Rieter Aktie

Good morning, ladies and gentlemen. A warm welcome from my side. Thank you for joining us today to review Rieter's full year 2025 performance and discuss the strategic path ahead.

Together with our CFO, Oliver Streuli, I will outline the key results of 2025, the progress of our transformation, our expectations for 2026 and beyond.

Before I begin the presentation, let me draw your attention to the picture on the cover page. That reflects the new Rieter consisting not only of natural fibers, but also of Man-Made Fibers.

So let's move to the agenda on Slide #2. We will briefly look at the key messages and review the market. I will then hand over to Oliver for a deep dive into the financials. Afterwards, we will take a more extensive look at the successful acquisition of Barmag, the medium-term financial guidance and the outlook for 2026.

And now to the key messages on Slide #4. Let me first start with the green boxes. 2025 was a year marked by cyclical weakness in the global spinning machinery market, influenced by geopolitical tensions, lower yarn margins and high volatility in investment sentiments. Against this backdrop, Rieter delivered an order intake of CHF 703 million, slightly below last year, but stable in local currencies.

Sales declined to CHF 685 million, reflecting the subdued market and the result of lower order intakes in the last years. Our operating EBIT reached CHF 2.5 million, affected by lower volumes and pricing pressure, yet supported by active cost management and the early impact of our restructuring measures. Despite a challenging market, we preserved strategic flexibility, strengthened our portfolio and positioned the group for accelerated earnings recovery once demand normalizes again.

Second, the blue boxes. The Asian countries delivered strong order intake, confirming the region's ongoing structural importance for our business model and long-term market presence. The most important structural development, of course, for the year was the successful acquisition of Barmag, a transformative step that expands our presence in the higher growth Man-Made Fiber market, enhances sales diversification across technology and end applications, adds scale, productivity levers, long-term synergy potential and strengthens our market position in the long term in the strategically important Asia region.

The soft integration is progressing according to plan. We expect to realize medium term a minimum of CHF 20 million in synergies, driven by portfolio consolidation, cross-selling, procurement efficiencies and optimized production structures.

One of the most significant regional developments was China. where sales increased by 32%. This growth was driven by a supportive investment environment, improved mill utilization and strong domestic demand. With our efforts to create a local for local organizational setup, we were able to participate more than in the past in this strong market.

Let's turn to the gray boxes. We continue to make tangible progress in sustainability and operational performance. The share of renewable energy used increased to 38.7% compared to 28.6% in 2024.

Women in management positions rose to 20.1%, up from 15%. This was enabled by systematically embedding a focus on diversity into all human resources processes and across the entire employee life cycle.

We were also able to reduce occupational accidents to a frequency rate of 2.7, down from 3.3 in the prior year. This was thanks to the targeted safety trainings in the year under review. These developments support both our ESG commitments and the long-term stability of our operations.

We now move to our group leadership team on Slide #5. To capture the full potential of Barmag and the wider group, we strengthened our leadership team with Georg Stausberg, who now heads up the Man-Made Fiber division. He brings deep industry expertise to this role and the whole combined company. This reinforced leadership setup provides the operational focus required for the successful integration, profitability improvement and long-term competitiveness.

And now to the Rieter full year results 2025. Let me start with the global economic and textile key indicators on Slide #7. This slide shows the resilience of retail sales, which confirms that people are still shopping despite of all the global uncertainty. Retail sales are particularly healthy still in Europe.

A look at the capacity utilization of spinning mills, however, paints a slightly different picture. In the rest of the world, capacity utilization is down year-on-year, while it is relatively constant in China. India maintains a healthy capacity utilization level of 88%.

And a word on the profitability of the spinning mills on Slide #8. Here, you see the cotton margins in terms of Swiss francs per kilo on the left compared with polyester on the right. The spinners cotton margin is naturally very slim and has come under increasing pressure in the recent years due to labor shortages and rising costs. Low capacity utilization further weighs on the margins.

Whereas the rest of the world stays quite stable, but with low volumes, India and China have low margins, but high volumes. A similar picture, you can also see on the polyester margins. So here, Barmag and Rieter pursue the same vision of fully digitizing and automizing the value chain underpinned by strong sales and service networks, which in turn will help strengthen the margins.

And now, a deep dive into the market situation on Slide #9. The 2025 market developed unevenly across the different regions. The Americas showed a stable market environment overall, being more positive in Central and South America, but more cautious in North America. Rieter is very well positioned in this market, and we see quite some growth prospects for the near future.

EMEA includes Europe, Middle East and Africa with the main markets, Turkey, Egypt, Uzbekistan and Pakistan. Whereas Turkey and Uzbekistan have still not recovered from the downturn. We see some market improvements in Egypt. Overall, we can support our customers with automation solutions and low energy-consuming products to create an advantage in the conversion cost per kilogram yarn.

India and the part of Southeast Asia is considered as ready for growth. The latest agreements between the U.S. and India regarding tariffs and the free trade agreement between India and the European Union have given more planning security for our customers. With the strong mill utilization, several larger projects are now in the final planning phase.

China has shown the highest resilience in the market over the last 4 years of downturn. Besides focusing on latest technology, which helps us, a clear investment plan by the central government supports this trend.

Rieter has implemented a strong local organizational setup to match the Chinese requirements and our growth in the biggest textile market indicates that we are following the right strategy.

This concludes now my part of the presentation, and I hand over to Oliver Streuli, our CFO, for the financials.

Thank you, Thomas. Good morning also from my side. I will now walk you through the key financial information for the full year 2025.

Sales amounted to CHF 685.1 million, a decrease of 20% compared to the prior year. Free cash flow came in at minus CHF 40.6 million versus a positive CHF 14.1 million in 2024. Order intake, as already heard, reached CHF 703.4 million, down 3% year-on-year in Swiss francs.

Despite the exceptionally low sales level, operating EBIT remained slightly positive at CHF 2.5 million, but below last year's CHF 33.9 million.

Restructuring, transaction and impairment effects totaled CHF 54.2 million significantly impacting reporting EBIT, free cash flow and leading to a net result of CHF 63.4 million.

Thanks to ongoing strong cost discipline consisting of structural and temporary measures, we were able to reduce overhead costs by another CHF 61.3 million compared to the prior year. And lastly, net liquidity improved to CHF 184.3 million, supported by the capital increase ahead of the Barmag closing.

Now let's turn to order intake on Slide #11. Order intake decreased by 3% to CHF 703.4 million. Machines & Systems recorded a slight decline. Components softened quite a bit, while After Sales delivered solid growth.

FX translation headwinds weighed on reported figures. In local currency, order intake was slightly above prior year. And overall, we achieved a positive book-to-bill ratio when compared to sales, which brings me to the next slide.

Sales declined by 20%, closing in at CHF 685.1 million. This was driven by the continuously low market and certain customer-driven deferrals, especially in December. Machines & Systems saw the steepest decline followed by components. In contrast, After Sales remained relatively resilient in absolute terms. FX headwinds reduced sales additionally by about 2.5 percentage.

Regionally, China grew by 32%, clearly the highlight, which underpins our local strategy. Americas was stable, while in contrast, Turkey, Africa and several Asian markets where Rieter historically holds a strong market position declined sharply due to the subdued market.

Now let us continue with the operating EBIT on Page #13. Operating EBIT remained around breakeven at CHF 2.5 million, thanks to strict cost discipline. The negative gross profit impact of around CHF 92 million due to the lower volume was largely offset by overhead savings.

Now allow me the comparison to 2023, our last normal or good sales year. In total, we have now reduced our overhead costs by almost CHF 120 million or by more than 1/3, which mitigates the continuously difficult market environment to some extent.

Regarding nonoperating EBIT and net income effects, restructuring and impairment costs totaled CHF 37.8 million and transaction-related costs, including financing amounted to CHF 16.4 million.

For the sake of completeness, some real estate disposals, most prominently in half year 1, as already communicated, also supported operating EBIT as part of streamlining our production and administrative footprint.

Now let's turn to an update on the announced restructuring programs on Slide #14. As outlined in Q3 2025, we expect the announced measures to deliver a run rate benefit of around CHF 27 million against onetime costs of around CHF 36 million. These benefits are expected to fully hit the P&L in 2027.

Now on to some details. On the Short-Staple Fiber division, as we newly call our natural fiber business, we implemented targeted capacity adjustments and shifted parts of the winder assembly to China. We also transferred repair services to Rieter India and Rieter Czech Republic and optimized the indirect to direct labor ratio across the supply chain in India, the Czech Republic, and also China. We also optimized the cost structure in India, Czech Republic, China and in the U.S.

In the Components & Technology division, we selectively transferred R&D and SG&A capacities to best cost countries and reduced the overall cost base.

Several footprint adjustments were also executed such as the sale of the Graf company Gomitex in Belgium, the closure of Graf Netherlands with production move to China. And finally, we executed a plant consolidation in Germany at Suessen and initiated the closure of Bracker France at the beginning of this year. These measures significantly simplify our footprint and structurally reduce costs, marking another milestone in improving our overall competitiveness.

Now on to cash conversion on Slide #16 (sic) [Slide #15]. Free cash flow reached minus CHF 40.6 million, reflecting the negative net result and transaction and restructuring-related cash outflows.

Lower advanced payments from customers also weighed on cash flow, while operating working capital improved to some extent through reductions in receivables and inventories, which was partly offsetting. Strong cash discipline obviously remains a key management priority also in this year.

Now a word on our financial position on Slide #16, which is my favorite slide, but has to be taken with a pinch of salt, obviously, given the pending Barmag closing at year-end. Our financial position improved during the year and the equity ratio stood at 53.3% and the net liquidity reached a positive CHF 184.3 million at year-end.

Which brings me to my last Slide #17 on liquidity headroom. Given the still muted market environment, debt levels will be elevated during the course of 2026 following the Barmag closing. However, it's important for me to state that available liquidity shows a combined liquidity of more than CHF 300 million, which consists of current accounts, deposits and money market funds.

On top, Rieter has access to a CHF 375 million revolving credit facility and more than CHF 100 million in bilateral credit lines. This means that our financing is fully secured and provides a sound base. This concludes the financial section.

Back to you, Thomas.

Thank you, Oliver. Thanks a lot. So let's have a look at the today's Rieter, a new global leader in the textile industry. And let's look at this new animal on Slide #19. With Barmag included, Rieter is now the global leader in both Short-Staple and Man-Made Fiber solutions.

We are present in 31 locations across of 9 countries. We now have more than 7,000 employees with leading-edge expertise in fiber technology, and we are offering technology coverage across the entire spinning and filament value chain. This expanded footprint is a key driver for the future, operating leverage, cross-selling potential, market share gains and profitability improvements over the cycle.

Here, you can also see the locations divided by the different regions, Americas, Europe, Middle East, Africa as well as in Asia Pacific. And on the right side, the 3 new divisions, Man-Made Fibers, Short-Staple Fiber as well as Components & Technology.

Now let's have a look at the global textile landscape and the value chain on Slide #20. With the integration of Barmag, Rieter enables the full spectrum of yarn production. On the left side, the raw material, which is used in the whole textile industry. This amounted to around 113 million tonnes of raw material per year. This 113 million tonnes are divided into 54 million tonnes of staple fibers and about 59 million tonnes of filament.

When we then deep dive into the figures for staple fibers, we see that roughly 1/3 or maybe a little bit more than 1/3 comes from cotton and 1/3 comes from polyester. These are filaments, which are cut afterwards into fibers and then are spun on our machines. The rest is made up of viscose and other products.

Now let's jump to the Slide #21. Rieter covers now the entire textile value chain from fiber to yarn and from polymer melt to filament, fiber and nonwoven products and covers the complete process from fiber preparation through to all 4 and spinning technologies in the spinning mills.

You see on the left side, the mentioned 3 divisions. The Short-Staple Fiber division unites Rieter's global expertise in short-staple fiber spinning systems across operations, sales and services. The division covers the full portfolio from fiber preparation to spinning preparation and to end spinning and winding.

The Man-Made Fiber division covers Rieter's complete solutions for processing polymers into filament yarns as well as systems for the production of synthetic staple fibers and nonwoven. The portfolio also includes the design and engineering of complex spinning plants, the manufacturing of core components and a comprehensive range of After Sales services.

Automation and digital solutions complete the offering, enabling efficient, high-quality and future-ready production across the entire textile value chain.

Through our third division, Components & Technology, we offer our customers specific textile components. Our brands are Accotex, Bracker, Graf, Novibra, SSM, Suessen and TEMCO. The division is the backbone of Rieter's technology leadership, bringing together in-depth expertise with forward-looking research and development.

The division drives the advancement of high-performing short-staple spinning machines, systems and components. The wide range of end applications from the 3 divisions varies from apparel to home textiles, technical textiles and nonwoven.

A word on the higher growth and more diversified end application on the Slide #22. Overall, and you see this on the left side, the consumption of raw material will increase from the already mentioned 113 million tonnes to 133 million tonnes in the year 2030. All end consumer markets will contribute to this higher consumption and production.

On the right side, you see the impact on our different business segments. All business segments will grow over the next 5 years. So the question is not that the markets are coming back. But the question is when markets are coming back.

From a macro perspective, the new investment cycle is overdue. But for this, we also need some political and economic stability to motivate our customers to start to invest again. Projects are there. Our offer pipeline is the highest since 3 years. And I'm sure a lot of those projects will be executed. But still, customers are hesitating to take the investment risk in this very challenging environment.

Now let's have a look into the future. What does that mean for us? And I hand over to Oliver for the medium-term guidance and the outlook for 2026.

Thanks, Thomas. Now let's do a deep dive into the new midterm financial guidance on Slide #23. It's clear that as a new combined group, we had to reconsider our midterm guidance for different market scenarios.

Now based on feedback received, we concluded that the market scenarios are a valuable approach to provide the capital market with our view on financial targets over the cycle. That is why we stick to this approach and adjusted our former low, mid- and high market scenarios, which now include the new division Man-Made Fiber, Barmag, an adjustment of the top line scenarios of the old Rieter Group, where we have to admit that we have been too optimistic in the past, and we had a hard reality check of what low really means over the last 2 years.

We also consider a substantial PPA impact in our profit and loss statement due to the acquisition of Barmag. Therefore, we will adjust for all PPA impacts to reflect the operating performance of the business in operating EBIT. And finally, we included our midterm synergy target of CHF 20 million stemming from the transaction.

In summary, we see strong potential for a combined company beyond 2026. However, our markets remain cyclical in nature, which brings me to the specific revised scenarios.

In a low market scenario, we now expect sales of around CHF 1.4 billion at an operating EBIT margin of 2% to 5%. In a mid-market scenario, we expect sales of around CHF 1.8 billion at an operating EBIT margin of 5% to 8%. While in a high market scenario, we expect sales of around CHF 2.2 billion at an operating EBIT margin of 8% to 11%.

In addition to our market scenarios, we would like to provide an update on other key midterm financial targets on Page 24. We target a leverage of below 2.5x net debt to EBITDA. It's clear that in the near future, capital allocation will be focused on deleveraging while our long-term ambition is to achieve a net cash position.

CapEx is expected at around CHF 50 million to CHF 70 million for the combined group in a more normalized environment. Short term, it will most likely be lower. And we adhere to our fundamental dividend policy of maintaining a payout ratio of at least 40% of available net profit.

