SAF Holland Aktie

Good morning, everyone, and welcome to our conference call on our Q1 2026 results. Turning to the financial highlights for the first quarter in this year on Page 3, please. Here, you can see that group sales reached around EUR 452 million, representing an organic growth of 5.6% year-over-year and benefited from the recovery trend in EMEA as well as in APAC. However, the Americas region continued its weak momentum in both truck and trailer segments. As a result, this caused a negative regional mix effect in the first quarter. And overall, profitability was nearly on par with the previous year, and the quarter closed with a solid adjusted EBIT margin of 9.4% and the adjusted EBITDA margin was 13%. The operating free cash flow came in strongly with around EUR 45 million, reflecting strict working capital management and, as said before, a solid organic growth. Leverage further improved to 2.2x, mainly due to the strong cash performance. And in a nutshell, Q1 '26 represents a solid start to the year and gives us confidence for the months ahead.

On Page 4, you can see the development of group sales and adjusted EBIT development. During the first quarter, SAF-Holland benefited from the ongoing recovery in the European OE market, while APAC markets also recorded a clear sequential improvement. Against this backdrop, the group delivered solid organic revenue growth of 5.6%, demonstrating the strength of its regional and business mix. The aftermarket business was -- continued to perform at a high and resilient level, providing stable support to overall revenues. While the foreign exchange effects created a headwind of around 5%, group sales reached EUR 451.7 million in the first 3 months of the year, slightly exceeding the prior year level. And now turning to profitability. SAF-Holland achieved a solid adjusted EBIT margin of 9.4%, and this performance reflects continued strict cost discipline, mainly within SG&A as a result of the first positive contributions from the efficiency program in indirect functions.

So overall, the group's resilient margin development once again highlights the robustness and scalability of SAF-Holland's operating model even in a mixed market environment. Moving on to the sales split by region and customer category on the next page, please. Here, you can see that in the first quarter of '26, EMEA further strengthened its position with the region increasing to around 52% of group sales now. This development was driven by the ongoing recovery in European trailer and truck OE demand. In North America, commercial vehicle production levels remain subdued. However, the market is providing early signs of stabilization. By contrast, APAC delivered a strong performance, supported by solid demand growth in India and Australia. And as a result, revenues in the region grew almost -- by almost 9% with APAC contributing 13% to group sales now. Looking at the performance by customer segment, the recovery momentum in Europe and APAC translated into a meaningful increase in trailer OE sales, which grew by around 6% and accounted for now 52% of group sales.

Truck OE sales now representing 11% of the group's top line, reflecting the still cautious market environment in North America and mainly in the U.S. And once again, the aftermarket business demonstrated its resilience and strategic importance, contributing a solid 30% -- 37% of total group sales. Let's speak about EMEA on the next page, please. With OE demand improving across the trailer and truck segments, EMEA delivered strong organic sales growth of 8% in the first quarter of '26. And this performance was further supported by a stable and resilient aftermarket business, providing an additional pillar of strength. Geopolitical developments, including the conflict in the Middle East, have so far not had any material impact on the group's order book, which gives us confidence for the upcoming months. And despite a slightly adverse mix effect resulting from the higher share of the growing OE business, adjusted EBIT increased by around 16% compared to the prior year.

This improvement was primarily driven by the positive scale effects and continued strict cost management, reflecting the benefits of the efficiency program implemented in the indirect area, which we started already last year. So overall, EMEA delivered a solid performance in the first quarter of this year. Speaking of Americas on the next slide, please. Here, you can see that in the first quarter of '26, demand in the OE business remains subdued across our truck and trailer segments, reflecting an ongoing uncertainty around the U.S. tariff policy as well as the potential industry discussions related to EPA27. At the same time, our aftermarket business once again demonstrated also its resilience and was able to partially offset the softer OE environment, supporting the overall sales development. Against a still comparatively strong prior year with solid -- with still solid truck demand, organic sales were moderately lower by 2.5%. FX developments remained a headwind with a negative impact of 8.5% on reported sales.

And following the successful implementation of retroactive price adjustments in the fourth quarter of '25 to fully offset additional tariff-related costs, the first quarter of '26 showed a stable overall pricing and cost position. The year-over-year development in adjusted EBIT mainly reflects lower fixed cost absorption in a softer volume environment. This effect was substantially mitigated by continued strict cost discipline, mainly also here within SG&A. Overall, the Americas segment demonstrated its resilience, delivering a solid double-digit margin despite ongoing market weaknesses mainly in the U.S. Last but not least, on the next slide, we speak about our APAC region. And here in APAC, the overall demand continued to improve during the first quarter, and the region benefited from the ongoing recovery in the Indian trailer market as well as a solid demand in Australia and New Zealand.

While exports from India to Asian markets remained subdued due to tariff frameworks, this had only a limited impact on the overall regional development. FX effects continued to represent a heavy headwind with a negative impact of 13.4% on reported sales. The adjusted EBIT increased by around 8%, in line with sales growth, resulting in a stable profitability level year-over-year. And at the same time, the SAF-Holland operation in China showed a strong operational recovery driven by improved capacity utilization as well as a targeted efficiency program. Overall, APAC delivered a solid and increasingly balanced performance with improving end markets and continued progress on the operational side. And having said this, I hand over to Frank for the key financials for the first quarter.

Thank you, Alex, and hello to everybody on the line. Let me start with a short overview on the EBIT to adjusted EBIT reconciliation for the group on Page 10. During the first 3 months of 2026, reported EBIT increased slightly by 2.8% year-over-year to EUR 36.9 million supported by our overall strict cost management. Moreover, depreciation and amortization from purchase price allocations were adjusted as usual and declined by EUR 1.2 million compared to the prior year, mainly due to expiring amortization related to the IMS acquisition. Our adjustments remained at low level of only EUR 0.9 million and were largely coming from legal and transaction-related expenses. As a result, SAF-Holland achieved an almost stable adjusted EBIT and a solid adjusted EBIT margin of 9.4% in the first quarter 2026. The adjusted EBITDA margin remained broadly stable at robust 13%, underlining the continued resilience of the group's earnings profile.

Moving on to Page 11, where you see the bridge from EBIT to basic earnings per share. As mentioned earlier, reported EBIT for the first quarter amounted to EUR 36.9 million. At the same time, we made further progress in actively managing below-the-line items. The financial result improved by EUR 10.1 million to a level of minus EUR 5.2 million. This improvement was mainly driven by lower unrealized FX effects. Following the adjustments to our intercompany financing structure, we were able to further reduce our overall FX exposure. The remaining exposure was positively influenced by favorable currency movements, particularly to the U.S. dollar. As a result, while the prior year period was still burdened by negative FX effect of EUR 5.8 million, the first quarter of this year benefited from a positive FX contribution. In addition and even more important, we further optimized our external financing structure and interest expenses declined by EUR 1.1 million or almost 9% year-over-year.

Income taxes remained broadly stable compared to the previous year with an effective tax rate of 35.3%. Tax rate continues to be mainly influenced by noncapitalized deferred assets related to interest and loss carryforwards. For the full year '26, we continue to expect a tax rate of around 35%. Overall, the improved finance results, together with an improved EBIT translated into a strong earnings performance. Reported EPS increased by 57% year-over-year to EUR 0.45. Hence, also the adjusted EPS increased by almost 38% to EUR 0.61. Adjusting all the unrealized FX effects according to our dividend definition, the EPS improved by 4.2% versus previous year, which is highlighting the resilience and profitability of the group despite a still challenging market environment.

Moving to Page 12, where you see the development of the equity ratio. Compared with the year-end 2025, equity rose by 4.9% or EUR 24.2 million to EUR 516.2 million, mainly driven by the positive result for the period. At the same time, the balance sheet total grew by 5.8% compared to year-end 2025 primarily reflecting the seasonal buildup of working capital in the first quarter. As a result, the equity ratio stood at a solid 29.3% at the end of March '26 and therefore, almost reached the year-end 2025 level. Turning to Page 13. I would like to speak about net working capital development. Net working capital at March 2026 was influenced by several factors. First, it reflects the usual seasonal buildup at the beginning of the year, which was further supported by continued top line growth. At the same time, trade payables developed very favorably, benefiting from extended payment terms versus our suppliers and providing significant positive contribution to working capital.

In addition, development was further supported by strict inventory management, which remains a key focus area for the remainder of the year. In contrast, trade receivables increased mainly due to a structurally different customer mix that was partly compensated by higher factoring volumes of plus EUR 8 million. Overall, these developments resulted in an improvement in net working capital of 4.2% to 17.1% of sales and therefore, comfortably in our target corridor of 16% to 18%. And now let me address the cash flow development on Page 14. Net cash flow from operating activities developed very strongly in the first quarter, reaching EUR 44.8 million. This performance reflects not only the solid operating result, but also a favorable development in working capital. As mentioned earlier, net working capital benefited from targeted measures, including improvement -- improved payment terms and a general strict inventory management.

In addition, tax payments decreased slightly in line with the underlying business development of previous years. The other line amounting to EUR 5 million primarily relates to changes in deferred tax assets. Investments in property, plant and equipment and intangible assets totaled EUR 5.1 million, corresponding to 1.1% of group sales. As typical for the first quarter, investment activity remained at a comparatively moderate level, fully in line with our full year guidance of up to 3% of sales. Overall, investments were focused on further automation and modernization of production processes alongside targeted equipment additions in line with our drive2030 ambition to grow our business to more than EUR 3 billion until 2030. Moving on to an overview of the leverage development on Page 15. Net debt-to-EBITDA ratio stood at 2.2x at the end of March '26, slightly below the level at year-end 2025 and benefited in particular from an improved net debt.

Gross debt increased moderately and was influenced by the issuance of a EUR 100 million promissory note loan. This transaction further strengthened the maturity profile and was mainly used to refinance around EUR 93 million of outstanding maturities mainly due in March 2027. At the same time, our cash and cash equivalents increased by approximately EUR 34 million. This improvement was achieved despite the ongoing share buyback program, under which EUR 6.2 million were deployed during the quarter. In addition, we further strengthened our financing profile by extending our revolving credit facility by EUR 75 million to EUR 325 million, which was undrawn by the end of March '26. Altogether, we see solid headroom to target on midsized M&A projects without additional financing. Excluding the IFRS 16 effect, our leverage would have amounted to a significantly lower level of 1.9x at the end of March '26. And now I hand back to Alex.

Yes. Thank you, Frank. I'm on Page 17, showing the 2026 forecast for the trailer and truck markets. And as mentioned earlier, European and Asia Pacific markets showed encouraging signs of recovery at the start of the year. And in contrast, North America continues to be shaped by a more cautious demand environment primarily driven by ongoing uncertainties surrounding the upcoming EPA27 regulations, but also due to the USMCA discussions going on. Looking ahead, we expect the trailer and truck markets in North America in '26 to benefit from improving freight rates and increasing regulatory clarity over the course of the year, supporting a gradual normalization of demand. Therefore, we continue to expect a largely stable development in North American trailer market. And at the same time, we have upgraded our outlook for the Class 8 truck market and now expect growth in the range of 0% to 10% plus.

In the Brazilian CV market, which remained below expectations and against the backdrop of a persistently high interest rate environment, we currently see a market decline in the range of 5% to 10% for '26. For EMEA, we continue to see a steady to moderately positive development in trailer markets, while the heavy truck market is expected to show a somewhat stronger growth profile with increases of up to 10%. Also, our market expectations for the APAC region were moderately updated post the strong development in Q1. Having said that, let me briefly come to our guidance for '26 on Page 18. And here, we confirm our guidance unchanged across all key performance indicators.

