Krones Aktie

Good afternoon, and a warm welcome from my side. My name is Olaf Scholz, Head of Investor Relations here at Krones. We have presented, this morning, our preliminary figures for the fiscal year '25. So Krones continued profitable growth in '25, and we forecast also a further revenue and profitable growth for '26.

Next to me is Christoph Klenk and Uta Anders, they will give you more details about these figures and also additional information. And we will also talk about the '26 targets. After the presentation, you will have the opportunity to ask questions. I think you also know how the Q&A session works. Please use the function raise your hand in Teams or send me a short e-mail, and then I will hand over to you.

Additionally, please be reminded that this meeting will not be recorded and that is also not allowed to record the meeting. Please also deactivate any functions of recording at Teams.

So I think we can start with the presentation, and I will hand over to Christoph Klenk, CEO of Krones.

Yes, Olaf, thank you. Warm welcome, ladies and gentlemen, on behalf of Uta and myself to our preliminary figures for 2025 and of course, to how we see 2026 and looking forward then in, of course, answering your questions.

I will skip, as always, I would say, the beginning of the slides because this has been actually working as a summary for you that you can see all in a condensed way. And here even over the numbers, I will skip because we go in detail anyway. I can say if we see here the numbers at the end of 2025 and seeing the results we are extremely happy.

Before I continue, I want to extend a big thank you to the Krones team globally. So 21,000 people having made this success possible because we're dealing with 160 countries around the globe and quite complex lines and businesses. And once somebody is failing, some projects are failing totally. So everybody is important in our team, and that's why we are so thankful that we have achieved those numbers with the team together.

Before I go ahead, we had various challenges in 2025. I just want to name them, not all of them because then we would stand here an hour, but at least 3 of them. First of all, is Middle East because we all forgot that in the beginning of the year, Middle East was pretty much under pressure with the strike of Israel and the United States in Iran, which actually affected the whole region. Then of course, we had the tariff issues during the year and should not forget that FX issues will affect and has affected our businesses as well.

On the other side, we had a highlight with Drinktec. You have been all being invited to that, seeing the Ingenic line and what we are doing with that into the services we are delivering. And of course, with Prefero, the Netstal acquisition and the, let me say, combination of the Netstal Maschinen and the Krones Maschinen. So that's the highlights. And again, thanks to our team that all those things have been working out.

Yes, numbers you see here, and these are the green tick marks that we have actually achieved what we have promised, and that's the most important thing for us, for Uta and myself that we once again have been robust in the statements we have made and that we have been achieving our targets.

From this on, jumping into more details, order intake. I mean, we have said all the time that order intake will be around 1 with the book-to-bill ratio, and this is actually what we have achieved. Yes, we have been -- and this is very obvious, we have been short EUR 100 million with order intake in comparison with the sales we have done. But nevertheless, I would like to put that into context what we have seen in 2025.

As said in the beginning, I mean, the beginning of the year, Middle East was a bit shaky because of what I have said earlier. Then, of course, we had a tariff issue, which I'm reflecting later on when we go to the split into the regions, how this affected North America, but this has been 2 challenges. And number three, and this is on the positive note, this is very important for us that we have maintained price stability.

I mean, for those of you knowing us for a longer period of time, in particular those times before COVID, pricing was all the time an issue. And since I would say the -- let me say, the markets are a bit more under pressure than before. For us, it was very important that we kept a very close eye on pricing and we kept price stability.

Some of those let me say, actions have been that we have been losing some of the orders just to make sure that the signal into the market is crystal clear. That's the remark I wanted to do here.

If we look to 2026 because Uta and myself, we have agreed on that once we go through the presentation here, we give you all the time, let me say, the view in 2026, of course, you will see a summary at the end. But as you have seen, book-to-bill ratio in 2025, around 1, which is actually 0.98, if you put it exactly on it, the EUR 100 million short, I'm just saying, we are looking about a book-to-bill ratio slightly above 1 for 2026.

So that means we will be higher than sales, and we will have in order intake a higher growth than we will have in sales. So that's the statement we are doing. And this is based, of course, always on, let me say, our interviews we have done with our customers by late 2025. And I would say what we see right now in the market looks good for Q1 to confirm what I have just said. So that's for order intake, and I assume you will have later on certainly more questions to it.

Order backlog, yes, that has decreased slightly, but only slightly, and this has been on purpose because our point was our delivery times have been too long. Fortunately, we have been able to decrease that to around 40 weeks right now. And in particular, let me say, orders, we are even going further down. So we have shortened that. And we can say that as of today, we don't lose orders because of delivery times. So we have been arrived into the competitive landscape again on where we should be, and that's important for us that this is not a reason that we are going to lose orders.

On the other side, it actually provides a very nice and stable fundament for the, let me say, economical development of Krones in 2026. So we are well booked into the third quarter. So very important for us because that gives us the visibility on our statements. But more to say again, by purpose, we are happy to decrease that because we need short delivery times.

Now from the market perspective, how do we see things? Number one, we see customers behaving slightly different than what we have seen in the past. I would assume that might be something for Q&A later on once you want to know more details about that. But basically, if you look to the split of the regions, and this is actually sales, it's not order intake. You might see that on the left-hand side that North and Central America in terms of percentage is going significantly down.

However, if you look to the absolute numbers, we maintain a quite stable level on sales in North America and roughly -- I mean it's easy to calculate, it's EUR 1.2 billion. So all 3 numbers are reflecting EUR 1.2 billion, and that has to do with the growth of the other regions. And of course, I named it earlier at the beginning based on FX reasons we have in that. So that's one thing.

If you look to pure order intake in North America 2025, that was decreasing, in fact, by 10%. Of course, in the second half of the year, influenced by the tariffs. But important for you to know, we plan on, let me say, the levels we had seen the year before last in terms of order intake for 2026 because what we see from our customers since the shock of the tariffs have been going away, the business cases are still even including the tariffs intact. I think we can talk certainly more about that in the future or in the Q&A.

Second, what is to remark here, even as South America looks pretty good in sales, we have missed the targets there. We had higher expectation into South America. So this was not going too well, to be honest with you. So this is one critical aspect for 2025. And if you look to Asia Pacific, that has been going down into sales and in order intake. So that as well a critical development in 2025.

But now the good news comes for all of the 3 markets, North America and Central America, South America and Asia Pacific, we do assume that 2026 will perform better, and we are looking into achieving our targets for 2026. And this, again, because many projects has been postponed are still active, not lost. And that's the reason why we have hope into those markets. And we will see, from our point of view, a good development in 2026.

Remarkable, Europe and Middle East, Africa, both of them in sales and in order intake have been growing significantly. And in particular, Middle East and Africa have helped to overcome the shortage in order intake in North America. And even China from the order intake numbers is an increase in 2026. Sales is declining a bit in the sense of generating revenue, but we are on a good path in terms of order intake. And last but not least, you see Central Asia and Eastern Europe is doing quite well as well. So even good on track here.

So that's from, let me say, the markets, the order intake and where we are with that. And with that, I'm going to hand over to Uta.

Thank you, Christoph. Yes. Good afternoon to all of you also from my side. I mean, as always, I will start with revenue development. I mean you have seen it already in our press release, but let me just give you some additional comments also from my side.

I mean we said 7% growth. So we are within our guidance of 7% to 9%. And we have mentioned or Christoph has mentioned it earlier already in that 7% is a EUR 99 million effect just coming from currency translation. That was mainly in Q3 and Q4. We didn't see it so much at the beginning of the fiscal year. That's why also we didn't put too much emphasis at the beginning of the fiscal year on it. But if you look now at the whole fiscal year, EUR 99 million is quite an effect. And if we took that out, we would have been -- or we would have recorded a growth rate of 8.9%.

Yes, Q4, I mean, we had always said for both order intake and revenue, Q4 will be strong with EUR 1.556 billion. It was strong 9.7% growth compared to 2024. So also there within our expectations. I mean, as Christoph has mentioned, we will highlight already on those slides, on the individual slides, our expectation, our guidance for 2026.

Our expectation for 2026 is a growth -- a revenue growth of 3% to 5%, and this is important adjusted for currency translation effects. I mean it's the first time that we are guiding this way. Not only I know that I mean, we also saw, as I said earlier, EUR 99 million is quite a high number for '25, and we expect a similar number for '26. So that's why we believe it's only fair to take that out in our guidance or guide this way.

Moving on with EBITDA, EUR 602.3 million. I mean we are not so much into superlatives, but let's say, it's the highest number we have ever recognized. So we are proud on behalf of our team that we have achieved that. And you can see 12.2% growth. So absolute numbers growth compared to '24. And I mean speaking about margin, you can see the 10.6%, so 0.5 percentage point compared to 2024. And we are with that within our guidance of 10.2% to 10.8%. And yes, I'm sure you all have calculated Q4 which was an 11% margin. So versus a 10.3% Q4 2024.

And for 2026, I mean, the headline of our press release has stated it already. We continue growth both in top line but also in margin. So that's why our expectation, our guidance is 10.7% to 11.1% for 2026.

Moving on with EBT, very similar development to what I had said already for EBITDA. I mean, if we look at the absolute number, EUR 424.1 million,7.5% margin. And I already want to say it at this point, I'm sure a lot of you have calculated the difference between EBITDA and EBT, which is a little bit in terms of growth, lower. So I mean, we had higher depreciation in '25 and also the interest result was a little bit lower because we had special effects in '24. But I'm sure we'll come to that also later in the Q&A.

Personnel and material expense, yes. Starting with personnel cost, I mean, you can see that we have increased it by EUR 125 million, which is, I mean, that's logical because of the additional FTE, which we will see in one of the next slides, but also the overall cost increase in payroll per person in general. Important for us, and you know that we have highlighted that also throughout the calls in the fiscal year, 30.1%, so very close to our 30%, which is an orientation for us as payroll, personnel cost as a result of total performance.

Material costs, yes, very positive development, as we can see. I mean, overall, we only increased material cost by EUR 110 million. So -- and that brought us then also down to 47.8% material cost ratio, so well below all other years, which is just the result also of the good work of our purchasing team.

I already spoke about employees very shortly. I mean you can calculate it yourself. We have an increase by 962 coming to 21,339 employees. So what makes up the difference of the 962? 1/4 of it is service technicians. Then we have some, but that's not 3 digit. So mid-2-digit increase because of M&A. You remember, we have bought CSW. And the rest of the increase is across the globe, as I always say, and also across the functions, also with emphasis, of course, focus on digitalization and IT.

Important for us also is, I mean, looking at the ratio of the German workforce in total that is 55.0% compared to 55.5% last year. And also to mention, you can read it in the headline, 1,600 employees in the United States.

Now coming to the segments, yes, I mean, for Filling and Packaging Technology, the story is always very similar to Krones in total because it is the largest segment. So I mean, with our EUR 4.774 billion revenue, we had a growth of 7.2%, also here effected or impacted by FX. We have met the guidance 7% to 9%, which is important for us. And we also here had a very strong fourth quarter, EUR 1.294 billion revenue.

Looking at absolute EBITDA and margin, you can see EUR 517.8 million and a margin of 10.8%. So also here well within our guidance, which we had given of 10.5% to 11.0% and Q4 was 11.2%.

Speaking about guidance, yes, for 2026, we expect revenue growth by 2% to 4% adjusted for currency translation effects and an EBITDA margin of 11% to 11.5%.

Moving on to Process Technology. I mean, EUR 514 million revenue, it's a growth by 1.2%. Our guidance was 0% to 5%. So we have met our guidance here as well. Very slight currency translation effects, but as I said, not major.

Speaking or coming to EBITDA, you can see at EUR 52.9 million. So another positive development here. And also if we look at the margin, 10.3%. Our guidance was 9% to 10%. So a very positive development also because you know that on the growth side, we are lacking turnkey projects, but that on the other side is beneficial also for the margin. Speaking about guidance, same guidance as we had it for '25, 0% to 5%, a 9% to 10% EBITDA margin.

Intralogistics, EUR 376 million revenue, you can see EUR 44 million more than 2024, which is a growth by 13.2%. Adjusted for currency translation effects, it was 14.9%. So very, very close to our 15% to 20% guidance, which we had given.

Looking at EBITDA and margin, yes, also if we look longer term, a very positive development here. Overall, 31.6% as an absolute figure, but also 8.4% as the number, which is also a result. You remember that we had said on the CMD that we are having smaller projects, but also new products, which we brought into the market also then with higher margins. And for 2026, growth of 5% to 10% and EBITDA margin of 7.5% to 8.5%.

So far for our P&L. Now let's look into our balance sheet and everything which is related to that. I want to start with cash and liquidity. I mean you have seen it already on the first slide. We had a very good cash flow in the fourth quarter again and overall a very good cash flow of EUR 283 million, which brought us then to a cash of EUR 549 million, which was above our expectations. And with free credit lines and used ones, you can see the number, EUR 1.437 billion liquidity. So very solid to manage global economic volatility as also the headline states.

Now coming to the right side of the picture, I mean, you see that we have increased equity by EUR 206 million to EUR 2.128 billion. And the EUR 206 million, of course, is the result of EUR 299 million net income, paying out the dividends of EUR 82 million and then a small miscellaneous change brings us to the EUR 2.128 billion, and it's an increase by 11% compared to December '24. And because the total of assets liability only increased by 6%, we increased our ratio to 42.2%.

Yes. And of course, I mean, good cash flow, very good cash flow is reflected in stable working capital development, 17.3%. So very much in line with what we had last year, so '24 below our 20% or also 18%, which we have as a hallmark also for the future. And then looking where it comes from, I mean, received prepayments, you see that with 15.6%, this is 2 percentage points lower than we had at end of '24. But if we look at the overall number, it is still about EUR 900 million as we had it also '24.

Now looking at inventory, also stable here as an absolute number. And that's why also the ratio decreased slightly to 12.5%, EUR 700 million approximately is the absolute number. And now accounts payable, yes, 15.5%. So on the level as we had at '24. And here, we had an increase in the absolute number, which, of course, then leads to a stable ratio.