As mentioned before, in the short term, our priority is to deleverage and strengthen the balance sheet, while in the long term, we aim at stable absolute payouts per share. We also continue to aim at an equity ratio of more than 35% by means of deleveraging and shortening the balance sheet by effective use of excess cash.

To sum it up, our new midterm targets position us well for margin expansion, stronger cash generation and a more stable and diversified earnings across the cycle.

And now to the outlook for the full year 2026 on Slide 2026 (sic) [Slide 26]. 2026 will be a transition year, shaped by the integration of Barmag, the full execution of the announced restructuring measures and a delayed market recovery.

In addition, we will not yet fully benefit from synergies in the combined Rieter Group. Therefore, in 2026, Rieter expects sales in the range of CHF 1.3 billion to CHF 1.5 billion. Please keep in mind that this includes only 11 months of Barmag given the closing on the 2nd of February.

The outlook for 2026 reflects the integration of Barmag and the restructuring measures announced in 2025, of which the positive effects will not yet be fully effective. As a result, a positive operating EBIT margin in the range of 0% to 3% is expected.

And with that, I conclude my presentation. We now welcome your questions. And for this, I hand back to Relindis for the Q&A session.

Thanks, Oliver. Ladies and gentlemen, we will start with the questions here in the conference room in Winterthur and afterwards open the lines for participants in the conference call. [Operator Instructions] Then we will take the questions from the webcast. As usual, the Q&A session will be recorded. I kindly ask the participants here in the room to wait for the microphone to mention your name and the company you work for before asking your question. There's a question, Ingo. Thank you.

This is Ingo Stossel from UBS. Can you maybe give us some more color on the divergence between your After Sales order growth and sales decline on the one hand? And looking at your leverage guidance, can you give us your estimate for the end of 2026? And then maybe a time frame, you say medium term below 2.5x long-term net cash. Can you give us maybe that in years or months ideally?

Thank you for the question. And maybe I answer the first one about After Sales, and then I will hand over to you, Oliver. So it is true in After Sales, we have -- we already presented in the past a lot of initiatives how to strengthen our business model. So in fact, there are 2, 3 key drivers we have taken up. One is we are more and more localizing our organization because service business is local business. You have to be very close to the customer. So we have strengthened our service organization all over the world.

The second part was availability of spare parts and delivery times. So we're working very hard to decentralize our warehouses and our spare parts to be fast towards our customers. And the third element goes a little bit with our overall strategy of digitization and automation. So we are pushing a lot to automize existing spinning mills. And there, we call this engineered solutions. So these are the three drivers that we have a better order intake.

Now the reality is that we concluded many orders or better orders than the year before, but still the execution of the orders is lagging because customers do have certain financing issues. So they close an order, they make a down payment. But then at the moment, with this very wobbling political environment, they don't invest yet, because some of those topics are also quite big investment amounts. So that's one key reason.

The second topic is that in After Sales, we also have the installation of new machines. And this part has been reduced in 2025 compared to 2024 because you have a certain time lag. When we deliver the machines in the next 12 months, you finalize the installation. And with the reduction of order intake and sales volumes in the new machine business with a certain time lag also our installation revenues are going down. So there is a little bit of mismatch between order intake is, in fact, positive, but we don't see it yet in our sales volumes.

And the second question, I think, Oliver, it's your turn.

You may understand that, we don't provide a guidance on leverage for 2026. However, I can help you with some indications. As you know, we financed the transaction roughly 50-50 with equity and debt. For that portion, we initiated a CHF 375 million term loan on the debt side. And on top, we had existing debt of around CHF 250 million at Rieter, so to say, which means that you may assume that our debt position is around CHF 500 million to CHF 600 million at the moment.

With regards to the phase-in of the midterm targets, that's usually to be understood over a time horizon of 2 to 3 years, probably around 3 years and the path to net cash comes thereafter.

And maybe to add on that, it also -- the speed of deleveraging also depends a little bit on the market recovery because usually, when the market is recovering, what first happens is you have a lot of order intake. And with the order intake, you have a lot of down payments. And history shows in both areas, let's say, the old Rieter, but especially also at Barmag that this cash generation happens extremely fast.

So if -- and we all pray for that, the markets in the near future now are picking up, then this can go very fast to deleveraging. It's not only profitability, but it's especially also net working capital, which improves substantially in the uptime or in the process where markets are picking up.

[indiscernible] Capital. I got a couple of questions. First one on the market. We can see retail sales increasing steadily in your presentation, also spinning mill utilization is increasing, yet the yarn fiber margins are coming down still. Why is that?

So what is happening at the moment is the following. I try to explain, of course, I'm in contact with many, many customers all over the world, and we have regular monthly, let's say, market updates. So we have to look a little bit on the 3 different areas. So China, India and the rest of the world because it's very different what is happening.

The end consumer market is there. That's the good news. The end consumer market even is picking up. So it's not so depressed like the machinery part. The end consumer market is, in fact, quite, quite stable, especially in the apparel side, whether this is the U.S., whether this is also in the European Union. Now what happened is that we had a substantial increase due to the inflation after the COVID crisis, mainly in the rest of the world. So labor costs were increasing a lot.

On top of it, the biggest market we had was Turkey. Turkey was destroyed after the earthquake. The reason why the spin utilization is so low in the rest of the world is especially driven by Turkey. If you go back 4, 5 years, our sales volumes in Turkey were like CHF 250 million. Now we talk about CHF 25 million. We were absolute market leader in this market, and the margins were very healthy.

Now Turkey never recovered from this earthquake. 70% of the installed base was affected by the earthquake. And people left the industry and the mill utilization in Turkey is slightly above 50%. So this in a mix impact for this rest of the world has a huge impact.

A little bit similar was Uzbekistan. They probably have overinvested in '21 and '22 like some other countries in the rest of the world. And it takes some time until all these overinvestments are absorbed by the increase of the end markets. And we believe that this is now the time where we see, okay, the good ones, the big customers, they are at full capacity and the small ones who have not the funds to invest in new technology, automation, they might go bankrupt. So there's quite some tension in this rest of the world.

Now India is different. India is split into North India and South India. North India are the big spinners. They are all above 90%. The biggest spinners in India are very healthy. They have very good net profit margins. They are -- they have full capacity. But again, in this country, the South, these are all small spinners. And they have been partially Indonesia, partially it was like a part-time spinning mill they had, and they are not competitive anymore.

So this is a small -- they still produce because their cost can be -- the fixed cost can be absorbed. And the domestic demand is now picking up. India as a country, we see there will be a shift from export activities much, much more into domestic demand.

And China is China for China. So China, even if we only see something like 70% spinning mill utilization, also there, there is not a north and the south, there is a east and the west. The east part along the coast, the traditional market of China, there is almost no investment anymore. Everything is investment in the west because costs for energy are much lower. You have CHF 0.04 per kilowatt hour and also the labor costs are very low. So that's a little bit how the market is there.

So rest of the world is still suffering, although markets is there, they are too expensive because labor costs are so high. And India and China, India is very good and China, in fact, is also good. We have 2 strong markets with China and India and the rest of the world, there is not yet light at the end of the tunnel.

When we look at Barmag's results in the last quarter and in H2, we can see a slight pickup in orders there, orders higher versus sales. Maybe you can talk a little bit about what you've seen for Barmag, but also for you over the last few months in terms of order intake.

Well, I don't want to comment the result of Barmag of last year, but I can maybe give an outlook. I'm not so much discussion about others like others are doing. So I more look forward into 2026. And let's be honest, Barmag is part of our group since 24 days. So I don't know everything because before we were not allowed to talk about any market or pricing or product topics due to regulations.

However, in the last 24 days, there were already a lot of meetings happening. All the different expert teams already have met the first time. I was 2 weeks ago at Remscheid. I will go next week to Suzhou and Wuxi to the Barmag factories in China. And what I can say is, first of all, we are impressed and got a confirmation about our good impression we had in the past. It's a very solid company, very well managed and have a similar strategy like us, technology leadership in order to achieve higher prices and margins.

And the pipeline we see is somehow also increasing. I know now after 24 days, several larger projects in the pipeline to come. The question is not if they come, it's again when they come. And this is not only in China, it's also in some other parts of the world. So I'm optimistic that Barmag is delivering good results towards our group.

We have a similar expectation in terms of sales volumes. So overall, we see in sales more a side step '25 to '26 because it takes some time until order intake will materialize in higher sales volumes.

Barmag even has a higher cycle time than the old Rieter part, whereas in Rieter, it was maybe 9 to 12 months. At Barmag, it's more like 12 to 18 months. So whatever we have as a pickup in certain markets will only materialize in sales volumes and EBIT at the end in 2027.

So Barmag, everything we have seen, everything we have discussed, I have to say, it's like they already belong to us in certain years. It's a perfect match. It took some time until we married, but now we are both -- we are altogether happy couple.

Now the Rieter part, when I look at Rieter, I clearly have to say China is stable, and there is no reason why it should not stay stable. China tries to create a lot of production volume with low margins because they are very cost competitive in the Eastern part of China. And we have changed a lot, and we are benefiting. We have quite substantially increased our market share in China.

And India, we are convinced with the latest agreements and a huge local demand increase because the middle class population in India is over proportionately increasing. All these textile activities will more and more focus on Indian demand and not anymore just for export. So we are convinced that India now is ready for growth.

Now, this is a little bit a change to our historical footprint. Historically, we were super, super strong in the rest of the world. We had the highest market share in the rest of the world, and the rest of the world was also more than 50% of the worldwide market. If you compare our sales volumes in rest of the world in '25 compared to '22, it has been reduced by more than 80%.

So we lost 80% of high-margin business and had to compensate now with more competitive businesses in India and China. And that's the reason why we have started to do all these transformation programs without Barmag.

We have to be where the new markets are. So this shift to Asia is a structural shift, in my opinion. Some areas in the rest of the world will pick up. Egypt, we are convinced. Latin America, we are convinced. And we also see now Bangladesh, Pakistan coming back. But some other areas, we are very hesitant like Turkey, Uzbekistan, countries where we had the highest market shares in the past.

And that's a good market overview, but more in terms of month-over-month over the past few months, maybe you can tell us, if you see a further pickup. We heard the pipeline is good, about firm orders. Maybe you can tell us something about that.

So starting to the year was okay, was okay. We saw that -- and a very early indicator is besides the parts business, it's also part of our component business. So we saw that in the last 3 months, our component order intake has substantially improved. So these are consumables, spare and wear parts where we saw a pickup. Another early indicator is also our company, SSM, who is also in the Man-Made Fiber business, but more in specialized areas. There, we had very good order intakes as well.

And our offer pipeline of new machines is the highest since I'm here. And this is now 3 years. These are not yet orders, but all these offers have to become orders and the question will be what is the share we can really get for ourselves.

I have to admit pricing over the last 3 years has been heaviest under pressure, because the cake has become smaller, and everybody had empty books and everybody was jumping on these orders. So we are mitigating that with very consequent cost management, Oliver.

And last one, then I'll go back in the queue. On the guidance, I can see that despite at least a little bit higher order intake, it's prudent to guide for basically stable sales and midpoint. When I look at margins, maybe you can tell us a little bit, how you came to the 0% to 3% Barmag alone roughly made 3% for the combined group. Maybe you can give us some more insights into that.

Sure. Perhaps I try to explain the bridge of the 2026 guidance towards the midterm guidance. And there are 2 main effects. One effect being that at Rieter, we still adjust our capacity, and also our cost base to the market realities. That's also why we announced those restructuring programs in Q3. So these effects will only fully materialize with the full year 2027.

And the second part is that the integration of Barmag has only started 2 weeks ago. And that's why we expect those synergies only to fully hit our P&L with the full year 2027. That's the reason behind that gap between the 2026 and the midterm financial guidance on that low scenario.

But what I more meant was the Barmag made roughly CHF 40 million, if I'm not mistaken. If we put that on to CHF 1.4 billion, we would come to the 3% already. And obviously, you did a lot of work for Rieter, too. So is it just being very cautious and that's fine? Or are there other things that we should consider which will push the margin down a little bit in '26?

I mean, Thomas mentioned it before. I don't consider this guidance as cautious, but that's realistic. We are in the middle of adjusting to the new market reality, plus there is also some margin pressure in the market and the market success that we have in China, we fully believe that it's structurally the absolute right thing to focus on those markets, but these markets are more competitive than the rest of the world markets in the past. So there is some pricing pressure, which is also reflected in the 2026 targets.

But Thomas, perhaps you want to elaborate on that as well.

I think the question is, what is the performance of the old Rieter? Are we contributing? When you take an operating EBIT of CHF 2.5 million, and we mentioned that some of it also was onetime because of real estate changes.

In all fairness, if you would deduct that, the run rate was negative in 2025. So we tried with everything we could do to compensate. So you first have to catch up. This will come mainly with the restructuring programs we have launched in the quarter 4 2025. And this CHF 27 million improvement, you can calculate half of it will come in '26 and the other half comes in '27 because some of it are production closures, and this is not from one day to the other, it takes a little bit of time. So that's the catch-up we have.

Then we, of course, in 2025, we had a drop in the margins for our new orders for new machines. So margins came under pressure because of the shift of volumes towards China and India. So this we also have to catch up with more cost measures.

Structurally, the old Rieter is not set up for a CHF 700 million business. This is below our real internal breakeven point. So we are doing that, and we probably will continue to adapt our footprint because we have far too many locations, clearly.

But at the moment, we are not ready to make high margins with a plus/minus CHF 700 million volume. So the Rieter part with that low scenario without any synergies is contributing almost nothing. Now you can say, well, combined, but you still would go maybe to 2% or 3% -- you might not be wrong there. And in year 4, even myself, I have learned that sometimes you have to be cautious because future is very unpredictable. So we rather prefer -- if it comes better, we will take that happily.

[ Thomas Litto from NZZ ]. I have 2 questions. First, like you have been cutting a lot of costs in 2025, especially like in Europe and Western Europe and Switzerland. And I'm wondering what will be like the long-term consequences of that, for example, if it comes to innovations and so on. I mean, these people haven't just been hanging around, I guess. So there has to be like an impact somehow.

And second question, you say like more or less the future is in Europe, is in China and in India. And you also say, like the margins are very low over there. So I'm wondering like, will this change like somehow in the future? Is there any chance that will change? Or you just have to live with that, that you will operate like in markets with very low margins?

So maybe I take that up as an answer. And it's, of course, something which is heavily discussed also within the company. This is -- it's a very valid question. So we had to adapt our cost structure to a new reality. This is the minimum everybody can expect from us.

And of course, we are segregating our workforce into different clusters. We say there are high-cost countries, there are mid-cost countries and there are lower-cost countries. That's point number one.

Point number two, whatever is a customer-related activity should be as close to the customer as possible. Many Swiss medium-sized groups have had the same challenge that it was more -- everything was at the headquarter and all the new Asian markets have been export markets. But this is not accepted by customers anymore. They want to have their local teams. So a lot of the shifts were customer-related functions we have moved into China, into India, but also into the U.S. away from headquarter, point number one.

Point number two, then in R&D and production, you have certain transactional tasks. Not everything is innovation. A lot is executing certain programs for customer-related products. This also should be where the customers are sitting because these are amendments to specific market requirements you might have in China or in India or in the Americas. So that's part of, let's say, R&D, we have started to shift to those markets.