At the same time, the current geopolitical environment, particularly developments related to the conflict in the Middle East and the potential implications for the broader economic situation of our end markets remain difficult to assess with a high degree of uncertainty. That said, based on what we see today, we feel confident in the resilience of our business model, which positions us well to respond flexibly to potential demand and cost dynamics. So from today's perspective, we do not see any material impact on SAF-Holland and therefore, remain comfortably with our current outlook. And last but not least, let me briefly summarize the key takeaways for the first quarter on the next slide. First of all, we have seen a solid start into the year with demand normalization in Europe and Asia Pacific, clearly gaining traction and translating into an improved top line performance.

This underlines that our regional diversification is paying off. At the same time, we continue to demonstrate the resilience of our earnings profile with an adjusted EBIT margin of 9.4%, we are essentially on par with last year's level, supported by disciplined cost management and a solid contribution across our 3 regions. Cash generation was very strong in the first quarter with an operating free cash flow of nearly EUR 45 million, reflecting our continued focus on efficient working capital management across the organization. So overall, Q1 was an encouraging start into '26 and gives us confidence that we are well positioned to navigate a volatile macro and geopolitical environment. Ladies and gentlemen, this concludes the presentation. Thank you for listening, and we now can start with our questions. Operator, the first question, please.

[Operator Instructions] The first question comes from the line of Holger Schmidt from DZ Bank AG.

I have a question on the aftermarket business. We have seen growth for a longer period. The revenues are down by about 14% as compared to the second quarter in '24. What is driving that? Is it purely the volume? Have you not been able to push price increases? And when do you expect the business to come back to positive growth again?

Well, if I understand your question correctly, Mr. Schmidt, you were asking about a decline of aftermarket sales.

That's right.

I -- which I cannot confirm. First of all, we are not displaying our aftermarket sales. And I can report that the aftermarket is very stable in both major regions, which is Europe or EMEA and also North America. Specifically in North America, that was the driver that we could keep our profitability. So there is no decline of aftermarket business.

I mean looking at the figures, I mean, if I'm right, you published EUR 167 million in aftermarket revenues in the first quarter.

You are referring to the 37% share of our aftermarket business in total group sales.

That's right.

It's what you're referring?

Yes.

Yes.

And this is down as compared to the second quarter in 2024, so about 2 years ago by around 14%, which means we haven't seen growth in the aftermarket business, effectively a decline in the aftermarket business over a longer period of time. And I'm asking what is it -- what are the drivers behind it? Is it purely the volume? Have you not been able to push price increases? What drives the decline in the aftermarket business since the second quarter of 2024?

So maybe I take this to ask again, you are jumping back 2 years going to 2024.

That's right, yes.

Yes, it's a good question. There might be a slight reduction, but aftermarket business, as you know, is really depending on driven miles. And we have seen, especially in the big market in Europe, a reduction in industry transportation due to the decline in the automotive industry. So reduced driven miles are a little bit impacting our volumes in aftermarket, what will recover as soon as we come back to normal industry levels in these regions. But it's not a big topic. If you add then the big portion of the U.S. of our Americas business that we are strong in aftermarket, you have to add again another 10% to 15% reduction from FX because we are reporting in euro and the sales is coming in, in U.S. dollars.

So overall, if we take the volume in aftermarket, we do have a little bit reduction in EMEA, but it's partially even offset by our higher population we have generated the last 5 years, but we also have a huge FX impact from the depreciation of the U.S. dollar in the top line. There is no issue in margin. And even on the price side, as we mentioned already in last year's calls, even the tariff topics we could offset in the U.S. in aftermarket as we do usually in our market. So from the business performance, we don't see any impact -- any negative impact in the aftermarket. It's key topic is FX, taking 2024 U.S. dollar rate to burn rate. And the second is a little bit in Europe, the lower driven miles from reduced industry transportation that we even partially offset with higher population. So performance-wise, no doubt in our aftermarket.

Okay. That's very helpful. So my second question is on your M&A ambitions. I mean, back at your Capital Markets Day last year, you highlighted the M&A ambitions. I think you mentioned an M&A capacity of up to EUR 1.5 billion with a focus on entering into adjacent markets. We haven't seen any major activity so far. Can you give us an update where you stand here?

I'll take this question again. First of all, the EUR 1.5 billion, I can confirm we do see firepower to do really reasonable M&As. Second is topic, the strategy is drive2030. So this does not mean that only 6 or 12 months after publishing it, we go and buy something. We are really, really selective. We are investigating a lot of companies, visiting companies. But our target is to create value for the company. And this is leading us into the topic that we have to really do a good analysis and look for a really perfect fit target. And I have to admit this takes some time. We have a good short list where we are discussing. And as well in our communication on the share buyback program, as we see that the activity will take us the time to really find a good target. We put some money on the share buyback program to invest it in parallel for the time being until we find the right target. As soon as we have it, you will get to know.

And we don't want to over -- let's say, overpay, of course, for targets. This is why we are really selective. And we take our time to get good targets. And as Frank said, once we are ready, we will get it.

Yes, that's helpful as well. Take your time. Makes sense. The third question is on the APAC business. I was a bit surprised about the 9% top line growth. It was quite remarkable after an extended period of declining revenues. I mean, it was driven by India and Australia. Do you think this is the start of a new cycle? And what is the potential for APAC in '26 as a whole and for the next 3 years?

Well, our biggest portion of the whole, let's say, Asia business for us is our Indian market, having more than 50% market share in trailer axles and trailer suspensions. We would like to grow that. We also have the capacity to further increase our output. That's a good sign. As a reminder, we just moved like 2, 3 years ago into a totally new facility with upgraded robots and organization. That's a good thing. India had a decline of markets the last 2 years. I can confirm that. This year, we had really a good start. We don't see huge impacts with the shortage of gas and electricity in India at the moment due to the Middle East conflict. The export specifically to the U.S. is still subdued due to the tariff situation. So we have to see how that develops. But clearly, I have to say with a share of 12%, 13% of the overall group sales, this is not sufficient. We reported that we at least would like to have 20%, 25% share in Asia until 2030 to more balance the different regions.

So if we had a 40% for Americas, 40% for EMEA and 20% at least for the APAC region, that would be a target for the years to come. We are driving that. We also put together the management teams in China. We had 2 teams, one for Haldex, one for SAF. We put that together under one roof now, this is gaining traction. We are increasing our sales, but also profitability is going up in China as one of the big markets or the biggest market in Asia. And as you said rightfully, also in the -- in Oceania, speaking of Australia, but also in New Zealand, we have high market shares with growth rates which are sufficient and good. So overall, to summarize what I just said, we would like to increase the overall portion of the business in Asia, not only in India, but also in China and the other regions like in Indonesia, Malaysia, Thailand, Southeast Asia in total, Japan to be more in the ballpark of 20% to 25% of group sales in the years to come.

[Operator Instructions] The next question comes from the line of Yasmin Steilen from Berenberg.

I have 3, if I may, and I will also take them one by one. So the first one on the U.S. truck and trailer market, you became more optimistic on the U.S. truck market. Is it already visible in your current business? So i.e., is it fair to assume or to expect a flattish development in Americas in Q2 and then the recovery in the second half? That's my first question.

Yes, I can confirm that the order intake and also what we invoiced in the first quarter was some kind of, let's say, slightly promising, okay? It's not overall a super wow, I have to say, it's slightly improving. Order intake is also coming specifically for the truck OE, which is one of the biggest portions of our overall U.S. business or North American business. The order intake for the second quarter is also okay, I have to say, it's increasing. We think that after we have more clarity on the EPA27 USMCA, it's still some more discussions going on.

Now new tariff regulations are coming in or talks are going -- and we still have the Middle East conflict, which drives massively the gasoline prices again now in Michigan is like $5.25, in California, $6 to $7. This really hurts our industry, I have to say, because all the diesel prices jumped and that drives the inflation in our transportation. But everybody in the market expect that the second half of this year, it's going to be better than -- much better than last year, but also better than the first quarter and the second quarter to be. So it's -- we are positively optimistic here that the second half would be better.

Okay. Perfect. Following up on this. So with regards to EBIT margin seasonality, do you expect the usual quarterly EBIT margin development? Or should we see a different pattern from the recovery of the U.S. truck and trailer market in the second half?

Basically, we do not guide EBIT by quarter to refer to our guidance, 9% to 10%. We had a good start in the year with 9.4%, almost in the middle of the guidance. And there will be usual seasonality, but nothing special.

Okay. And then the last one on working capital and the supply chain. So with the Middle East conflict, do you experience any tightness in your supply chain? And how should we think about the net working capital ratio in this context for the remainder year and also assuming the recovery of the U.S. market in the second half? That's my last question.

Overall, we have a quite solid local-for-local supply chain and also dual sourcing or free sources as well. So we don't see big impacts in terms of shortages on the supply chain. Energy cost is also not a big issue for us. We have less than 1% energy cost in our P&L. So we don't see a shortage in delivery and interruptions. Everybody has to monitor the energy supply in India. But as Alex mentioned, also, this is still working good. And hopefully, this conflict will be solved in the next weeks easily. So we don't see a big issue in that. On the net working capital also, as I have mentioned, we could manage, especially in inventory, not a big jump in the first quarter as we have normally in the season.

What is good and is also one of the reasons for our good net working capital and cash performance in the first quarter, also the improvement of accounts payable, improvement of payment terms where we placed a really solid program last year for sustainable improvement. This will remain -- and the remainder is the accounts receivable customer mix, but I don't see any big impact on the net working capital ratio as well. The corridor, 16% to 18% is a solid corridor and this structure of business with 35% to 38% aftermarket ratio. So also Q1 is a good implication for the remainder.

And mainly also add on from my side, we just had a leadership update 1 hour ago with our EMEA team and APAC team. We had the same question coming here and what I replied is well done for the first quarter, but there is still room for improvement when you see the last couple of years. So we are working very hard mainly on inventory management, but also on getting our money from our customers in.

We now have a question from the line of Nicolai Kempf from Deutsche Bank.

Yes. It's Nicolai from Deutsche Bank. Good start to Q1, so well done. I'm a bit surprised about your comments on the U.S. market just because -- and I'm just referring to trucks here, I know trailers may be a bit different. But I mean, the orders you've seen in Q1 are very strong. And I mean, yesterday, the U.S. Class 8 market leader reported Q1 numbers as well, and they pointed to a 50% unit sales increase from Q2 versus Q1. So my question is a bit if we also like assume that Q2 and so on will be stronger, I think, first of all, this could maybe make your topline guidance appear rather cautious. And my second question is, would you expect any mix shift? And how would this impact profitability so having more OE business and less aftermarket business?

Well, starting first with your last comment about the mix shift. I don't see that because typically, this is not linked to each other. You have a running population in North America, mainly in the U.S. of trucks and they need repair. I don't see a big drop of aftermarket or a shift from the aftermarket to OE. I can also confirm what you said that the order intake specifically for the month of February and March was very good and very promising. There is one thing. We have to stay cautious here because with the Middle East war going on, with the petrol, the gallon prices jumping to $6, $7 per liter, the fleets are very cautious.

And then we have the -- another discussion, new tariffs coming in. So the government, in my point of view, does everything to put uncertainty in the whole environment and the market. So our fleets are very cautious to really further invest. So let's hope that the order placed being placed in February and March also will be delivered in the second quarter and the third quarter. We stay a little bit more cautious. Let's hope for the best, but we do our planning and the planning is not overoptimistic in that regard.

Okay. Yes, clarify.

I wanted to add regarding to your mix effect, higher OE is also coming in with higher economy of scale. So this natural product mix effect, again confirm what Alex said is not coming, but we have better utilization of our equipment. And on the order book, we also need to admit that Q2 last year was a quarter with still high sales looking into a declining market where you have usually low order book. Now we look into lower delivered sales compared to last year, but looking into an improving margin. So it's -- for me, from the comparison, it's fully clear that we have this difference in order intake compared to previous quarter, we see at Daimler Truck when they published. But as Alex mentioned, it delivered finally.