Receivables, contract assets as last number, a slight decrease, 1 percentage point. If I look at the overall number, also slight decrease -- a slight increase, close to EUR 2 billion we are here now. And if I look at the total working capital, you don't see that number on the slide, EUR 80 million increase.

But we see that number on the next slide as change in working capital. But let's start, first of all, with free cash flow in general. We have mentioned that already a few times throughout this call, EUR 282.9 million. So above our expectations because we had a very strong fourth quarter again as we have it usually.

And if we look where does it come from or where does the free cash flow before M&A come from, of course, first of all, earnings development, other noncash changes, which is mainly depreciation and then change in working capital, I already mentioned. Other assets and liabilities, the major or the bulk in that is tax payments, EUR 111 million, so income tax payments. And some of you may wonder why that is so much higher than it was in '24. '24, we had some consolidation effects from Netstal included. So that's why it's not 100% comparable.

So cash flow from operating activities, very solid, very good with EUR 446 million. And CapEx, EUR 185 million, so 3.3% so slightly below our 4% and then other, which is smaller things, bringing us to our free cash flow without M&A. M&A activities in 2025, you remember Q3 CSW acquisition, that was the largest in here. And then financing activities, other, that is mainly the payout of the dividend of EUR 82 million and then some lease payments. And then you can read it yourself, change in cash, bringing us to our cash of EUR 550 million.

Free cash flow as an overview over many years and also then slightly shown what our expectation for '26, yes, we're always a little bit more cautious. Yes, Christoph is smiling because it's always a kind of discussion on how high is the bar. I'm sure that some of you will also measure the bar and have a number there. But what is our message here? Our message is here, we also expect for '26 a solid and a good free cash flow. That's our message.

And last but not least, for 2026 -- 2025, of course, ROCE 19.1%, yes, it's logical. EBT increased by 13%. Average capital employed increased only by 8%. So that's why our ROCE increased by 0.9 percentage points to 19.1%. And also to give you the absolute numbers, EBT EUR [ 470 ] million and average capital employed close to EUR 2.2 billion.

Yes. So far for the actuals. And now let's just summarize one more time the outlook for 2026. I mean I have mentioned all those numbers already throughout the call, but already -- one more time here as a summary, 3% to 5% revenue growth. Important is the asterisk, adjusted for currency translation effects, EBITDA margin, 10.7% to 11.1% and ROCE, 19% to 20%.

And of course, we have the usual disclaimers. And actually, we have added here also reliability of forecasting revenue is impacted because of the volatility of exchange rate. But that's why we have adjusted it in the revenue growth guidance.

And for the segments, also here, the summary one more time. I have mentioned all of them already throughout my presentation. So that's why I will not read them out one more time. And that is everything from my side for the presentation.

Yes. All right. So let's have -- so let's have a look on the midterm targets. And since we have this morning several interviews with newspapers and journalists, I thought I should give a bit more of a taste on it because if you look to the planned revenue in 2026, you might ask the question, is that target still valid? And I can say it's still valid. And I just want to give some highlights on that.

First of all, as we say that always here, we are not talking only with our customers about their 1-year investments. We are even talking about their 3 years investments and how markets might develop into the future. No security on that, but at least we have a pretty good understanding about possible investments in the different regions. So that's one thing. And the investment cases are pretty robust. I mean that you see when you see what, let me say, hurdles we had in the world economy, in the geopolitics in 2025 and still the order intake was good.

Then we have our basic growth drivers intact. I don't want to repeat them in detail, is growth of world population, particularly in Asia and Africa and Middle East. It's definitely escaping from poverty in many areas of the world of the people. Then it's in the mature economics. It's definitely product varieties and differentiation. So that helps us a lot for new lines and it's cost pressure of our customers because new lines will simply have a better cost structure than old lines.

Then there is, of course, our new factories coming up in China and in India. That has -- if we say new factories, that has to do we can actually better compete with local competition. We are still, for example, in China, the #1 in terms of revenue, but we have, let me say, growing competition, and we need to get on the price levels of our Chinese competitors where we can get really close to and have a bigger scale of, let me say, equipment being built in China. Same is true for India. So on those 2 factories, we have hope and they have to deliver contribution of it.

And then the most important one is innovation. And if you look to what you have seen on Drinktec, there is this new line type, but it's not, let me say, a machine or a line because of it's a new line. It's about getting more share of the life cycle revenue of our customers. Of course, we are going to take more responsibility. But if you look to the utilization of our installed base, that is a significant proportion on the growth we have. So if you look to all of that, that's quite a big proportion, which is coming along.

I have to add, we all the time had some acquisitions being built in. They are, let me say, on reasonable scale, EUR 30 million to EUR 70 million. That's the ideal sweet spot for us in the sense we do acquisitions, so that might be not overweighted into what we are going to see until 2028. But nevertheless, it's part of it. And then there is one other big thing Uta referred to that already. That's the FX because if we look to that, and if we would see the FX effects in 2025 and 2026, we are close to EUR 6 billion with the guidance in sales with the guidance we have given for 2026.

So if you look to all of those factors, I think this is a reasonable number. And if we see then around EUR 7 billion being possible in terms of revenue, that will be a, let me say, a reasonable number from our point of view. Certainly, for the time being, with the FX effects more difficult to achieve. But nevertheless, I would say, for the time being, we have no reason to see that our fundamental underlying, let me say, factors out of the markets would not work. That's the statement I wanted to do here and to express that very clearly.

So I would say with that, we are through our presentation. I mean, key takeaways that's a summary of the presentation. I wouldn't say that we are going to refer that once again. I would move directly on to Q&A. Thanks for listening.

So thanks to Uta. Thanks to Christoph for these information about the actual figures and the outlook.

I already got on my list Adrian Pehl from ODDO with some questions.

So actually, first of all, a question on what you mentioned in terms of the dynamics in China. I just want to make sure to get that right. So basically, the development that we saw throughout 2025, is that rather a function of the investment cycle of Chinese customers? Or would you say that you have been losing share? I mean I hear you that the situation on the order book side is improving. But how do you see your market position going forward in China?

And the second question is linked to a little bit the slide, obviously, that you showed on the free cash flow development. I just want to make sure on the CapEx side of things, what should we expect for 2026? And how is the phasing of the CapEx given that you are ramping up your capacity throughout the years? I'll start with these 2 and then I jump back into the queue.

First to where we are in China and how -- if we look closer to the market, how do we have to see the market there? I mean, first of all, to give general questions of the Chinese market is very difficult because you need to see it different in the different, let me say, beverage categories. And we have to see it, of course, different in the, let me say, various products we have in the Chinese market. So it's a different route.

But if I look into channel, I would say China has had over the last 5 years, a bit up and down. So we have been on a higher investment level than it has been a bit going down. It has been a bit going up. But if we look to a long run, it's pretty stable. And I would say the investment patterns of our customers is on a very comparable level.

Now if you look to the future, I mean, China is right now in terms of investments dominated by aseptic bottling lines. The Chinese market has some specialties. And if I look back the last, Krones had a bit of a shortcoming because we didn't have aseptic lines localized. What we deliver out of China is PT lines for water and CSD, which was working well and everything included. So from, let me say, the end -- from the beginning to the end. And now the next step, and this is becoming true in 2026 are aseptic lines out of China because the market is significantly growing.

Historically, we have been the biggest supplier of aseptic lines over the last 20 years in the Chinese market. We have around 250 systems installed in the market. Then it has been going down a bit and then it has been going up. And we have a disadvantage of what I just said, no local production, but this is coming up right now. So I would say, if I look to the future, there's a better fundamental on which we sit in terms of the local supply, we can supply out of the market. And we have strengthened our technical, let me say, ability in China in addition. So I would say there is a good potential for the future.

And second, we have been working on the other side of the product portfolio that we get a bit of, let me say, more simple products out of the Chinese operation to serve -- to begin -- I mean really to say to beginning to serve the market better.

Now if you look to the order, let me say, behavior of our customers, this is a quite competitive market. And then I would say this is changing because we have seen customers being good 5 years ago, they have lost really market shares and others have taken them. Fortunately, because of the long term, we are already serving the Chinese market and a good customer relationship, we don't care too much which customer is at the moment investing or not because we have access to all of them. And we have a specific program in place to get customers on board, which we didn't know yet because they are new customers.

And we are having a team observing the local competition in detail just to understand what we need to do in order to get with certain customers an order, which is not all the time only the product. It has a lot to do with the services we supply around the product. I hope that gives you a taste where we are in China.

I take the CapEx question?

Yes.

Adrian, it is what we have communicated also throughout the conferences. We stick to our 4%. That's also the bottom-up plan we have. And I mean, we have mentioned all the investment cases, but projects we are currently undergoing. Christoph talked about the strategic importance of India, but also of China. We spoke about the U.S. that's where money goes into when it comes to CapEx, but also here in Germany, I mean, investing into a new warehouse here at our headquarters, but also investing more automation into our machining facility close by. So those are the big tickets, and they end up at 4% as we had planned it all the time.

So thanks to Adrian. The next question, I just see a phone number starting with 44. I don't know.

Somebody from the U.K. that's obvious.

That must be U.K. number, yes. It's a U.K. number and then next is 7407. But let me skip to the next one, which is [ Vitor Shen from Iberbell ].

So just regarding the outlook provided, I was just wondering of the composition of it. I mean, is it possible to split it a bit? I understand that it's communicated in local currency. And thereby, can you elaborate a bit more on how much, I would say, it could come from pricing and how much from volumes? And also if M&A is [ loosely ] part of the strategy for 2026 as well, if you could get some color on that?

And the next question will be on the EBITDA margin. So you're enhancing them. And is it possible to elaborate a bit more regarding the drivers implying the improvements, notably the cost optimization measures? I have seen in the presentation that personnel expenses were increasing relative to total performance, while material expenses were decreasing. So can you please shed some light on this as well? I mean is this trend going to be the same for the coming year or not?

So if you look to the, let me say, a more detailed split of the 2026 perspective we give. I mean, number one, we do not see significant changes on, let me say, the markets we are going to serve, okay? So I would say the composition will be pretty much the same. And that's the reason why we see -- once we see currency on the same levels as of today and the changes that currency impact, and that's what we're actually stating might then be very comparable.

If you look to the composition of, let me say, our segments, even this composition will be pretty much the same. I mean, with the growth of what we have said, this will be pretty easy to calculate.

If you look now to our main segment in terms of machines and services, which we do not separate there, even there, the composition will be the same. There might be small gainings in terms of the life cycle because that's important for us, but that's the beginning, it will be pretty small. So I would say even this composition will be pretty much the same.

And if you look to pricing, there is very little in terms of pricing included. We keep prices stable. And even in those areas where we had historically, I would say, better and fast price adjustments, which is the spare part and life cycle business, even there, prices are pretty stable because customers do not accept that we are raising pricing for the time being. I mean we are fighting -- and I said it in the beginning, we pay a strong attention that pricing is not eroding. That's our target. But if you look to sales in total, there's no pricing effects being included.

So I hope that gives you for, let me say, this category a point. And if you look to the strategy to 2026, I mean, if you look to the overall situation, we have been, let me say, driving the company significantly by growth in a pretty large scale over the last 4 years. Yes, that's a bit less than in the past. But if you look to 2026, we have big initiatives in the markets that we go more in specific cases of the market that we strengthen, for example, namely processing that we say we have -- we are going to attack certain markets stronger. We have for categories of processing, different sales forces being in place, which are coming just to make sure that we maintain the growth.

Same is true for Intralogistics. And if we look to our core business, it's about what I said that in 2026, the factories in China and in India are going to be started up. That's an important factor to serve the markets closer. And of course, as always, we are building stronger footprint into life cycle around the globe just to make sure that we are going to harvest on the installed machine base and getting more share in the service section. I would say that's my summary. Okay. Thanks. Uta?

I wouldn't have said it as such.

Good. M&A is something which we certainly look into, which might be as well part of it. Did I read it right, what you said? Yes. Good. Then we go to the...

Then let's go -- let's look at margin expansion. I mean, 10.7% to 11.1%. Actually, it's compounded by various developments. First of all, let's look at payroll. I mean I mentioned earlier staying around 30% is important for us. I mean, despite of staying at around 30%, we expect as an absolute number, an increase in payroll just because of, for instance, collective bargaining agreements, which is around, but it's just an approximate number, 3%.

Then on the other hand, and I have communicated that also throughout our conferences, we expect decrease in material cost. And why are we certain that we can achieve that? Because already last year, so 2025 in summer, we have actually closed quite some deals in terms of securing steel, for instance. And we are not only securing that for us, Krones, but we have also secured it for some of our suppliers, which then gives us a leverage also on some of the supplies we get. So that is important, and we have also hedged copper. So that's the 2 major components of our cost base.

Then I mean, we will not have a Drinktec in 2026, which also has a certain effect. I mean you know it was around, but it's just an approximate number, EUR 10 million last year to EUR 25 million. So we will not have that high amount in 2026. And as a fourth lever, we will have only a moderate increase in FTE in 2026 compared to 2025, so very moderate. And then last but not least, we have always talked about the strategic measures we are executing to secure our margin, to secure our performance. And we have spoken earlier about CapEx. I mean, I have spoken about our machining plant. And there, we are increasing the level of automation, which helps us also then to increase operational efficiency, just to name 5 reasons why we -- or 5 portions why we believe that the EBITDA can increase as a margin. Does that answer your...

The next question is coming from Lars Vom-Cleff from Deutsche Bank.

Two quick ones, but I guess the first one you already answered. I mean, looking at your organic growth guidance for this year, 3% to 5%, if I understood you correctly, you said pricing is stable, so that it will be fully and solely driven by volume effects, correct?

Yes, correct.

Perfect. And then, I mean, more and more of my companies are worried or starting to get worried about chip prices rocketing, potential supply chain bottlenecks. Would you see that as a risk for your company as well? And if chip prices stay on this extremely or far elevated levels they are currently or some of them are currently trading on, would you be able to pass on the additional costs to your customers?

First of all, I would say we, as a management, and this is maybe one of the learnings out of the last 5 years that you worry all the time about your supply chain. But nevertheless, I would say we see no hurdles at the time being that we are not capable of, let me say, getting those components on board, which we need for our production.