And then the question is what's left for Europe, and especially what's left for Switzerland. And here, I want to make a very clear statement. Europe and especially Switzerland has a fundamental meaning and importance for us. And this is the innovation. I don't know another country who has such an innovation DNA like Switzerland.

I mean, we have the best universities. We have fantastic people coming from the universities. We are a very attractive place for many high-caliber brains outside of Switzerland. Innovation is the key driver. That's the strength and the survival package of Switzerland and this is also valid for Rieter.

So in our different places we have, for example, our 3 component companies, SSM, Bracker and Graf, the innovation is all in Switzerland and will remain in Switzerland.

If I look on our R&D department we have here, we have now a new department, which is called new technologies. This is all based here in Switzerland. Digital automation brains are all based here in Switzerland. So the core innovation will be made here in this place.

If you then have to execute a development plan with milestones planning, you have to purchase the material, you have to work with suppliers. Some of those tasks are then in our customer markets. But that's super important. Europe and Switzerland, it's driven by innovation and value-added tasks. And if you have more repetitive transactional execution tasks, you are more on the customer side and therefore, more in the customer markets.

Does that answer this first part of the question? The second one, you have to repeat once again. I somehow have forgotten with all my enthusiasm.

The margins in India and China, how this -- is there any chance that they will be higher like in the future or if you just have to be with that?

Margins are -- margins are very simple. It's price minus cost. And the price is driven by the market, and those 2 markets are very competitive. So you have to work on your cost. And working on the cost is that you have to follow a China for China strategy and an India for India strategy in the production and the sourcing.

And you might have the one or the other area where in the innovation, you have to say, wow, does the Chinese and an Indian customer exactly need everywhere that premium package? I believe, yes. But the premium they are willing to pay for it is maybe lower than in the rest of the world.

So our answer is prices, we get better prices in China and in India than competitors. We do get that because we are considered as a technology leader. But we have to work on our cost competitiveness. And this means, you have to source out of China for China, and you have to source out of India for India.

And the rest of the world, by the way, I also believe that in the next 2, 3 years, some rest of the world markets will pick up. I'm sure about that. And there, we also have enough production capacity here in Europe. We have 2 major sites in Czech Republic and in Germany besides the component factories where we serve more the rest of the world.

Any more questions here from the room? I don't think so, really.

[Operator Instructions] So Valentina, may I kindly ask you to open the first line, please.

Sure. The first question from the phone comes from Amira Manai, ODDO BHF.

I have actually 2 main questions. First one is regarding the 2026 guidance of CHF 1.3 billion and CHF 1.5 billion in sales and an EBIT margin between 0% and 3%. Could you break down the underlying assumptions for return on a stand-alone basis versus the contribution expected from Barmag? And what would be the main risks that could jeopardize your scenario this year?

Oli, that's your turn.

I mean, the main assumption is pretty simple one. So we don't expect a significant recovery in the market to be reflected in sales. There might be some recovery in the market reflected in order intake, but not in sales. That means for both entities, more or less similar numbers than in 2025. That was the main assumption.

And on the profitability side, as we outlined before, 2026 will be a transition year on the way to achieving the midterm targets in a low market scenario. I hope that answered the questions. The line was not very good.

Yes. And what the main risk that could jeopardize your scenario this year? What are the main risks?

Well, it's a very good question. It's not so easy to answer because in the last 3 years, I could not count anymore all the risks which have arose unexpected, and then even materialized within 1 week. So I think one risk is that, the biggest risk is, in fact, that all this tariff situation is not somehow now fixed.

Now I don't want to challenge any Supreme Court decision, and I don't want to challenge any company decision, whether they want to claim back or not any tariffs. But finally, we achieved somehow now all over the world some stability that everybody knew what the tariffs are.

Now -- and it seems that U.S. government somehow stays with the 15% more or less now on this level. Whatever law you need to do that, I cannot exactly explain to you. So I think that's the biggest risk is really this tariff situation.

There is a second risk that's a supply chain situation. I'm not aware -- or I don't know if everybody is aware, but with the increase of artificial intelligence with KI [ Foreign Language ], how you say in German, and all these new demands for chips, chips have become short again. So chip prices are going up, and this could disrupt all over the economy again. I don't want to see anymore cars where you don't have any navigation system because they don't have chips anymore or machines from us who cannot run because there is no electronics available anymore.

So that's another risk which we have foreseen and mitigated. We secured all our supplier contracts. But that's a second risk. And I think the thirdly risk in all fairness, could be wherever a new war will happen, because with all the peace activities we had in the last 12 months, I could not say that, the war activities have been substantially reduced. And there is always in the one or in the other place, certain uncertainty. That would be more from our side. I don't know if you see more risks on financing, on banks, on financial markets.

I think something which obviously was a risk in the past, but where I see more ease on the financial markets is basically that we see a global trend towards lower interest rates, also driven by lower inflation and that could be a bit of a tailwind. But yes, I think, it's good now with the risk section.

So to come to a conclusion, I see much more opportunities and chances looking the next 3 years ahead than I see risks.

Okay. Then we will take the next question, please.

The next question comes from Walter Bamert from Zurcher Kantonalbank.

Can you hear me?

Very good, loud and clear.

Perfect. So I'm asking a lot of questions that help me in modeling. Can you give me the pro forma net debt figure after the closing?

Walt, as I said before, we don't give a specific guidance, but you can take as a rule of thumb that we took a term loan of CHF 375 million to finance the acquisition, plus we had existing debt that so-called old Rieter of around CHF 250 million. And if you combine that, you ballpark where we currently stand. What I did not mention before, I mean, this number is obviously elevated and is not in line with our deleveraging plans. This is also why we have discussed that with the banks, and we have found the consent with the banks. They know about the risks and opportunities over the next 18 months. And as we said before, the financing is fully secured.

The challenge is not the figures you mentioned. The challenge is the net cash situation of Barmag, which is not very transparent to me. But okay, I can work with it. And the other question is, you indicate somewhere purchase price allocation effect of about CHF 50 million. You mentioned mid-double digit. So that would eat up the entire EBIT of 5.5% indicated by Oerlikon on Barmag in -- if that stays about at the same level in this year. Is that correct? Or is there something wrong with my assumption?

No, that is more or less correct. As you may assume, if you acquire a market leader and an asset-light business, then the purchase price allocation consists of a lot of intangible assets and goodwill that is just normal.

Now in the first year following the closing of the transaction, you have extraordinary purchase price allocation driven by the step-up on inventories, for instance. And so in the first year, it will be slightly elevated. And in the following years, we will be in a run rate for the combined group of around CHF 40 million to CHF 50 million.

You mentioned CHF 40 million to CHF 50 million run rate in the coming years, phasing out over about 5 years. Or what would you assume there?

It very much depends. For brands, we take a longer period. It's very much a mix on the different elements of the purchase price allocation. We will provide more details on the purchase price allocation with the half year figures. You may appreciate that we just closed the transaction 2 weeks ago and any PPA assumptions at the moment are provisional in nature.

What is very important to understand that this PPA effect, this is normal if you do a big transaction, these are noncash costs, and they are also not reflecting of the operating performance. That's why we normalize. Obviously, over time, they ease, and it is also our target to, at some point, come them back to a more reported figure.

That brings me to the next question. When you say you guide for 0% to 3% EBIT margin, that would be lower on a reported base due to the purchase price allocation, or you have that reflected already in there?

No, that's operating EBIT margin guidance. This is adjusted, and you can find the slide in the appendix, Walter, on the details that is adjusted by purchase price effects as well as restructuring and any incremental transaction costs. We had some transaction costs with regards to the closing, but they are much, much lower, obviously, than what we had in 2025.

In Slide #30 in the appendix of the presentation.

Okay. And that would mean you're rather assuming operating performance in line with last year where Oerlikon reported 5.5% EBIT margin overall.

I think that's a fair assumption. I think that is a fair assumption.

Yes. And then -- can you give a figure for the one-offs you expect in the staple fiber business in this year?

Well, obviously, we will have some cash outs with regards to the restructuring activities that we undertake, mostly consisting of severance, which unfortunately are pretty high in France and also in Germany for the measures we undertake. That is one element.

Then we also plan some incremental restructuring, not in the amount announced in Q3, but there will be most likely further measures. And then as mentioned, it's the transaction costs minor in nature, but I would say, those are the 2 main areas, apart, obviously, from the purchase price allocation effect.

With parts of it already provisioned in last year.

Exactly. Exactly. So all the programs, that's important -- from an EBIT point of view, all the programs we knew and where we have a very clear plan what to do has been provided in this quarter 4 last year. But of course, this has not been cash effective as we have certain closures now during the course of 2026. The cash impact comes in 2026. And the P&L impact we had in 2025.

Okay. We will now move to the questions from the webcast. The first question comes from Andreas Meier, Finanz und Wirtschaft. What is the future of the Turkish market?

So I mentioned that before, the market in Turkey for us was shrinking by 90%. It was the strongest market we had in the past and it's the weakest market we have today. And it all happened, in fact, with the -- it was a combination of elements. One was the earthquake on February 6, 2023, where 70% of the installed base has been impacted. Not everything has been destroyed, but people left.

The second topic is, of course, that from a macro economical point of view, it's not so easy to understand what exactly the target of the Turkish government is. They have imposed very high minimum salaries. So to give you an idea, a worker in Turkey costs about $1,500 per month. A worker in Egypt costs $250 per month. Labor costs are roughly 15% of total cost in a spinning mill. And if you have 5x or 6x higher costs, you just become totally uncompetitive.

So this means the Turkish spinners make no money. The large one have economies of scale. They are maybe serving around the 0 line, but the small ones, they make all a loss. Then they have not the fund to do the necessary investment and the necessary investment for Turkey to survive is automation. They have to automize their spinning mills. If they do, they don't have this handicap of labor cost anymore. And this is why Turkey for us in terms of automation is the key market we are now focusing on. We have launched now several programs. But of course, if you don't have money, it's also difficult to invest into automation.

So it's a little bit chicken or egg and the government has promised certain support, which has not happened in full. And so Turkey is really struggling. And if this, let's say, government controls are not eliminated in terms of minimum salaries, if there is not a support to invest into automation, I think the textile industry of Turkey is really under pressure.

Now the Turkish customers do the following. They go to Egypt. So the biggest investors now or some of the biggest investors in Egypt are now Turkish spinners, who have all the know-how because Turkey has a huge know-how in the spinning industry or textile industry, but the home territory at the moment is not affordable anymore. So they go to Egypt and they wait that, Syria becomes stable. And then they just jump over the border.

And so the country itself, Turkey, I see very challenging in the next 2, 3 years. There is the one or the other project coming up, but it's very, very difficult for them. And it's homemade and an external factor with the earthquake.

Okay. Then I move on to the next question from Dennis Piretra. Retail sales decreased by 20% in 2025, falling to CHF 685 million. Is this drop attributed to a loss in Rieter's market share? Or is it a result of a broader downturn in the global market?

Maybe you can say a few words then to the one or the other shift from '25 to '26. I think it's both in all fairness. The market was still down and even went down a little bit more. That's one element. And then, of course, sales is always the result out of orders you had. And still in '24, we still had some orders from the good times '21 and '22. So in '25, we were just living from orders we got in '23 and '24. So it was now the real new normal. That's one point.

So there is a book-to-bill topic. It's the first time that our bookings are higher than our billings. It's a turning point we have seen on a low level, by the way, but it's a turning point.

And the second topic is, yes, the market has not recovered. But the third topic is even more important. Historically, and that's why globally, we probably have lost a little bit of market share because the market who was the strongest one was China, where we have the lowest market share, although we improved tremendously our market share there, but the mix shift to China was bigger. So from a mix impact, we improved in China, but China became more important, and this has dampened our global market share. And where we have a super high market share in the rest of the world, this market has disappeared.

So it's especially an outcome of tectonic shifts from the 3 or 4 regions we have in the world. When I look on our order intake figures, I'm confident that in the future, our market shares will go up. And I think the reason why '25 was especially low, we also had the one or the other shift, Oliver.

Yes. I think it's very, very difficult to differentiate between underlying market performance and market share. It is my strong belief that the market has the much bigger effect than the relative competitive situation. On top came also that in 2022 and 2023, we had very high sales levels because we took a lot of orders, our competitors did not take anymore. So that also distorted the picture to some extent.

Now, when I look at the different regions, I'm referring to Page 33 in the presentation. For me, the highlight, clearly, if I look at the difference in local currency, which is reflective of the underlying performance, China increased sales by 38%, which is clearly a highlight. The market was not up by 38%. So we gained market share there.

Then North and South America, we expanded slightly. So we at least kept our market share stable over there. And then we had a couple of very, very difficult markets. As mentioned before, Turkey, minus 76% because the market is just inexistent at the moment in Turkey due to the challenges we've heard. And then also in some other Asian countries, which were heavily affected by tariffs, such as Vietnam, for instance, where we declined by 20%. And there, it's very much driven by the underlying market.

Okay. Thank you. Then the next question comes from Leonie Zirn from UBS. Three parts. I will start with the first one. Your numbers suggest good positive order intake in machines end of 2025 and slightly positive for components, while negative for aftersales. Can you give a bit more color here? What exit rates do you currently see in 2026 in machines and components similar to the fourth quarter?

Exit rates.

Cancellations...

Cancellations. So it's true. We had a better fourth quarter than what we had the 2 years before. That's point number one. And this is a good sign. And the reality is it really was driven by new machine sales and also by order intake and components. I mentioned that before, it started in November that we saw that our component business is picking up.

Now the aftersales business, we had this trend of the installation part of our aftersales business. This still was shrinking. And we also saw that, Engineered Solutions, which are mainly focusing the Turkish market at the moment and some rest of the world markets, there was no money availability to invest. So it was a little bit counterintuitive that although, they have the need for that, and we are doing a good job in the aftersales business, but especially for this topic of Engineered Solutions, it was not really picking through in Turkey. And that was the main reason why we had a difference in the development of the 3 segments.

Now, when we talk about -- you mentioned exits, and I take cancellations as a word because this is usually what we had. So we were having more or less the same level of cancellations like in the past.

Now, of course, what we have to do and this we are just starting, we have to look how order intake are booked in the new Rieter Group and how we deal with cancellations, because we now have a certain history and procedure like Barmag is doing that, and we have a procedure how we did it in the past. So we now have to align that, and this might give the one or the other cancellation during the course of 2026 in the first half year when we align all that.

So cancellations were on a similar level, like in the past. Now we just said only that we want to review our backlog. We still have some orders of '21 and '22 in our books where we have the down payment. But you can imagine, I was also asking the question, well, are you sure after 5 years that they still will execute the job. And we have -- this we will check. But it will be the last year of such reviews.

Okay. Then I move on to the second question. Aftersales margin dropped from 17% in 2024 to 11% in 2025. Can you please give some color here?

Well, I think it's mainly volume driven because you saw that our volumes were going down in sales, not in order intake, but in sales. Now our gross margins in aftersales are extremely good. So this hits us a lot in the bottom line, which you cannot compensate with any structural cost adjustments. It's not possible.

Aftersales is damped to grow and to achieve a certain volume. That's one part. I think that's true. And there was within aftersales, we also had some more engineered solutions in our sales volumes than we had in the past. The margins of engineered solutions are a little bit lower than maybe in spare parts and in repair. So there was a slight mix impact. This also has hit us partially.