Yes. Maybe just, I think you answered the question. My question was about the mix shift in profitability because the aftermarket is much more profitable than the OE business. And so then if you have a higher share of OE versus aftermarket, could this impact your margins, but you've answered that. Maybe just one quick one on Europe. Also here, rather positive signals from the truck manufacturers. I know Germany is slowly coming back, not as strong as hoped for. What do you see here in the market?

Well, we see the positive development. We were quite happy with the first quarter, not super happy like in '22 or '23 I have to admit. We are running 2 shifts in all the plants. So this is a good output, which then also creates more population for the aftermarket for the years to come. Order intake is okay also for the second quarter. So also here, we are positive looking into the future. As I said, it's not like it was in 2023 when the markets were booming and Germany is still, let's say, a question mark, I have to say. People are hesitant still. And sitting on the money, there is money available. Interest is not too high in Germany or in Western Europe. They are willing to invest. But now what happened just 6 weeks ago with the new, let's say, Middle East crisis damped a little bit the overall positive signs in the first quarter we have seen. But the second quarter is also the order intake is quite promising, I have to say.

[Operator Instructions] The next question comes from the line of Werner Friedmann from A's & I's.

It's only one question from my side. It's on the APAC region where you had shown a very, very strong organic growth of 22%. And usually, with such kind of growth, the EBIT margin would react positively too. This has not happened in that case. And I've also seen that the number of employees in the APAC region was up very strongly. Maybe if you could elaborate on what is happening there?

Yes, that's an easy one. That's mainly coming from India and India. Unfortunately, the share of aftermarket and OE, it's not like 70% to 30%, 70% OE and 30% aftermarket. It's mainly driven by OE business, so 90% plus and the increase in sales was coming from the OE business and the OE business, the margins are stable. This is why the margins did not jump heavily, I have to say.

We have really good cost flexibility. You even could not see last year when sales declined an impact on margin. So we have really a flexible cost structure, and that's why margin goes basically stable along with sales up and down.

Ladies and gentlemen, there are no more questions at this time. I would now like to turn the conference back over to Mr. Lorenz-Dietz for any closing remarks.

Yes. So thank you, everyone, for your questions. Our Investor Relations team is available in case you have any follow-up questions. We will be, as usual, on the road attending conferences in the coming weeks and months and look forward to seeing you there. Have a good day, and goodbye.

Thank you.

Dear ladies and gentlemen, welcome to the SAF-Holland SE Q3 2025 Results. Today's presenters are CEO, Alexander Geis; and CFO, Frank Lorenz-Dietz.

The presentation slides are available on the SAF-Holland Corporate website. [Operator Instructions] Please note this conference call will be recorded and published on the corporate website of SAF-Holland SE. Everything spoken through un-muted microphone will be processed during the online meeting and published on the website of SAF-Holland SE. [Operator Instructions] The Q&A session is exclusively for institutional investors and analysts. All other participants of the conference call are kindly asked to contact the Investor Relations team directly if they have any questions. Mr. Geis, the floor is yours.

Thank you. Good morning, everyone, and welcome to our conference call on our Q3 '25 results. Let me begin with the Q3 '25 financial highlights on Page 3, please. The past quarter was again characterized by a challenging market environment, which SAF-Holland mastered well, thanks to its resilient business model and operational discipline. In numbers, group sales declined organically by 2.5% and ultimately reached EUR 417.2 million, which is around 5% below the prior year. Despite softer demand from OE customers and additional tariff-related expenses, we were able to maintain a solid profitability of 9.1% and an adjusted EBITDA margin of 13.2%. And in addition, the company generated a solid operating free cash flow of plus EUR 38.5 million. That's a clear improvement compared to the second quarter.

Leverage remained stable at 2.4x due to the cash outflow for the dividend payment, M&A activities and additional lease liabilities for our new Texas plant in Rowlett. Given the continued softness of the North American truck market and muted demand from Southeast Asian customers with U.S.-based end clients, we have adjusted our full year '25 sales outlook accordingly.

Now let me continue with the group sales and adjusted EBIT development on Page 4, please. You can see that group sales in the third quarter of '25 continued to reflect the lower demand in the global CV markets. In particular, the North American OE markets as well as demand from the Southeast Asian customers, for instance, in Thailand and Vietnam were affected by the U.S. tariff policy. As a result, OE sales declined by 6.9% year-over-year, leading to an organic sales decline of 2.5% in Q3. And in addition, FX effects weighed on top line performance by 3.3 percentage points, while Assali Stefen provided a low single-digit euro million contribution to group sales. Overall, group sales declined by 5.2% compared to the prior year. And in the first 9 months of ' 25, group sales were 9.9% below the previous year's level with organic sales down 9.7% year-over-year.

Between July and September, adjusted EBIT was again affected by a net effect of tariff-related costs in the low single-digit million euro range, which we expect to largely offset through further price measures over the next months. In addition, profitability was impacted by a moderately higher depreciation ratio. Consequently, adjusted EBIT declined by 12% year-over-year, resulting in a 9.1% adjusted EBIT margin. For the first 9 months of this year, adjusted EBIT totaled EUR 121.1 million, corresponding to a solid margin of 9.3%, while the adjusted EBITDA margin remained nearly on the prior year level of 13.1%.

So now moving to the sales split by region and customer group on Page 5, please. You can see here that the overall distribution of group sales by region and customer segment continued to reflect investment hesitation among truck and trailer customers, particularly in North America, India and Asia. In this context, the EMEA region performed quite well, accounting for around 52% of group sales, supported by the acquisition-related contribution of Assali Stefen. The Americas region represented 37.1% of total sales, while the APAC share declined to 10.9%, mainly due to the softer demand of Asian trailer manufacturers with end customers in the U.S. as well as a weaker mining business.

Looking at the split by customer segment, you can see that OE sales declined by 6.9% year-over-year to EUR 246.7 million, driven by the overall weakness of the CV market. Within this, the trailer OE segment accounted for 48.1% of third quarter sales, up by 1 percentage point due to the stronger performance in EMEA. The truck OE segment with a strong exposure to the Americas, was more impacted by the uncertainties related to the U.S. trade policy. In contrast, the aftermarket business once again proved resilience, declining by only 2.5% to now EUR 170.5 million and underlines the continued robustness and stabilizing nature of our aftermarket operations. As a result, the aftermarket business contributed 40.9% of group sales in the third quarter of this year.

So speaking about -- having spoken about the different regions and the summary, we come now to the single regions and starting with EMEA on Page 6, please. Here, you can see that the top line development in the EMEA region showed a return to positive growth, supported by slightly improving demand from both trailer and truck customers in recent months. And as a result, sales increased organically by 5.6% in Q3. The aftermarket business remained broadly stable compared to the prior year, continuing to provide a solid foundation for the region. In addition, Assali Stefen, as said before, contributed a low single-digit euro million amount to sales in the third quarter, following its first-time consolidation at the end of July '24. For the first 9 months of '25, total sales in EMEA were 3.1% below the prior year's level, reflecting an organic decline of 7%.

Looking ahead, while the recent positive order momentum is not expected to continue at the same pace, current volumes remain sufficient to ensure efficient capacity utilization. On the earnings side, adjusted EBIT grew to 8.2% in Q3, mainly driven by better fixed cost absorption and higher utilization levels. And as a result, profitability for the first 9 months of this year stood at 7.8%, including a onetime FX valuation effect from Q1.

Moving to Americas on the next page, please. Here, in addition to the cyclical downturn in the North American CV markets, demand for both trucks and trailer remained subdued, primarily due to the ongoing uncertainties surrounding the U.S. trade policy. In contrast, the aftermarket business once again demonstrated its robustness and resilience. And as a result, organic sales in the third quarter declined by 7.9% year-over-year, while negative currency effects further reduced sales by around 5.7%.

Overall, third quarter sales in the Americas were 13.6% below the previous year, contributing to a 14.4% decline over the first 9 months of '25. In addition to the lower top line, earnings were a little bit impacted by additional procurement-related costs linked to the U.S. tariff situation amounting to a net effect of a low single-digit euro million figure. While initial compensating effects from price adjustments were already visible, the regional teams are now working for further -- to further mitigate the impact of the Section 232 tariffs, which came into effect at the end of August. Consequently, adjusted EBIT decreased by 22.2% year-over-year, resulting in a still double-digit adjusted EBIT margin of 10%. And looking ahead, we expect that the tariff-related cost burden on the procurement side to be largely compensated, among other measures through pricing and efficiency measures in the coming months. So for the first 9 months of '25, adjusted EBIT totaled EUR 53.1 million, which equals to a margin of 10.6%.

So last but not least, coming to APAC now. And here, I can say that the market environment in APAC remained uneven and overall subdued, particularly in those segments that are strategically important to us. While the Indian domestic trailer market achieved moderate growth despite the usual slowdown during the monsoon season, unfortunately, customers in Vietnam and Thailand with end users in the U.S. continue to show purchasing restraints due to the uncertainty surrounding the U.S. trade policy. As a result, sales in the third quarter of this year amounted to EUR 45.5 million, representing a 21.5% year-over-year decline, which equals an organic decrease of 13.9%. And also here, in addition, negative foreign exchange effects reduced sales by a further 7.6% year-over-year.

On the earnings side, the decline in profitability was mainly due to the lower top line, particularly in higher-margin markets. Nevertheless, despite continued market softness and tariff-related uncertainties, we maintained a solid adjusted EBIT margin of 10.8%, making the 11th consecutive quarter with a double-digit profitability. So overall, we closed the first 9 months of '25 with a robust adjusted EBIT margin of 11%.

And having said this, I hand over to Frank for the key financials.

Okay. Thank you, Alex, and hello to everybody on the line. As usual, let me start with a short overview on the EBIT to adjusted EBIT reconciliation for the group on Page 10. Our reported EBIT for the third quarter of 2025 declined by 21.7% to EUR 28.9 million, mainly reflecting a lower top line as well as some additional tariff-related expenses.

Total adjustments for restructuring and transaction costs amounted to EUR 3.8 million in Q3, primarily related to the integration expenses from recent acquisitions and expenses for the restructuring of production and logistic processes in North America and EMEA. These measures include, among other things, expenses for the footprint optimization in North America. In this context, we are relocating part of our production from Dumas to the new plant in Rowlett, Texas. In addition, depreciation and amortization from purchase price allocations were, as usual, adjusted accordingly and totaled to EUR 5.4 million. As a result, we achieved an adjusted EBIT margin of 9.1% for the third quarter, while the adjusted EBITDA margin for Q3 remained robust at 13.2%, nearly reaching the prior year level.

Moving on to Page 11, where you see the bridge from EBIT to basic earnings per share. As mentioned earlier, EBIT amounted to EUR 28.9 million for the third quarter of '25. By implementing targeted measures to reduce FX valuation effects, mainly from intercompany financing and benefiting from a favorable euro-U.S. dollar exchange rate, we were able to avoid any material valuation impacts in Q3. In addition, besides the improvement of the EURIBOR versus prior year, we further optimized our financing structure, leading in total to a 17% reduction of interest expenses compared to the prior year. As a result, the finance result, which had been significantly burdened by FX effects last year, improved to around EUR 8 million in Q3 2025.

Income taxes also declined significantly, partly because the prior year quarter was negatively impacted by catch-up effects from previous periods. As a result, the overall tax rate stood at 33.9% for Q3 and 35.8% for the first 9 months of 2025. Overall, reported EPS improved by 49.4% to EUR 0.31 in Q3, reflecting these positive financial developments despite the weaker top line. Using the new calculation method for the distribution relevant profit for the period, this would correspond to a distribution relevant EPS of [ EUR 1.07 ] for the first 9 months of 2025.