And out of this learning from the last 5 years, we have a totally different view on supply chains because we -- our arrangements would have said it earlier that we are going to hedge material and making these on a much longer period than we have been doing that in the past. We have included our suppliers, and this is even to the chip question, even for all the suppliers because we don't buy any chip direct. So if we buy chips, they are either in the PLCs, which we get delivered from Siemens and others or in other electrical components, which we get supplied again from Siemens, from B&R and so on. But what we have is, we are sitting with them and to look deeper into their supply chain.

And I would say the fact that we have been all the time concerned that the Taiwan and Chinese issue might come up that we have secured supply chains in, let me say, different quantities and different time periods than we have been doing that in the past. And this will help us over a pretty long period if things go south that we can: a, maintain pricing and; b, can maintain supply. I don't want to go more in detail into what we have done there, but it's at least beyond one business year. That's the important message we sent here.

Second, this is another learning once pricing of certain components goes out of the frame, like chip pricing would go up. And we can explain that to our customers. We have gained significant experience in translating material cost increases once they are reasonable and can be not compensated by other sectors of material costs that we can translate that into pricing.

This is still, let me say, a procedure. We do every 6 weeks, controlling procurement and sales. Is there anything which we need to translate because that was one of the learnings out of the, let me say, supply chain crisis. Once we look early into that and address it early, we can manage even, let me say, significant price changes in the supply chain reasonably. So I hope this gives you a taste on how we are going to manage that. And I wouldn't say that we are fully protected to all of this because we all know that the prices might come up. But at least we have prepared in a reasonable manner for such kind of incidents which might happen.

Christoph Blieffert from BNP.

Can you give us some idea about the revenue contribution for the new Chinese and Indian factory, please in '26?

Very simple, India will be very low because these are actually most probably for the time being, what we see today, 2 lines, which are built in India and being then shipped to customers. So if you look to the overall revenue, it's small. It's more for, let me say, if we look to order intake in India and the agreements we are going to do with our customers, and this will actually pay off 2027 and 2028.

For China, I mean, today, we are doing a low 3-digit number revenue in China locally. And I would say this is going to be [ extended ] by 10% to 20% in 2026. Why is that? Because the factory goes into operation by July. And I would say, until we have it in really full speed, it will be October. But nevertheless, we are doubling the capabilities in China for 2027. And this is what I said earlier that we are even going to localize our aseptic business there, which is a significant proportion, which can even add then another, let me say, 50% to what we are going to do in China.

So it will be quite a significant proportion. I think there will be a chance in one of the next meetings to show you some slides how this looks like. This is a factory, which is really big. And at the end, we are talking about increasing our headcount in China until mid-2027 from today, roughly 1,000 to 1,500.

But small in 2026.

Small in 2026. Yes.

You have been highlighting the negative FX impact of again, some EUR 99 million in '26. This is based on the current exchange rate levels?

So the EUR 99 million is '25. That's what we have highlighted. And this was just the difference between the average exchange rates '24 to '25. So translated them with the same exchange rates. And actually, most of it comes from the U.S. dollar, about half of a significant portion. And '26, yes, we expect a similar level. Does that answer your question?

Similar level means again [indiscernible] close to EUR 100 million? Yes?

Like we had it in '25, yes, around EUR 100 million.

And if the exchange rate remain on the current level, would you have to adjust your 2028 targets?

That's a good question because we can answer that when we know how the exchange rate will remain, let me say, later than 2026. But I told you earlier, I mean, we are keeping this target of around EUR 7 million in place, okay? And how much we might be short because of FX effects, I can't tell you today.

We always the statement, we believe in the growth of our market. There are potentials which we can actually lift ourselves. It's not only market related. And since I have been explaining that, we would not make the statement at all that we are, for the time being, skip any of those targets.

I mean there are many unpredictable things in front of us, but we have seen that world economy is for us, in our market is quite stable. And we believe we have talked that up and down. We still believe in that target, and we stay with that even with the FX effects in place for the time being.

And please allow me that do not take the notions in for the time being. I have to be really careful because there any word is interpretated. So we stay with the targets of around EUR 7 billion in 2028. That's important.

Now we identified the number from U.K., Constantin Hesse from Jefferies.

Yes. Sorry, I had some issues with Teams. All right. So I have 3 questions. I would love to start with the medium-term guidance, one. So I already heard that on the call, you talked about order intake in Q1 looking good. So what I want to understand for '26 because clearly, there has to be some kind of growth cadence into that about EUR 7 billion figure in '28, meaning that order intake clearly has to be above 1x book-to-bill this year. So what I want to understand is what visibility? And are you actually seeing a pick up in order intake where you could today already give confidence that '27, we could see an accelerated growth relative to what we're seeing currently, obviously, assuming no further FX headwinds?

Well, visibility is certainly not up to 2027. I mean visibility, if I might explain that, how we -- what kind of visibility we have and how we deal with that. We have 3 measures: number one, discussion with our customers to understand those our own analytics. That's one package, why we actually look into the markets and how we think that we see investments coming. Then second, we have the more short-term view, which might go, let me say, until end Q2, beginning of Q3. And this is how many quotes we have out and how the pipeline looks like.

And saying that this includes as well that we look into how much is the lost order rate we have because it's important, is there enough volume in the market and we are losing because of other reasons? Or is the market, let me say, as such not intact? But what I can say as of today, and this was true even for 2025, volume is not an issue. If my sales colleague would stay here, would say, Christoph volume is no issue at all, just pricing is a problem. But this is my second statement. We want to maintain pricing. So this is all the time a bit of a, let me say, a different balance we need to keep.

And number three, short term, why I say Q1 is okay, we are mid of February. We know the orders we have already on hand. We know what is out there, and we know what we usually gain or lose. So I think this is something where we are usually pretty good in predicting that. But 2027 is staying significantly on the measures we have in our own hand. What I said earlier, the factories we are going to build, the innovations we see, the life cycle we want to extend, the processing where we see big potentials in the market that we can grow further and even Intralogistics, which has been doing great for us, where we can grow on.

And we have then, let me say, Netstal, what we call advanced molding technology, where we see options and some smaller, let me say, growth areas where we are going to grow. So if we put it only on what we know from the market, this would be not enough for us to see really the case. And yes, order intake, of course, has significantly increased in 2027. That's no doubt about. And this is something we have in mind once we look into the statements we have just given.

Fair enough on '27. But then just rephrasing the question, keep it simple, Q1, Q2, Q3, which is what you have visibility on, you're confident that book-to-bill is above 1?

As confident as you can be with all the history and, let me say, the know-how we have. We have not yet the orders for Q2 and Q3 in our hand. But again, pipeline is good. We have been, I would say, any week in discussion, is that sound what we have planned to? Do we -- can we stick to it? Is there other reasons why it should not work? But from all what we know, things are looking pretty good for the time being.

I promise I wouldn't give too long being in the business because we all know that Iraq, Iran -- sorry, Iran and the Middle East is, let me say, under pressure for the time being for us, an important market. I would predict that there is a reasonable reason -- or let me say, it's reasonable that there will be a strike, which would be then serious for our business. So that might be some of the downside. But if things could go normal, yes, I'm quite confident that we are going to get our order intake.

So second question, just on cash levels. We're reaching close to EUR 550 million in net cash. So I'm wondering, is there -- in terms of M&A pipeline, is there anything potential coming up that could be larger? And if not, at what level of cash would you start considering returning cash to shareholders?

First of all, I mean, we have proven over the period that we have been using the cash for possible M&As. And I would say, on the other side, we are very careful in terms of our cash positions because we all know that this is something very comfortable once you have it in particular on times get a bit more shaky. But I can say we are -- how to say, we are working on M&A projects. However, we do speak only in case they are just before becoming true. So these are things which might come up.

And we have -- sorry, when I say that not yet considered to pay extra dividend to our shareholders because we believe the reinvestment in the company is going to happen. We see things which could be done in the market in terms of M&A, and let's see how this continues through 2026 and 2027. So I don't think we come into the question whether we have to use our -- or we have to give our cash to pay it out to the shareholders.

Yes. And also with the profitable growth, we believe our forecast shows that the payout ratio or payout per dividend is going to increase. So that is the lever where we believe that this is beneficial for our shareholders as well.

And then just curious around the free cash flow development. I mean, you said that you're being conservative for 2025 -- 2026, sorry. But just to understand the dynamics of it because from today's perspective, I mean, because you basically confirm the '28 guidance, I would assume that orders start accelerating in '26 in order to have the book to grow in '27. So looking at the free cash flow development, what is holding you back from generating a free cash flow that is similar or even above 2025?

I mean, yes, we're going to invest further 4% of revenue. That's also what we plan for 2026 and also the years beyond. I mean for working capital, I mentioned earlier, a level of about 18%, which is an absolute increase also for 2026. Of course, we're going to generate good levels of cash flow from operating activities. And so we expect a good level.

And why is it in our expectation lower than it is for 2025? I mean, you may remember that for 2025, our expectation actually was a bit lower as well. So that means we have generated more cash flow. And I mean you can cash flow only generate once. So there's maybe also some effect -- some small effect from '26. But overall, we expect a very good cash flow development for '26 as well. Some, as my colleague may say, also conservatism in here, but we believe it's going to be a good one as well. And we don't guide it. I mean it's, of course, indirect part of our ROCE guidance, but the free cash flow, we don't guide. We just give an indication on the expected development.

Christoph, can I quickly just -- Christoph, can I just ask very quickly? You said Iran, obviously, is an important part of the business. If there is potentially a strike there, is there any -- what's -- I mean, any idea that you could give us in terms of what the potential impact could be?

First of all, when I look to Iran, I mean, I'm looking more to the countries, let me say, aside from Iran, like Saudi Arabia and Israel. So I do not talk about Iran. That's from a business perspective, not important. So I was more looking to the uncertainty which brings that to the region because if you look to our Israelian and Saudi Arabian friends and customers, I mean, if such a strike would go to happen, they are concerned whether their countries would be attacked. That's the reason behind it.

And I would say our customers are in this region quite robust to whatever weaponized conflict they are going to see. Nevertheless, a bit of an uncertainty might be if, let me say, such a counter-attack of Iran might jeopardize those areas. And I would say it's limited to those being around Iran. And -- but if I really can figure out what the impact would be, I can't tell you. I would take it around. I mean, if you look too, we have digested a 10% decrease in order intake in North America because of the tariffs. And we have been able to compensate that in other areas.

And I would see that other, let me say, areas of the world, and I would name Asia in particular, have a big potential for 2026. And again, I wouldn't promise it, but I would see potentials to compensate in other areas as well. And that's the reason why we still stay pretty sound on our statement, book-to-bill ratio will be slightly above 1.

And the next questions come from Sven Weier from UBS.

I'm sorry, I have to follow up on the revenue guidance, and I'm probably the only person on the call who hasn't understood it yet. But the 3% to 5% guidance that you give, is that already after the EUR 99 million? Or do we have to deduct it so the real guidance is 1% to 3%?

So first of all, the EUR 99 million is '25, but I said it's a similar number for '26 and the 3.5% is not after the EUR 100 million, the similar number, you have to deduct it.

Okay. Good. That's what I thought, but I just wanted to confirm that. And then the other question also on currency because you said U.S. is down 10%. I mean, is that an organic figure? Or is that including the negative currency effect? Because otherwise, I guess, you would be kind of...

Yes, yes, including. Including. Including.

So organically, you've been actually quite flat in the U.S. despite all the trouble?

No, it's half-half. It's half-half. It's half-half. If you look to the numbers on order intake, what I just said, I would say a bigger proportion is tariffs, but it's certainly a proportion is currency. Yes. But nevertheless, this is not -- you have to look into -- currency is an order intake, not so big issue. It's just a translation effect, which we usually have once we translate P&Ls from the U.S. into Germany. Because on the orders, we are dealing with the numbers we have in the quotes, very simple.

And we don't translate them because if we quote bottling lines to the U.S., we have here a euro quote, so if we count. We have not the U.S. count. Once we quote out of the U.S., of course, it's U.S., and we do not translate that at all. It's just a number we see. So order intake has not so a big effect of FX than actually the sales because we don't have the, let me say, exact translation.

And final question for me is just if you could share what kind of beer exposures do you still have left? I mean we all can obviously see...

That's a good question.

The issues that the beer makers have and it doesn't seem to keep getting better, the generational issue, I guess. So has it become quite small already? Or what's left in beer?

First of all, I have to say, complement how you phrased the question in the sense of what beer percentage we have left and beer exposure. This is really good. 2025 was really bad on it. If you look to it, I think it would have been around 20%, maybe beyond -- below that. But interestingly, we have received this year quite good orders from the beverage -- from the beer industry. So I would -- if you look to purely Q1, this would be on old levels, maybe between 25% and 30%. But all in all, we do expect that beer is, I would say, on a 22% to 25% level in our portfolio.

And it's still decreasing since Intralogistics is growing, and we have been actually in processing, not growing at all in the beer that has become a pretty small business in the processing. I would say -- and I can say the number that's pretty easy. We have around EUR 120 million in the processing business being exposed to beer, not more anymore. Where we are coming from, I would say, EUR 300 million. So that has been compensated all by other, let me say, activities outside of beer. And in the core, I would say it's pretty stable because bottling lines are more replaced than brewhouses.

And what is the nature of the order that you got? I'm just curious, I mean, if these guys invest, what are they still investing? Is this an emerging markets order or developed markets?

To be honest, it's all over the place. So we have orders from Europe where we have very old equipment being replaced from well-known breweries, but it's as well in Asia, where we have received orders, and there is still some orders out there in Southeast -- in South America, where we believe those orders are going to materialize in the next 3 months as well. So it's all over the place.

And I have to say maybe that's interesting for you in the audience that in particular, the German brewers have been quite active in ordering equipment and getting on better cost levels. So I would say they have been -- had a lot of courage into what they are going to do. So in particular, in Germany, investments in breweries have been pretty good in 2025. And the same looks like for 2026, even if you look to the market development, which is not so good all over the globe, it's, I would say, a lot of hesitation for investments into breweries.

