million. This means the company remains well within its target corridor of 5% to 6% of Group revenue.

In the second quarter of 2025, ElringKlinger's net working capital amounted to EUR 417.4 million and with a net working capital ratio of 25.2%, the Group is moving closer to its short- and medium-term target of keeping the ratio below 25%. This reflects ongoing efforts to optimize capital efficiency and strengthen operational flexibility.

Following elevated expenditures around the turn of the year in Q4 2024 and Q1 2025, CapEx normalized in Q2 2025 amounting to EUR 26.3 million. The CapEx ratio for the second quarter of 2025 stood at 6.4%.

Yes, ElringKlinger is continuing to sharpen its strategic focus and to align its activities for enhancing profitability. As part of its transformation, the Group is laying the groundwork for sustained growth in new drive technologies, an area where it has already secured major series production contracts such as for cell contacting systems. The goal remains clear: to generate more than 50% of Group sales from non-ICE applications, meaning internal -- non internal combustion engine applications by 2030. This is what CapEx is used for.

We're currently establishing our battery hub for the Americas region in Easley, South Carolina. The setup is progressing well, and we anticipate commencing operations in the third quarter of this year. In parallel, we're expanding our battery competence center in Neuffen, close to our corporate headquarters. The logistical enhancements are nearing completion and will provide additional production capacity for the large-scale orders to be ramped up. This expansion is scheduled to go live in Q3 2025.

Furthermore, we are preparing production facilities to support the launch and continued ramp-up of cell contacting system orders. We're also preparing production in China. These measures show that the investments are targeted, and that the transformation is continuing with the start-up of these orders. Importantly, these targeted investments are expected to have a positive impact on cash flow over the medium term as new production capacities come online and begin contributing to revenue growth.

And after significant investment-related cash outflows in the first quarter of 2025, ElringKlinger returned to positive territory in Q2, generating an operating free cash flow of EUR 23.8 million. This reflects the Group's disciplined financial management and the initial returns from its strategic investments, particularly in preparation for upcoming large-scale production orders as well as effects from working capital measures.

Net financial debt slightly increased to EUR 374.9 million, corresponding to a net debt-to-EBITDA ratio of 2.1. As to the end of Q2 2025, Group equity amounted to EUR 659 million, reflecting a decrease compared to the EUR 687.6 million reported at the end of Q1 2025. The equity ratio, therefore, stood at 36.7%.

Coming to the segment performance on Slide 11. Overall, the OE segment generated sales of EUR 276.9 million in the second quarter of 2025. When comparing to prior year's figures, you have to consider a sales contribution of EUR 44.1 million of the divested entities. The adjusted segment margin rose to 1.0%. The Aftermarket segment continues to successfully pursue its growth strategy, recording another increase in revenue. In the second quarter of 2025, sales reached EUR 95.4 million, which implies a growth of 13% compared to previous year's quarter. With an adjusted EBIT margin of 18.7%, the segment once again delivered a strong level of profitability.

The Engineered Plastics segment delivered a solid performance in the second quarter of 2025, benefiting in particular from its diversified industry mix. The segment recorded sales of EUR 35.7 million, marking an increase of around EUR 4 million compared to the same quarter last year. With an adjusted margin of 8.8%, the segment demonstrated its resilience in a challenging market environment.

Let us now take a look at the market expectations and the outlook for the Group's figures. And let me briefly touch on what will determine our actions in the second half of the year on Slide 12. Preparations for the ramp-up of further orders in battery technology required higher investments, particularly in the fourth quarter of 2024 and the first quarter of this year. This will continue to normalize in the second half of the year so that we will achieve a figure between approximately 4% and 6% of consolidated sales for the year as a whole.

The further ramp-up of the first large-scale production order will lead to a continued high level of sales in the E-Mobility division. In conjunction with further measures, this will also lead to a further improvement in operating free cash flow. Once the main construction work has been completed, we'll start operations at our new battery hub in South Carolina. As a result, we'll capitalize the property in accordance with IFRS 16, which will affect financial liabilities. Overall, this will also increase the net debt-to-EBITDA ratio.

Going forward, this ratio will improve again as a result of the planned further reduction in net financial liabilities and the continued increase in profitability. Streamline, our program to reduce global personnel costs will also lead to a structural improvement in earnings in the upcoming years. In conjunction with strict cost management, we're well on track to achieve our full year target of an adjusted EBIT margin of around 5%. Moreover, we are continuing to implement our SHAPE30 transformation strategy. We're analyzing our product groups for marketability and deriving measures to sustainably increase profitability, particularly in the OE segment.