Moving to Page 12, where you see the development of the equity ratio. Compared to year-end 2025 -- 2024, equity decreased by 9.5%, respectively, EUR 49.9 million to EUR 477.2 million, mainly due to the dividend payment of around EUR 39 million as well as negative valuation effects amounting to around EUR 37 million. Since the balance sheet in total increased by 3.9%, the equity ratio declined to 26.9%.

Turning to Page 13. I would like to speak about net working capital development. Net working capital at the end of September 2025 was influenced by several factors. As the OE business remains subdued, the aftermarket business, which generally required higher inventory levels continued to be relatively strong. In addition, we adjusted our net working capital management proactively as a precautionary measure in light of the ongoing trade policy uncertainties, and we built some additional stock buffer related to the relocation of production from -- in the U.S. from Dumas to the Rowlett plant in Texas. As a result, net working capital increased by 11.2% to EUR 297.3 million compared to the end of December and included factoring of EUR 34.8 million.

Moreover, it also reflects the usual seasonality in trade payables and trade receivables. Consequently, the net working capital ratio stood at 18.7% of sales, also reflecting the overall lower last 12 months top line development. By year-end, we expect to return to our target corridor of 16% to 18%.

And now let me address the cash flow development in Page 14. After generating net cash flow from operating activities of EUR 30.5 million in the first half of the year, we achieved an additional EUR 48.8 million in the first quarter. For the first 9 months of 2025, this results in a total of EUR 79.3 million. Compared to prior year, this development was primarily driven by lower EBITDA and a higher net working capital level, reflecting the current market environment, as explained before. However, this impact was partly offset by lower tax payments. Investments in property, plant and equipment and intangible assets totaled EUR 31.7 million, representing 2.5% of group sales. As in the first half of '25, these investments focused on further automation and modernization of production processes, preparations for the new plant in Rowlett, Texas and capacity expansions for air disc brake and localization of fifth wheel production at Duzce in Turkiye.

Moving on to an overview of the leverage development on Page 15. Despite the refinancing measures implemented in recent months, the net debt-to-EBITDA ratio remained unchanged at 2.4x at the end of September compared with the end of June. The increase versus year-end 2024 was primarily driven by higher net debt, including around EUR 20 million in lease liabilities related to the new Rowlett plant, which is scheduled to open in the coming months.

Net debt also rose due to the financing of net working capital, as explained before. The dividend payment as well as the purchase price payment for the remaining 40% stake in the Haldex joint venture in India. EBITDA declined to EUR 227.5 million, reflecting a stable margin at lower sales caused by the current market conditions. Excluding the IFRS 16 effect, our leverage would amount to only 2.2x.

Looking ahead, we expect to gradually reduce leverage in the coming quarters, supported by further operational measures. Our target remains to bring leverage step-wise below 2x over the coming quarters.

Before I hand over to Alex, let me shortly also comment on the recently announced share buyback program on Page 16. Following our successful implementation of a group-wide cash pool and hence, the concentration of our cash flows in recent quarters as well as the elimination of all debt maturities until 2027, we see this as the right time to initiate a share buyback program, reflecting our confidence in SAF-Holland's financial strength and long-term value creation potential. We, therefore, plan to invest a total of up to EUR 40 million in the repurchase of our own shares. Along that program, we will acquire up to 5% of the outstanding shares as treasury shares, probably starting at the end of this month or earlier and continuing until the end of next year. To this end, we intend to renew the authorization for share repurchases at the 2026 Annual General Meeting. We are convinced that this share buyback represents an attractive investment and a clear signal of our confidence in the company's long-term growth potential. Our liquidity position remains strong, supported by a successful cash pooling and solid financing with no outstanding maturities before March 2027.

And with that, I hand back to Alex.

Yes. Thank you, Frank. I'm on Page 18, showing the '25 forecast for the trailer and the truck markets. Here, you can see that between January and September, the truck and trailer markets were particularly affected by the investment hesitancy, driven by the ongoing uncertainties surrounding the U.S. tariff policy, especially in North America and Asia, as explained before. We continue to expect that both the truck and trailer markets in North America will decline by 20% to 30% compared to the previous year's level, with the truck markets likely to trend towards the lower half of this range and the trailer market towards the upper half of that range. Expectations for the Brazilian CV market remain unchanged, but thanks to our strong positioning in steering axles and trailer equipment with such components, we are less exposed to the weaker market development. So we are growing against the market.

In contrast, the Chinese CV markets have gained positive momentum, supported by government stimulus programs, and we now expect both segments to increase by 10% to 20% year-over-year. Our outlook for the Indian domestic trailer market remains unchanged with an expected development between flat to minus 5% compared to '24, implying a strong recovery in demand during the fourth quarter. In EMEA, we have slightly adjusted our expectations. Following a phase of positive order momentum in recent months for both truck and trailer, order activity did not continue that pace. Overall, as communicated last week, these regional developments and market trends have led us to adjust our '25 sales guidance.

So next slide, please. And in light of the market developments just outlined, we have revised our group sales guidance and now expect group sales between EUR 1.7 billion and EUR 1.75 billion for the full year of '25. Given the ongoing challenging market environment and moderate order expectations for the coming months, we have, in line with our Drive 2030 strategy, initiated an efficiency program aimed at further optimize our organizational SG&A structure. In this context, additional adjusted expenses in the high single-digit euro million range may be incurred by the end of the year. Last but not least, the forecast for the adjusted EBIT margin and CapEx ratio remain unchanged.

So let me briefly summarize the key takeaways for the third quarter on Page 20, please. First, the ongoing trade policy uncertainties continues to weigh on global CV markets. The tempered investment sentiment in the U.S. also affected the trailer demand in Southeast Asia. Nevertheless, despite these external headwinds, our solid underlying profitability once again demonstrates our operational discipline across the entire organization. And after a rather subdued cash flow performance in the second quarter, we were able to return to a strong level of free operating cash flow in the third quarter, even against the backdrop of continued net working capital development. And looking ahead, while we expect order momentum to remain moderate over the coming months, we are proactively addressing this through continued strict cost management and further efficiency measures, particularly within the indirect workforce, so SG&A.

And ladies and gentlemen, this concludes the presentation. I guess we can now start with your questions. So operator, the first question, please.

[Operator Instructions] And first up is Nicolai Kempf from Deutsche Bank.

It's Nicolai from Deutsche Bank. Two on my side. First, on the share buyback, I think it's something that is appreciated by the capital markets, and it's also shown by the share price reaction in the last 2 days. I'm just wondering, does the share buyback now limit your M&A activities, or is it just an additional tool to allocate cash to shareholders? And my second one, a bit of housekeeping. It's on the free cash flow in Q3 and the others plus EUR 13 million. Can you just give a bit more color what's behind this?

I will take it. Thanks, Nicolai. First of all, as mentioned, the share buyback, we came in a really good position with the cash full implementation to having a centralized amount of cash available. And in terms of capital allocation, there are a lot of opportunities. We are convinced that share buyback is the best one for the time being as we also have no refinancing requirements. And from the total amount talking about EUR 40 million in the next 13 months, this does not burden us in any financing of potential M&A. So no change in the Drive 2030 strategy. We are focusing on external growth, looking for M&A targets and continuing as presented in our Capital Markets Day. So no change at all. Then related to the cash flow improvement in the third quarter. Talking as a CFO, it came late. I would have appreciated to see this already in the second quarter. It's getting net working capital somehow under control, having a strong cash-related operational performance, so strong EBITDA generation, no additional investment in net working capital, and this is then finally ending up -- also cautious investment in CapEx, this is ending up in the numbers you see.

Okay. But do you know what the others is referring to in this case? On Slide 14.

Yes. The other position normally is a change in accruals that if it's yes, -- basically, it's a change in our accrual positions.

Next up is Klaus Ringel from ODDO BHF.

It's three on my side. One would be a follow-up to Nicolai's questions on the share buyback program. Do you intend to cancel the shares that you have bought back? That's the first one. Maybe let's take it one by one.

Yes, I can take this. As mentioned, we will take the shares as treasury shares, and we will not cancel them.

Okay. Second one is, yes, maybe an early question, but your view on the North American transport market going into next year. Is it fair to expect a stabilization, or might we even see a slight year-on-year growth there next year?

Well, I would like to take that, Klaus. This is Alex speaking. We do not expect that the market further drop. It already bottomed trailer for sure, and truck also went down drastically over the last couple of quarters. Well, we have changes -- we see changes in the tariff policy every other day, and it's really hard to predict what's going to happen next month. So basically, we saw that the tariff war with China now, as it looks like, got stabilized with the 50%, 55% tariffs implemented for Chinese goods being imported into the U.S. We don't know what's going to happen with Canada and with Mexico in the future. So it's really hard to predict anything. The only thing I can tell you is that the other countries in the Americas like Canada, Mexico, Brazil doing okay for us. I'm not super happy if I'm okay with that development. It's quite stable. The one market which is suffering a lot is the U.S. market. And I'm talking to a lot of customers, both OE manufacturer, but also fleets. They have a lot of cash available. And due to the uncertainty at the moment, they are really hesitant in investing more and more. There is no need for new equipment. I can -- do not -- I cannot give you really a good question what's going to happen in '26. We hope that the markets are going up. We are ready for that. We did our homework with plant consolidations and new equipment installation. We can scope with an increase. But I guess it has a bottom up, and it can only get better.

Okay. That's clear. And the last one would be on the, yes, additional efficiencies or the new efficiency program that you spoke about. Can you give an indication of the cost impact or the, let's say, amount of savings you're expecting from that?

Well, we are further consolidating plants in different areas of the world. And we are already implemented a structural change of SG&A in the third quarter, which will be impacting us a little bit in the last quarter of this year, but mainly in next year. So we have to work on our overall SG&A rate, which is for the sales we are doing now, in my point of view, too high. So we're not talking a blue collar, we are talking a white collar. We put departments together and get more leaner in all respects of the organization in all the regions, but also in the headquarter, and this is what we are going to do. I said before, this might have an impact in the high single-digit million euro range by the end of the year, but we have to do that to get prepared, to also make sure that the profitability in the years to come will be even better than at the moment.

Next up is Yasmin Steilen from Berenberg.

I have two left. So the first one coming back to the U.S. market. So we've heard from most OEs that the idle production in September and November again. So have we also seen idling in November? And what are your expectations on the winter break? Might we see some kind of extensions there? And if the OE market remains weak, when could we expect the aftermarket to significantly improve? And maybe on the legislation emission, legislation changes in the U.S., is there any update from your side what your expectations are? And then finally, could you provide an update on the progress of the expansion of the disc brakes into the trucks business? So what's the current status after the first production ramp-up with your European customer in Q4 last year?

I would like to take the question in terms of the order income. Well, in November, we do not -- cannot speak about November, but we do not see a significant drop of orders coming in, in EMEA. In the U.S., it's still, as I said before, it bottomed, okay? So order intake is there, but it's not really super good. So we do not see a big increase now in December and January. From what I see in EMEA, our customers, both truck and trailers and mainly trailer is our big sales contributor in EMEA, they do close 2 to 3 weeks, which is the normal closure period in the Americas. I can report that we have talks with a couple of truck manufacturers, but also trailer manufacturers. And some of them, they are closing 2 weeks, the other 3. The most I heard was closing that they do close the last 2 weeks in December and the first 2 weeks in January. But in average, I would say they're going to close 3 weeks by the end of the year with New Year's Eve. So no longer closures, so to say. In terms of the legislation changes with the Euro 6 in U.S., we do not hear anything new. We are in constant dialogue with the official authorities. I think only the government, Mr. Trump, knows what's going to happen. But at the moment, I cannot report any news regarding this. We hope that we get some news in beginning of next year, how it's going to look like by the end of '26 would be good to have some presales already in '26. At air disc brake, I can report that we are -- we started already Q4 '24 as reported before to a major truck manufacturer in Europe. We got some new inquiries for quotation for other brake specifications, not only from that truck manufacturer, but from two other truck manufacturers in Europe. And also, we are in the process of releasing our brakes with three truck manufacturers in the U.S. That's a constant process we are following. It's not overnight, but we see the first signs of success here. And we also are talking with another truck manufacturer, actually with two truck manufacturers in China. We got some orders for trailer brakes, but also for truck brakes, we increased our capacity for another model also in China. And there are rumors and talks that the government might change the legislation soon that all trucks have to be equipped with air disc brake in China. If this is true, we are ready now. And yes, we have a dedicated plan for this in [ Suzhou, ] which is in China. So we are ready for that. And this is also one of the big pillars in the future, not only to do -- to increase OE sales to our truck customers, but also then get more aftermarket sales in the coming years.