And is that around also a lot of energy efficiency and those environmental topics, let's say?

I would say it's more economical reasons that they, in many cases, bring 2 lines down to 1 with higher speeds, higher efficiency, getting better, let me say, economics because they have less people in. That's more the investment scheme we see right now. And there is still some very old equipment out there in case you look to bottle washers, which have, in their case, they are 25 years old. They have a significant amount of energy consumption where they just because of energy reasons, go to reduce that energy consumption of pasteurizers; if they are old, they are horrible in terms of what they consume in water and heating.

And a little question, I think I see from Adrian, Adrian Pehl.

Actually, a very quick one on Intralogistics. Obviously, I mean, you want to grow the business still quite substantially. So you achieved 8.4% margin in this segment last year. So I was wondering why should we assume that the margin is not going to see more momentum on this one? Is that due to mix? Or how should we see this?

Yes. I mean Intralogistics from a, let me say, profitability standpoint, let me say, and I would call it commodities, which I call hybrid warehouses has been over the years under pressure. And what we did and this we stated as well on our Capital Market is that we looking into, let me say, more advanced order picking systems and that we have moved, let me say, the portfolio significantly. Then we have, let me say, a momentum that we are exploring new markets in Asia, while we have on the other side, the mature markets in the U.S. But I would say, if we look in comparison with, let me say, comparable product portfolio structures, we are doing pretty well in terms of the profitability. And we wouldn't see Intralogistics necessarily being in the short run on the same profit levels than we see the core. That's a fact. And I wouldn't say anything wrong in case I would make the statement that's going immediately in the right direction.

So I would say the profitability we see we are quite happy with. It was quite an effort to be there. And I would say we can grow certainly further because and this adds on the margin because even our service business is growing, and this is not parts in this particular point. This is more software upgrades and helping people -- customers out with crews running their installation. So there's a different business model. Again, if we grow an installed base, I think we have a better chance in grabbing the aftermarket business, which is highly profitable in that section. And in the long run, I see a good development in terms of profitability as well, but it will be not in the short term.

All right. And very last follow-up, actually on the service share in general for the group. I take it that actually the service share increase is probably more pronounced as of 2027 as well and more or less like -- I think the line of communication so far has been 2025, 2026 rather not a significant increase on the service side. Is that correct?

Yes. I mean if we talk about significant, it's a question of what is significant, but we are growing our service business. So it's still growing. It has a very solid fundament. And if we look to the first 2 months, things are in line. Is it, let me say, that you see a huge momentum in sales? No, it's a kind of a very constant development. And we would see that even over the period of 2027, 2028. In life cycle, there is no, let me say, big jump. It's more an evolution rather than really an explosion what you might see. Even with the new lines we bring up, I mean, we are going to ship 8 of those by the end of the year, beginning of next year, which we are harvesting on. But if it's really completely having scale, and we stated that all the time, it will be 2027 to 2028.

So let me check the channels or ask a [ community side ]. I don't see no hand raising, also no mails from my mail server, so Christoph [indiscernible].

Again, thank you very much. We are beginning of the year. As always, there is, let me say, a realistic optimism. We see and you have heard from the statements we have made. We are, I would say, as we have been always quite committed to the numbers we have given. A lot can happen, of course. But nevertheless, we managed that and compensated that with the markets we have. So we are looking with realistic optimism forward and even looking to listen to our 2028 numbers. Thanks a lot for staying with us and having your questions. It was a pleasure, as always. Thank you.

Thank you very much.

Thank you.

It's 1:00. So good afternoon, and a warm welcome from my side. My name is Olaf Scholz, Head of Investor Relations here at Krones. In a challenging macroeconomic environment with global uncertainties, we have confirmed today our financial targets for 2025. And Krones has also continued its profitable growth path.

Today, Christoph Klenk and Uta Anders will give you more details about these figures and will give you also additional information. After the presentation, you will have the opportunity to ask questions. I think you also know how the Q&A session will work. So please use -- raise your hand in Teams or send me a short e-mail, and then I will hand over to you.

Additionally, be reminded that this meeting will not be recorded, and it is also not allowed to record the meeting. Please also deactivate any functions of recording at Teams. So after these words in the beginning, I want to hand over to Christoph Klenk, CEO, to start the presentation. Christoph, the floor is yours.

Olaf, thanks a lot. Yes, warm welcome on behalf of Uta and myself to today's conference call for Q3. So happy to have you. And I would like to start off with the statement. We are quite happy where we are, quite satisfied. And now we are running you quite briefly through the numbers, which you know already, and then we are looking forward to the Q&A session, which we are going to have.

I would like to start off with drinktec once again, and most of you have been joining drinktec and have seen what we have stated there. Nevertheless, I just wanted to do a short summary on drinktec. I mean for us, it was really an outstanding show. And this morning in the U.S. said, I would say this drinktec has maybe remarked a milestone of Krones because for the first time, as we showed to you, we have shown that we are combining our lines through digitalization with our life cycle services, enabling a new business model. And I would say we all know how long it took in the industry, not only in ours that such models are becoming true. And we are quite happy that we have been moving through, let me say, those challenging times and exercise to get where we are.

Nevertheless, and this statement we made already on drinktec as well, there's a long way to go to convert, let me say, the organization, our people, our customers and the technology to a level that we can really harvest on. Nevertheless, it's generating a further gap in terms of our, let me say, innovation level to maybe our competitors. So we are well positioned. On the other side, drinktec was again a great spot to talk to our customers, which is important when we come later on to Q&A in the sense of where are the markets, what is going to be 2026 in terms of the outlook, what our customers think.

And last but not least, I mean, you get a good impression with all the competition. We have the luxury that most of them are showing up on our booth as well, and we have a chance even to talk to them, of course, on a legal basis as always. But nevertheless, you get quite a good feeling where they are. And in particular, for us, it was important to look at our Chinese competition to understand them. And despite that, we have good research in China that we had a chance to look on their latest developments, which you not obviously see in the market. So drinktec was all in all, for us, a very good thing. And we -- even with the good feedback we got, we stay humble on where we are because we believe only if we judge the future right and be down to earth, we can actually drive things forward.

So with that statement, I jump into the presentation. And as always, I flip over this chart because I don't want to go in details. We go through everything. You are aware of where we are after 9 months jumping over that as well and coming to the order intake. I mean, this is -- I was joking this morning. I mean, we were all the time saying order intake should be book-to-bill ratio and compared to sales around 1. So we have a deviation. I think when I have it right in mind of EUR 4 million, it couldn't be better. And it's not organized. I have to say it's just the numbers we got out of the system. So we are quite happy, I can say order intake went well in Q3 as expected and as predicted. So we are really happy where we are with that.

And you see the comparison to Q2, you see the comparison to Q3 last year, and you see the overall comparison. I think if you look to all categories, we are fine with where we are. And it's once again the proof of our statement, our markets are robust. Pipeline is full. Yes, we have some hesitation in the market for decisions because there are more projects out than what we have as order intake. But nevertheless, I would say this is fundamentally absolute sound and okay.

Coming to the order backlog, no changes into that, which is good and bad to some extent. I mean, good for the visibility we have in terms of how can we use our capacities for the coming year. So that looks good. I mean we made that statement that we are set for -- up in the third quarter. This is true in particular for our main business, bottling and packaging. Intralogistics looks a bit better as the order backlog even is actually covering the full year 2026. And I would say processing is on the same level as we see it here with the bottling and packaging equipment mainly.

So we are very well set for next year and important for us, delivery times were going back. We had a target to be between 40 and 45 weeks for 2025, and we are, for the time being at 45 weeks. We have some slots where we could deliver faster. We organized that on purpose just to make sure that we are not losing orders because of short delivery times. But all in all, that pays off quite well.

Nevertheless, we have -- even here, we offer good financial stability for next year with this order backlog even with the challenging environment we have all over the place. Bringing us to how does the split look like for, let me say, our international revenue. And even compared to the last conference calls, we had no surprises here. I would say everything is developing in the right direction. You might wonder about the strong back going down to 21% in the U.S. But again, that has to do with growth of other markets. If you look to Europe, that went quite well. So let me say, in absolute terms, it's not as bad as it looks here. So absolute terms are okay for North America and Central America. And of course, Europe has caught up and that was pretty necessary.

Remarkable is, from our point of view, Middle East, Africa because we had just the Gulf exhibition where we had a lot of discussions and very positive discussions. So order activities in Africa, Middle East is really good and high. On the other side, it's explainable because they have been the last continent moving out of COVID-19. So I would say that's a logical consequence. All the rest, I would say, is not so much to comment. China looks critical when you look to -- we are going back by 1.5%. But again, that has to do with other markets growing. They have been in absolute terms on a stable level, and we see that order activities by the end of the year in China looks good as well. So not more, not less. I think all the rest, if you have questions to the market, we can do later on in the Q&A. And with that, I hand over to Uta.

Thank you very much, Christoph. Yes, moving on with revenue development. I mean, starting with Q3, I mean, as you can read, EUR 1.381 billion, which is a 4.7% growth quarter-over-quarter. Let me comment here at this point already about FX. I mean, up to Q2, we didn't pay -- not pay. That would be wrong. We didn't focus too much in our communication on FX because actually up to Q2, it wasn't that material. In the third quarter, we saw first more significant effects, in particular, coming from the U.S. dollar. And year-to-date, we have approximately EUR 60 million translation difference from U.S. dollar, Brazilian real, Mexican peso and Chinese renminbi being the major ones. Coming back to Q3, taking this out, we would have been also within our guidance.

Coming to the fiscal year, year-to-date, EUR 4.107 billion, you see 6% growth. Without the FX effects, we would have been at a little bit more than 7%. I want to comment also on Netstal. I mean, as you know, in 2024, they had only been included for 2 quarters, whereas now they are included for the full fiscal year. So on quarter 3, no effect on the growth itself of 2025, a little effect. But as you know, we had included Netstal also in our guidance, 7% to 9%.

Coming to our guidance, we confirm our guidance, and we are of 7% to 9%. And we are, of course, well aware that the fourth quarter must be much stronger than the average 3 quarters, and I'm sure we'll comment on that also later on.

Moving on to profitability. Yes, also here, I mean, as Christoph said, we are satisfied with the third quarter, EUR 142.2 million, 10.3%. Already at the Capital Market Day, we had also said that Q3 will be hit by the expenses of drinktec. This was the case without the expenses of drinktec, we would have been at the upper end of the guidance of for the third quarter. And now looking at year-to-date numbers, EUR 430.7 million, 10.5% EBITDA margin and also comparing to last year, quite a significant increase by 0.4 percentage points. Netstal continues to dilute. I'm sure we'll talk about that later as well. And last but not least, we confirm our guidance also here of 10.2% to 10.8%.

EBT, the only thing I would like to add here on top of what I already mentioned for EBITDA is, as you see, slight financial income, a little bit more than EUR 5 million. That was EUR 7.5 million last year because last year, we had an extraordinary positive effect, which didn't happen this year. But all in all, as we are stating they are also within our expectations.

Moving on with personnel and material costs and starting with personnel expense. I mean, as you can see, EUR 1.277 billion, EUR 109 million more than same period last year, year-to-date. And this is the result of, firstly, increase in FTE, but of course, also merit increase in 2025. And as you can see, we are at 31% ratio, so slightly above our target range of 30%.

On the other hand, if we look at material cost, I mean, as you can see, slight increase in absolute terms only EUR 57 million and the ratio itself due to, yes, very good cost management, but also certain mix effects went down to 47.7%. Taking all together, material and personnel, we are well below the 80%, which we are always also focusing on.

Krones employees. In the fiscal year, we increased employees by 754. About 1/4 of it, close to 200 is service technicians. I mean we have mentioned many times to all of you that they are important for us, first of all, to deliver our backlog, but secondly, also because they are a source of growth in terms of service business. So that's one part of the growth. We also have more apprentices, and I mean there is a certain M&A effect from here also. And the remainder of it, the remaining increase is across the world also to cater for the growth in 2025, but also then beyond towards our 2028 targets.

Moving on with the segments now, starting with Filling and Packaging Technology, making up 85% of our overall revenue. I mean, as you can see, EUR 3.479 billion for the full fiscal year, which is a 6.2% growth. I mean the FX effect I mentioned earlier, is to the most extent in this segment. And Netstal, as I mentioned, same development as I had said it for the group.

Speaking about EBITDA margin, we had the Q3 at 10.5%. Also here, the most expense -- the most portion of the drinktec expenses was with Filling and Packaging Technology. So the statement made for the group is also true here. And looking year-to-date, you can see 10.7% increased by 0.3 percentage points. And also here, we confirm our guidance for both revenue growth, 7% to 9%, but also margin 10.5% to 11%.

Moving on with Process Technology. I mean, as you can see, and that is true for the quarter, but also year-to-date, we are more or less on the same level as we were for 2024 in revenue development and well in line with our growth forecast, which is 0% to 5%. And looking at the EBITDA margin, nice development, also strong Q3, 10.2 percentage points versus 8.7% last year. And year-to-date, we are at 10.6% versus 9.6%, which is, to a certain extent, also due to mix. But most importantly, it's just also because of executing the strategic measures we also showed to you on the Capital Market Day. Also here, we confirm our guidance, 0% to 5% growth and margin, 9% to 10%.

Moving on to Intralogistics. Also here, we can see a slight growth, both in year-to-date figures, but also in the quarter. Year-to-date, 13.4%. Intralogistics actually also has a certain FX effect because quite a portion of their business lies in the U.S. Overall, growth by 13.4% year-to-date. Looking at the margin, also here a nice development, strong third quarter, 7.4%, bringing us to 7.2% year-to-date, whereas last year, we were 1.6 percentage points lower. also here the result of executing the strategic measures, but also a certain mix effect. And also here, we confirm our guidance of 15% to 20% revenue growth and also we are well aware of the very strong fourth quarter needed for that and EBITDA margin, 6.5% to 7.5%.