And then, of course, as rest of the world is heavy under pressure, where prices are much higher than when you go to China, or to India where the landscape is more competitive, you also have a little bit of negative mix impact on the aftersales margins. But we are quite confident that we will have a good result in 2026.

Okay. And then the third part is concerning guidance. Does your guidance price include further downside risk? Or do we still need to add a buffer in case markets remain weaker than expected? Also, your margin guidance of 0% to 3% is below the low scenario of 2% to 5%. How should we understand this? Any drags likely to be expected on the 2026 margin you would like to mention?

I mean, obviously, guidance always includes ideally a balanced view on risks and opportunities. I think we elaborated on our assumptions. So no significant market recovery materializing on sales level. So more or less the same picture like in 2025. If that was to further deteriorate, which again is not our current understanding, and also not the market indications, that would pose some downside risks. But otherwise, we believe that is a very balanced view.

With regards to the difference between 2026 and midterm, I think we have also elaborated 2 main drivers. First, the full integration of the Barmag business, and also the phasing of the synergies that we expect.

And the second one being that, at Rieter, we still need to fully execute the announced restructuring measures. It will become effective fully with 2027. And as we heard before, for 2026, we expect roughly half of the CHF 27 million run rate benefits to materialize, and that gives you the gap.

Everybody understood. Good.

Thank you very much. There are no more questions. Back to you, Thomas.

Okay. Thank you very much. Ladies and gentlemen, I would like to conclude now this call. I think it's clear 2025 was challenging. But on the other side, strategically, it was super, super important for us and transformative. And the acquisition of Barmag will strengthen our market position, and it will also create or is creating a lot of earnings potential.

Our medium-term value creation levers are very clear. We will realize the synergies of minimum CHF 20 million. The market will recover. I think we have done a lot in operational excellence, but I believe we still can do a lot in operational excellence. This journey never comes to an end. And we have started to work on our widening portfolio on one side in terms of customer markets.

But on the other side, we also -- internally, our portfolio where we do produce what, we also have been very clear and consequent in execution. We are committed to a disciplined capital allocation. So in terms of expenses, CapEx, we are still pushing the brake because we want to use cash to generate a better EBITDA net debt ratio.

So we also will work on a sustainable margin expansion. I have no doubt about that. If you have done so many things in operational excellence, cost structure, efficiency, once markets come back, then you have an operating leverage which immediately jumps up your profitability. And with this more diversified portfolio, we are now also very well positioned that we can unlock long-term shareholder value.

So thank you very much to all of you online, but also here in the room. I would like to close this annual press conference. And thank you for your interest. Goodbye. It's a very warm day today. So spring is coming back, and we should take that as a very positive sign for our market developments.

Thanks a lot, and goodbye.

Thank you, and good morning, ladies and gentlemen. A warm welcome also from my side. This is the agenda. We will briefly look at the key messages, deep dive into the current trading results, review the status of the planned Barmag acquisition and provide an update on our strategy execution and close with the outlook. Before we look into the details, let me say a word about the current environment. The market situation continues to be characterized by investment restraint due to trade policy uncertainty in key markets.

Although Rieter registered growing interest for new machine projects, many requests did not yet lead to binding orders intake as customers postponed their investment decisions until the 2026 financial year. Lower volumes in the machinery business and the associated weak demand for installation services, along with cost-saving measures by customers are delaying the conversion of orders into sales and they are also waiting on the earnings of the aftersales and component divisions.

So now to the key messages on Slide #4. Let's start with the green boxes on the left. Order intake at CHF 559 million was only 11% lower than the prior year period. However, if we exclude the exceptionally high purchase order of our Chinese customer, DIW, in the financial year 2024, order intake in the first 9 months of 2025 was 11% higher than previous year. The improvement was driven by a strong third quarter in 2025. Sales at CHF 458 million were 22% below the prior year period. Maybe a word on orders above sales. Longer book-to-bill cycles can be observed in the aftersales business in particular. And on the blue boxes, as mentioned, the market outlook remains challenging.

This is also why we continue to relentlessly push performance improvements across the group to reduce costs significantly. At the upcoming ITMA Asia exhibition taking place in Singapore next week, so end of October 2025, we will be presenting novel automation solutions that pave the way towards fully automated production. And last but not least, the gray boxes. The Barmag acquisition is on track. The capital increase has strengthened our balance sheet and the necessary financing for the acquisition has been secured. And now to the market. Slide #6 shows the market situation at a glance. After a promising first quarter 2025, macroeconomic turbulences strongly impacted market sentiment. Let's start with the rest of the world, which you can see on the left side. There, the overall market development in Europe and Turkey remained flat. However, we are seeing positive signals in some Asian countries as well as in the Americas. Particularly in the Americas, Rieter was able to record new orders.

In addition, additional promising opportunities for new machines are arising in Latin America. This is the result of the reshaping of supply chains and nearshoring. The demand for automation solutions is on the rise, which validates our strategic approach and the efforts we are making to realize a fully automated mill. Let's go to India. If we look at the overall Indian market, which is dealing with the fallout from the tariff dispute, we see that mills in general continue to struggle with low margins, especially smaller ones in the southern part of India. Given the significant role the textile industry plays in the India's economy, the government is stepping up its support for this vital sector. We are seeing strong mill utilization among Rieter customers and have signed now several large contracts. And what is also important, automation solutions are more and more in high demand. Last but not least, China. China remains the strongest market. The investment sentiment is particularly positive for the domestic market, and the government is providing targeted support for the Western territories.

So let's move to order intake. Slide #7 shows our quarterly performance since 2023, excluding the mentioned big, big order from the Chinese customer, DIW, which we recorded last year. If you see on this -- if you look at this chart, you see that without the DIW purchase, we see here that order intake has steadily risen by 11% during the first 9 months of 2025. If this trend persists, we would expect this year's fourth quarter to also exceed last year's final quarter. This concludes my part of the presentation, and I will hand over now to Oliver.

Thank you, Thomas. Good morning, all. Let's look at order intake on Slide #8. Order intake stood at CHF 559.3 million in the first 9 months of 2025, which equals an 11% drop to the prior year period. As we saw on the previous slide, the year-to-date order intake level is clearly unsatisfying and below expectations, but we saw an accelerating trend in the third quarter 2025 with a run rate which is much closer to a normal market than we have seen in a long time. A month does not make a quarter and a quarter does not make a year, but we take this as a positive for the time being.

Now to the divisional details based on year-on-year performance. The Machines & Systems division recorded a particularly large decline of CHF 49.1 million because, as mentioned, some commitments did not materialize or customers postponed their investment decision to 2026. The Components division's order intake fell by CHF 19.6 million, mainly as a result of the soft machines business. The After Sales division by contrast, continues to deliver a solid performance with an increase of CHF 16.8 million in order intake. This positive development once again confirms the strategic growth initiatives that we initiated. The decline in order intake was further accentuated by some foreign exchange translation effects in the amount of CHF 18.6 million, which takes me to Slide #9 on sales.

The realization of sales remains challenging as a result of the geopolitical uncertainties. Many customers are reluctant to adhere to previously fixed schedules and push out their investments by changing the delivery dates. Sales, therefore, were CHF 457.7 million in the first 9 months of 2025, which represents a 22% drop compared to the prior year period. Sales in the Machines & Systems division fell by CHF 76.5 million (sic) [ 67.5 million ] and the Components division by CHF 27.7 million and in the After Sales division by CHF 19.8 million. Similar to last year, we expect a significantly stronger fourth quarter this year when it comes to sales generation. The negative FX translation impact amounted to CHF 11.6 million.

Let's turn to the planned Barmag acquisition. The planned acquisition of Barmag makes us a globally leading system provider for natural and man-made fiber. We are confident that all required regulatory approvals for the completion of the acquisition will be obtained in the fourth quarter of 2025. This step represents an important milestone in the implementation of the company strategy, which was announced in October 2024. The last weeks were extremely eventful as we successfully secured the long-term financing of this landmark transaction under challenging conditions. We are grateful for the strong investor support and the commitments of our financing partners. Without those two success factors, this historic transaction, and I will come to that, would not have been possible. We, as a team, are convinced that Barmag will unlock significant value for our shareholders and other stakeholders in the coming years.

I would like to share a couple of facts and highlights. Ladies and gentlemen, this was the largest public equity raise relative to market cap in Switzerland ever successfully completed. The numbers say it all. The deal earned 79% -- sorry, a 79% (sic) [ 97% ] approval rate at the Extraordinary General Meeting in September 2025 with a 99% take-up for the rights issue. This is truly extraordinary, and I can't thank our shareholders enough for this amazing endorsement. The rights issue enables the diversification of the shareholder base, which will also support the next chapter of our equity story. And on the debt side, we were able to sign a CHF 750 million syndicated credit facilities with a group of Swiss and international lenders.

To conclude with, all the temporary bridge facilities have been successfully refinanced and that well before the closing of the transaction. In short, funds are ready. On the right-hand side, you can see the status of the regulatory approvals. All filings and approvals are according to schedule and clearing is still depending on some competition authorities, especially China, Egypt and Turkey, whereas approvals have already been obtained in India and Portugal. Consequently, we expect the transaction to be approved in the coming months, which will then trigger the closing of the deal. That's it from my side. Back to you, Thomas.

Thank you, Oliver. So let's talk about strategy, and this takes me to the update on Slide #12 and 13 and onwards. This is our strategy house, which we unveiled at last year's Capital Markets Day, and it still relates to the actual Rieter company. After a successful closing of the Barmag acquisition, we will have to refine the strategy to make it valid also for the whole new Rieter Group. Let me highlight 3 areas: automation and digitization, supply chain excellence and agile structures. At the ITMA in Singapore next week, we are presenting novel automation solutions that pave the way towards fully automated production. Imagine a fully manual mill today. It takes around 20 operators to produce 1.9 tonnes of yarn per shift and 10,000 spindles. In a fully automated mill with cutting-edge Rieter technology, which we will present finally then in 2027 at the ITMA in Hanover, it only takes 3 operators for the same output.

Now at ITMA in Singapore, we are presenting 3 technologies that will be key to achieve full automation. According to our sample mill calculations, we are now already achieving a ratio of more or less 6 operators per 10,000 spindles. So great progress of the team. You can see these innovations on Slide #15, and let's start with SERVObale on the left side. SERVObale is a system for the automated transport of cotton and man-made fiber bales. The system adapts to different packaging sizes and enables customized laydown. SERVObale can also be easily integrated with an existing bale management system.

In the middle, you see SERVOcan. This is our fully automated can transport system, which automatically guides cans from carting to spinning. SERVOcan replaces manual transport, lowers the labor cost and ensures continuous and consistent material flow. And last but not least, at the end of the whole line, SERVOpack. The fully automated packaging system is the comprehensive solution for the efficient processing of packages, including transport, quality control and packaging. It ensures final production stability, thanks to the quality control system. And SERVOpack also enables the customized design of pallets, boxes and bags to meet customer requirements. At the end, for the whole packaging activities, you don't need a single person anymore.

The next chapter you see on Slide 16 is agile structures and supply excellence. We continue to push for performance improvements across the group. This means we are relocating functions to customer markets. This includes the decentralization and strengthening of the sales organization to improve customer centricity. We are also establishing P&L responsibility for regions and branches to increase accountability and entrepreneurial spirit. We are improving our production footprint. This means we are optimizing production to increase efficiency and leverage economies of scale. We are executing our China Plus One footprint strategy for all machinery types to reduce dependency on global supply chain. We are optimizing our supply chain. This means we are rolling out and completing right at the moment our global procurement organization, and we reduce key dependencies in supply chain with a dual sourcing concept.

And last but not least, we are heavily working on production cycle times to be faster and much more improved time to market. Last but not least, we are simplifying our organizational structure by increasing efficiency by reducing organizational complexity and redundancies. And last but not least, you will see that also by the end of the year, we continue to manage our overhead costs very, very tightly. Now let's have a look on our adjusted outlook for the full year 2025. As a number of projects have been postponed for deliveries to 2026 due to the macro political uncertainties, Rieter, and this does not include the Barmag division, now expect sales for the full financial year 2025 of around CHF 700 million. Previously, our guidance was CHF 750 million to CHF 800 million. Despite these lower sales volumes, we still expect an operating EBIT margin at the lower end of the range of 0% to 4%.

This excludes restructuring costs and costs associated with the acquisition of Barmag. In that area, we would like to give a little bit more insight. For the full year 2025, Rieter expects transaction costs with an impact on EBIT of around CHF 15 million. We also see significant additional restructuring costs with an impact on this EBIT figure. And then net financial expenses, including the expenses associated with the acquisition of Barmag will be around CHF 20 million. As a consequence, if your operating EBIT is between 0% to 4% and at the lower end and you take into account all these extraordinary costs, our net result is expected to be negative and thus will deviate significantly from the prior year figure.

With that, we conclude our presentations, and I hand over to Relindis for the Q&A session.

Thanks, Thomas. Ladies and gentlemen, we will now open the lines for the participants in the conference call. Then we will take the questions from the webcast. As usual, the Q&A session will be recorded. [Operator Instructions] I will now hand over to Maria for the questions from the conference call. Maria, please go ahead.

[Operator Instructions] The first question comes from the line of Amira Manai from ODDO.

I currently have some questions that I will ask one by one. First one is, could you precise which country is more affected by customer postponements and if you have seen any order cancellations or maybe further delays since end September?

Okay. Thank you, Amira. So the major countries impacted by the tariffs has been mid of the year India. You will all know that Trump due to the oil deliveries from Russia to India, he has imposed 50%. So a lot of Indian customers are exporting the yarn or their fabrics to the U.S. and the U.S. is the biggest consumer market for textile. So India has been impacted and some of the Southeast Asian countries. China, not so much. And Latin America, although they have partially some tariffs, in fact, is progressing quite well. And regarding cancellations, there is no new level of cancellations. We always have the one or the other maybe order which is canceled, but it's more about postponement of deliveries and in the order intake, postponement of decisions.

And could we have the impact of the Chinese contract in Q4 2024?

This was very small. The fourth quarter, if you look into the presentation where you see this quarterly result, this Chinese contract has been issued to us in 3 quarters. A big chunk was coming in quarter 1. The second big chunk was coming in quarter 3 and then a small part was coming in quarter 4. All in all, if you take these dotted lines on the Slide #7, all in all, it's roughly CHF 150 million.

Okay. And can we have also the current spinning utilization by geography?

Could you repeat it once more? I did not understand fully.

It's about the spinning utilization rate by geography.

Yes. Okay. So spinning utilization in India is -- and we measure that per year per customer. So we don't have it for the whole country. We're measuring that with our customers. So in India, it's around 90%. So very strong because the majority of our customers are in the North. And the Northern customers are bigger and not so much suffering because they're also vertically integrated. In the south, you have smaller spinning mills, and they are struggling much, much more, but that's not so much our problem. In China, we are quite stable on a level of 70% with our spinning mills. Turkey is still struggling also there. The big ones are quite well occupied. And the small ones, there are a lot of small spinners in Turkey, they are struggling, but they are not so much our customers. And then when you look on Southeast Asia, it's a mixed picture, stay somewhere at 70%, 75%. The U.S. and Latin America has improved, has become better. And so all in all, we are still globally slightly above 70%. A real good figure would be 80%.