Does that help?

Yes, perfect.

Next in the line is Jorge González Sadornil from Hauck Aufhäuser Investment Banking.

Can you hear me?

Yes, good morning.

Sorry, I have also a few questions on your look for next year. Sorry about that. My first question is about the EMEA market. So I saw the demand, at least in Spain is quite strong. So I'm wondering if Germany with your comments that now the demand is not that supportive, is maybe in a wait-and-see approach due to the potential support from the government at some point next year and on relation on the infrastructure investments. Do you see some kind of postponements because of this because maybe the stocks are already at good levels and your clients want to wait for more clear programs to enjoy the support, or it is just related to the economy? That will be my first one, please.

Well, that's not an easy question. I try to answer that as best as I can. I can confirm that the Spanish market is developing quite well. They had a double-digit increase in percentage in trailer registrations. We are one of the main suppliers to Spain, also supplying the big ones. Here, I can confirm that we got an increase in orders, and we see that, and they already developed for the whole year quite well. And about Italy, I have to say they are not too bad developing, so quite good. Well, the -- I wouldn't say the pool house, but the market which is really under the bus at the moment is Germany, I have to say that. And if the German government would be much faster in decision-making. And also then after they have taken the decision to bring them up to speed, that would be much of a help. So they freed up a lot of money for infrastructure projects. We don't see that that much at the moment to happening because they have to free the money and then they have to do all the requests for quotations and the bidding process, and it takes a very long time. We see a little bit more request for quotations coming in on the military side, specifically for low beds, heavy-duty equipment that's coming in. But also here, before the German government frees up the money and the decision has been made who gets the money for the investment. That takes too long, I have to say this. Other markets are doing okay. The biggest weak market we have at the moment, as I said, is Germany and here in particular, it's the curtain-sider business. And the curtain-sider standard business is very much impacted by the car manufacturing business, which dropped a lot. So a lot of Tier 1 and Tier 2 suppliers, they do not have many orders from the car manufacturers. So it's much lower than before, and this triggers the orders for the curtain-siders. We're lucky as the curtain-sider business is in the hands of a handful of the biggest players in Germany, where we do not have a lot of share. I have to say, we are very big in tippers in coolers and in small other trailers. And here, the market is okay. But we are also waiting for the infrastructure programs, the military spend and also the curtain-sider business coming back.

Okay. That's helpful. So we can say that taking into account the situation in Germany, we are in Germany and in these countries -- in the Central Europe at low levels already at maintenance kind levels for demand, or this is difficult to say?

No, we are in Germany. Well, Germany is the biggest market and Germany has some of the biggest manufacturers in Europe, of course, of trailers and everybody is in a waiting mode to get free cash out of the infrastructure programs from the government and the military spend. It's -- I repeat myself, the government is far too slow, and they are just waiting to spend the money. But once it's coming, should be much better. I heard yesterday that the GDP growth for Germany is expected to be 0.9% for '26. That's not super good. At least it's not a further drop. But it's -- in my point of view, it has bottomed. Well, we have to wait what's going to happen with the spending.

Okay. Then for the U.S. market, I was hearing yesterday from [ Daimler ] Truck that they expect the recovery to be backloaded in the second part of next year in U.S. It's true that the truck is always more related to new regulations. But what is your view for the trailer? Are you expecting if the tariff volatility ends, and we have some clear scenario. Are you expecting the trailer to benefit a little bit from the delays in truck, or do you think the situation is similar and the clients will keep waiting? How do you see the different levels of investment for these two types of products?

Money is available. As I said before, I talked a lot to truck OEs to trailer OEs and fleet, they're saying, well, we have to renew the fleet. We are waiting for, let's say, a certainty in the market, not having a government going back and forth every other day because you cannot base your decisions made on tariffs being 15% one day, then 50% the other day and 125% the other day, that doesn't make sense. The trailer market is the lowest I have ever seen in the last 25 years in -- basically in the U.S., I said before, the other countries are doing quite okay. But the U.S. market is really down in trailers being in certain segments, being down 50%, 60% that's unbelievable, and there is still a hesitancy to go the first step and invest on the truck side, which also accounts for about 50-50 of our OE sales, so 50% truck. As I said before, we are working on getting more orders for truck suspensions, where we can grow further and also the air disc brakes where we would like to grow further. We saw some positive signals coming in already, but it's far too early to say it's getting better next year. But to summarize, truck, we have to see. Maybe there is a good signal where the new legislation might kick in '27, so there will be a prebuy in '26 in trailer market, I really expect that the market will be better next year because it bottomed up already.

That's great. And finally, my very last one. I'm curious on India. If we take out the share of exports to other countries in South Asia that at the end are producing for U.S. If we focus on India market itself, what do you see for next year? Do you see an acceleration or the country is still difficult to forecast at this point?

Well, if we take our export sales mainly to Southeast Asia, so we had a couple of customers, they bought a lot of actual suspensions from us for container chassis being supplied to U.S. customers that stopped completely. The import duty on complete container chassis or trailers manufactured in Vietnam, I think it's more than 500%. For components, it's 46%. And if I'm not mistaken for complete trailers, it's 500%. So basically, those customers are out of the game unless there will be a new agreement with the U.S. government. But if you take those export sales out to those customers, we slightly grew over the last couple of months. We also will be growing a little bit moderately in the last quarter in India, and we hope that our internal demand will be higher in '26 than it was in '25. We don't see a declining domestic market in India because also here, it's lower or it's on the -- we just discussed that a couple of hours ago with our team. It is on the '22, so 2022 level, which was low to medium. And of course, we also did some initiatives to grow, and it's not only our company, York anymore, but also on the Haldex side, we invested quite a lot in new product lines. So also here, we would like to grow, but the biggest contributor is York with the axles and suspensions. And here, we expect a slight increase for the domestic Indian market in next year.

So next up is Holger Schmidt from DZ Bank.

I have two questions left. The first is on the pricing environment with low demand and intensifying competition, how do you see the competitive environment developing? And are you seeing rising price pressure? The second question is at the Capital Markets Day in the beginning of the year, you outlined that you are looking to tap into adjacent markets. Could you give us an update on your efforts and progress in this regard?

Yes. Let me start with the price pressure before we come to the Capital Markets Day and M&A with Frank answering this. While there is always a price pressure, okay? Everybody would like to fill the production facilities. We are working two shifts. That's our -- basically our sweet spot. We are not working Sundays and night shifts where we have to pay a premium, specifically here in EMEA. We have all our production facilities under control. In the U.S., it's a little bit more under pressure since both truck and trailer is really down at the moment. But also here, you can see we came in double digit also in Q3 with the lowest sales quarter for the last, I think, 3 years, where we have seen, so everything is under control. We initiated our SG&A initiatives to further reduce our overall cost with being in effect in 2026. So from that perspective, it's okay. From a price pressure, there is always price pressure. But you have to talk with your customers, we are not selling by price, we are selling by features. We are the lightest in the industry when it comes to axles, have premiums. Our fifth wheel business state is good for both on-road and off-road. So one part number for both. We are the only ones providing that. This is why we still have a very high market share. And I cannot report anything unusual in price pressure because this is ongoing in good years and even in bad years, where the markets are down or up, that's a standard daily business we have to deal with.

Yes, exactly. We have stable margin and keeping or gaining market share globally. So there's no price pressure basically.

And we don't see any change in the behavior of your competitors.

Well, they also need to make some money at the end. And please recall the split between OE and aftermarket. We are at 40-60 at the moment. Following our conversations in the last couple of years, well, and I grew up in the aftermarket, that's our profitability business, we are making sure with that we come in now with 9.3% hopefully, for the whole year. So that supports us. The perfect split is 1/3 aftermarket, 2/3 OE. We still have -- even if OE now jumps up, we still have a good share of aftermarket, which is the stabilizing factor of our company, and we don't see a change of behavior. We had a lot of Chinese companies coming into Europe. Most of them have withdrawn because they don't make any money and selling a component once it's easy fill by price, but second, time, it's quite difficult because you have to have the service, the parts available. That's an infrastructure you have to build up in decades. It took us more than 40 years to build up our aftermarket structure in both areas, the big ones, EMEA and also in Americas. You cannot cope that overnight in a couple of years. Yes, we have seen a lot coming in trying to sell by price, but they all disappeared again.

And taking your second question related to the entry or growth in adjacent markets and industries. As presented in the Capital Markets Day, we have two initiatives. One is the internal initiative to build on our position we have already with Orlandi in the agriculture business, bringing in additional components, especially from Haldex that are good products for agriculture. This is something where we are working on. We have a project team pushing this. It takes time to enter into these markets, but we are convinced and our targets are unchanged for the organic part of the adjacent industry growth. And the second is the external growth for sure, as we know that our core markets are consolidated, and it's hard to do bigger M&As in our core business. We are looking especially into adjacent industries related to agriculture, to grain business, whatever. And this is a big portion of our M&A activity and scanning of companies that we are looking into. So unchanged.

And well, we are in talks. Of course, we cannot speak about whom we are talking, but we also have to make sure that we are not going to overpay for companies we might acquire in the future, and it has to make sense also from a scale perspective and from a synergy perspective. It doesn't make sense to add another EUR 10 million or EUR 20 million here and there. We are in talks. And as soon as something is going to happen, we will inform you, of course, officially with an external information.

The next question comes from Miro Zuzak from JMS Invest.

Can you hear me?

Yes.

Yes.

I have three questions. The first one regarding the Americas regions and especially South America. We learned from competitors of yours that they are gaining market share, organic growth up 8% or 6% in the quarter, new customers ramping up and so on. Is it -- are these market share gains against you or against other players? Because I see your sales are down. I don't know the split between North America and South America. But are you -- is this a reason for the soft Americas Q3 results that you have presented?

Well, I'm not sure if any of our competitors are reporting in both first North America and then South America. I think they also only reporting Americas. There might be the case that they are growing a little bit in agribusiness, which they acquired a couple of companies before. We cannot see that we are losing market share. In some segments, we are a little bit increasing. Specifically, as I mentioned before, Brazil went down in both trailer and truck market. We are coming out this year better than last year. We are planning also an increase in Brazil for next year. So far, I can already see because we ramped up a couple of new production -- product groups in the last two years. We even increased our capacity in our plant in the south of Brazil. So from that perspective, we are targeting bus, truck and trailer segments, and specifically, the bus segment is running well. I have to say that. But from the other product groups, I don't see that because we have our output. We see the data of build rates and our build rates, so we don't see that. There might be that another competitor lost some market share because most of the components were coming from China. And as we know, China got a huge hit in tariffs. That might be the cause. Most of the components we are getting for the U.S. maybe are not coming from China. It's just a small percentage share of our components we are using made in China. So from that perspective, we did not get a huge hit. Of course. We got some hit, as I reported before, with the tariffs implemented, we passed those on to our customers. A little portion is still remaining, and we hope that until the end of the year, we can also fill that gap with the increase in our sourcing spend. But from a market share gain, I cannot confirm that we are the ones lost any business.