Now moving on with everything which is related to the balance sheet, starting with liquidity, cash, liquidity reserves. As you can see, we are holding -- we were holding EUR 363 million cash and combined with used credit lines and free ones, we had a liquidity position or reserves of EUR 1.24 billion, which gives us sufficient room in under global economic volatile situation.

And equity, starting first with the absolute number. As you can see, we have increased equity by EUR 107 million, which is the result of, first of all, net income, EUR 214 million in the reporting period, paying out the dividend, EUR 82 million, brings us with some miscellaneous effect then to EUR 2.029 billion, so above EUR 2 billion. And as our equity increased by 5.6%, our total balance sheet only by 1.5%. We have 42.1% equity ratio.

Working capital also here, stable also compared to the situation in the last 2 fiscal years, so 17.2% as an average over the last 4 quarters. And looking at the breakdown, as you can see, received prepayments, around 17%. there as an absolute number, approximately where they had been '24, both September and December, so slightly above EUR 900 million. Inventory also here, 13%. So absolute figure, similar number a little bit or around EUR 700 million.

Accounts payable, yes, 13%, so below what we had end of the fiscal year, but also end of September. You know that we are working on that number in order to get it a little bit higher. and receivables POC, yes, 35.9%. So very similar as we had at end of last year, and we are holding approximately accounts receivables and contract assets approximately EUR 2 million, bringing our working capital as an absolute number to EUR 1.051 billion, which is an increase by EUR 195 million. And that EUR 195 million, we can also see in the third line of our cash flow statement. And just concentrating on 2025, I mean, we spoke about EBT already other noncash changes, the most portion in here is depreciation, change in working capital, I already commented on it. Other assets and liabilities, major portion here is paying out income taxes, bringing us to cash flow from operating activities of EUR 174 million.

CapEx, 2.8%. So under proportional yet, EUR 114 million and with the other brings -- that brings us to free cash flow of EUR 80 million, which we also commented in our press release and also in our first page of this presentation.

M&A activities, I mean, some increase in the third quarter. In the first quarter, we only had the payout of the earn-out Ampco 2.2. Now we have the acquisition of CSW, so Can Systems Worldwide, which we talked about also on the Capital Market Day, EUR 31 million approximately and some stake also in GHS, which we also commented on the Capital Market Day. And with financing activities, mainly the dividend here brings us then to net change in cash of EUR 80 million and our cash at the end of the period, which we saw on the previous slide already or the one before.

Cash flow year-to-date already mentioned, EUR 80 million, and our outlook for 2025 also did not change around EUR 200 million. I mean, as you know, Krones is very strong in its cash flow in the fourth quarter, and we are predicting the same for 2025.

Last key figure, last guided key figure, ROCE, 19.5%. You see that we are more on the upper end of our guidance, 18% to 20%. And as I always say, this is a simple mathematics. I mean, EBIT increased by 11%, average capital employed increased by 10%, and that increased at the end, the return on capital employed. Overall, the capital employed in average increased to a bit more than EUR 2.1 billion. Yes.

Good. Yes. If we look to the governance the guidance we have given for 2025, we confirm all 3 numbers. We are aware that there will be kind of a tough race by the end of the year to get our revenue growth managed. Uta mentioned already that we are impacted to a certain extent by currency developments. But nevertheless, we confirm all 3 numbers. And staying here, beginning of November, this statement is rock solid because we know pretty much where we are in all of the, let me say, 3 governances we have given, and we stand here with all the confidence we have into that.

If we move on. Same thing for all our segments. We are in line with, let me say, the governance we have. And I can say we confirm here again once for all those that we are going to be into our governance we have given. don't want to go into details, which we might do them in the Q&A. Midterm targets, yes, even there, we -- and we spoke about that on the Capital Market Day as well. Our point was it will be not a linear way to go there. That was the statement. Not more to that today. Even that one, we keep as it is, no changes here. And then we come to the last slide, let me say, taking the key takeaways. But nevertheless, you heard all of them. I want to repeat it. We are happy where we are. We are confirming our governance for 2025. And if we look to our markets, they are robust. This is what we see. And with that, I would finish off our presentation and be happy to go into Q&A.

Olaf, you are going to organize that one.

Thanks a lot, Christoph and Uta for the insights of the third quarter or the first 9 months. Yes, we already got some questions in. So first one is Constantin Hesse from Jefferies.

Olaf, can you hear me okay?

Yes.

Great. The first one would be, I mean, obviously, Q4, you have really good visibility on the back of your backlog. So I want to focus a little bit more on the order intake momentum that you're seeing in Q4 because in order to keep that book-to-bill ratio at 1, you're also implying that your order intake is going to be quite strong in Q4. So I'm wondering where are we on order intake? And maybe you can share a little bit of feedback following drinktec. Yes, let's start with that one.

Yes. All right. Yes, that's -- logic is absolutely okay and expected that question that this will come. I mean I would phrase it this way. We are -- we have a lot of final negotiations scheduled for Q4. And I would say all of those seems that they are really finally scheduled because one of the problems in 2025 was that we have a lot of -- had a lot of postponement in finally or in scheduled final negotiations. Now it looks like that these final negotiations are becoming true. And once they are becoming true, I think we have pretty good visibility which orders we are going to win, okay? Because this is not by surprise, and I think we have a very good prediction on where we are.

And this is the reason why we still stay with our statement, we will be year-on-year at around 1 in terms of the order intake compared to sales. So book-to-bill ratio around 1. And yes, that will be a pretty strong Q4. And from all what we see in the pipeline and even more important from the dates which have been agreed on for final negotiations, it looks like that this is reasonable. The only thing which we can't predict is that somebody comes up in the last minute and say, no, the budget is not there anymore, and we might postpone it to Q1. This could be, but it's not likely that it's going to happen. So that's the reason why Yes, we have this, let me say, optimistic view.

Second, and you had a good point in what about drinktec and the consequences out of that. One good thing is that we had very good discussions on drinktec, how would be the rest of the year. And this had been continued, let me say, over the last weeks that we have been in constant discussion where our customers are with the bigger orders they want to place. And again, this one is confirming what I just said that those dates, which are set for the final decisions, most of them, I would say it this way, but the biggest amount of those dates look like it's going to happen. And that's again why we are confident for our statement book-to-bill will be around 1.

This is great. Can I just follow up? I mean, this momentum, I mean, obviously, macro overall continues to be relatively sluggish. So going into next year, you obviously said that your customers are behaving a little bit. I mean some of them are, I guess, still a little bit slow. Some of them are still postponing orders a little bit. So with that potentially improving in '26, would you -- could we potentially see an acceleration again in order intake in '26?

If you don't misinterpret it could, yes. Now I want to be serious on it. I mean we are talking right now about 2025. And I said it earlier, our pipeline is good. So if we look -- first, we need to finish off 2025. And I would say, if you look to next year, we don't see that the momentum is going to be lost. That's the statement I can do. What we have in the pipeline, which is already then true for 2026 looks even good and which I would say there is a -- we are realistic, optimistic for next year. Realistic, I have to say, in accordance to the global economy situation. I would make this statement, but not more for the time being because first, we need to finish off 2025 and then we talk about 2026.

Perfect. That's fully understood. And jumping over very quickly to volume versus price formula. Maybe you can talk a little bit about the competitive environment at the moment and how pricing is behaving here? Because I think the commentary was that pricing is stable over 9 months. So maybe just a little bit of color on a quarter perspective.

Yes. There has been no change at all in terms of pricing that's stable and we are managing that quite well. I mean, for those of you following us for a longer period, maybe that was one of the most essential changes we have made that we are knowing today on any order where we are in terms of contribution margin and that we are managing that order by order. So I would say the price level is good and stable. There is no, let me say, complain at all that somebody from competition would behave in a not expected way. So I think the market is quite reasonable in terms of pricing, what we can see right now.

This is great. Last question for me. Just if you could do a bit of a reminder on where you are in the ramp-up or the capacity builds overseas.

Yes. I mean that's pretty simple because so far, we are in the stage of building the factories, which is all the time pretty easy compared with starting them up. So none of the new factories has been started up. Everything is on schedule. And we are looking forward that in both of the factories in India and in China by mid-2026, we are starting production. And I would say even there, we are very optimistic because with the learnings we have from the start-up we had in Hungary at the time and the start-up we have done and the, let me say, acceleration program we had already in China, we have a lot of experience how to do. And we are using those people who have made in Hungary and in China, the last start-ups. There's a very professional team together.

So I think it will go relatively flawless from what we can see right now. Even in the phase of -- we have in India, we have already the core team on board. And in China, it's anyway, let me say, managed by the team we have already 4 years. So I would say, all in all, everything is in line. And this is true even for North America. I mean we are in the process of getting new machines there, which are important for our spare part business that we can do all the spare parts, which we are manufacturing ourselves. Some of them have been coming from Germany. They are now localized in North America. This gives us perspective in case we want to extend new machine business for production in the U.S. So all in all, everything is perfect on track. So we are quite happy where we are.

Thanks to Constantin for your questions. The next, I got through e-mail, but he will ask this question by his own. Benjamin Thielmann from Berenberg. Can you hear me?

Yes. Okay. Cool. Two questions, if I may. First question would be trying to get some color on what we could expect in Q4. I mean, I understood that Q4 is probably going to be a strong quarter. It, to some degree, must be, so you guys get into the 7% to 9% top line growth corridor. And if I strip out the drinktec one-off, we have seen in Q3, is it fair to say that we're maybe even seeing a margin at around like 10.9%, maybe even hitting the magic 11% in Q4 this year?

This is certainly a question for the CFO.

First part of the question, which was about volume, yes, I mean, we do the calculations you also do and seeing what 7% means and what 9% means and -- but to take it serious. I mean our last forecast confirmed one more time the 7% to 9% also regardless of FX effects. So this is net of these effects. I mean -- but of course, if you look at the quarter itself, I mean, in order for it to end up at the upper range, it would have to be really, really, really high. So some -- I mean, we expect maybe a growth for the quarter at around 10%, maybe a little less, so kind of that to achieve our 7% to 9% growth rate.

And then speaking about EBITDA, yes, Q3, as we had said, was hit by drinktec. And with the volume effect coming from Q4, but also on the negative side, maybe some negative mix effect, we expect a good -- a very good fourth quarter. Will it be -- I mean, I will not say this magic number actually. I will not say it. But we expect a good quarter. And we also -- I mean, speaking about the guidance, 10.2% to 10.8%, we are at 10.5%. So I think our expectation is also at least not to decrease. And I hope this answers your question.

Yes, it does. Maybe a second question, if I may, is on taxes actually. We have seen that, for example, in Q1 this year, tax rate was up probably 300 bps year-over-year. Q2 was then in line with last year. And now in Q3, we have seen that the tax rate was a little bit higher than last year as well. I was just wondering what could we aim for in Q4 or maybe for the full year? Is it fair to say that we're going to be somewhat in line with what we have seen in Q4 last year? Or is there anything I should bake in?

I mean the expectation currently for the tax rate for the full fiscal year is similarly on what we are today. We don't expect any change there. And also maybe a little bit of color, why is it at 29.3%, I believe, 29.3%. I mean we are utilizing also the tax loss provisions we are having, so tax loss carryforwards. We have nondeductible expenses also what we also see in all countries that -- how can I say it, that every country looks more and more in getting taxes. And that by itself increases a little bit the tax rate. But for the full fiscal year, 29% is a reasonable figure.

And the next question is coming from Adrian Pehl from ODDO.

Okay. Perfect. Just, I mean, rephrasing a little bit the question on the remaining growth that you have for Q4. Actually, I mean, lower end of the guidance is somewhat shy of 10% you need to grow. I just want to hear a bit your words on the production capacity and the risk of spillover of some deliveries into Q1. Do you see something more pronounced here on that end? Or are you fine with the setup to deliver, obviously, on the lower end. I mean the high end would mean even more deliveries coming into Q4. And the second question is on, again, order intake to some extent. I mean, obviously, yes, Capital Markets Day on the fair, most likely good discussions. But I just wanted to get a sense on the phasing of the order intake in Q3.

And maybe you could share a few words on the developments in October until now, if there was some sort of acceleration, I mean, again, could be from drinktec, could be from macro, whatever. So that would be helpful. And then I have 1 or 2 follow-ups.

Yes. I mean let's start with revenue Q4. I mean we have different sources of revenue. I mean, life cycle business, which is stable, also has some seasonality in Asia, for instance, positive in Q4. That is one of the source. I mean, overproportion in intralogistics, as you saw, that also comes into play or plays an important role in delivering our revenue. But most importantly is we have, in particular, with October and November, 2 very, very strong months here in Germany, a lot of working days that helps us. And I mean, also delivering as per the delivery dates helps us and is forecasted. And taking this all together makes us confident that we achieve our growth target and deliver a much higher Q4 than we had Q4 last year.

And to your point, is there a split over? No, we don't see that. Not at all. I mean if I have been understood this way when I stated something, this was not the intention because the split over, as Uta said, because the -- let me say, the higher amounts of, let me say, lines and equipment we deliver are fixed to delivery dates, and that's the reason why we don't see a split over. To the order intake, October, October was actually, let me say, in line with expectation. It was not, let me say, the average of the 3 months we are going to need or we need to have for the statement we have made. It was from the beginning clear that November and December will be the months of decision. And again, that has to do how final negotiations have been scheduled.

So October was a reasonable month, but it was not extraordinary. But that has no impact on the forecast we have because, again, the larger projects are based on scheduled negotiations. If we look to the, let me say, repeating order income from life cycle and maybe from components, that's different. They have been -- the October have been strong. That's good. And that -- but this is all the time, the same by the end of the year, the last 3 months for those products, which are, let me say, I wouldn't call it commodity, I would be blamed internally. But if you look to the commodities and service, spare parts and components, the last 3 months are all the time strong. So this is the view on it. And because of the discussions after drinktec and in particular, those discussions we -- and this includes me as well, we had over the last 3, 4 weeks, we are making that statement that November and December from what we can see right now looks good.