One such decision, for example, was to discontinue the system business for electric drive units while continuing the profitable drive components business. We'll consistently execute this step in our portfolio. The same applies to our location strategy. We'll eliminate unprofitable setups and take the necessary measures to focus on the Group's profitable core business. We have made such decisions for the Thale and Fremont locations, for example.

All these measures serve only one purpose, which is improving the Group's profitability and sustainably increasing its competitiveness for the future. The mixed situation on the markets is set to continue. While China's light vehicle production is on the rise, the markets, Europe and particularly North America are still lacking momentum. However, the strong growth in China is helping to offset the weaker performance in these regions.

Looking at the development from the first half to the second half of 2025, according to the latest S&P Global Mobility forecast, we can now expect growth in 2025 compared to the previous year, whereas back in April, the decline had still been forecast. And this rapid shift in projections highlights the current volatility of the market environment. Regionally, China is expected to grow by 10.8% from the first half to the second half of 2025, significantly driving the global forecast of plus 0.4%.

And in contrast, the North American market is projected to decline by 7.9% and Europe by 9.7% over the same period. And this trend in automotive production is also clearly reflected in the full year comparison emphasizing the uneven regional dynamics shaping the global market. While China is projected to see robust growth of 3.8% in 2025 compared to 2024, both the North American and European markets are expected to contract significantly with declines of 3.9% and 2.5% respectively.

And as a result, the modest global growth forecast of plus 0.4% is largely attributable to China's strong performance, underscoring its pivotal role in stabilizing global automotive output amid broader regional downturn. Overall, the automotive market is showing a slight growth of, I said it, 0.4% in 2025. With its strong exposure to the European market, ElringKlinger continues to be affected by the lack of market momentum. However, this is being at least partially offset by the large-scale customer orders and a solid Aftermarket business.

Following a relatively strong first half of the year, we anticipate a weaker second half. Nevertheless, we confirm the outlook provided in the fiscal year 2024 annual report published in March against the backdrop of a volatile market environment. As stated earlier this year, the Group expects organic sales to remain at previous year's level, meaning that sales revenue, excluding the 2 divested entities forms the basis for comparison.

Given the complex environment with a wide range of influencing factors, we continue to expect an adjusted EBIT margin of around 5%, in line with the previous year. Thanks to our strategic measures and revenue contributions, we aim for a medium-term margin range of approximately 7% to 8%. Operating free cash flow is projected to reach between 1% and 3% of revenue.

Yes. Looking ahead, our financial calendar for the second half of the year includes 2 key events: the publication of our Q3 2025 results and our Capital Markets Day. These milestones will provide further insights into our operational progress and strategic direction.

That wraps up my part. I'm now looking forward to your questions. Thank you very much.

Our first question comes from Marc-René Tonn with Warburg Research.

Basically 2 to 3, if I may. First one would be on tariffs, the EUR 3 million negative impact in Q2, probably a pretty large number as a drag on your profitability. Two questions related to that. One is, do you expect some amount of that to be recovered in the second half through price increases, negotiation with customers?

Secondly, when we look at a bit on the, let's say, profitability in the individual segments, is it fair to assume that a large proportion of that was attributable to Aftermarket, where I think the EBIT margin was at least a bit lower than it was in the previous quarters? And if not, what was the reason behind the lower Aftermarket margin in that quarter?

Second question would be on the liabilities from supplier finance agreements in your balance sheet, which I think showed up there for the first time. Could you kind of, let's say, perhaps qualify what was that? Is it some kind of, let's say, similar to reverse factoring or part of trade liabilities figure on how we should look at that, that would be -- could be helpful.

And the third question, perhaps you have these pretty significant ramp-ups now ahead of you in the third quarter and then probably also let's say still ramping up in the fourth quarter for the battery cell connecting systems. And still some way to go with regard to your free cash flow guidance, in particular for the current year, because you could give us some, let's say, how much risk is in there? Or is it, let's say, as usual, often something go wrong with these ramp-ups in terms of, let's say, working capital management or cost overrun or anything like that. But if you could give us some indication on the risk profile there.

And perhaps lastly, on the IFRS 16 effect for the Easley plant in the U.S., could you give us some, let's say, some more quantitative number on the expected effect on the net indebtedness?