And now for 2025 guidance, on which key assumptions it is based by business unit and by geography? And do you anticipate or is there any risk in Q4 related to postpone maybe projects? How confident are you in achieving this new guidance?

Maybe Oliver, that's a good question for you.

Yes. Thanks. Obviously, that's the key question on the confidence level. Of course, it might well be that we still have some postponements as we had throughout the year. Nevertheless, if you compare the implied sales level that we plan to do in the fourth quarter, it is slightly below what we achieved in Q4 2024. So that is certainly something that we have delivered already. And a large part of the orders that we still need to deliver is today in our backlog. And as we move forward in the year, the risk decreases, obviously, when it comes to sales execution. That's what we can say for the time being.

And do you anticipate further restructuring cost for 2026?

Well, maybe I can start with the general trend and then maybe a little bit more in the details, Oliver can answer. Everybody asks when is the market coming back. So -- and I have mentioned that many times, the investment cycle is overdue. It's just overdue. And in the last semesters, each time we thought it's now coming back, there was another hit somehow coming from the outside world, whether this was an earthquake, whether this was now the tariffs, whether this was a war. But the fact is that it is the longest phase in the market ever. So it's 4 years now in a row. And all these machinery is becoming older. It's not latest state of technology anymore. The ones who are investing now, they have better machinery, so they are more competitive. And this, of course, creates a handicap for the ones who have not done any investment. So investment cycle is overdue. That's very important.

Second, due to the fact that we experienced one or the other negative impact in the last 2 or 3 years, we take a conservative approach for 2026. So if then the market is better, we take it with pleasure. But our planning assumption is more conservative. So if we have this conservative approach, we have to prepare a successful but still challenging 2026. And this requires that we continue the execution of our performance program. Now what it means in times -- in terms of facts and figures, we can give you maybe a little bit of a guidance, but this is still subject to finalization of plans and also Board approvals. And maybe Oliver, you can elaborate a little bit on that.

As you may understand, we are at the moment in the middle of the planning for next year. Now as Thomas said, that the underlying assumptions for next year will be cautious. And if the market then develops better, we take that, obviously, with pleasure. That means that the strategy execution, as we explained on Page #8, will require additional funds. Whether we will book that in this year or in next year is not yet decided and not yet approved, but our directional preference would be to book the majority of any additional restructuring expenses in this year.

Now what does that mean specifically? As I mentioned, neither have we taken a decision on all the measures yet nor do we have approvals on the internal side for it. But for the half year, we had restructuring expenses in the amount of CHF 10.4 million and as our planning goes, you may expect additional restructuring costs between CHF 20 million and CHF 30 million for this year. And if we were to do that, that would then be the majority of the costs and no significant additional costs in the same magnitude could be expected for next year. That is our current status of planning.

And maybe to add one comment here, just to add one comment. The year 2025 has so many special impacts. So we have restructuring, but we also have this huge transaction costs, which, of course, impact our net result. And in our favor is to have it clean by the end of the year. So we don't have to have all these different type of profitability levels and all the explanations, what is in and what is out, but to have it in one wash all done. And then we don't have all these alternative measures or performance measures for 2026.

Okay. And my last question is about monthly performance for July, August, September and maybe start of October and the measures that could be taken to limit ForEx impact?

So quarter 3 was a good quarter in order intake. You have seen that it has been better than last year. It has been substantially better also than 2023. Within the quarter, it was an extraordinary good month of September. But as Oliver mentioned, a month doesn't make a quarter and the quarter doesn't make a year. Now October looks so far good. And let's wait where we end up the year. Maybe the next yes.

Just about the ForEx impact and measures that could be taken?

FX impact, Oliver.

Yes, sure. I mean, just for the avoidance of doubt, that is a translation impact predominantly that we show and translation impact always occurs if you consolidate in a different currency, then you book your sales and that cannot be mitigated. And every other impact, we are well under control with our hedging strategy. I think we need to speed up a bit. We have a lot of questions in the call. I hope that was helpful for you, Amira, and then we will go to the next one.

The next question comes from the line of Walter Bamert from ZKB.

Let's start with the guidance you give for the financing cost, CHF 20 million in this year. Can you also indicate what to expect as a run rate in the next year?

Oliver?

Thank you, Walter. That is premature to provide you a guidance on. As you may understand, we have not closed the transaction yet. Also, we are not allowed to talk to the target at the moment on sensitive information such as current trading, financing structure and so on, and we will provide you with that in due course post the closing of the transaction.

Okay. You didn't give the Barmag trading update. And here, perhaps you can explain us how you track what's going on with Barmag these days? And if we have to read from your indication of trade uncertainties impacting your incumbent business that you also have to be more cautious on Barmag into the next year?

As I mentioned...

Please go ahead.

We are between signing and closing, and we operate in similar markets in the textile industry, and it is highly sensitive and actually forbidden to talk about the details of the business unless we have closed this transaction. So we are not in a position to provide you with a trading update. You may please reach out to Oerlikon if you want to know any more details on Barmag on current trading.

Okay. Then you indicated that the book-to-bill cycle in aftersales is extending. That's for me somewhat counterintuitive. How should we interpret it that people are booking earlier or they just delayed the delivery because they don't have the financing to pay for it? Or what is causing that lengthening of the cycle?

So there are 2 elements. It's a very good question. There are 2 elements. One element is that in the After Sales business, we also have the installation of new machinery. So we book the order, but the execution of the new machine business has been delayed. Then also the installation is delayed. And that's quite a substantial amount. So this is almost half of this negative or it's even more, let's say, half of this negative sales development in After Sales. So there is a time lag due to the installation.

Then in After Sales, we also have modernization and upgrades of the -- of existing spinning mills. Our most famous product is the ROBOspin. And they have a similar trend like new machinery business. So we booked all the orders, but customers at the moment are delaying the delivery. They don't want to cancel, but they somehow do very strict cash management. And then in the rest, so which is parts and repairs. In the repairs, there is no delay. And in parts, they know as soon as they have the full mill utilization, let's say, above 80%, 85%, they will need spare parts. They at the moment, use spare parts internally from machines they don't use, but they know they have to have it once the mill utilization is ramping up. So they already ordered to be ready, but they wait -- some of them wait with the delivery. Over time, this should balance out then.

Okay. Then regionally, I only saw the revenue generation, but not the orders. Is that a good indication also for the order development regionally? Or are there important differences in there? For example, in Africa, I see low revenues, but probably that market is picking up.

The major market we still have is China. Thanks God, we were putting a lot of emphasis to strengthen our organization. So China is developing very well. Even according to our internal targets, they are doing good. The second strong market in order intake is India. It's also improving compared to the last year. The so-called rest of the world is more quiet, but there are a lot of -- there's a lot of interest into new projects. So companies like -- countries like Vietnam, we see a lot. Also Bangladesh is coming back. Also Pakistan now with certain stability is improving, but it's not yet in our order book. The only region where we can say they are already improving in the orders is Latin America. The others are very busy, but they have not yet pushed the button.

Okay. And then I got different -- I picked up in your presentation that Q4 revenues will be significantly higher than last year. And I think in the last question, there was somewhat lower than last year. So can you repeat exactly what you said on Q4 revenue generation, please?

Maybe, Oliver, you can repeat that once more.

Yes, happy to take that. Walter, if you look at the last year's numbers, the 2024 numbers, you see that we did in Q4 around CHF 270 million in sales. And if you look what our implied Q4 sales number is, if you assume the CHF 700 million top line guidance, that is slightly below that number. So we expect sequentially stronger sales in Q4, so more than in the previous quarters, but on a year-on-year basis, slightly lower sales versus 2024.

The next question comes from Alessandro Foletti from Octavian.

Just a couple, again, a little bit on your confidence. You mentioned that you expect -- the customers have pushed out the orders, no cancellation pushed out and that they will decide in '26. What gives you the confidence that they will then really decide at some point in 2026 and not keep pushing out?

Well, I'm very close to our customers. I spend about 1/3 of the time with customers. In fact, I'm sitting at the airport jumping to a plane to Indonesia. So I will step out at 10:00 a.m. and Oliver will finish everything. So it's very clear, customers, they want to get rid of this overdue investment cycle. They know that. They are just a little bit like -- it's a little bit like Mike Tyson once said, everybody has a plan until you are punched into the face the first time. So -- and they had some punches. So they are somehow recalculating when is the best time to do the investment. I see that they start to organize themselves. They recalculate.

And it's also interesting, they have a little bit the benefit of reduced interest rates as these are huge investments they have to do. They say, wow, okay, I have a negative part of the trade, the tariffs. They have now more clarity how much they have to bear by themselves, how much they can pass on to customers. So this gives them more confidence now. And then they see, okay, financing becomes cheaper. So they are a little bit opportunistic before they now really push the button and close the deal. And that's what I see in many -- on many customer sites who are depending also on external financing. Those who are very strong with their financing accounts and have a good balance sheet and do not depend on external financing, they now already do the investment.

Okay. I would like to ask you a bit of a clarification on something that you mentioned earlier. When you said that about the capacity utilization that is still around 70%. But in some areas, you mentioned China and India, where you are active with the largest clients and the smaller have troubles. So in a way, I don't understand if your clients are only the largest one that are doing well, why is still the uncertainties then reflected in your numbers?

That's a good question. It's not that we only have large customers. We are also dealing with the small ones. As we are a market leader, we have all type of customers in our book. But of course, the share of the large customers is bigger than maybe with some competitors. So this is a benefit for us. And most of the orders we have booked this year in the new machine business have been dominantly been booked with larger spinning mills. But the smaller ones we have, they are still hesitating. And so that's the reason why we say we want to be -- we don't want to overpromise. We would like to overdeliver. And the history has taught us that I don't know what happens in a month or in 2 months. So we take a conservative approach looking forward with the hope that it really becomes better, and this we will take then with measure.

Right. Maybe my final question on the gross margin of your clients, which you also mentioned. Can you give a bit more indication maybe regionally or how big is the squeeze or that they might have between cotton and yarn prices? Or how are these moving?

So the margin of a spinning mill over a cycle is usually less than 5%. Operating profit of a spinning mill is less than 5%. So it's quite a thin margin spinners are working with. As soon as they have higher volumes, then they have an operating leverage. The margin goes up because they have much more fixed cost absorption. Now large customers are usually integrated. They do not only spinning, they also do weaving, knitting, dyeing and garmenting. And you see that the profitability of the bigger ones is better than of the smaller ones.

Now in a down cycle, the smaller ones are more serving around the 0 line or some of them even do a loss at the moment. But they know almost like us, when the market is coming back, then this can turn very quickly. So the size is important. The utilization is important. The vertical integration is important. And of course, at the moment, where are you located and what kind of tariffs do you have.

We will now take some questions coming from the webcast. Relindis, back to you.

The first question comes from Reto [indiscernible]. Did I understand that correctly, you expect the order intake in Q4 2025 to be higher than in Q4 2024, even without the DIW effect. Can you quantify the postponed orders?

Well, we cannot give you now a clear figure for the order intake in the fourth quarter. But as we mentioned before, September was good. So far, October is good as well. So this would mean that we do have a good confidence that orders -- total orders for the 3 quarters will be higher than in the previous years. However, I have to say when you look on this chart on Page #7, both in '23 and '24, the reference was quite low. But still, if we go into a magnitude of maybe CHF 150 million, plus or minus, this depends, of course, of individual projects. Then finally, we come to a region where we can say, okay, now we really have a substantial improvement year-on-year without this extraordinary DIW order.

Good. The next question comes from Eugen Perger Research Partners AG. Are there other countries to mention in Asia, for example, Bangladesh, Vietnam, may they take over business from India if the letter states under tariff sanctions for a longer time because of the Russian crude oil issue?

It's a good question. Bangladesh is especially strong in the weaving and garmenting. So especially in garmenting. What happens today is that a lot of yarn, which is produced in India is exported to Bangladesh and then they make clothes out of it. Now India, in our assumption is more and more now challenged that they have an increasing domestic demand. So this is a good challenge. And I believe that the Indian spinners and weavers are more and more focusing to satisfy this domestic demand. So this might be that someone else is jumping in into more export activities and Bangladesh definitely is one of those countries who could benefit from that. Another one is in Southeast Asia is Vietnam. Vietnam has a lot of large spinners and also working for U.S. companies, so U.S. textile companies. And after the first shock in Q2, they now start to plan more projects to expand their facilities. So I'm slightly optimistic for the Southeast Asian countries.

The next question comes from [indiscernible] from UBS. In light of your guidance for negative result, can we expect the dividend to be suspended for this year also to help with deleveraging.

So good question. I think a dividend is decided by the Board of Directors. I'm now here not as a Chairman, but I'm here as a CEO together with my CFO. So in the history, Rieter always has been very meaningful with the dividend policy. And we want to satisfy all stakeholders. So shareholders, but also our credit facilities. We are interested in a strong balance sheet. And so we will take all this into account when the Board will have the final decision. But the reality is that we have a dividend policy, which says we are paying 40% or more out of a profit. And so if there is no profit, we will have to rethink whether it is meaningful or not to pay out the dividend.

Thank you, Thomas. I have two questions from [indiscernible] Asset Management, I will read question by question. Any outlook for 2026?

So I mentioned before, we take a conservative approach. We had a good September. Oliver has said it very well. September does not make a quarter and the quarter does not make a year. Definitely, we see -- I come always back on the Slide #7. We see that year-on-year-on-year, our sales team has improved the performance in a challenging environment. Our assumption is -- our planning assumption is that '26 remains challenging. So we are preparing from a cost point of view, all our cost measures to be successful in this challenging 2026. And yes, there is some hope and there are signs that '26 becomes better than '25, but we prepare for a conservative approach.

The second question from [indiscernible] is takeup of rights issue may be okay, but a big part of the new shares seem to create selling pressure in the stock market.

[indiscernible] for that question. Explaining the share price, it's always very difficult, and it's not my core profession. I would rather trust in you dear attendance of this call to explain that better to me. What we can clearly see is that today's share price does not reflect the strategic value of this transaction. It also does not imply a closing of the transaction in due course. And very honestly speaking, we're also a bit surprised by the share price reaction because during the road shows that we had both of the announcement in May, but also in the lead up to the capital increase, we had predominantly and actually exclusively positive feedback from the investor base. Everybody was understanding the strategic rationale most of the people said it makes absolute sense. And that was also reflected then obviously in the content at the AGV and in the take-up of the shares.

Now is there some short-term speculation in the shares? The right was probably a bit too cheap when just assessing market dynamics, and that led to rather low entry prices for some shareholders, and they might realize now some short-term gains and lead to certain share price pressure. We all hope as a team that very soon, the focus shifts towards the long-term perspective of this company. And as a good wine, usually a good strategy and also a share price takes time to ripe, and we are very confident that we can be more successful in the future with this transaction, and that will also then reflect in the share price. That's all I can add to this point.

Thank you, Oliver. I have three questions from [indiscernible]. I will read it question by question. When it comes to future procurement savings, can you confirm that probably the CHF 20 million savings are rather conservative?

I can confirm that.

Okay. Then we move on to the second question. What is your expectation when it comes to future EBITDA margin levels during a downturn, 6% question mark and in better times, 10%. Are this level realistic, sorry?

Please, Oliver. Yes.