All right. I appreciate it. And then 2 probably smaller questions left. One is, I mean, regions, you said, well, nothing to really speak about. On the other hand, if you look at Q3 developments in China, that's the only one that popped up for me as that was relatively weak also sequentially. I mean, obviously, I know you had a strong base last year, but any words on that, if we should expect some slower revenue trajectory in China would be helpful. And very lastly, on CapEx, I mean, the run rate that I saw, I think, is not overly -- was not that much in the 9 months on average. So should we see an acceleration of CapEx spending also in line with the capacity that you're ramping up? Or is that going rather into 2026?

I'm going to answer on the question to the revenue in China in Q3. I think that's just the timing effect. I mean we don't see any, let me say, major issues in China right now. So we maintain the stable level we have, and that might have to do with bigger orders, which then coming in the next quarter and not in this quarter. So very simple -- this is the simple reason. The order intake in China has been absolutely reasonable. We are well set with the factory we have there. So I would say the Chinese business, even it's not easy because we all know the economical situation in China is challenging. But all in all, I think that goes okay.

Then I will comment on CapEx acceleration, yes, that's forecasted. That's part of the plan. So here, we are backloaded when we have bigger projects, which we have. So we expect quite some CapEx in quarter 4. And -- but this is also speaking about free cash flow. This is included in our free cash flow. So it's not only that we will have higher outflows, but also higher inflows.

Is that a number similar to last year's Q4 basically?

I say, yes, approximately slightly higher because I think we are at 2.9%, were at 2.8%. And as we had the same forecast approximately, I would say slightly higher -- yes, slightly higher, but approximately, A, approximately the same.

Adrian. And the next one will be Lars Vom from Deutsche Bank.

Two questions remaining. Unfortunately, I try to come back to 2026. And looking at next year, you stated that the order intake or with regards to the order intake that the momentum is not lost. So looking at the Bloomberg consensus, not at least after your Capital Markets Day, consensus is expecting 5% revenue growth, which would be below your medium-term CAGR of 7%. Do you see that contradicting? Or are you happy with the 5% you see? As the expected growth currently?

Since my statement on drinktec has been not a favorable one, stating about what we are going to see next year. I'm very hesitating today to comment further on any terms of revenue, sorry when I be so strict. Again, I did say that the momentum is not lost. We did say and we say that and maybe it was not a good statement, we will slightly grow next year. This we have said, but today, we are standing here and talking about 2025. And we are looking with good optimism, realistic optimism into 2026. And we were making -- we made a statement that our path to EUR 7 billion will be not linear.

So this is -- sorry, when I be so strict on that one today because I don't want to repeat, let me say, misinterpretation. And we will say there is growth for next year. This is our statement, and we stay with that one so far.

Okay. Perfect. Appreciate it. And then you stated in your prepared remarks that the -- in absolute terms, North America is okay. However, if I remember correctly, you said with the Q2 reporting that North America has the potential to show increasing momentum again in the second half. Is that statement still true? And does the rest of the world only has grown or has only grown stronger recently? Or is North America growing slower than you earlier envisaged?

I mean first of all, we need to, let me say, frame a couple of things. If we talk about the revenue in North America, that has 4 major components. Number one, that's the new machine business and line business from our core segment. Second, it's the life cycle, it's into logistics and it's processing. And when you look to processing and into logistics, they are fully localized and they are developing in the right manner, so everything is fine. Lifecycle Services is the strongest in Q4. And new machine business, where we generate revenue right now, those are all orders which have been placed before anybody talked about tariffs. And since -- and this is different, new machine business the import duty is on the customer side.

So there is no impact for those revenues being generated in Q4 from the equipment shipped from Germany to the U.S., just to make that sure. And yes, we stay with the statement how things are scheduled that -- and that has even to do with how installations and commissionings are made. Q4 looks strong for the U.S. That's the statement. And as I said, life cycle is stronger in the -- at the end of the year. So that contributes as well to, let me say, a good outlook in terms of North America for Q2 -- Q4 in 2025.

And then again, of course, it has to do a bit with the growth we have around the world that what I said, the decrease in North America, it looks like a decrease However, if you look to -- in absolute terms, it will be quite stable. It has been not growing, but it has been stable. And this has been already anticipated that has nothing to do with tariffs before because there have been very strong investments, let me say, in 2022 and in 2023 to the U.S. market. And it was clear that in 2025, it will be a bit flattened out. So no surprises here for us at all. And the perspective on the U.S. market is good. I have to say, because if you want to hear one remark, it looks like that by Q4, customers are, let me say, familiarize themselves with tariffs. And it looks like that they see that the business cases are not disappearing with the tariffs. And that makes us, let me say, to a certain extent, confident that in 2026 and 2027, despite the tariffs, our business will normalize in the U.S.

Thanks from Lars and questions. So I check my e-mail. No more questions through the e-mail channel. So perhaps once again, if you want to have some questions, run.

If there are no further questions, Olaf?

I don't see any. Sorry. Too early. But I see you're raising hands now. Yes.

Can you hear me okay?

Yes.

Firstly, apologies from Stefan Bauer who's actually traveling today. But we had a sort of high-level question. Just going back to your feedback on drinktec. And you spoke about the business case just now being in place. But we just wondered when you were talking to your customers at drinktec, what are the high-level sort of key motivations, which are still driving these sort of very impressive growth rates, whether it be savings on electricity, savings on water recycling capabilities or digitization, which you highlighted at the beginning of the presentation.

I mean the major feedback, I mean, if we look to the line concept and the life cycle concept we showed on drinktec. I mean this carries one thing which is very important for our customers. This addresses their OpEx costs because the model as such, generates more output at same cost levels. And if you do -- if you introduce something like that, the interest is overwhelming. I can really say overwhelming in the sense of -- I mean, if we would have everything available tomorrow, I mean, we would get it from our customers immediately.

Nevertheless, I mean, we spoke in length about that, that it takes at least 2 years until we get the business model established in the market and things are going in the right direction. So this was certainly the overwhelming status. The second takeaway, and this is maybe for me, even as important as having introduced a new business model into the future. I mean all what we presented has been based on what our customers said 3 years ago. And the speed in which we executed those, let me say, request statements beyond expectation. I mean they have -- nobody has expected we are going so far with the manless line. We are going so far with autonomous material supply so far with the life cycle concepts that we have in a time period, executed and the line was in operation.

It was not somewhere a showcase. It was in operation on a never seen level before in that speed. I mean this was an important message for us internally that we can innovate with high speed. And this counts even more if you look to, let me say, the mid- and long-term challenges in the market, and I can say, of course, there are Chinese competition, that we are on the innovation side in the right direction. So that was the second key away. And I can say number three, teaming up with all of our customers because if you are on a show, you have different dialogues because if you go in the day-to-day business to a customer, you mainly talk about problems with our customers, this installation, this performance, blah, blah, blah, on a show, you talk about the future, about what is in 3 and 5 years.

And the feedback we got about our positioning makes us very confident and I say again, humble about what we can achieve in the future. So that's -- if you would ask me the major takeaways. Then in addition, the portfolio we have showed. And I can say we have been earlier talking about the Netstal acquisition. I mean that we made this step that we are, let me say, in the recycling loop, if you look to that, is going to be closed with a lot of know-how from us.

Second, that in the mid and long term, with injection molding, we can run different aseptic concepts that we have presented our visions forward. So again, this has been received with a lot of respect for Krones, what we have done. So this is the takeaway we have. And I would say, at the end, we have been very happy with drinktec. And again, as I said, we still say humble because we are looking out. We know who is out there as a competition and how hard we have to fight that we maintain the position and manage our growth.

I also see the Benjamin Thielmann. Ben, you have additional questions, please?

Yes. Maybe just one quick follow-up, if I may. I was just checking as a quick industry read across. Was there anything that you would consider to be weird in your Q3 numbers, maybe in your Process Technology division in terms of end market exposure. Was there any weakness that we have not seen in H1, maybe in the liquid dairy market, for example?

No. I mean we are not so much exposed to the liquid dairy market. While we have some business in there. If you look to processing, I mean, the only thing, and we said that is that the bigger projects are missing in Process Technology that has, I would say, mainly to do with breweries. But nevertheless, we could compensate nicely with the other businesses we have developed. So -- and again, no surprise here because we did expect already from the beginning of the year that the breweries will be in terms of investments low. We managed that quite well. So there has been no surprises from us in that particular part, I would say.

Thanks to you, Ben. So then I have a look once again on the e-mail channel. So no further questions, e-mail channel, and I don't see any raised hands in the Teams channel. Christoph?

Yes. Then thanks a lot for listening today. And I hope we have been as, let me say, predictable and robust as you are used with Krones. And again, final statement is we, myself and the complete team here at Krones is very confident about our governance in 2025. And then we are looking forward to talk to you next year. Thanks a lot. Have a good day, and have a good week, and have a good remaining year. Thank you.

Thank you.

Thanks to you. And now we close the call.

Well, ladies and gentlemen, good afternoon, and a warm welcome from my side. My name is Olaf Scholz, Head of Investor Relations here at Krones. In a macroeconomic environment marked by uncertainties, we have confirmed our financial targets for 2025 and have also increased the profitability in the first half year '25.

Christoph Klenk and Uta Anders will give you today more details about these figures and give you also additional information. After the presentation, you will have the opportunity to ask questions. [Operator Instructions] Please be also reminded that this call will not be recorded, and please deactivate any functions of recording at your Teams. I think we can start with the presentation.

So I hand over to Christoph Klenk. Christoph, the floor is yours.

Yes. Olaf, thanks a lot. Warm welcome from Uta and myself. Happy to have you here in our conference call for the second quarter and the first half year. As always, we run you very briefly through the presentation. Of course, we skipped the summary. Most of it, Olaf has anyway done, and we come directly to the numbers. Here I can say without going to the numbers because you will see all of them. But nevertheless, we are happy what we have achieved so far.

Even it's not being contributed today in the share price, we see all the time some kind of a miracle for us that with those numbers, we are not matching expectations. Let me come directly to order intake. Again, here, I can comment, we are quite happy with the, let me say, world economy in some areas in struggle because of all the things we know. Nevertheless, we are happy what we have achieved here. It's more or less on the same level as last year. And we had -- you remember in last year, in the Q1, a very strong order intake, and we are capable this year in both of the quarters, Q1 and Q2 being close to the numbers we had last year. So all in all, for us, a very good situation.

And I can say we believe our markets are still robust. Order intake has been influenced by some of the decisions which have been postponed in particular, in North America because of the uncertainty. And we cannot yet really made a statement on what would be hopefully the deal which has been made on Sunday, and we all hear that there is -- there are uncertainties behind what that deal means for our customers in their way to do decisions for the projects which are pending. But nevertheless, we have been capable of compensating most of it with other regions and other countries. So we are quite happy with that one. Looking to the order backlog, I mean, no surprise here. It's actually in line with the order intake.

You see we are still on a very comfortable level. And with that level, we are reaching into Q2 next year with, let me say, capacity utilization, which gives us a quite safe situation in terms of the planning at least for the first half of next year. And we do not expect that order intake will go away. So I would say security that 2026 goes on a good level is given there. Let's jump then to how the split is in the markets. Even here, no surprise actually. I mean you might look at Central and North America, a bit more critical since you see there a decrease of the numbers. But nevertheless, this has nothing to do with tariffs, first of all.

This was expected because we saw that the -- let me say, the investment boom had a bit cooled down in North America, but we believe the 21% you see here is a quite stable level, which might continue for the future. And we have, in particular, in North America, many projects, which are in the second half of the year for commissioning for our bottling lines and for intralogistics. So this might give a change maybe in the second half of the year to a certain extent. I mean if we look to South America and the Middle East have developed very nicely. I'm quite happy with how things were going there. And if you look to China, where everybody talks about the Chinese economy is in struggle. For us, it's still working good.

And if we look on the prospect we have right now, even we are satisfied with China. A bit more critical, we see Asia Pacific. This could be on a higher level. And here, there's one country contributing to, let me say, the numbers which are not as high as they should be. This is, in particular, India. Since there, the investments have a bit slowed down because so many investments were going into the country that needs to be first utilized and brought into the market and being harvested on before new investments are coming up. But all in all, we believe even Asia Pacific is in a good condition and delivers fundamental for the future.

So that's from, let me say, the market for the time being, my statements made, and I hand over with that to Uta.

Thank you, Christoph. Good afternoon also from my side. And as usual, I will continue with P&L information segments and then later on everything around the balance sheet. Let's start with revenue development. I mean, you can see EUR 2.727 billion, 6.7% growth year-over-year. And yes, the second quarter was only 0.6% growth. I mean we had forecasted or communicated also in our conference call in Q1 that we expect the second quarter be a little bit lower just because of the fact that there is full Easter in it, that there is with Sunday and all the other public holidays, which we have here in Germany and which there we are lacking working days and with working days, of course, then also POC revenue recognition.

So the revenue which we have recognized was in line with our expectations. And looking at the full year, we are confirming our guidance, our guidance being 7% to 9% revenue growth. And yes, we are well aware that the second half of the fiscal year must be higher than the first one. And first of all, we have the backlog to achieve that. Secondly, production schedule also confirms it. And thirdly, also everything, as Christoph already said, installation and commissioning, not only in North America, is scheduled in a way that we can achieve our 7% to 9% growth. Continuing on with EBITDA. Yes, from our point of view, a good development, EUR 288.5 million EBITDA, which is a year-over-year growth by 12.6%.

And looking at the margin, 10.6%, whereas last year, we had 10.0%. There is still some diluting effect of Netstal included. And also, if we look at the second quarter stand-alone, also here, we have achieved 10.6%. And with our numbers, which we show here, we confirm our guidance for the fiscal year, 10.2% to 10.8%. And this is why, I mean, we know the backlog, we know the price quality in the backlog. We know the utilization of our resources and also the effects of the strategic measures, including cost reduction measures are as planned. EBT and EBT margin, year-to-date, EUR 205.5 million, 10.7% increase, 7.5% margin.