Okay. Very clear. Second question regarding your guidance, EUR 1.75 billion is the upper end. Against the backdrop of your comments in the call and also the Q3 numbers presented, is it still realistic to get to the EUR 1.75 billion, or is this rather, let's say, the profitability higher that basically the outcome will be rather in the middle or maybe even a bit the lower range of the guidance.

Well, Miro, I cannot comment on this because we just went out with this range. This range was also triggered by our huge FX loss. Just give you a gut feeling for this. If you see the FX losses per year, if they weren't there, then we didn't have to do our talk, and it is in the ballpark of...

Would have been basically in our...

EUR 50 million, EUR 60 million of just FX loss mainly coming from the U.S., but also from India. We have already the numbers for October. They were okay for us. And we are now down the road middle of November, end of December, we are pretty confident that we do not have to adjust it further time. This guidance, we are cautious, but I'm not commenting if it will be now EUR 1.750 billion or whatever. The range is EUR 1.7 billion to EUR 1.75 billion, and the rest I leave to the imagination.

EUR 50 million is fair call for high market.

Okay. So worth a try maybe. Just one further question and then I step back into the line. Regarding the cost and the cost seasonality, I think you did a great job on the costs on all three lines, selling, administrative and also R&D. Now I went back in my model back a couple of years to understand the seasonal patterns, and I actually didn't recognize any. So in some years, you had like larger Q4 cost compared to Q3. And in other years, we had lower Q4 costs compared to Q3. This year, what is your forecast regarding the cost lines versus Q3 in terms of seasonality? Do we see like an increase again in Q4, or do you think you can maintain this excellent level that you have presented in Q3?

So we don't give a forecast for cost by quarter. I think if you take our full year EBIT guidance of around 9.3% and the 9 months EBIT of 9.3% of sales, then that's what you should take into your model. We should not -- we will not give any more details on that related to seasonality.

So we are quite confident that the reason why we did not change the adjusted EBIT guidance for this year that we will hit the guidance. So we can also not comment on the seasonality of Q4. I would say that. Typically, OE sales is a little bit lower because of the end year closure in all the areas, mainly in Europe and in the Americas. And you have some more days off in the U.S. you have the aftermarket. It's a little bit less than last year, but the people are still a little bit cautious and watch the cash they are having. So there is no big development.

Okay. I see we have no more questions in the line and also time is basically over. Thank you, everyone, for your questions. The Investor Relations team is available in case of you have any follow-up questions. And we will be on the upcoming conferences, as usual, available and maybe some road shows. And having said this, have a good day, and bye-bye.

Thank you.

Dear ladies and gentlemen, welcome to the SAF-HOLLAND SE H1 2025 results. Today's presenters are CEO, Alexander Geis; and CFO, Frank Lorenz-Dietz. The presentation slides are available on the SAF-HOLLAND corporate website. [Operator Instructions] Please note, this conference call will be recorded and published on the corporate website of SAF-HOLLAND SE.

Everything spoken through the unmuted microphone will be processed during the online meeting and published on the website of SAF-HOLLAND SE. If a participant does not wish to be recorded, they should refrain from participating in the Q&A session and keep their microphone muted. The Q&A session is exclusively for institutional investors and analysts. All other participants of the conference call are kindly asked to contact the Investor Relations team directly if they have any questions.

Mr. Geis, the floor is yours.

Thank you. Good morning, everyone, and welcome to our conference call and our Q2 '25 results. This is Alexander Geis speaking. And please let me begin with the Q2 '25 financial highlights on Page 3. The past quarter was characterized by continued weak end markets. In figures, this means that our group sales fell organically by 11.7%, which was partially offset by acquisition-related effects and ultimately reached EUR 442.2 million, which is around 13% below the prior year.

Nevertheless, despite much weaker OE market environment and additional tariff-related costs, we were able to maintain a solid profitability of 9.1%, while the adjusted EBITDA margin amounted to 12.8%. Operating free cash flow amounted to EUR 0.9 million due to the lower top line development and higher working capital needs also linked to tariff uncertainties.

Leverage increased to 2.4x due to the cash outflow of the dividend payments, M&A and additional lease liabilities for our new Texas plant in Rowlett. While order intake in Europe continues to improve, the North American market remains soft and also continues to affect our business in the APAC region. As communicated last week, we have adjusted our full year '25 outlook accordingly.

Let me continue with the group sales and adjusted EBIT development on Page 4. Group sales in the second quarter of '25 continued to be impacted by muted commercial vehicle markets in all 3 regions, especially the North American as well as the Asian OE markets were affected by the uncertainty caused by the trade policy discussions, especially post the U.S. Liberation Day in April. Accordingly, OE sales were 16.2% below the previous year's level, which ultimately resulted in an organic sales decline of 11.7% year-over-year in Q2.

Moreover, FX effects caused group sales to decline by 2.7%. And in contrast, acquisition-related sales from Assali Stefen contributed a high single-digit euro million amount to top line. Sales in the second quarter declined by 12.8%, and in the first half year was, therefore, 11.9% below the previous year, while group sales declined organically by 12.8%.

Between April and June, adjusted EBIT was impacted by additional tariff-related costs in the mid-single-digit million euro range, which we aim to offset as much as possible until year-end. Additionally, the profitability was impacted by a higher level of depreciation and amortization. Hence, adjusted EBIT decreased by 25.7% compared to the previous year's level, resulting in an adjusted EBIT margin of 9.1%. However, keep in mind that profitability in the prior year strongly benefited from special sales campaigns in the aftermarket segment in EMEA and Americas.

Overall, during the first 6 months of the year, the adjusted EBIT amounted to EUR 83 million and resulted in a solid margin of 9.3% of sales. The adjusted EBITDA margin reached almost the prior year level and amounted to 13.1%.

Moving on to the sales split by region and customer category on Page 5, please. The overall distribution of group sales by region and customer segment was strongly influenced by the investment hesitation of truck and trailer customers in North America and Asia. Accordingly, the EMEA region performed in comparison stronger and achieved a sales share of just over 50%, also due to the acquisition-related sales effect of Assali Stefen. The Americas region, in turn, contributed 38.4% to group sales. Moreover, due to the soft demand in the APAC region, the APAC share decreased to 11.1%.

And now looking at the split by customer groups in Q2. Sales in the OE business declined by 16.2% year-over-year to EUR 261.8 million. This decrease was driven by the previous mentioned weakness in global CV markets. Accordingly, the trailer OE segment accounted for 47% of the second quarter sales, representing a decrease of 1.5 percentage points.

The truck OE segment, of which a large portion comes from the Americas region, was negatively affected by uncertainties surrounding the U.S. trade policy. And in contrast, sales in the aftermarket business declined by only 7.2% to now EUR 180.6 million. Also here, please keep in mind that the prior year benefited from special sales campaigns and it continues to be a resilient pillar of the SAF-HOLLAND business model. As a result, the aftermarket business accounted for 40.8% of our sales.

So next page, please, to speak about the EMEA region. As you can see, top line development in the EMEA region in Q2 remained subdued due to the ongoing softness in the trailer market, which is estimated to have declined between 10% to 15% year-over-year. As a result, sales decreased organically by 8.4% in Q2. Despite this, the aftermarket business remained robust, although it did not reach the strong level of the previous year.

For the first half of '25, total sales were 7.5% below the prior year level, including an organic decline of 12.3%. And looking ahead, we continue to observe a slight improvement in order intake for both truck and specialty trailer segments and expect this trend to continue, which should provide a solid foundation for the second half of 2025.

Looking at the EMEA earnings due to the lower top line development and despite strict cost discipline, the adjusted EBIT margin declined to 7.9% compared to a strong Q2 '24 that benefited from higher-margin aftermarket sales. As a result, profitability in the first half year amounted to 7.7% and includes a onetime FX valuation effect from Q1.

Let's speak about on the next page about Americas. In addition to the cyclical downturn in the North American commercial vehicle market, demand for both truck and trailer was further dampened by the uncertainties caused by the U.S. trade policy. In contrast, the aftermarket business remained robust and resilient. As a result, organic sales in the second quarter declined by 13.3% year-over-year. And furthermore, negative currency effects reduced sales by additional 5.3% year-over-year.

Overall, second quarter sales in the Americas region was 18.5% below the previous year, leading to 14.7% decline for the first 6 months of '25. In addition to the decline in earnings caused by lower top line in the second quarter, we incurred additional costs related to the U.S. tariff issue amounting to a mid-single-digit million euro figure. As a result, adjusted EBIT, therefore, decreased by 31.7% compared to the previous year, leading to a still solid double-digit adjusted EBIT margin of 10.2%. Despite the challenging market environment, this marks the 10th consecutive quarter in which we achieved our strategic target of maintaining double-digit margin in Americas.

Looking ahead, we expect that the additional tariff-related costs on the procurement side can be largely compensated. For the first half of '25, the adjusted EBIT amounted to EUR 37.5 million, which equals a margin of 10.8%.

Last but not least, coming to the APAC region on Page #8, where the market momentum in the APAC region remained muted in most of the countries, partially due to investment hesitation in course of the discussions of the U.S. trade tariff policy and especially in Southeast Asian countries like Vietnam and Thailand, they paused their trailer activities for the U.S. market. Moreover, the [ Indian ] trailer market remained soft due to the [ post ] economic expectations, also difficult financing positions for fleet operators and trailer manufacturers as well as continued weak mining business in [indiscernible] Asia.

Accordingly, sales in the second quarter of '25 amounted to EUR 49.2 million and was 24.3% below the previous year, which means an organic decline of 18.4%. Moreover here, negative currency effects reduced sales by 5.9% year-over-year.

Looking at the bottom line, the decline in earnings was mainly driven by a lower top line in higher-margin markets such as India and Australia. Despite ongoing market softness and uncertainties related to tariffs, we achieved a solid profitability level of 10.8%, marking also the 10th consecutive quarter with a double-digit adjusted EBIT margin in the APAC region. Overall, we closed the first half year with adjusted EBIT margin of 11.1%.

And having said this, I hand over to Frank for the key financials in Q2.

Yes. Thank you, Alex, and hello to everybody on the line. As usual, let me start with a short overview on the EBIT to adjusted EBIT reconciliation for the group on Page 10. As previously mentioned, our reported EBIT for the second quarter of 2025 declined by 25.6% to EUR 34.5 million, primarily due to a lower top line and additional tariff-related expenses. Total adjustments for restructuring and transaction costs amounted to just EUR 0.2 million, which is mainly related to integration expenses from recent acquisitions. Depreciation and amortization from purchase price allocations were as usual adjusted accordingly and in total, EUR 5.6 million. Consequently, adjusted EBIT fell proportionately, resulting in an adjusted EBIT margin of 9.1% for the second quarter 2025. Despite the additional burden from tariff-related costs, the adjusted EBITDA margin for the first half of '25 nearly reached the prior year level with 13.1%.

Moving on to Page 11, where you see the bridge from EBIT to basic earnings per share. As mentioned earlier, reported EBIT amounted to EUR 34.5 million for the second quarter of 2025. Within the finance results, the interest expense reduced due to improved financing structure, overall debt reduction and in general, lower interest rates. This was offset again by unrealized foreign exchange rate effects as in Q1, mainly due to the weaker U.S. dollar against the euro. While this presented a temporary headwind, these are noncash effects that may reverse in future periods, and I will provide you a more detailed explanation on the next page.

In addition, income taxes declined in line with our top line development, but were adversely affected by noncapitalized deferred tax assets on interest and loss carryforward. As a result, the overall tax rate stood at 38.9% for the second quarter and 36.8% for the first half of the year. Overall, reported EPS was negatively affected by both the weaker top line and the unfavorable currency development.