Obviously, I understand the question, but you may well understand that we need to rework our midterm margin guidance and come up then with a proper framework post closing of this transaction, which as mentioned, you may expect in due course, and we will update you then on time on what you may expect in terms of margin framework in the future. I think for Rieter a stand-alone case, it's still valid what we have announced in the past. And for the combined unit, we want to close first.

The third question, as even the best company like VAT are rather given cautious outlook announcements regarding the next 1 to 2 quarters, do you think that you have to go further reducing your overall costs? Or are you already gone quite far?

I mean on the outlook, as you may understand, we have just decreased our sales target for this year. So the cautious approach of other companies seems to be mirrored as well in our industry. On the cost side, I can reassure you, and you can also find it in the press release, we have reduced our overhead costs by more than CHF 100 million in the last 2 years. So we are actually ahead of our next level cost saving target, and we are not finished yet in optimizing our structure, as was also presented on Slide #16. So we will continue to improve on that end. We continue to improve the company, and you may expect further improvement on that end as well.

Okay. The next question comes from Andrea Frey. Can you provide the guidance on net leverage for financial year 2025 and 2026?

Oliver?

We do not provide guidance on leverage so far, and we will also not change this policy. You can rest assured that we are closely monitoring the situation that we are working heavily on the various levers that you have to improve your leverage situation such as net working capital optimization, et cetera. And with regards to 2026, since we do not know the details of the Barmag current trading and their immediate future for next year, given we have not closed the transaction, we can also not provide you with the guidance for the combined unit.

The next question comes from Andy. Is there a financial outlook 2026, including the Barmag acquisition?

I think that was answered already.

There's another question from Andy. Is there any comment that existing shareholders considerably lost out the transaction basically raised the value of existing shares?

I could just reiterate what I mentioned before. And honestly speaking, Thomas and I and the entire management team, we are significant shareholders as well, and we fully participated in the capital increase. We don't see that the current share price level reflects the value of the company from a long-term perspective and the relevance of the transaction in a meaningful manner, we don't see that. Now what can we do to change the share price levels? We just need to continue to work on the strategy execution on our core business and then hope that it will over time reflect in the share price. But in the short term, it's clearly disappointing.

The next question comes from Claudia. As of September 30, 2025, Rieter's order backlog was around CHF 590 million in September 2024, CHF 690 million. Well, 9 months in '25 book-to-bill ratio is smaller than 1.0x. What does that mean in terms of revenue evolution for the next 6 to 12 months?

Well, we calculate the book-to-bill and in a way that we divide the order intake by sales. And if you win in the same period. And if you win more orders than you book sales, basically, you may expect that your sales level in the immediate future is going to rise. And otherwise, you may expect that it's going to fall, neglecting any changes in trends in the immediate future. As we outlined previously, the order intake figure on absolute terms is below expectations. That's clear. All we can do is continue to work on the various initiatives. And as mentioned, we had a solid September, and we continue to work towards the further materialization of our order pipeline. And then we may expect also a change in the sales development. But I can assure you that normally in this business, you have a visibility of 6 to 9 months ahead. And so this order backlog level, which is slightly up is not usually on normal level.

And there is a second question. Net financial position, you closed half year 2025 with CHF 286 million net debt. Meanwhile, received net cash of CHF 460 million, CHF 470 million from the concluded capital increase. Then you are in the process of acquiring Barmag for an enterprise value of CHF 850 million. The calculation would suggest a pro forma net debt of roughly CHF 670 million after the deal closing at year-end 2025. Is this a fair assumption? And the second part is, I would assume that leverage will go up well above 3.0 and will stay there for several quarters at least. What are your plans and strategy in terms of leverage and deleverage?

As I mentioned before, and I am now not in a position to fully challenge or give a comment with regards to your estimates. It very much depends first on our trading and our business development, but also on the situation on the Barmag side. And given we have not closed this transaction yet, we do not know those details. We're not allowed to know actually to be precise. But you can rest assured that we are at the moment, intensively working on different scenarios. We will prepare for different scenarios. And our strategy is unchanged that we want to deleverage this business as fast as possible. Even a leverage, as we mentioned during summer of around 3x, we believe is too high on a mid- to long-term basis, and it should be significantly lower. Now you may also understand that a strategic transaction of this magnitude was not possible to conclude without debt. So we had to accept the temporarily higher debt level, but with a clear strategy and intention to deleverage over time.

Okay. And there is a question from Martin from [indiscernible] Invest. Mr. , allow me to correct you. The theoretical cheapness of the subscription rights is irrelevant now. Even with the rights issue, there is no short-term gain left for any shareholder who participated. Your share price is now trading near its all-time low and significantly below the capital increase price. So the capital market foresees a negative strategic value on Barmag transaction. So will we see an extra Barmag, Rieter signing call with the new details?

You may expect that we will provide you with an update as soon as we have them post closing of the transaction where you may also expect the results for the full year in due course from Rieter and then also a view on the combined guidance. And as I mentioned before, speculation around share price and why it, is where it is. I think about that, we have talked sufficiently. But in principle, I agree with you, at the moment, the capital market is not assessing any value to this transaction. And -- but on the other hand, we are convinced about the strategic rationale and about the value of the Barmag business. And you also seem to be convinced as was the feedback during the various road shows. And so we leave with this discrepancy at the market, obviously, at this point in time.

There is a similar question from Christian of ODDO. Since the start of the capital raise, October 23, the share price has fallen by 1/3 corrected for the theoretical excise price. In your view, what are the reasons for this heavy drop?

I can just speculate. But first and foremost, you have to consider that this was the biggest capital increase in relation to market cap ever conducted in Switzerland. So the fact that you were able to execute is a significant success if you look over the medium and long-term perspective of the combined company. That has to be said first. Then on the mechanics of this capital increase, I could just speculate. But one of the reasons mentioned was that the right was probably rather heavy given you had to subscribe for 25 new shares if you own one right. That led to certain selling pressure on the right side, which was then not reflected on the share price level and so on and so on.

But I see it from another perspective, actually, unless you need to realize your loss now unless you absolutely have to, you have not lost anything. It's just the book value. And if you are convinced about the medium and long-term strategy of this combined company, and as I mentioned before, a transaction, a good strategy needs time to ripe, and you may not expect the reaction after 2 or 3 weeks' time, then I just ask for a bit of patience, and that's what I read into the share price. And honestly speaking, and I can just repeat myself, me, Thomas and the entire management team, we are exactly in the same boat as you. We are all core shareholders.

Thank you, Oliver. There are no more questions. Back to you, Thomas, for the closing words.

Okay. As Thomas mentioned before, he had to leave as he is seeing customers in Southeast Asia, he had to leave for a plane. So let me address the closing words. Now with the planned acquisition of Barmag, we are accelerating our growth strategy to become the undisputed leader in the textile machinery industry with a strong presence in both natural and man-made fibers. By broadening our range of applications, we are convinced that we are ideally positioned to seize the opportunities in expanding markets and to generate more resilient returns. And this will create value for customers, employees and also for you, dear shareholders, in the coming quarters and years ahead. About that, we are convinced. Now we will keep you informed on the status of the closing and the opportunities this opens up for us and our stakeholders. Thank you again for your patience and for your interest. Goodbye.

Ladies and gentlemen, welcome to the Rieter's Half Year Results 2025 Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

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

Good morning, ladies and gentlemen. A warm welcome also from my side. Here's the agenda. We will briefly look at the key messages to review the market and give you an update on the planned Barmag acquisition. I will then hand over to Oliver for a deep dive into the financials.

Let's turn to the key messages on Slide #4. I will discuss in the financial part, just order intake, sales and operating EBIT. Oliver will walk you through the details on sales, EBIT, free cash flow and net profit. So let me start with the green boxes.

The first half of 2025 was challenging to say the least, marked by macroeconomic and geopolitical turbulences as a result of the Trump administration's trade tariffs. We got off to a good start in the business year 2025, seeing increased offer activity across the board, also orders were coming in smoothly. But then the massive disruption caused by the trade tariffs brought order intake to a grinding halt in the second quarter 2025. The uncertainty proved to be toxic for investment decisions. The missing order intake in the second quarter of 2025 consequently translates to missing sales volume in the second half of 2025. As you may remember from our annual press conference in March, we consider this as essential for our top line guidance.

The hesitation of our customers in turn led to higher inventory for the first half of 2025. On top of our strict cost discipline, we introduced additional cost measures, which brought operating EBIT almost to a breakeven level. Even so, the CHF 336 million sales volume fell short of our breakeven point. The second half of 2025 is therefore set to remain challenging.

On to the blue boxes, for the planned acquisition, we are on track so far. We have completed all filings for the merger control authorities and expect the takeover to be cleared during the second half of 2025. Strategic progress in the After Sales division led to a remarkable order increase of 25%. This demonstrates that our strategy is bearing fruit, and we can expect our After Sales business to shore up profits in the second half of 2025.

Let's turn to the gray boxes. We were again able to save a substantial amount of overhead costs. This demonstrates that we are consistently implementing the defined cost saving measures. Health and safety. Safety got off to a disappointing start standing at 3.9 for the first 6 months of 2025 after reaching 3.4 (sic) [ 3.3 ] for the full year 2024. We are working across the company to enhance the company's safety culture and improve our performance in this regard going forward. Our goal is to get the figure below 3.

Diversity. The share of women in management positions has improved considerably crossing the targeted 20% threshold and reaching 20.5% for the first time ever, up from 15.3% in 2024. This is a clear demonstration that our efforts to improve gender balance are working.

And now to the market. Spinning mills showed a mixed picture in the first half year 2025. India remained resilient and China constant on an existing level. This also means that there is an After Sales market out there. Consequently, if we further improve our delivery times and parts availability and expand our network of repair stations, I am confident that we will see further growth in this higher-margin business.

The rest of the world has remained flat. On one side, the rest of the world countries are mainly exporting their apparel and functional wear to the European Union and the U.S. The low consumer sentiment in these key markets as well as the U.S. trade tariffs have not allowed a substantial increase of mill utilization. And then in addition, some markets are increasingly struggling with labor shortages and costs. So we must further push our digitization and automation solutions to help our customers operate their mills efficiently and effectively.

And now a deep dive into the market situation on Slide #7. This slide shows the volatility we face in our markets. Let's start with India. India remains resilient, driven by strong government support and increasing domestic demand. Customers are planning the further expansion of their capacities, but most of the potential orders are planned for shipments in 2026 and 2027.

Then China. In China, more bullish activities are in the Western area of China, whereas the East and the South are suffering from higher labor costs. China is still among the strongest markets as the country modernizes its installed base and the demand for automation technologies is set to rise accordingly. We saw strong sales growth across the divisions here. We were able to close our first orders for air jet and then a larger one for ring spinning machines, which will translate into order intake over the next 6 to 9 months.

Then the rest of the world. The Trump tariffs impacted many countries in the rest of the world. We were, however, seeing a silver lining in Latin America and Brazil, but we expect the latest round of tariffs to have a dampening impact. Turkey, we'll face a consolidation process with a higher demand for automation solutions as labor costs are becoming too high. But then also new markets are emerging. Some countries of the Commonwealth of Independent States, the Central Asian countries such as Turkmenistan, are planning to copycat the Uzbekistan story and want to develop their own textile industry.

A prerequisite for a thriving textile market is a strong spinning sector, which provides the downstream yarn material textile manufacturers required. We are ideally positioned to help these countries expand their spinning sectors with our technology and our know-how. Southeast Asia was strong in the first quarter of 2025, but the second quarter faced project postponements for new orders due to the uncertain tariff situation.

As mentioned earlier, the Barmag transaction is on track to be completed by the end of this year. So far, everything is running smoothly. We filed the transaction with the merger control authorities in India, in Turkey, in Portugal and Egypt in June 2025. And also completed the filing with Chinese authorities in early July. We expect the transaction to be approved before the end of the year 2025.

This concludes my part of the presentation, and I now hand over to Oliver Streuli, who will give you a further update on the financial part of the planned Barmag acquisition.

Thank you, Thomas. Good morning, ladies and gentlemen. The financing of the transaction is fully on track. Specifically on the debt financing, we are currently syndicating the CHF 375 million acquisition debt in the form of a term loan. In addition, we are refinancing and expanding our existing revolving credit facility in the amount of CHF 375 million to reflect the change in scale of the combined company.

On the equity financing side, we are progressing with the preparation of the offering documentation and market materials and plan an extraordinary general meeting on September 18 this year. Following approval of the capital increase, we plan to hold comprehensive investor marketing activities in the second half of September. With regards to our anchor shareholders, both existing shareholders continue to fully support the transaction.

Let me continue with the key elements of our financial performance in the first half year 2025. Let me start with the key messages on Slide 11. The first half year 2025 was a challenge from an operational point of view. Sales declined by 20%, more or less in line with our expectation on the back of low capacity utilization of our own sites at the beginning of the year. The decline was most pronounced at our division Machines & Systems followed by After Sales and Components. At this sales level, Rieter is structurally below our breakeven point.

Only thanks to additional extraordinary cost measures and short timework at most sites, we were able to achieve an operating EBIT close to the 0 line at minus CHF 2.7 million. We continue to adjust the organizational structure and our capacity in line with our announced strategy. On top, transaction costs in relation to the acquisition of Barmag and extraordinary restructuring costs amounted to CHF 14.6 million. Our cash flow was negative at CHF 36.7 million due to the negative operating result and relatively high finished goods due to postponed orders, especially in the division Machines & Systems.

Although sales developed according to our expectations in the first half year, a further market recovery remained absent, which is reflected in order intake of CHF 355 million, a decline of 12% to the previous year.

Let me now deep dive into order intake and other KPIs on the following pages. The comparable order intake for the first half year of 2024 included a separately announced order intake of our Chinese customer, DIW in the amount of CHF 62 million. Excluding this big one-off order, our order intake in the first half year of 2025 remained more or less on a stable level versus the prior year in spite of the very challenging second quarter 2025.

By division, order intake decreased by CHF 42 million in Machines & Systems, especially due to a low second quarter with many investment decisions being further pushed out by our customers on the back of increased uncertainties around the outlook of the global economy and tariff risks.

Order intake at Components suffered most notably from lower demand for new machines and systems. While After Sales managed to grow year-on-year by 25% due to increased demand for engineered solutions and repair service. This growth is a confirmation on the strategic and operational initiatives taken to expand our aftersales business and clearly a highlight of the first half year.

On Page 13, we see the sales development in the first half year. As stated earlier, the drop in sales in the first half year in the Machines & Systems division materialized according to our expectations, due to a low filling rate of our capacity with the existing backlog at the start of the year. What came on top were customer-driven delays in the delivery of finished goods due to the current market environment, which is also negatively reflected in higher finished goods inventories.

The Components division showed a mixed picture with new machinery focused business units suffering while consumables and/or man-made fiber-focused business units developed more stably. The customers on the After Sales division in many of our core markets, especially Türkiye, are struggling with low capacity utilization. As a result, orders are not being called off, but often postponed. In addition to that, field service, including installation revenues are directly linked to the volatile new machinery business. This makes up a substantial portion of our aftersales revenue.

The revenue structure as we see shows a growing share of repairs, indicating that more is being repaired than replaced. Strong growth in the area of modernization and retrofit involves longer lead times on the other hand, such as ROBOspin or compacting solutions.