So here, you can see that compared to last year, it's only a 0.2 percentage points increase. And this has 2 reasons. Reason number one is we had -- in last year, we had an extraordinary positive effect in financial income of EUR 4.5 million. So that contributed to the 7.3%. There's none included in year-to-date 2025. And then secondly, also depreciation is increased compared to last year. But overall, also EBT margin was in line with our expectations. Personnel and material expense, let's start with material costs. I mean, as you can see, despite of the fact that we have increased revenue by 6.7%, we have only increased material cost by EUR 6 million, and that brings down the ratio to 47%. So very similar picture as we had it in quarter 1.

I mean that shows that we have realized cost reductions in material cost. On the other hand, we can see in the personnel cost, I mean, as we also saw it in quarter 1, we are above 30% -- and also we are above last year's number. And this is because of some of the increases in the tariffs, but also because of the headcount we have increased. And looking at the full fiscal year, we expect the number to reduce -- the ratio to reduce. Krones employees worldwide, we have slowed down the growth in employees, as you can see, compared to end of 2024, 333 people employees in addition, bringing it to 20,712, which is 1.6%.

And I mean, if we look at where we have increased, I mean, first of all, the breakdown between Germany, Krones AG and outside of Germany is more or less as it was end of last year. And if I look at what we increased, it's mainly service technicians. This is the bulk of the increase, more than 100. And in addition to that, all what I had communicated also in the other calls, digitalization, but also strengthening, for instance, project management, but also being able to grow further. So far, overall information on profitability for the group. Now let's come to the 3 segments.

And I mean, Filling and Packaging Technology is very much in line with what I already mentioned with the whole group. So first of all, if we look at the revenue development, EUR 2.301 billion, this is a 7% growth. So it's on the upper end -- on the upper end, lower end, sorry, on the lower end of the guidance of 7% to 9% year-to-date, but we see also a strong EBITDA development year-to-date with 10.8% and compared to last year, also an increase by 0.4 percentage points. Also here, we confirm our guidance for both revenue growth as well as EBITDA margin.

So 7% to 9% revenue growth and EBITDA margin, 10.5% to 11%. Moving on to Process Technology. Revenue, EUR 252 million, as you can see, very similar to what we have recognized last year. But if we look at the EBITDA margin, you can see that we have increased it further to 10.7% from 10.1% last year. And this is also because we have a better mix in here. Yes, we have more component business, pumps and valves. And on the other hand, the customer or the turnkey projects there we have some little delay. So that's why it's a better mix than also from a margin point of view.

If I look at the guidance for Process Technology, also here, we confirm our guidance for revenue growth, which is 0% to 5% and EBITDA margin, which is 9% to 10%. Last but not least, Intralogistics, -- year-to-date revenue, EUR 174 million, and this is EUR 22 million more than we had last year at this point of time, and it's a 14.4% growth. So slightly below our growth target for the whole fiscal year, but you know that in Intralogistics, we normally have a significantly higher second half of the fiscal year and the same we expect also this year. Looking at the margin, on the other hand, I mean, we can see that we have increased margin significantly to 7.1%. And also here, I want to confirm both our guidance for revenue growth, 15% to 20%, but also 6.5% to 7.5% for EBITDA margin.

Now moving on to cash and equity. And looking at the middle side -- middle part of the slide, we can see that as of end of June, we were holding EUR 377 million cash. And with used credit lines and free credit lines of EUR 2 and EUR 848 million, we have a solid liquidity situation of EUR 1.225 billion, which gives us the opportunities for future growth for M&A opportunities, but also gives us resilience in difficult macroeconomic times. Looking at equity situation, you can see that we have increased equity by EUR 46 million, and that's a composition of, first of all, net income, EUR 146 million Secondly, we paid out in the second quarter the dividend, EUR 82 million, and the remainder is a mix of non-income effects, which we have in equity.

All in all, and also with a constant balance sheet sum, we see that our equity ratio has increased to 41.4%. Working capital, first of all, in the middle part of the slide, we can see that overall, last 3 fiscal years, we are more or less stable at 17%, so well below our 20%, which we have always mentioned as kind of an orientation for us. Looking at the breakdown of the working capital, there are 3 developments which I would call positive. There's one development which we will pay further attention to.

Let me start, first of all, with the positive ones. I mean, receivables POC, as you can see, 36% as we had it also end of last year. Inventory 12.6%. So it reduced further. That was what we also communicated throughout our last calls that we want to keep it constant despite of increased revenue, received prepayments is also more or less on the same level. Payables is where we're going to focus more on to because 13.1% is below our expectations here. And if I look at the overall working capital as of end of June, we are holding EUR 985 million working capital, which is an increase by EUR 130 million, and the bulk of it is actually coming from payables.

Free cash flow before M&A, as we also saw it in our communication is EUR 46.7 million, and it's broken down by the earnings before taxes, which we have communicated, other noncash changes where the bulk of it is depreciation, change in working capital, which I went through a minute ago. Other assets and liabilities, a major portion here also tax payments and then cash flow from operating activities, EUR 103 million. CapEx still under proportional as we have it usually throughout the fiscal year and then EUR 46.7 million before M&A. M&A activities are the same as we have communicated them in the first quarter and free cash flow as reported, EUR 44.5 million and financing activities other, that is mainly the dividend payment we had.

And all in all, we have a change in net cash of EUR 65 million, which brings us to our EUR 377 million, which I communicated 2 pages ago. Free cash flow for the whole fiscal year looking first half of the fiscal year and the rest, I mean, EUR 47 million, as I said. And we need a strong second half year of the fiscal year. I mean, as you know, we usually have a very strong fourth quarter, and that's also what we count upon this fiscal year. ROCE as the last guiding figure, 19%. So a small increase compared to 2024 and also in line with our guidance, which is 18% to 20%.

And if I look at the breakdown, 2 components, as you know, we have a significant increase. And if I look at the average working capital, we also see an increase because of the increased capital expenditure or the investment we are doing, but also because of working capital, as I had communicated a minute ago. Outlook. Let me continue with the outlook. I mean, all has been said by me already. We are confirming our outlook for revenue growth, 7% to 9% EBITDA margin, 10.2% to 10.8%, ROCE 18% to 20%. And the same is true for our segments, Filling and Packaging 7% to 9% revenue growth, 10.5% to 11% EBITDA, Process Technology, 0% to 5%, 9% to 10%; and Intralogistics, 15% to 20% and 6.5% to 7.5% Yes. And our midterm targets for 2028 are also confirmed.

And for the key takeaways, I hand over to Christoph.

Well, I mean, the key takeaways we have already said. So I think we can skip those. I would say we go directly to Q&A since this is the most interesting part of the session today. Olaf, you are assisting it.

So let's have a look who has questions. As mentioned before, I already got some questions from Benjamin Thielmann want to ask some questions. Ben? -- you question.

This is Ben from Berenberg. I have 6, but I would take 3 and then I go back into the queue and come back a few minutes later. First question would be on Filling and Packaging Technology revenues in Q2, which came in flat. And I know that last year, Q2 was really strong for you, especially in that division, lots of holidays, bridge days in Germany, but I was wondering whether there was a negative impact in Q2 this year from order postponements, especially from the United States.

Not at all.

Okay. And then I would have a follow-up on that one. I know that order cancellations were never really a risk for you guys, but now also considering we're a little bit into Q3 already, is there any significant change you could flag in terms of order postponement behavior from your customers?

Again, there is a no -- I give you a bit more insights on your question are. So let me talk a bit about it, in particular about the revenue in Q2 with BPE or Filling and packaging equipment. So I'll give you an insight into that. Go ahead.

Okay. Perfect. And then maybe on Asia Pacific, you mentioned already that EMEA seems to be slowing down year-over-year. We see that in Q2 numbers as well. Q1 was up by nearly 30%. H1 is up by, I think, 1.5%. So I was wondering what do you expect in terms of expenditures in India? I mean there was a time of lots of investments, as you mentioned, is that something that could drag into definitely the second half of the year, but when do you expect that to normalize?

Yes. All right. So going back to your first question, how and why has Q2 being, let me say, slow compared to last year? I mean, Uta mentioned a couple of factors, but there is one other thing in. We are scheduling in accordance to the required delivery times of our customers. So now -- and this is one of the reasons Uta said that earlier, the second half is significantly higher booked than the first half. And that has simply to do with delivery times because we do not build and put machines on stock because otherwise, working capital would be in bad shape.

So this is one of the reasons why it's this time backloaded the year and Q2 was not as strong on those 2 factors. But I would say, for the time being, and this is started with July, I think we have the highest peak ever in terms of capacities booked, and this will continue until November. I have to say, December, we are, let me say, confident because December has all the time this week less. So there will be, I would say, less revenue in December. But this is actually the reason where it's coming from. And there are 2 factors. This is one in the factories where we have POC, but don't forget there is a part of commissioning, which is out in the field. And unfortunately, many of those projects are scheduled in the second half of the year.

That's the reason why the Q2 revenue looks not as good as you might think and where we are backloaded in the second half. To the second question, did we see postponement of orders or cancellation due to whatever and in particular, due to the tariffs in the U.S.? No, not at all. I mean, yes, some customers had really difficulties once they have heard that they have to pay 10% tariffs, which is true right now. But nevertheless, everybody expected much higher things in the future. So some of them have been heavy to get their lines right now.

And this is the reason why we didn't see any postponement nor any cancellation. And again, cancellation with us is unusual since we have very tight agreements once an order is placed and the down payment is made, then we have very clear, let me say, contractual conditions. If somebody wants to cancel, it's not so easy. It's -- we want to have full contribution of a customer when they book an order. So that's to the second question. And number three, APAC and how do we -- and particularly India, I mentioned that, yes, India has been slowing down. But if we look to our analysis and the requirements the Indian market has in terms of beverage consumption, again, we look into India in the long run into a very promising country.

And we have a joke here. We call India the country of the not to fulfill promises because we have predicted already for, let me say, 25 years, this will be the country where things are going in the right direction. But whatever we hear from our customers right now, whatever analysis we have for the beverage market, we are extremely confident within the Indian market, and that's the reason why we build their factory because we believe this will be a big contribution that we grab some of the market there more than we have today. Is that fine for you?

Very fine for me.

Thank you, Ben. The next question I have is Sven Weier from UBS.

I got 2. The first one is just when you look at your different end market verticals between brewery and nonalcoholic, I was just wondering about the different dynamics there because we've all seen some of the more tougher brewery results in Q2, especially on volumes. So I was just wondering about the different dynamics, not just regionally as we discussed, but also end market-wise. And then I'll come back with the second question.

Yes. I mean, very clear and straightforward. The dynamics in the brewing market is compared to previous years lower. I mean that's for sure. And we see that definitely when we look on the order intake mix, in particular for returnable lines, that's pretty much down. And it's all compensated on the soft drink side, the nonalcoholic water and so on with PET and aseptic. We see a shift in the portfolio with that by 3% to 4%. There are still orders even of breweries. So it's not that they are completely gone, but they're investing a bit more careful. So the projects are getting smaller. And this is particular, again, with the brewhouses from Steinecker, which is an issue.

Nevertheless, since we have rebuilt Steinecker pretty much for smaller orders for more service business, it's not harming us in processing technology in the sense of there is lack of order intake or revenue and in particular, on -- not on profitability. So I would say a brewery is really an issue. And if you talk to them, you will see that a lot of investments are going for them into still sustainable investments. This is in particular because they have a lot of, let me say, heat and steam consumption. which they need to reorganize in order to get better CO2 balances and to keep their promises.

This is really what we see despite that the consumer is using less alcoholic beer. We see in some markets compensation of -- with nonalcoholic beer, particularly in Germany, for example. But this is only, let me say, European approach to the beer market. You won't see pretty much of nonalcoholic beer all over the place in other continents around the world. So it's pretty much related to Europe. So yes, brewery is slow. And it has as always a bit of a cycle. Let's see how things will turn out. Nevertheless, we could compensate with other markets.

Yes. Almost -- I was just wondering within Process Technology, when you look at the order intake, so did you say that also within PT, you compensate maybe weakness at Steinecker with other areas of business?

Absolutely. Absolutely. Yes, definitely, yes. Other businesses are developing good in processing technology. And since you see -- I mean, we are flat in terms of revenue and order intake in processing. And if you look to that, this is a big compensation of the, let me say, turnkey projects, which we had in a magnitude of EUR 30 million to EUR 80 million in the past 3, 4 of them, maybe in the last years, maybe 2 of them a year, but we compensated all of that so far.

Sounds good. The second and last question I had was just on order intake in the second half. I mean we all know the Drinktec coming in September, and you know that I keep on asking it. in terms of order intake, every time you tell me, don't expect this to be a big ordering trade show anymore. But still, I mean, I wonder, could there be like a small effect? And would you also think that this kind of po tariff agreement that we have now is kind of enough for the American clients starting to go ahead? Or do they need to see more for coming back to order?

Yes. Maybe I should ask my colleague from sales, Thomas Ricker, which you know quite well. I mean he's more enthusiastic about getting more orders in Drinktec than I am. But I'm looking still to the numbers, what I know from the previous years, and I will still see the way that Drinktec is not an exhibition where we do particular orders. But I would say, this time, we believe it's really an important exhibition because we believe that with the developments we have made and the outstanding thing is that -- we had only 3 years between the 2 Drinktec, and we are really coming up with significant new innovations, and they are already in operation.

And this is something where customers might look at, oh, this is cool because we have been never as fast as we are this time in getting in that magnitude something new on this exhibition and having it already with one customer in operation. So this gives certainly a lift in terms of fundament for new order intake, let me say, in the consequence of Drinktec. But again, I'm still the opinion that the fare itself will not deliver extraordinary order intake, maybe with one exception, if Mr. Trump times the agreement on the tariffs rock solid just 10 days before Drinktec, I think we might have a bit of a boom from the North American customers.

And commenting on that a bit, the agreement at least led to the point that we received the last 2 days already 2 orders from North America, where customers hold them back so far because they were saying, okay, it looks like it's somewhere in the 15% range, and it's better than what we thought before. Nevertheless, we have not a clear picture how our customers judge the agreement. And since the last couple of hours days, more uncertainty came into the agreement, some of them already gave a feedback, let's wait until things are more fixed in terms of, let me say, contractual fixed agreements rather than a shake hand, which is true so far. So I would say that's the summary I can see Drinktec and how we see things.