Moving on to a more detailed view on the financial result on Page 12. The financial result for the second quarter amounted to minus EUR 17 million and benefited from a significant reduction of interest expenses of approximately 28% compared to the prior year. This positive development was mainly driven by a general decrease in the average interest rate, improved refinancing conditions as well as a slight reduction in gross financial debt despite recent M&A activities. However, the continued weakness of the U.S. dollar related to the euro led to negative unrealized foreign exchange rate effects, primarily on intercompany loans. The U.S. dollar alone accounted for an unrealized FX effect of minus EUR 8 million in the second quarter 2025.

Additionally, other currencies contributed to a further negative impact of around EUR 0.7 million. As announced during the Q1 call, we have initiated several mitigation measures to reduce the impact on these fluctuations and aim to complete the implementation until year-end. The first positive effects are already reflected in the Q2 financial result. That said, we recognize that these currency issues negatively affect our underlying profit for the period. Therefore, we will make the following adjustment to our future dividend calculation.

I'm on Slide 13. We are going to adjust the profit relevant for distribution under our dividend policy to the extent that the available profit will be adjusted by unrealized exchange rate effect in the financial result and its related tax effect based on the overall group tax rate of the relevant period. To say that pretty clear, the payout ratio remains unchanged at 40% to 50% of the distribution relevant available result for the period.

On this slide, we provide an exemplified calculation on the potential impact based on half year numbers. With that new calculation, the distribution-relevant EPS changes from EUR 0.50 per share to EUR 0.77 per share and reflects a reasonable base for dividend calculation.

Moving to Page 14, where you see the development of the equity ratio. Compared to the year-end 2024, equity decreased by 11.8%, respectively, EUR 62.4 million to EUR 464.7 million despite the result for the period due to the dividend payment of around EUR 39 million as well as negative FX valuation effects amounting to around EUR 36 million. Since the balance sheet total declined by only 2.2%, the equity ratio declined to 27.7%. As communicated already in past presentations, our internal target related to equity ratio remains higher than 30%. With our solid profit-generating business case, we will reach this again in due time.

Turning to Page 15. I would like to speak about net working capital development. Net working capital at the end of June 2025 was impacted by several effects. As long as the OE business remains weak, the aftermarket business with its generally higher inventory requirements will remain relatively strong. Furthermore, we were trying to maintain higher stocks in markets where we expect short-term opportunities in order to be able to react quickly if chances arise.

In addition to the seasonal-driven increase of inventory between December and June, we adjusted our net working capital levels as a precautionary measure due to uncertain trade policy. As a result, net working capital increased by 9.9% to EUR 320 million compared to the end of December and included factoring in the amount of EUR 40 million. As a result, net working capital ratio stood at 18.2% of sales, also reflecting the overall top line development.

And now let me address the cash flow development on Page 16. The net cash flow from operating activities in the first half year amounted to EUR 30.5 million and was impacted by the market-driven decline in EBITDA as well as by net working capital developments, as just explained earlier, and it's comparatively higher cash outflow compared to the prior year. Paid income taxes declined, reflecting the lower top line development in previous periods. Moreover, investment in property, plant and equipment and intangible assets totaled EUR 22.2 million, equivalent of 2.5% of sales. These investments were primarily directed towards further automation and modernization of production processes, preparations for the new plant in Rowlett, Texas and capacity expansions for ADB and fifth wheels at the Düzce in Türkiye. Overall, we achieved a solid positive operating free cash flow of EUR 9.1 million in the first half year with room for further improvement in the upcoming quarters.

Moving on to an overview of the leverage development on Page 17. The net debt-to-EBITDA ratio rose to 2.4x at the end of June. This increase was primarily driven by rise in net debt, including almost EUR 20 million in lease liabilities, mainly related to the new Rowlett factory, which is scheduled to open in the coming months. In addition, net debt increased due to a lower cash position resulting from various payment obligations, most notably the dividend payment and the acquisition of the remaining 40% share of the Haldex India joint venture.

EBITDA also fell to EUR 235.3 million, reflecting lower sales due to current market conditions. However, based on further improvements on net working capital as well as potential business recovery in EMEA and APAC, we target to improve leverage stepwise in the upcoming quarters as our leverage should be below 2x.

And now also, let's take a quick look at the maturity chart on Page 18. With the successful placement of a strongly oversubscribed promissory note loan, which attracted demand more than twice the offering volume and secured interest rates at the lower end of the marketing range, we are now in a position to fully redeem the tranches maturing 2025 and 2026 as well as repay the outstanding drawdown of the revolving credit facility. In total, the transaction generated proceeds of EUR 330 million. This strengthens our maturity profile and positions us well for future M&A opportunities.

Having said that, back to you, Alex, for the outlook and closing remarks.

Yes. Thank you, Frank. I'm on Page 20, showing the full year '25 forecast for the trailer and truck markets. So during the first half of the year, the truck and trailer markets have been impacted by investment hesitancy due to the ongoing uncertainty surrounding the U.S. tariff policy, especially in North America and also in Asia. Accordingly, we currently anticipate both truck and trailer markets in North America to be 20% to 30% below the previous year's level.

Following a strong performance in '24, the Brazilian trailer market developed weaker during the first half of '25 and is expected to remain soft. We now forecast a decline of 10% to 20%. However, our strong focus on steering axles and trailers equipped with such components means we are less affected by that general market development. So for the Brazilian truck market, we revised our outlook downward, we're expecting a decline in the range of minus 5% to minus 10%. In contrast, in China, the commercial vehicle markets have regained positive momentum. We now expect a stable or moderately growing development for 2025.

Our outlook for the Indian trailer market remains unchanged, with an expected development in the range of 0% to minus 5% compared to 2024. However, we expect a recovery towards the end of the year. Our market expectations for EMEA remain unchanged. In EMEA, we saw a positive order momentum in both truck and trailer and expect the continued demand in the second half of the year. Overall, as you have seen last week, these expectations led us to adjust our 2025 guidance, which brings me to Slide #21.

In light of the market developments outlined before, we have revised our group sales guidance and now expect group sales of around EUR 1.8 billion and expect a positive impact from the recently announced order to supply swivel axles for military transport equipment and improving momentum in Europe and towards year-end also in APAC. Furthermore, due to the weaker performance in our high-margin regions, Americas and APAC, and the higher relative contribution of the EMEA region to adjusted EBIT, we have also revised our forecast for the adjusted EBIT margin, which is now expected to be around 9.3%. And last but not least, the CapEx guidance remains unchanged at up to 3% of group sales.

Ladies and gentlemen, let me conclude the presentation with some key takeaways on Page 22. So the uncertain global trade policy environment weighed on our top line performance year-to-date, which is evident in North America and Asia, where market conditions for trucks and trailers were impacted negatively. Unfortunately, these external uncertainties continue to cloud visibility and undermine the market outlook for the remainder of the year.

On a more positive note, excluding additional tariff-related costs, our underlying profitability developed solidly, which underscores the strength of our operational fundamentals even in a volatile external environment, and we are going to largely compensate these additional costs until year-end. Despite lower absolute earnings, we achieved a positive operating free cash flow and remain focused on further optimizing our net working capital management in the coming months.

Looking ahead, we expect gradual positive momentum in Europe and India to contribute to more favorable second half. In addition, our aftermarket business continues to perform robustly and will remain a key stabilizing pillar of our performance in the coming quarters.

So ladies and gentlemen, this concludes the presentation, and now we can start with your questions.

[Operator Instructions] The first question comes from Nicolai Kempf of Deutsche Bank.

It's Nicolai from Deutsche Bank. A couple and maybe I'll take them one by one. The first one, you've stated that you expect the leverage to be again below 2x. Is this going to happen until the end of the year?

No. The leverage of 2.4, we have this lease, as I mentioned, the Rowlett topic with EUR 20 million lease liability in addition, the work on improvement on net working capital and net debt, and it will take some quarters to improve below 2, but it remains our target.

Okay. Understood. The second one would be on the guidance, which basically implies that H2 will be a bit stronger, I think it's 2% versus H1. And you said that Europe is improving, APAC is improving. I just want to make sure that these 2 regions are enough to offset the very soft market in North America.

Yes, Nicolai, you are totally right. We are totally unhappy with the development of the market in the U.S. But still Canada and Mexico are doing good, South America. Also for us, it's basically just the U.S., which is our biggest CV market. And then it's also the truck business, which is unfortunately getting softer. But I can tell you that the order intake for -- specifically for axles but also for fifth wheels on the truck side for Europe is getting much better. So basically, we shifted -- we are fully booked here in Bessenbach with 2-shift operation now. We shifted really a lot of orders to our Turkish plant, which is also booked now in 2 shifts, which is good.

So we have to bring all the material out. So Europe alone will compensate the North American or U.S. decline. And then also from Australia, we see positive signals in the mining there. Southeast Asia is getting slightly better, and India is our biggest market from a sales perspective. We are waiting for the monsoon to be over, so late Q3 and beginning of Q4. Here, we got the hit specifically due to the U.S. tariff situation. So internally in India, the market is okay, but we also did a lot of export business, as I outlined before to customers in Southeast Asia like Vietnam, like Thailand, they were manufacturing trailers for the U.S. market and they have now duties of 46%. So they stopped rapidly in India, and we have to get the market back specifically in India. So this then overcompensates the losses in North America. But the positive signal is the order intake here in Europe, which continues. We are fully booked until October now, which is okay.

Understood. And my last question is also again on the guidance. And basically, I am a bit wondering why you are guiding to narrow. Basically, last year, you had to adjust the guidance 3 times. Now we also adjust the guidance and it's August, there's still a couple of months to go. And with this new U.S. administration, everything seems possible. So I'm wondering why are you guiding to narrow? And why didn't you consider a wider bandwidth of guidance here?

I think this is a bit of a philosophic question. We are in July. We have now basically 7 months in the books, guidance taking sales of EUR 1.8 billion is reflecting a range from [ EUR 1.750 billion to EUR 1.850 billion ]. This is the EUR 100 million range. I think this is a quite solid guidance. Doing it in a broader range, one could do this, but then the question is if we have any idea how our business is developing.

For sure, there is always in every guidance where it's a risk and the market uncertainty this year is higher in terms of FX development, in terms of whatever happens in tariff restrictions and so on. But assuming to continue the year as it was running so high, I'm feeling quite good with this way of guiding our business.

The next question comes from Yasmin Steilen of Berenberg.

I have three, if I may, and I will also take them one by one. So the first one on the business environment in the U.S. So you have further cut your volume forecast for North America for the truck and the trailer industry. Can you share any early indications on the current trading? So have the OEMs extended the summer holidays? Or are there indications that they will do so? And might there be the requirement for you also to reduce the shift in the second half in the U.S.? That's my first question.

Yasmin, this is Alex. I'm going to answer your question. Well, there's only one reason. This is the President of the United States. He's shaking the whole world, but also U.S. I was traveling heavily in the U.S. this year, also in the second quarter and spoke to a lot of trailer manufacturers, but also truck manufacturers, but ultimately to fleet operators. They have a lot of cash. They are willing to invest. They have to invest because after 2 years of a decline in the market, specifically in the trailer market, they would like to renew the fleet, but they are -- they want a solid foundation of making decisions.

And at the moment, they have no clue how it looks in the next 4 weeks because the tariff policy changes overnight every day. And so they cannot count on the fundaments of their decision-making. And this is basically -- this is the saying of 9 out of 10 fleet operators. They're saying we need to invest. We'd like to renew the fleet, we have the cash, and we're ready to go, but we don't know how it looks in the next month. And this is basically very uncertainty or a lot of uncertainties for these guys.