On to the order backlog on Page 14, where we see an order backlog of CHF 510 million, which still represents a solid level, but is more or less unchanged from the situation at the beginning of -- at the end of 2024, mirroring the absence of a more broad-based market recovery for the reasons mentioned earlier by Thomas.

As can be seen on Slide #15, we were able to defend our operating EBIT and achieve a level close to breakeven despite the historically low sales level. Specifically, the lower sales level led to a negative gross profit volume effect of CHF 42 million compared to the first half year 2024. Again, additional cost savings in the amount of CHF 15 million in R&D and overhead spend and extraordinary measures led to an operating result before restructuring and acquisition costs of minus 2.7%.

For the sake of transparency, related restructuring expenses and acquisition costs amounted to CHF 14.6 million resulting into an EBIT reported of minus EUR 17.3 million. However, this figure lacks comparability, and we therefore, would like to draw your attention to the operating EBIT when assessing the performance of our operations in this very difficult environment.

For cash flow, let's move to Slide #16. Cash flow was adversely impacted by the negative operating result and headwinds from the development of our net working capital. More specifically, postponements of orders led to higher finished good inventories, while the lower amount of accounts payable and advance payments is a consequence of the low operational load and the subdued market activity in the first half year. On the CapEx front, we remained highly disciplined and spent only the absolute necessities for the time being, which is roughly half of the spend of last year for reference.

On Slide #17, we see the summary of our debt and equity position at half year closing. Net debt increased mainly by the amount of negative free cash flow and the dividend. Rieter continues to be solidly financed and still a several hundred million of unused credit lines at our disposal for operational purposes, which is important to state. Our equity ratio softened due to negative operational results and on the back of the realization of cumulative translation adjustments, but remained well above the 30% mark.

That's it for the time being on the financials. Back to you, Thomas, for the outlook.

Thanks, Oliver. And now on the adjusted outlook. We expect a stronger second half of the year for the 2025 fiscal year. Though this depends on the continued market recovery. As the market recovery has slowed due to the macroeconomic uncertainties, we are adjusting our sales forecast for 2025 as a whole year. Without consideration of the Barmag Division, we now expect sales of around CHF 750 million to CHF 800 million, and previously, we said that we will land at the previous year's level of around CHF 860 million. Excluding restructuring costs and costs associated with the acquisition of Barmag, we expect an operating EBIT margin at the lower end of the range of 0% to 4% for 2025 as a whole.

With that, I conclude our presentation, and I will hand over to Relindis for the Q&A session.

Ladies and gentlemen, we will now open the lines for the participants in the conference call. Then we will take the questions from the webcast. As usual, the Q&A session will be recorded. I kindly ask the participants to mention your name and the company you work for before asking your question.

So Sandra may I kindly ask you to take the first question.

[Operator Instructions] Our first question comes from Walter Bamert from Zürcher Kantonalbank.

Your biggest earnings contributor in the first half was a nonoperational real estate sales gain. Why don't you adjust for it in the operating EBIT? And why do you think you don't have to mention that in the press release?

Thank you for the good question. In the past, we have always had real estate transactions. And we had bigger ones and smaller ones, such as Ingolstadt or the sale of the Rieter Real, which are really substantial. Apart from that, we always have other transactions which are of a smaller scale, and we considered the sale of a nonoperational office building as not material in the context of the operations overall. So that's why we did not mention it in the press release, but it is well explained in the annex of the half year financial report.

Is that the last real estate gain? And is that a house where we had the opera?

That was the former headquarter that we had as you might recall. That was not sold when we sold Rieter Real. Overall, it's now rented by a third party, not used by us anymore.

And with regards to whether it is the last real estate transaction, we continue to review our footprint and there might be one or the other real estate transaction also in the future, but it's not to be expected that there are further major real estate transactions, such as we did in 2023 or in Ingolstadt.

The next question comes from Alessandro Foletti from Octavian.

Alessandro here from Octavian. I have a couple, if I may, and I would like to take them one by one. Maybe first on the -- a very quick one. You mentioned that Q2 was much weaker than Q1. Would you be willing to give a bit of an indication of what was the difference between Q1 and Q2?

Sure, Alessandro, happy to take that question. Normally, Q1 is a relatively weak quarter because you have the usual start into the year in Europe and then you have Chinese New Year, so it's normally rather soft. So in normal circumstances, actually the softest quarter of the year. Now this year, it was different. It was double-digit percentage amount, better than the second quarter. Normally, the second quarter is much stronger. So that is exactly what we elaborated before. I hope that helps.

Yes, it does. And then on the After sales, as you mentioned, I agree, this is really the good part of the result. Now I was wondering, you mentioned all this Turkmenistan and I was wondering, is there any sort of large order into this after sales? Or is it really just an operation advancement in that business segment?

I think it's both. So first of all, yes, we also mentioned that we had the first larger order in Turkmenistan. This is true. These were a couple of millions. So it does not explain the difference. The difference is really driven by more repair business and by more engineered solution business, whereas the value for installation of machines has been further reduced. So there are some positive and negative elements. But it's mainly driven by higher repairs and engineered solutions. And the engineered solutions are driven by Automation Solutions. That's the key driver there, our ROBOspin product. And repairs, we are opening more repair stations everywhere in the world to be close to our customers, and this starts to pay off.

Right. Okay. So -- and do I get it right that spare parts would be part of that business lines? Or would it be rather in components?

Spare parts is part of the After Sales business. There was a slight growth, but not yet the growth we would like to have, to be clear.

Right. And then my last question, if I may. I think, Oliver, you mentioned that -- I mean, you're still solidly financed in the CHF 700 million credit line. However, from my perspective, if I look at the balance sheet in just a few numbers, you have now almost CHF 300 million net debt. I understand part of it is exceptional due to working capital, it might reverse. But then after the capital increase and the acquisition of Barmag, I calculate like you will be above CHF 600 million net debt. Is that not high? At least it seems high to me. Do you have plans to reduce it further? What are your thoughts here, please?

I think it's premature to give you a guidance on the leverage levels post-closing and refinancing of the transaction. But as indicated also in our roadshow in relation to the transaction, the leverage will be too high for us over the medium term. So we will start rather on the high end, most likely above the 3x net debt to EBITDA, and we clearly plan to deleverage the business over the coming years. This is a must. But as you can well imagine, if you combine 2 rather cyclical business rather at the trough from the market, it's unavoidable that becomes a certain leverage with it. But clearly, we strive towards a much, much lower leverage figure over the medium term.

Okay. Good -- so -- but you -- the way I understand it is you sort of believe you will be able to reduce that leverage kind of operationally? Maybe the business recovering, customer advances, I don't know.

To a big part, yes. A key driver is certainly advanced payments. As you can also see in our balance sheet for the half year closing, we had another headwind from advance payments position. Payables in days, they increased. So we did a good job operationally, but in absolute terms, they increased due to the low operational load. And then if you have a couple of orders which shift and still sit in your inventories, you really have quite a strong headwind. Then you have the dividend and all other things.

But really, the upside potential with the transaction comes from a recovery of the market, higher advance payments plus I have state again, we believe that Barmag has a structurally lower net working capital than ourselves. So together, it should be accretive also on the cash flow side.

The next question comes from [ Andy Schneider ] from [ Z Capital ].

I would be interested in some comments, not 1Q versus 2Q, but even monthly. What can you tell us about April, May and June. It would be interesting to see how it developed after Liberation Day?

Well, I think we can -- I do not want to share top line and bottom line figures per month, but I can give you an indication. So the indication was that in April, with the Liberation Day, it was worldwide, everything was coming to a halt. It was just a full break in the Machines & Systems business, but also in the Components business, I have to say.

Then the first country, we started to recover, and this was important for us was China, after Mr. Trump and Xi Jinping somehow came to an agreement for the time being. The mentality now in China is the following that they say, well, it seems we have done a good deal. And the Chinese customers are more and more in any way supplying the Chinese domestic market. So we saw them in May, the first orders coming back, mainly in China. Then in June, the rest of the world was still quite at a stop because everybody was expecting what happens in July when then the final tariffs are coming.

And then in June, what I saw was that besides China, now India is starting to recover. We anyway had in the first -- or by the end of 2024 and in the first quarter of 2025, India was very bullish then they stopped. And in June, I saw that India was coming back, and I can say now in July, this is not yet in the half year results, we booked the first bigger orders also in India.

The rest of the world is quite damp, I have to say, not only for tariff reasons. Our third biggest market in the past was Türkiye, and Türkiye is just struggling to get out of the downturn because of this super, super high labor cost they have. And -- but also Latin America, somehow has not yet coming back. And when you look what kind of a tariff now Brazil got and Mexico got, which are somehow nearshore markets for the U.S., I think it will still take a couple of weeks and months until this is digested. So we are, of course, all waiting what will be in some key markets for us, final decisions by the Trump administration because this will have impacts on Bangladesh, Vietnam, Latin America not so much maybe on Türkiye.

So it was a really super and stop. In April, China was coming first, India now was coming second. And in the rest of the world, it's still very, very, very low levels.

And I would like to get a sense of how you came up with the CHF 750 million to CHF 800 million in sales that implies a big improvement in sales in the second half. Obviously, you have the CHF 510 million order backlog. Maybe you can talk a little bit about the backlog. How much of that is set to deliver in 2H or longer-term orders? Or do you think would address that? I'm trying to get a sense how we came out with that guidance?

So the CHF 750 million to CHF 800 million are really solid. Of course, today's time, you sometimes never know what happens, but when we look at our order backlog, this CHF 750 million to CHF 800 million are more or less secured. It includes a growth in our After Sales business, which should be possible because we also had a strong increase in our order intake in the first half of the year, and it has the shortest lead time between order intake and sales execution.

In the component parts, those elements, which are also more consumables, we have assumed just a straightforward continuation. And in those elements where it is more project-driven, so with Machines & Systems business, we do have the backlog to be executed according to the contract in the second half of the year. So definitely, this range of CHF 750 million to CHF 800 million for us is, at the moment, I don't see a reason we should not be able to achieve that.

Now why do we have a deviation of up to CHF 100 million to the last year, last year's guidance or March guidance we had, we always said also at the press conference that we need a strong first half. We were confident that we will have a strong order intake in the first half. And we knew that certain products also in the Machines & Systems business and certain projects should be executed still in 2025 as those orders have not been -- we have not lost them. They just have been postponed. So they don't come into execution in the second half of the year. And this impacts us up to CHF 100 million, and that was the reason why we took down this guidance of our sales volumes.

So of this CHF 510 million backlog, roughly CHF 100 million were set to deliver this year, but will not be delivered? Or are these CHF 100 million not in the order of backlog yet officially?

This CHF 100 million are not yet in the order backlog because the order has not been decided by the customers. Some orders might come still this year, but they will not impact our sales. Some orders, I know the customers have said, for example, in Vietnam, we will only take the final decision in 2026.

Okay. And so if you would take the CHF 750 million and then take your EBIT guidance, am I right to assume that at EUR 750 million we will be at 0 for EBIT, and at CHF 800 million probably 1% plus higher. That's how we should think about that?

Well, excluding restructuring costs and transaction costs, as you may understand, really comparable figure, I think this is a fair assumption, yes. Of course, it depends on the mix development, but this is in line more or less with our planning.

Okay. Okay. That makes sense. And can you tell us about the operating leverage you have on any additional CHF 1 million in sales, how much EBIT margins do you typically make plus/minus?

So it depends a little bit on the sales mix. If you take -- if you take our CM2 or our gross profit margin, let's take 25%, this also includes certain fixed costs. So you are probably right when you take, let's say, CHF 100 million top line impact something like CHF 40 million -- CHF 35 million to CHF 40 million EBIT. So if you have CHF 50 million, you can be CHF 20 million better or CHF 20 million worse. So it has quite a big impact. It depends a little bit on the product mix or on the divisional mix. So the impact on the After Sales business is higher and it is lower in the Machine & Systems business. But overall, you could take something like 35% to 40%.

Perfect. And then last question. So last question is an add-on question to Alessandro's question about after sales. You said that you opened more repair stations being a little bit closer to the buy-ins and getting some volume there. Any other measures you could tell us about that are -- that are already pushing this business higher, which is great.

Yes. So there are several initiatives. One is the topic of repair stations because recently due to not too much as a professor to elaborate on that. But repair means you take a part, you repair it in your repair station, this can be mechanical repairs or electrical repairs and you bring it back and you put it into the machine. So there, it's a lot about qualification, are you able to do such a repair. And the second is the speed. So for the most important part, we have now built up extra part. So we take a part to us, immediately fill in or replace it with intermediate part, repair the original one, go back and then exchange the part again. So this is one driver.

Second drivers are engineered solutions. We are pushing a lot these automation solutions and especially in engineered solutions or modernization or upgrade of existing machines, it's mainly the topic of the ROBOspin. And there, we could sell even more, but we also don't want to make a mistake. We have to build up our field resources that we don't land at the end that we have promised a lot and then we cannot install these robots. So this is definitely another key driver.

Then when you come to third big part is the parts, spare parts. And these spare parts, we have 2 topics. One is the delivery time and the variability in our warehouses. There, we have done a lot of analysis. We have not yet substantially improved our situation. But we know now what is the root cause. So I'm expecting more growth coming from spare parts due to the fact that we will be able to deliver faster the required spare parts. But then spare parts also is a pricing issue. And we have seen that in certain areas, we have completely outpriced ourselves. And so we were not even selling those parts.

So we have done now certain pricing adjustments in areas where we were not competitive. It does not impact negatively our mix because we have anyway not sold those parts. But now we see that our offer and even order activity has increased. So these are the key focus points, opening repair shops, pushing ROBOspin and then working in the part on pricing and availability.

The next question comes from Leonie Zirn from UBS.

This is Leonie Zirn, UBS. The first question regarding the guidance would be a follow-up. You mentioned that you see or expect a slight market recovery or at least improvement -- gradual improvement into the second half. Does this imply that you see already a recovery in full swing in 2026? And also, do you see any other downside risks to the guidance except the slowest market recovery?

So downside risk to our guidance, I do not see. But the only thing what can happen is today, so many things are to a certain degree, unpredictable. I cannot tell you what happens in certain, let's say, thoughts the next week or the next month. Yes, we do see that the market activity has started to increase again. So besides China, I mentioned it has started in India. We now have booked the first bigger order again in Bangladesh. So this is a good sign. And in our discussions with customers, the projects have not been canceled. They have been postponed. So the decisions have been postponed.

When I look on our offer pipeline, the offer pipeline is substantially higher than what we had by the end of 2024. So this is an indication that once, let's say, the confidence comes back, there will be quite a sharp market increase. And this should also translate into higher order intake. Now the higher order intake, it's a question of little bit of timing. When does it impact our top line in sales as normally our lead time in the area of Machines & Systems is somewhere between 6 to 12 months. Then it is the question when does it also start to increase our sales volumes. And my assumption is this will happen not right at the beginning of 2026. It goes more into the second quarter, third quarter 2026. But it's too early to do our guidance on top line for 2026.

Yes. Okay. And then the second question, also a follow-up regarding Turkmenistan. You mentioned that you had a big order there. Can we also expect a follow-up order. And then generally, on After Sales, you mentioned that this division is improving which reflects your improved customer excellence strategy, let's say. And so I guess, this improvement is also -- or can be interpreted as structurally, right? Or how should we think about this?