And I guess your guidance on orders of book-to-bill of around 1 implies kind of a stable H2 against H1, roughly speaking.

Yes. Yes, definitely. We are -- I mean this is the most discussed issue we had, how does order intake develop? And our clear statement is we stay with the statements we have made. And this is proven by the pipeline and the order intake we had, in particular, let me say, after 1st of April because that was an important indication for us in seeing now July, seeing the pipeline we have, let me say, the postponement behavior, which we had in terms of decision that this is going to be reduced slightly. So that's the reason why we stay with the book-to-bill ratio around 1 and being for the time being, quite confident on that.

And is the cost -- I mean, just also talking about the cost of Drinktec. Is that something that is visible in the Q3 results, something we should keep in mind for our models?

It's visible in the second half of the fiscal year and Q3, yes, some of it will be in Q3, some of it will be in Q4. But it's definitely going to impact in terms of that is cost, but not in the margin for second half of the fiscal year.

So is it like a low single-digit million amount or Hopefully...

It's a high single-digit amount, yes.

High single-digit million amount.

I mean we can name it. It's not so difficult. It's around EUR 10 million. What is it in total. And this is what we manage. This is nothing new. This is the same number as we had over the years once Drinktec was [indiscernible].

So the next question coming from Adrian Pehl from ODDO.

Actually, I've got 3 questions. One is on the strong gross profit that you had in the second quarter. Uta, you were already referring to some savings you had on the material side in the quarter, but I was still wondering if that was supported also by mix, maybe also a little bit higher service share in the quarter. And the nucleus of the question is what should we expect in terms of the effects that we saw in Q2 for the second half? And the second question is on your personnel expenses. Obviously, the ratio was above 30% in the first half.

Actually, in Q2, there was quite some growth on the personnel expenses side year-over-year. You mentioned that you were slowing down a bit the personnel buildup, but I was wondering if you are taking further measures in the second half to improve the ratio. And very lastly, on the FX effects that you saw in the second quarter, I noticed obviously that the other operating income, not quite sure if that was coming from there, but I suspect it was quite high year-over-year, helped the margin, obviously, to some degree. Maybe some thoughts on FX in general would be helpful. And how should we think of it in the second half?

Yes. Let me start with the third question. I mean it's, I think, a mix of about 30 currencies, which we have. And if I look at the translative effect onto the P&L, it's rather minimal because if you look at the quarter -- year-over-year, if you look at the U.S. dollar, year-over-year average is very low change. So looking at all, I mean, we had the dollar, which is very slightly lower than we had other currencies, which were also a little bit higher.

So coming from a translative effect for the first half of the year, there is not so much effect. If I look at the balance sheet, I mean, there are some effects. Some of them are in other operating income. At the same time, we have also FX losses. which are part of the other operating expenses. So it is more to the other operating income, if I look at the overall balance. But all in all, if we look at the fiscal year, we do also from a top line perspective, do not expect a major effect coming from FX. And also, if we look at the bottom line, the same is also true. I mean we are managing it through hedges.

We are managing it through also partly price increases if needed. And that's -- and some of it, you also saw if you looked at the equity schedule, you saw that we also had some income uneffective effects here, which came from the balance sheet items. So it's really a mixture of a lot of topics. It is from a P&L point of view, not of major concern for us. Continuing on with personnel expense. First of all, it's the reflection of the increases we have done and also it's the reflection of the tariff agreements with the collective bargaining agreement, which came into play in Germany also on April 1.

And speaking about the first point, reflection of the headcount or FTE increases. I mean, I talked a lot also about service technicians increase, yes. Over the years, we have increased them significantly. And it takes a bit of time for them to get trained to become fully effective. So that means we have their payroll right now, but we do not yet have all the effects then which come beyond 2025 in them being fully operational. So that's why we believe that it's going to come down also throughout the fiscal year and also for the benefit in the future of higher service revenue also just to take that as an example.

Now let's talk about material cost, I mean, 47% and also after the first half, that is a significant decrease. It has to do with the savings, which we have realized in particular last year, but also this year. And it has also a certain effect coming from mix. I mean we talked about the lower new machine volume overall in the first half of the fiscal year. And all in all, this brought it down. We believe it's going to increase over the fiscal year again. Does that answer your question?

That does.

Thanks to you, Adrian. So I see Ben again on my list with the second time.

Yes, exactly. Just #4 and 5 because Sven asked one of my questions. But may I ask what share of your APAC revenues is actually coming from India because China is not included in here. So I would assume that India is by far the majority of that.

Let me just think that I must say something wrong how big India is into that. I mean, first of all, India was rising over the last 3 years significantly. And if I look to the total order intake, it went up in some of the years up to, let me say, 15%. And I would say we are down to, I would say, 10% to 12% coming from India. The rest is coming from all over the place. Don't forget that we have with Indonesia, Malaysia and Vietnam, Thailand, very big countries there, which are contributing to the order intake in APAC. Just Indonesia was having 250 million people there and it is quite important for us as a market.

So India was not too big. I think I was a bit low with the number in 1 year because we had 1 year, I think, in 2023, where it exceeded even the 20% part of the order intake in APAC. But so far, it's not, let me say, outstanding big. What we saw is a good growth rate there and that we believe that once we are localized more, we can grab more on the smaller orders, which will contribute then to the market and particular developing customers.

Okay. That is very helpful. And then my last question, if I may. Regarding full-time employees, you have shown that you right now have roughly 21,000 people working for you, roughly 1,600 of that in the United States. What is the sustainable headcount level you guys feel comfortable with? I mean, roughly 8% of your headcount is in the U.S. and you're somewhat shifting away production from Germany, but is there any short-term hiring we should expect in the U.S. or in any other country? Any color on that would be helpful.

I would answer it this way. Even in case we want to hire, we wouldn't be able to because the biggest problem we see with shifting something to DS would be getting qualified people on board. I mean we said that in several occasions that, for example, once we want to hire service technicians in the U.S. A big proportion of that, we are actually bringing over from the Philippines, from Pakistan, from the Middle East, where we have qualified service technicians, and we help them to mitigate into the U.S. because we don't find the people on a qualified level.

And once we talk about having more products in the U.S., and I'm very careful with that statement, I said that earlier, the 15% of tariffs, I would say, is exactly at the border line with the cost advantage we have here in Germany versus the U.S. And there might be in the mid and long run, some of the shift of the products to the U.S. But really the limitation to a big extent is getting the right people on board. We have been shifting the last 5 years, a bit of labeling technology back to the U.S., which we brought back in the 2000 and started to do that labeling business, new machine business again in the U.S. 5 years ago. And the biggest problem was getting engineers and qualified mechanics and electricians that we do, let me say, final assembly in the U.S. and get those machines on a reasonable cost level out of the factory.

So that's the reason why we are so careful with that one. And in the long run, you can expect that the headcount in the U.S. will be higher, but you wouldn't see any peak coming up just in a sudden that we are going to hire the people. We are happy to answer them.

Thanks a lot for your questions. I think the next one is Jorge González.

I would like to follow up on the FX impact and the order intake for the second part of the year. So following also on the question for the order intake in the second part of the year, I understood that you still expect onetime book-to-bill for the year or around that number, which, in fact, implies around 10% growth, some robust growth in the second part of the year compared to the first part. Do you think Drinktec is going to support this or the typical seasonality is going to support this? Or are you expecting an acceleration on any other driver that you can share with us for the second part?

Well, again, Drinktec, I would see only as, let me say, laying the fundament for further orders, but then they are really coming in 2020 or beginning of 2026, let's see. But nevertheless, our estimate on order intake is definitely not based on the Drinktec. It's based on the quotation pipeline we are preparing and the pipeline we have out at our customers. So we have a pretty good understanding how long it takes from, let me say, a quote, which is then renegotiated several times and redesign several times until we get the order on board.

And when we see how many of the decisions will be in the second half of the year, this is the fundament of our estimate that we say the order intake will be around 1. Can there be surprises on the -- let me say, on the upside? I would say, yes, because the pipeline is good. And we do not know how much of those quotes in the pipeline will be further postponed the way we have seen, let me say, the last 3 months because we actually factored in the behavior of the last 3 months, how the pipeline in the second half will be decided. If this is shortened, there might be upside.

But this is far too early to really say something to that, and you know us, we have been, I would say, quite robust on our statements how we judge order intake. And that's the reason why we stay for the time being with the statement, it will be around 1 year-over-year. And this can be -- can have a slight upward trend, yes, can be, but I wouldn't be far away from today saying this is something I can say this might be a good option.

And in your view is more backloaded into Q4? Or you're expecting some even...

Loaded into Q4. It's unfortunately, the order -- let me say, the order doesn't follow the queues we have. I would say it's loaded between September and November because we see -- December is usually slowing down already to a certain extent, we all know because of the Christmas vacations are there. And August is slow because of summer vacation. So it's between September and November, and this is why it's Q3 and Q4.

And allow me for the last one on the FX. So I can understand that in average, we are at similar level if the dollar remains at this level. But now that you are having every time more exposure to the emerging countries and taking into account the strength of the euro, is this somehow changing your pricing policy for the future? Or it's not a problem you see that you can pass through pretty well the increases that this will suppose in the future.

Yes. I mean, if I look to the general scheme which we have, if we talk about line investments or investments of, let me say, bigger projects is anyway done in euro. That's a very important message. So even in case we deal with Nigeria or with Ethiopia, the line orders are in euro. This is sometimes a problem because, of course, limitation of foreign currency is a big limitation for those countries. There would be orders out there in case they could have the foreign FX and could run for it.

Now the issue comes then with the services, which are made mainly in local currencies. And there, of course, we adapt pricing, of course, because otherwise, we couldn't follow, let me say, a devaluation of the currency once we would be not able to do so. But this is then, let me say, in the operational line. And this has nothing to do that what happens then later on in the P&L with translation or in the balance sheet.

But for the -- let me say, for the operational perspective, those are the 2 major aspects. L business and let me say, investment business is done in Europe. If we talk outside of the U.S., U.S. is a bit different. And in Turk, we talk services, this is local currencies. And this will follow, of course, in the case there's a devaluation, we actually fix or change the pricing that we can live with the devaluation. However, then it comes to us part is the P&L and the balance sheet. There we have an impact, let me say, which is quite reasonable.

Then the next question comes from Baader Bank, Peter Rothenaicher.

One question regarding services. Can you comment how was service revenues and orders performing in the second quarter? I think on the one hand, you also had the problem in servicing of lower number of working days. On the other hand, you mentioned the delivery of lines was here under pressure. So how was it developing? And overall, how do you perform in terms of machines connected and into your new service models? Is there any progress? And how is this developing?

First of all, service is performing quite well. So we are happy with the results we have achieved, and we have further growing in terms of our services on a, let me say, single-digit number, but we are quite pleased how this is going, in particular in those more difficult times. And if we look to -- with our service technicians, we serve 2 things. This is services at our customers for the installed equipment. And of course, we are doing the commissioning of our lines with our service techs. As I said, the installation commissioning was a bit lower in Q2. This helped us a lot on the other side to do the life cycle business with our customers.

And that's the reason Uta mentioned that why we are hiring significantly still on service technicians because we have a kind of, let me say, quite high level of installations and commissioning for 2025 remaining and for the entire 2026 because don't forget those lines, which will be produced in the first half of 2026, that will be installed in the second half of 2026. And this is going even into 2027 already. That's the reason why we are hiring on such a big magnitude service technicians. Now to the point on how can we harvest on connected lines. Well, one of the answers, and I hope most of you come to Drinktec because we are going to show you what we have been calling line of the future because the essential part in the line of the future is how digitalization connected lines enables us to do new levels of services in the future.

And it would go far beyond now to say, okay, we can explain that today, but where we made extremely good progress, the number of lines being connected. And the problem in that was never us. It was all the time our customers, which hesitated a lot to connect and to give data. But it seems to that this problem is overcome because, let me say, cybersecurity has been increasing. We are approaching them professionally, blah, blah, blah, all of this. So I would say from the lines we ship, and it's around 300, 200 of them are going to be connected. So that's a huge number. And if you look to machines, any lines carries around 10 machines and each of them is connected.

And this is a huge number. What goes along with that is our digital service centers, which are growing significantly. There we have the issue that we need to train people. This is a totally different business than in the past. Service technician travels to the customer, fix the machine with a spanner or do some reprogramming in a machine. That's not the case anymore. We have kind of consultants sitting in our digital service centers, getting those data from the line and supporting the customers in various ways, calling them, giving them support into -- jumping into their PLCs or even sending our service technicians or even telling them, hey, guys, there's something wrong with your machine, better shut it down.

We do an overhaul, whatever that things are going right. So this is on a very good progress. And I would say it's delivering right now a great fundament for further service businesses around the world. So you see me speaking quite enthusiastic about it because I was strong, let me say, advocate in the sense of being critical to it, but now it's getting really momentum. And we are going to show that on Drinktec with very good explanations how we are doing those things.

And the second question is on M&A. Anything new here? How do you see the opportunities in the market?

Peter, I couldn't hear it, but I assume your question is about M&A in the sense of, is there anything new which we can say? No, there is nothing we can say right now, but we are in the progress on some smaller acquisitions, but they would have been not in a magnitude that you would actually incorporate those in your models to say there is a bigger scale coming up. It's smaller technologies where we believe it's delivering good benefit in some of the markets to diversify a bit and to make ourselves a bit stronger in those markets. But nothing which we could name right now and which might not become true in the next 3 months, maybe by the end of the year or beginning of next year.

Thank you, Peter. Well, I will check my e-mail folder perhaps if there are additional questions. No. Also no more questions coming over the Teams channel. So no more question, I think. Christoph.

Yes. Then thanks a lot for taking the time and spending the time with us. For those of you who have been not on summer vacation, nice summer vacation with better weather. I mean, in Bar, it's ugly. So let's look forward that the sun is shining again, and hopefully, our share price goes up. Thank you very much.

Bye for now. Thank you.

Thank you.