Yes. Thank you for your questions. I would start with the first one. Tariffs, in fact, hurt us and they hurt us in a sense that they partially offset the improvements that we have achieved by the sale of the 2 entities last year. If I look forward, then there is a further higher level of tariff to be expected. Is that going to be recovered at some point in time? There is -- from today's perspective, there's really no visibility because when we look at tariffs, its central government driven essentially in the U.S. and it's -- if not impossible, it's very difficult to recover to our knowledge.

When we look at the profitability of the segments, then in fact, we've been growing with the Aftermarket in the U.S. in particular. So that is also the reason why here in Q2, we see an impact, in particular here in regard to the U.S. business, but also to further ramp-up costs that are associated with that. And it is going to be offset but it's going to be starting in the second half of 2025 when there is an offset. So there is a higher level going forward to some foreseeable future, but it's going to be at least partially offset because some of the tariffs are not necessarily associated with Aftermarket only, but also with some items here in regard to the OE segment.

Yes, in the second question here, you were asking on working capital instrument that we have reported here in the second quarter 2025, the first time, and this is, in fact, right, yes, this is a reverse factoring tool that we have here in place, which is a little bit over EUR 50 million at June 30. And this is an instrument that will help us to bridge the period where we have to fund a lot of, in particular, tooling, but also other items here for our ramp-ups that are going to be sold off at a later point in time.

And for this purpose, we have implemented this tool here, which has a higher capability overall in terms of financing possibility. And again, this is an instrument that helps us to bring us through this period until we realize a lot of cash inflows from the sell-off of tools and other items here that are associated with the ramp-up of those large-scale orders.

Number three is a follow-up essentially on the same topic. We see still the possibility to reach a positive free cash flow for the whole year despite the fact that we are significantly negative right now. And there is a couple of points to that. There is the one that I was just describing, working capital instruments that will help us to offset some of the tied-up capital for one. Number two, there's going to be a start of production in the second half of the year where our expectation is that we will be able to invoice and offload some of that inventory that we carry. And there is also in regard to the structuring of the Group, there are some other opportunities here that I would, let's say, mention in general.

So there is a chance that we reach it, and we have identified all the individual figures how to manage that. But you're right, when we see delays coming up, which we don't see as of yet, then there is a risk also that if things are going to be delayed, then, of course, invoicing and offloading of those items could be, but it's too early to say that now going into the second half of the year at this point in time.

And I'm coming to your fourth question now. This is your question on IFRS 16. There is leasing liabilities going to be coming on to our statement associated with the right of use and the amount to be expected is somewhere between EUR 75 million and EUR 100 million as an amount that increases the financial debt and will also increase in the short term, the net debt-to-EBITDA ratio until it will come down through positive cash flows for one and also a higher EBITDA ratio here related to the ramp-up of those large-scale production orders. I hope I answered all your questions.

Our next question comes from Michael Punzet with DZ Bank.

I have 2 questions. The first one is on the restructuring. Can you give us any idea what we could expect as restructuring provisions in the coming quarters, so for the full year 2025? And the second quarter is on the insolvency of one of your customers. Can you may be shed some more light on what's happened there? And have you taken measurements to protect yourself for such events in future?

Yes. Thank you for your question. Let me start with question number 2. That is a start-up vehicle company that we identified in the past year as a chance to develop ourselves here into battery applications. And typically, we assess, so to say, counterparty risk -- in this case, we have done so as well. But in the very negative market environment right now, this was something that just happened. And that will lead, in fact, to a point where we will further sharpen here product portfolio as a consequence of it.

Yes, to your question number one, restructuring, I mentioned that we target approximately EUR 30 million cost reductions through streamlined program with a maximum amount here, roughly speaking, of EUR 30 million restructuring expenses. This would be the high side of provisions to be expected, the way I look at it right now. But the other items that may be noncash, the provisions for the restructuring is a cash flow item going forward. There may be other noncash related accounting items by deconsolidation of other group companies, but not in a very significant amount as I see it as of today. Is that answering your questions?

Yes.

It looks like we have no registrations for any further questions. So I hand back over to Mr. Jessulat for any closing remarks.

Yes. Thank you. Finally, I thank you all for your attendance. As always, if there's any further questions, give us a call, our IR department is happy to answer it. See you or talk to you next time on November 12 for the Q3 figures and our Capital Markets Day afterwards. We wish you a good summer season. Thank you very much.