So Turkmenistan, I can confirm, we just had a follow-up order in July. So what we have booked in the first half of the year was an After Sales order, but they are also planning new spinning mills. So we just booked a small Machines & Systems order now in July. And according to my latest news, I received yesterday, we will get also more orders early '26 in the Machines & Systems business. So, yes, there are follow-ups coming there. And it's not only Turkmenistan, we see that also Kazakhstan, Azerbaijan and Tajikistan are trying now to copycat this Uzbekistan story. And so I'm expecting over the next 1.5 years, more orders to come there.

And coming back to after sales business, yes, in the Capital Market Day last autumn, we tried to show what are our key initiatives to improve our aftersales offering. And we are just following step-by-step this strategy. And these are structural changes, warehouse setup, more decentralized sales forces and installation people. And yes, this will have -- this will create a fundamental change in our After Sales business.

Okay. And then the last question would be on the restructuring costs and CHF 14 million nonrecurring effect that you mentioned. Can you maybe explain a bit what is included in those CHF 14 million? Is it a restructuring in preparation of the acquisition? Or is there also advisory costs included or lawyer costs? Or is it mostly only the stand-alone business that is included here in terms of restructuring expenses?

Sure, Leonie, I am happy to give a bit of color. Roughly CHF 10 million is related to restructuring costs. That is spread across the biggest manufacturing sites that we have where we did some capacity adjustments, as you may understand, in the light of the lower volume and a bit over CHF 4 million is related to the acquisition of Barmag. This includes adviser costs and other OpEx in relation to the transaction. Obviously, there is expected more costs to come in the second half of the year on the restructuring side. There will also be a bit more restructuring still to be done, but most likely not in the magnitude of the first half year.

Okay. So in some, can we expect this to double for the full year? Or a bit less?

The costs in relation to the transaction will most likely double perhaps even a bit more. And on the restructuring side, it very much depends what measures we will undertake on what volume we will adjust the company for the coming year. There we are in the middle of the preparation works, and you may understand that we cannot give an outlook on that yet.

We have a follow-up question from Alessandro Foletti from Octavian.

You mentioned that in one slide, I think that your profitability -- or sorry, that your customer profitability is not really top. And I was wondering why is that really? Because I saw the cotton prices have been coming off the bottom and they're going up. So your clients cannot push through the price increases?

No, it is -- that's not the main reason. It always depends a little bit on the buying strategy of the customers. Our customers are also to a certain degree, speculating on the cotton price. So some of them buy cotton in advance when they expect that cotton price will maybe still further increase. So they buy cotton on stock. Now they are sitting on that stock. And even if the cotton price goes up, goes down and the so-called spinners margin, so the difference between the cotton price and the yarn price might go up, they still first have to use the cotton they have bought. So -- and this, to a certain degree, is a little bit speculation on their side.

In the long run, of course, if there is a structural improvement of this spinners margin, then once the stock is used, then they start to benefit from that. And what we look at is we look on the spinners margin. We are investigating into this, and we also look on the top line and bottom line development of the bigger companies. And interesting enough, the bigger companies they have an improvement in their profitability because in many cases, they are vertically integrated or downstream integrated, they do not only spinning, but also more weaving, knitting, dyeing, garmenting and they have an increase in their margins and the small ones, they are suffering.

Okay. So do you have a bit of a guess, maybe when this profitability could start improving when we consider all sort of elements?

Well, what I believe, but this is now, let's say, our hypothesis. My hypothesis is that our customers, they have to make a strategic choice. One is the small ones will only survive if they are in the niche. So they make very specific yarns where they have a high price for the yarn and they can somehow occupy a specific niche. The small spinners, which are in the, let's say, mainstream business, they will not be competitive anymore. So I believe that there will be a consolidation happening. So bigger companies will survive, and smaller ones might struggle in all fairness. If they are not in a very specific niche, they will sooner or later disappear, and there will be a consolidation happening on our customer side.

Then I can say what is now the impact for us? The impact for us as much as this is, of course, sad for the smaller customers is good because we have a strong relationship with the large customers because 2 years ago, we started to set up a key account management program in our organization where all the top customers worldwide have an executive sponsor in the Executive Committee. So if Oliver Streuli has his own customers, he is visiting a minimum once or twice a year.

So we see that our top customers, the top customers, they have a substantial share in our sales volumes. Not the top 10, but if you go to the top 50, then you already crossed the 50% line in our top line development. And so this means if smaller ones, they are much more price-sensitive. They usually go, for example, in India and in China, they go for very local competitors of us, whereas the bigger ones, they have a long-time relationship with us and they trust in our technology. They trust in our service capability. So for us, this trend is a positive trend.

Okay. Understood. Maybe if I may, one final follow-up. Are there major differences on a regional basis. So somehow this story is sort of valid, let's say, in Asia and Türkiye, really?

So you mean the...

This consolidation and changes between large and small customers and the profitability of them.

So biggest consolidation, in my opinion, will happen in Türkiye because there the customers will have to invest into automation because labor costs are so high. So the smaller customers don't have the funds to invest into the existing spinning mills. So they are suffering a lot. And I know that our customers in Türkiye, we have mill utilization of roughly 60%. And it was once at 90%. Now this difference is driven by lower markets in the European Union. But more than half of this difference is because they don't -- they can't finance people or they do not even find people.

Now the bigger ones are more putting money into automation. So the relative labor needs are lower. So bigger customers of us in Türkiye, they have a mill utilization of above 90%. So they will survive. And what then happens, these small mills, which will disappear, the overall production capacity will go down. So the bigger ones will invest into expansion, which then will drive order intake for us. That's our forecast going the way forward. And this is valid for other markets as well. This is valid for Latin America. This is also valid for other countries in the Orient, whether this is Pakistan or Bangladesh or also Vietnam. And India and China is different because there, especially in India, the labor costs are still very low. So this disadvantage of not finding people or they are too expensive is for the smaller ones, not so dramatic, so they can survive.

And in China, it's very obvious. There is a move from the coastal area to the Western area because there, there are government incentives and also labor costs are lower than in the coastal area. So even within these big countries, you will see movements.

Ladies and gentlemen, that was the last question on the phone. I hand back over to Relindis for the written question. Please, you may proceed.

Thank you, Sandra. The question comes from Dennis [indiscernible]. In view of the considerable increase in net debt expected in the future, would you consider discontinuing the dividend payment?

Well, maybe I -- now I answer that first as a CEO, and then I answer as the Chairman. So yes, it is true. We will have an increase in net debt, but I would like to add one comment to the explanations Oliver has done in 2, 3 questions before. It's the ideal timing for structural acquisition, because when you look on the cyclicity of our business, when there is an upswing coming in the market, we are highly cash generating.

So highly cash generating for 2 reasons. First of all, and this is our absolute ambition. It will improve our profitability because we have done so many things, and we still will continue to do a lot of cost measures. And then the volume is coming, and I come back to the question of Andy [indiscernible] from Z Capital, then you have an operating leverage, which will boost our profitability. Secondly, we also then have much more down payments to come in. And especially on the bar mark side, this is even more impressive and on our side. So it will generate more cash inflows.

And when we presented our acquisition in May, we said that plus/minus, and yes, give me a year plus, maybe not a near year minus, but it could be a year plus depends when really the market is coming back within plus/minus 40 years, we will be debt free, because of cash flow generation through net working capital and cash flow generation through improved EBIT and EBITDA margins. So that's -- first of all, I do not worry about cash generation in the future.

Now the second topic is dividend. Dividends are decided by the Board of Directors or proposed by the Board of Directors and then decided by our general assembly. And we have a clear dividend policy. We would like to pay out above 40% of our net profit, we would like to pay out to our shareholders. And now we will see what we have to decide in the year 2025 because it's a special year. We have some restructuring costs, okay. This is maybe not so special, but I think it is more special when you have a tough year.

And then, of course, we have this huge acquisition. And yes, we will have substantial costs within the EBIT, but also in the financing area. And I'm not sure, and we will have to discuss whether we should punish shareholders who agreed to do such a major transaction that we then say, but now we have to save the money and we don't get a dividend because of that. So this will be a delicate discussion we have. We want to be attractive as an investment case. And this also means we have to take care about our employees. We have to take care about our customers, and we have to take care about our shareholders. So we will see how we decide at the end of the year.

Okay. There's one additional question from Walter Bamert. So back to you, Sandra, again.

We have a follow-up question from Walter Bamert from Zürcher Kantonalbank.

I'm referring to the CHF 100 million revenue slippage into the second half or the next year. I understand that rather into the next year, mainly related to Türkiye and not a fault of Rieter. So is it more a financing issue that the client wants to pay late? Is it project development? I try to find better out when we can assume that and what is going on in the market. Is that a general theme with the delays? Or is it just single projects, which have the usual delays?

So thank you, Walter. This is a nice question than the first one you asked. So let's talk to these revenues. To be clear, this is not only Türkiye. It's very important. This was not only a Türkiye case. That would be too simple for us, I have to say. It was in April, we needed until May. We needed order intake in machines and systems that we can still execute until the end of the year. We knew those projects. We knew all the projects. Yes, there were 2 projects in Türkiye, but there were also projects in Egypt. There were projects in Vietnam, and there were projects in Bangladesh, Pakistan and to a smaller degree also in India. So it was much wider. It was not only Türkiye. But we need those projects to be booked until May because we selected the projects. We still can execute until the end of the year.

So we have a list of all the major projects where we believe we can still get sales in the year 2025. And none of them we have lost. Not a single one. All of them have been postponed. And they have been postponed either they say, well, maybe in the second half of 2025 when we know how much the tariffs are or the one or the other even has said, listen, at the moment, I'm so uncertain, I only decide in 2026. So it's important to know it was mainly the hit in April and May, which did not then allow us to still execute in 2025. None of those projects have been lost. And they either should be decided in the second half of the year or in the first half of 2026. And that has impacted our sales recognition.

And you might remember, in March, we said we need order intake until May, so we can deliver still our sales volume in 2025. And this was not happening. And in all fairness, yes, it's not our fault, but we have not managed to reach the breakeven level. I think we have done a lot, and you mentioned correctly, we try everything whether this is now direct business, restructuring, whether this is the one or the other opportunity to sell a piece of land or whatever. We want to be positive by the end of the year in our operating profit.

Exactly. And regarding that, also, you have a lot of momentum in your order book. I mean it seems that you had more orders at the beginning of July than in the first half of the year. Can you add that up? How much is it in this in July already? And when will you give an update on your recent development in the second half. We do you have a 9-month figure? Can you make an update before you have the EGM because I think you can use some momentum for the capital increase.

It's -- we have to be very careful because now as we are in a, let's say, transition phase until we have the capital increase, we have to take care that from a governance point of view, we are behaving absolutely correctly. So the type of messages we are giving, of course, are very important that we do not somehow manipulate anything. This is not our style at all.

What I can say July was -- I think it is -- so it's not yet over. So I can say, yes, we had some good orders in July. I mentioned the follow-up in Turkmenistan. This was not so big. But there, I believe bigger ones will come. And we also had a very good order in India. And we are expecting another good or large order in China. And if this happens, it would be the best month so far this year.

On the other side, orders are huge, but the question is when are they executed and they are not executed. An order in July, it's difficult still to execute in 2025. However, one of these orders will be executed in 2025, but this was also planned in our figure of CHF 750 million to CHF 800 million.

Okay. Then a small question on the restructuring cost of CHF 10 million in the first half. That is not yet cash relevant. That will happen later or what's the cash out?

Yes. Part of it was already cashed out. Part of it was not cashed out. It also will not be cash out. If you do, for instance, an impairment on a machine because you don't need the machine anymore. So it's rather difficult to give you a precise figure on that. But it's mixed. Part of it is and part of is not yet.

Okay. Then you restructured the EBIT of the first half of '24. Will there also be a restatement of the full year figures?

Yes, there will be. Because it's very important for us to provide you with comparable figures, apart from, of course, the naked reported figures, but comparable figures, which allow you to assess the operating performance of the company. There, we continue to take out any extraordinary transaction costs and also any extraordinary restructuring costs.

Okay. And last but not least, the Trump trade. I mean, direct tariff impacts you have none?

Well, there is -- it's not none, but -- so we -- when you look on the U.S., shipments of our machines are coming to the U.S. either out of Germany, out of Czech Republic or out of China. All our preparatory machines are produced in China. Our rotor and air jet machines are produced in Czech, and our binders are produced in Germany. But there is not a lot of business for machines in the U.S. So this is very limited.

But our spare parts and our components coming out of Switzerland and Germany, they are, of course, impacted by the tariffs. But the good thing is this is the same story for everybody. So everybody has that issue. And with the actual tariffs, which are very moderate, and we will see what at the end will be there. The yearly annual direct impact is -- would be a mid-single-digit million maximum because it depends a little bit who is the importer. If the customer is importing directly, the customer has to pay the tariffs. If we first ship the material to our company in the U.S., then, of course, we are, by ourselves, be importer and have to pay the tariffs. But what we have done immediately, all our contracts now have a clause in the spare part area that the change in the tariffs we will increase or decrease the prices to the customers. Whether we can push that through all the time is another question. But direct impact is limited.

The indirect impact is much more important. Because our customers are exporting their products directly or indirectly to the U.S., and the U.S. is money-wise the biggest garment market in the world. So it's by far, the biggest garment market in the world. The whole European Union is slightly larger. If you take all the countries together, but the U.S. is the biggest market. And our customers, especially in Southeast Asia, in Egypt and Türkiye are mainly exporting either to the European Union or -- and/or to the U.S. So they are not knowing whether they can sell their product still to the U.S. because when you have like in Vietnam, the first round of tariffs, 67%, nobody buys you the clothes anymore.

And that was the reason why they said, "Well, I first have to manage how is my business going on, before I do a CHF 20 million investment," and you have to know a very simple calculation. If you make a medium normal expansion of spinning mill, you invest about CHF 20 million into machines, you invest CHF 20 million into the building, air conditioning and so on, and you invest CHF 20 million into the -- at the beginning into net working capital, because you have to buy the cotton, you have to train your people. So if someone invests CHF 20 million for us, the real investment for the customer is CHF 50 million to CHF 60 million. And in all fairness, in such unpredictable time, I understand that someone says, "Hey, wait a minute, give me some months' time. I'm not willing to do now -- I first have to check what it really means for us." So it's the indirect impact, which has created this hesitation.

There are no more questions.

Very good.

Thank you very much.

So ladies and gentlemen, thank you so much for attending this call. Thank you also for the questions you have raised. I just want to say our ambition is to strengthen further our resilience in the current market environment. Even if markets are coming back, it does not hinder us to work on our cost structure, and to work on our supply chain footprint, to work on our customer service and on our technology leadership. Because independent of where we are in the cycle, we want to deliver as committed and we have committed that we want to deliver a positive EBIT even in a year, which is, again, very, very challenging. And this is in line with our disciplined execution of the strategy, which is even more important in turbulent times.

So besides all the day-to-day operational activities, we have to drive our strategic agenda forward. And besides that, we have to capture market opportunities. And last but not least, we will stay further cost conscious, and we will do our homework to become super, super fit in order to get then the operating leverage once the market is coming back.

Thank you so much. With this, I close the semiannual media on the investor call. Once again, thank you for your interest, and goodbye from Oliver and myself and, of course, from Relindis. Thanks a lot, and have a nice day. Bye-bye.

Thanks.

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