So I hope that in the following weeks and months, the whole tariff discussions with all major countries in the world will be fixed also with EU, with India, with all the other big suppliers to the U.S. and then you can make up your calculations. And then from there, we expect the orders to come in. Nothing to do with pausing and not -- or the truck manufacturers not building anything. It's the fleet operators who make the ultimate decision, and they are just waiting to have the basis of making the decisions right.

Okay. Then maybe staying in the U.S. on the truck disc brakes business. So during your Capital Markets Day in March, you have mentioned that SAF received the certification by 2 U.S. truck OEMs, so besides the business you're already generating with the Scandinavian truck OEM. Can you provide more color on the development and if when we can expect additional sales from truck disc brakes to come?

Well, we already have a little bit of additional air disc brake truck business in the United States. We -- as I said, we started now to be spec-ed in the spec books of the truck manufacturers, but not of all the truck manufactures. So the team is working heavily on also get the specs in the books for the remaining truck manufacturers, specifically with the big ones. So as I said, the teams are working on that. This will not happen overnight because this is a like 3- to 4-year journey. We already started last year. We see first positive signs.

And then also here, we would like to offer a fleet spec. So basically, we go to the fleets, we convince them our brakes are lighter, better, availability for rear axles in the trailers, but also the front axles in the trucks would be the same or nearly the same or some components will be the same, so they would have a benefit. They are available, and we are working on this heavily.

Okay. And then the next one on your military order you've announced just earlier this week. How should we think about the profitability of the OE business? And could you also talk a little bit about the competition in this segment?

Well, we would not speak about profitability of single orders, of course. But as most of you might know, military contracts come with a slightly higher profitability than the normal business. And then also speaking of swivel axles, that's a very special heavy-duty application. They typically come with also a higher profitability. So it's pretty good that we do that. We are going to start supplying in the last quarter of this year until middle -- at least middle of next year. We are also working on some more tenders for the same customer, but also for customers in Europe.

So there are a couple of tenders out and to be out very soon, where the different countries in Western Europe demanding the transportation or the transportation builders of heavy-duty military trailers to quote. So they are out, and I expect specifically in '26 that more are coming also in the -- not even -- not only in the high 7 single-digit region, but also a little bit higher, so 8-digit region. There are some more tenders coming out, and we are ready for this. We have the capacity. We can build them here in SAF, but also can build them in the Tecma production facility in Italy. So more to come. And we are working aggressively on getting those tenders.

And with whom are you competing on, on these tenders? So are these the usual suspects? Or are there also some special companies involved in this?

There are only a few companies who can manufacture those specialties. On the U.S. side, basically, there is none and because we are spec-ed and on the European side, there's only like 2 or 3.

[Operator Instructions] The next question is from Jorge González Sadornil of Hauck Aufhäuser Investment Banking.

The first one is around the guidance. I would like to follow up on the question that Nicolai already did. And trying to understand the midpoint of this guidance of around EUR 1.8 billion. Can you share with us what are your assumptions, for instance, in North America for truck and trailer? Because I see in your Slide 20, I think now the ranges that you are providing are quite conservative, taking into account the data that other OEs and other companies in the sector have provided like [ more brands ] and other truck manufacturers. So I would like to understand if this EUR 1.8 billion is basically taking into account the worst of this new range or the midpoint of the new range, it is possible. That will be my first question, please.

Well, then we would have said we exactly will hit the EUR 1.8 billion, EUR 8.1 billion is just the middle we did in our new range. To be honest, we don't know how the U.S. will develop. This is all depending on the tariff situation. We got so much shaking in the second quarter in the U.S. We got also hit, where we imported some components from areas where the U.S. put some tariffs on starting from April 1, okay? I told you that it's in the middle of a -- well, it's basically EUR 4 million to EUR 5 million where we got the hit with the tariff situation. And we also supply to OE manufacturers, both trailer and truck, and we have to pass it on, but you cannot do that within 1 day. So we are in discussions with some. We already found agreements with some, we are still in discussions. And as I said before, we would like to get the margins back. So our burden we got from the tariffs in the second quarter within Q3, latest Q4. We're working on that.

And ACT currently is at around 25% minus for both truck and trailer. So this is why we said minus 20% to minus 30%. ACT is minus 25% in both in average. It all depends, as I said, on the tariff situation and how quickly the U.S. administration is finalizing the tariffs with the major import countries or supplying countries. And then our customers, which are the fleets will restart immediately with ordering new trucks and trailers.

Okay. Thank you for the color. My thought here is that with such a low comparable the second part of last year, you are more cautious also because of the FX and you are not -- I mean, as negative as, for instance, ACT for -- especially for trailer. I think I know truck is completely impossible to predict. But in terms of trailer, we are not at already really low levels of production because to me, 20% to 30% taking into account the levels of last year, it sounds, I mean, like you can go on holiday at this point already. Like it's really low levels, taking into account the numbers of other players. It has to do with maybe also a better development from your site last year in the second part of the year compared to the market. I mean do you have any higher impact than other players because of your highest exposure to disc brake or has nothing to do with just to be on the safe side?

Well, we always would like to be on the safe side, as you know us, a little bit on the conservative side. But also please keep in mind that we have a relatively high aftermarket share of sales in the Americas, okay? So that share is a little bit higher than we have it in Europe versus OE due to the Haldex base sales we are having in the aftermarket and also our [indiscernible] business in the United States with 3 dedicated plants doing so.

So yes, we are dependent on the trailer market in North America. But if you see aftermarket is the biggest contributor, then we have the truck business and then the trailer business. Trailer is really bad at the moment. Nobody is buying anything. Container chassis is down by 95%. And as I said before, I repeat myself now the third time, everybody is waiting on decisions by the U.S. government and then they can do their planning and then they can reorder. And they have to reorder because the trailer market is down now for nearly 2 years. So everybody needs to reinvest as they have to reinvest in Europe because the peak was in '22. So '23 was okay, '24 wasn't a good year. And '25 so far, the first half year was also look good, and this is why we see now a big increase in orders for trailer OE here in Europe, but also in Turkey. We shifted a lot to Turkey.

But again, for North America, we never had an impact like this coming from the tariffs. So we will see. We are cautious. If it's getting better, let's say, in Q3 and then in Q4, it would be even better for us. But the dominant sales contribution comes from the aftermarket in Americas for us, which is very stable.

And taking your look at the situation from a positive angle that I think it makes sense now as you were mentioning, the down cycle have already extended for longer than usual in U.S. and also in Europe. So I'm wondering, in Europe, so for next year because I imagine that also in your assumptions, you are considering rather stable demand still for this year. But next year, what we can expect with these investment plans supporting demand potentially in Germany and in other countries in Europe? How do you see the pickup of demand in Europe? Do you any view on how the market can grow compared to this year? Because we were -- I think if I'm not wrong, we were last year like 20%, 30% below the typical average demand in the last 3 years. So how do you see the improvement in a gradual way? Or do you think we can see a strong jump at some point because the low...

First, I think that the market is going up. It needs to go up because, as I said, the last 2 years, the markets were really down. So the trailer builds in Europe were really down and the markets have to go up. Everybody wants to invest. The money is available and interest rates in Europe are much lower than in the rest of the world. Take interest rates like in South America, now they are at 15%. This is crazy, like India, 10% to 12%. Turkey, you cannot even get a credit. But in Europe, specifically in Western Europe are still very, very good to get credit lines at a low interest rate and also the fleets would like to renew it and they have to renew the trucks have an average age, which is higher than normal and specifically the trailers, they are higher.

So as I said now, in the second half, we see already an increase in orders coming in. And talking to the fleets, they would like to get more trailers in their fleets back in to renew the fleet. So I personally think that 2026 will be a better or even a much better year than the last 2, 2.5 years, like second half of '23, '24 and the first half of '25.

And I think the demand in defense equipment and so on that gives us some orders related to heavy-duty transportation, it's a signal that as well as the programs, the money the government, the European government will put into defense, we will also benefit from that. And if then this is -- if it is in Germany can take a bit more time. We start to invest in infrastructure. This goes again into construction companies, to business where we are really strong in the market. So there is a lot of positive opportunities in front of us. The question only is when will it really kick in.

And when will the money be released. The government, they have to do the tenders. Tenders take time. As we can see now with the military business, they already announced that last year. It took now nearly 1 year until the tenders were finished and we start shipping. So it's a little bit of time delay, but I think 2026 in Europe specifically will be a good year.

And very quick -- 2 very quick ones. On the remedies for the tariffs, this extraordinary cost that you had in North America has to do with materials you need to buy from different sources? Or it's more about moving production? I mean there is a risk that you cannot recover this? Or it is a question of time?

You mean the tariff implications we had in the second quarter?

Yes. This extraordinary cost that you have around EUR 2 million, I think it was.

EUR 4 million to EUR 5 million, we said. And basically, we have always a dual-source strategy, okay? So we need at least 2 suppliers for 1 component to not be dependent on 1 supplier in case something happens or to get the huge pressure from the supplier to increase prices on their end. So always dual or, if possible, a triple-source policy, and we also buy from low-cost countries, of course. And then April 1, the U.S. administration came out, okay, we're going to put now 55% tariffs on China, for instance, or more on India or Brazil or some other areas of the world.

So we had to -- on this day, if we imported stuff and there was still stuff on the water hitting the ports after April 1, we had to carry the additional tariffs, so the customs duties and you cannot pass on to the customers immediately within 1 week or 4 weeks. Most of the times in the aftermarket, we have a delay of 6 to 8 weeks. That's a contractual thing. And with the OEs, that's a minimum of 3 months. So basically, as I said before, we solved some of it. Aftermarket is easier to solve than OE. And with OE, now we are working on that. But as I said before, we are very confident that the majority, I think not everything, but the majority of those extra costs related to the tariffs in the second quarter, but also in the third quarter now will be passed on to our customers in Q3, so latest in Q4 for Q2 then.

Perfect. And very last one on APAC. Obviously, we were -- I mean, we were not probably conscious of the share of exports that APAC was having into North America through the Southeast client, Asia clients. So I'm wondering if you can give us a rough range for how much this sales represent? And is -- what was the contribution in Q2 just to understand if we are already at the -- potentially at the floor of the revenue in APAC or if there is still some potential additional impact in the following quarters?

Also here, Jorge, I have to say it again, the U.S. administration is still discussing with a lot of Asian countries to fix the tariffs. The only one they fixed now is Japan. And -- but they didn't fix Vietnam, Thailand, India. India is still a big hassle because they said this is a secondary tariffs due to the Russian conflict we are having. They are still buying a lot of oil, and they said last week, it's going to be 25%. This week, they said it's going to be 50% if they don't stop supporting Russia. We can't count on this, and our customers also do not count on this because imagine you manufacture trailers, you got to ship it over to the U.S. And then after 6 weeks, your products hit the port and the day before, the U.S. administration says, now it's 50% tariffs. So nobody is bringing anything on the water right now until everything is settled and fixed and they can calculate. So we have to wait for this.

And we have quite some export share from India, as I said, to those South Asian countries, manufacturing trailers and components for U.S., but we also have now developed axles for the U.S. market made in India because China with 55% tariffs is very high. We have the products ready. But now with the 25% or maybe 10% or maybe 50%, we paused all the activities. We didn't ship anything to the U.S. right now because, as I said before, we face the risk. The day we hit the port, we get 50% tariffs. So we don't do that at the moment. We are waiting until the final decision has been made by the U.S. government. Not gambling [ it all ].

[Operator Instructions] There seem no more questions to be incoming. So with that, I close the Q&A session and hand over to CFO, Frank Lorenz-Dietz.

So thank you, everyone, for the questions. The Investor Relations team is available in case of any follow-up questions. And we will be, as always, on the road and attending conferences in the coming weeks, and look forward to seeing you there. Thank you.

Thanks, everybody.